A new way to hedge against falling housing values

A new way to hedge against falling housing values

"the Chicago Mercantile Exchange quietly began trading futures contracts on home resale values last May. The contracts are based on the Standard & Poor's Case-Shiller Metro Area House Price indexes, which track price changes of existing homes in 10 major metro markets."

RealEstateJournal | Surge in Home Prices Leaves Homeowners Underinsured

RealEstateJournal | Surge in Home Prices Leaves Homeowners Underinsured


By M. P. McQueen
From The Wall Street Journal Online

It's the downside of the housing boom: Many homeowners are now significantly underinsured.

Americans have been pouring money into their homes in recent years, adding everything from marble bathrooms to fancy backyard barbecues: Last year alone, spending on improvements like these hit an estimated $155 billion, up 27% from two years earlier. At the same time, the global boom in commodities prices -- lumber, copper piping and other necessities -- as well as rising labor costs has pushed up replacement costs by 7% a year since 2001.

Will Mortgage Rates Continue to Decline? � The Real Estate Bloggers

Will Mortgage Rates Continue to Decline?

The Federal Reserves decision not to increase the interest rate had a immediate effect on the 30 year mortgage and lowered it 17 basis points in a two week window. If oil prices keep declining we may see a period where inflation is kept under control enough to keep mortgage rates in the 6.50 to 6.75 percent range and provide enough of a foundation for buyers to trust the marketplace.

I think that the price of oil is much more important to the housing market than most people think. It has been a key driver of inflation along with increased salaries. If the psychological pressure of putting gas in ones car is mitigated, then people may be more comfortable with their present pay and situation.

30-YEAR MORTGAGE RATES

Date 30-Year Rate
8/10 6.55%
8/3 6.63%
7/27 6.72%
7/20 6.80%
7/13 6.74%
7/6 6.79%
6/29 6.78%
6/22 6.71%
Source: Freddie Mac

FSBOBOLINKS: New Signs of Cooling in Housing

FSBOBOLINKS: New Signs of Cooling in Housing


he housing market is deteriorating by the month.

In the latest and strongest indication that the home buying and selling frenzy is over, the National Association of Realtors reported yesterday that sales of previously owned homes fell to the lowest level in July in more than two years, prices flattened and sellers waited longer and longer to find buyers for their homes. The supply of unsold houses on the market hit a record high.

Economists said the data showed the housing market was following the traditional path of a slowdown: a drop in sales followed by a decline or a plateau in prices. But they remained divided over just how severe and long-lasting the coming slump was likely to be.

“It does feel a little scary right now,” said Celia Chen, director of housing economics at Moody’s Economy.com. “I think these markets will correct. The price gains that they have seen have exceeded what can be supported by the economic and demographic fundamentals.’’

Existing-home sales in July declined 4.1 percent from the previous month to a seasonally adjusted annual rate of 6.3 million, the slowest selling pace since early 2004, when sales were running at a rate as low as 6 million.

“We had a hot market, and now it’s going to be back to normal,” said Edward Leamer, an economist at the University of California, Los Angeles. “Sales volumes will continue to decline, although they’ll bottom out sometime in the next year.”

The median selling price for existing homes, which rose at double-digit rates for much of the previous two years, was up only slightly last month. And had home prices not continued to rise in the South, where they gained slightly more than 3 percent compared with a year earlier, the national rate would have fallen.

Soaring condo plans come down to earth

Brought to you by

Jack Snyder

The unprecedented boom in condominium towers is remaking downtown Orlando's skyline. But with fewer than half of the 30 announced projects completed or under construction, the timing -- even the survival -- of the rest is now in question because of rising costs and prices.

Developers who a couple of years ago could have sat back and taken deposits from eager buyers before starting work on a building are now battling fiercely for attention, hoping to snare enough sales to justify a construction loan.

Those 18 unbuilt projects are competing not only with one another but with the eight towers that are being built and with sales in the four that are already open. They also have to contend with the thousands of city-center units in apartment-to-condo conversions.

Two of the towers now under construction contain apartments, not condos, reflecting a renewed demand for rental housing now that several years of conversion activity has consumed most of the apartment complexes in the downtown core.

The two big questions for most of the remaining towers are: How high will their asking prices be pushed by still-rising construction costs? And can they find enough buyers in an increasingly expensive market to obtain the financing needed for actual work to start?

"At best, there could be delays," said Charlie Lentz, managing director in Orlando for Integra Realty Resources, Inc., a national real-estate-consulting firm. "At worst, some projects may not be financially feasible at this time."

Construction costs are "the number one thing killing some projects or putting them on hold," said Tim Baker, a principal at Baker Barrios Architects, an Orlando architectural firm that has done the design and planning work for more than a dozen of the downtown projects.

"Dealing with costs was huge," said Scott Stahley, senior vice president of Lincoln Property Co., which just started building the 32-story Dynetech Centre at Magnolia Avenue and Washington Street after months of delay. The tower will have 164 rental apartments.

Rising costs so concerned developers of The Paramount, a condo tower now under construction on east Central Boulevard, that "we were borderline on whether to go forward," said Steve Patterson, chief executive officer of Zom Inc., the venture's majority partner.

Asked how profitable the 312-unit tower would turn out to be, Patterson replied: "I'll let you know when construction is done."

Both Lincoln Property and Zom are nationally known developers, with solid track records and strong relationships with lenders. But lesser lights could face an uphill fight to secure financing for their projects, said Jamie Buckland, senior vice president and commercial-banking director for EverBank Financial Corp., a Jacksonville-based bank that just opened an Orlando office.

"It's an entirely different market today," Buckland said. "Lenders are only going to consider the most solid deals."

The push for sales

What makes a solid deal? Solid sales, for one thing.

JLJ Properties LLC of Lake Mary, which wants to build a 510-unit condo complex called Eola Place, recently spent thousands of dollars to wine and dine local real-estate agents in the hope they will steer prospective buyers its way. More than 300 Realtors turned out for the free martinis and food.

Even so, the developer is pushing ahead with sales for just one tower with 196 units.

"It would be crazy to try and bite off the whole thing right now," said John Bahng, a partner in the venture. Bahng would not disclose what percentage of the tower's units the company has to sell before a bank will open its vault, saying only that he is talking with several interested lenders.

Condominiums and downtown Orlando didn't mix well for years. Only two high-rise condos were built downtown before the turn of the century -- Park Lake Towers in the 1970s and 530 East Central in the 1980s -- and both sold poorly. But as the region's and the nation's housing markets set off on a five-year boom early in this decade, so did people's interest in living in Orlando's city center.

More than a score of projects were announced. The Waverly, downtown's first luxury apartment high-rise when it opened in 2001, went condo two years later. Downtown's first condo high-rise project in two decades, The Sanctuary, opened last year. Two mid-rise condos, Thornton Park Central and The Jackson, opened during that same time frame.

The 26 other condo or apartment projects under construction or in planning stages would, if all completed, add more than 7,000 residential units to the downtown core.

But the housing market has softened this year, and some of the downtown projects are clearly stalled. North Orange Condominiums, for example, was first proposed in late 2002 as apartments for a site just north of Colonial Drive. Yet the site remains vacant, a sales office has come and gone, and the developer couldn't be reached for comment last week.

A few other developers are forging ahead with sales campaigns in hopes of landing enough buyers to attract lenders' interest.

Sales are to kick off in a few weeks at The Monarch, a tower off South Street near State Road 408. Prices for The Monarch's condominiums are expected to start in the high $300,000s.

The goal for Tradition Towers, to rise on the site of the University Club on Central Boulevard, is to pre-sell half the building's 276 units to trigger construction financing. Although building costs have soared 50 percent since the project was first planned more than two years ago, buyers for the project's luxury apartments are still out there, according to Steve Walsh, president of Broad Street Partners, the developer.

"We just sold a 4,200-square-foot penthouse for $2.3 million," said Walsh, who expects to have enough buyers in hand to break ground in four to six months.

In the Orlando area, condo sales generally have remained stronger than single-family home sales, which peaked last summer. That's because the typical condo unit still sells for less than $200,000, while the median price for a single-family dwelling is somewhere north of $250,000.

As a result, the number of condos sold in the Orlando area during the first half of the year, while slowing in recent months, was still 51 percent ahead of last year's first-half total, even as single-family sales fell nearly 10 percent behind last year's record-setting pace.

Downtown demand

But in downtown Orlando, prices for condos have been soaring because towers, already an expensive form of residential construction, have been particularly affected by the rising cost of materials and labor the past couple of years. And rising interest rates are making it harder for prospective buyers to qualify for a mortgage.

City-center condos are still in demand, said Craig Ustler Jr., a downtown developer and president of CondoHQ Orlando LLC, the brokerage handling sales at 55 West on Church Street.

"Thousands of people want to live downtown," he said. "It has become a question for many whether they can afford to."

The 55 West project, announced more than three years ago, was delayed for months as the developers rewrote their price list and added more units to the tower before starting construction late last year. The 405-unit building is now 75 percent sold, Ustler said.

A partner in what would be downtown's biggest project -- Orlando City Place, at Colonial Drive and Hughey Street -- sees the current market squeeze as a normal correction that won't affect his plans.

"We're going forward," said George Kalivretenos. The developers have completed their transformation of the former Holiday Inn into The Lexington condo-hotel and will start work next year on more than 1,200 condos and apartments, he said, with office and retail space.

GDC Properties Inc., a New York-based developer with extensive Florida operations, says it expects to have no problems financing its mixed-use apartment project in downtown Orlando.

The project, once called The Ivanhoe, has since been renamed Verde. In planning stages since 2004, it would feature twin 35-story towers with a total of 476 apartments at North Orange Avenue and Marks Street.

GDC President William Ingraham said construction is now expected to start late this year or early next. "Market conditions are ideal right now for a rental community of this scope," he said.

Heathrow-based Wescar Cos. recently bought property at North Magnolia Avenue and Marks Street, including the old Lunch Basket building, with the intention of putting 80 to 100 condos on the site.

But at this point, the company is starting design work only.

"We'll be in no rush," said Wesley Geys, the company's vice president. "We'll let the market tell us when the time's right."

Florida leads nation in housing growth

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For the second year in a row, Flagler County, Fla., had the highest rate of growth in the number of housing units of any county in the nation, according to U.S. Census Bureau estimates released today.

The estimates cover July 1, 2004, to July 1, 2005, and show that Flagler's housing stock increased by 14.8 percent, or more than 5,000 units. Flagler had added more than 4,000 housing units a year earlier.

Three other Florida counties made the top 10 with the highest rate of growth in housing stock: Sumter (ranking second); Osceola (fourth); and St. Lucie (ninth).

The remainder of the top 10 consisted of Pinal, Ariz. (third); Franklin, Wash. (fifth); Culpeper, Va. (sixth); Washington, Utah (seventh); Kendall, Ill. (eighth); and Rockwall, Texas (10th).

The United States had an estimated 124.5 million housing units as of July 1, 2005, representing an increase of 1.8 million, or 1.5 percent, since July 1, 2004.

Florida also topped the list of the states adding the highest number of housing units, gaining 247,000 homes over the period. Following Florida were California (182,000), Texas (179,000), Georgia (98,000) and Arizona (87,000).

Maricopa (Phoenix), Ariz., was the biggest numerical gainer among counties, adding 52,000 homes over the period, followed by Clark County (Las Vegas), Nev., and Harris County (Houston), Texas, which gained 35,000 and 34,000 units, respectively.

At the state level, four of the five states that had the most rapid housing growth are located in the West: Nevada (first with a growth rate of 4.4 percent); Arizona (second at 3.5 percent); Florida (third at 3.1 percent); Idaho (fourth at 2.9 percent); and Utah (fifth at 2.9 percent).

Nevada's growth rate was almost three times faster than housing unit growth for the nation as a whole, according to the Census Bureau.

The estimates are based on Census 2000 counts supplemented by administrative records such as building permits.

New Signs of Cooling in Housing - New York Times

New Signs of Cooling in Housing - New York Times:

In the latest and strongest indication that the home buying and selling frenzy is over, the National Association of Realtors reported yesterday that sales of previously owned homes fell to the lowest level in July in more than two years, prices flattened and sellers waited longer and longer to find buyers for their homes. The supply of unsold houses on the market hit a record high.

Movin' Out

Movin' Out

Sales data released yesterday by the National Association of Realtors showed a clear pattern--the states with the biggest drops in home sales were the ones who've seen the steepest price appreciation over the past few years.

Movin' Out

Movin' Out

Sales data released yesterday by the National Association of Realtors showed a clear pattern--the states with the biggest drops in home sales were the ones who've seen the steepest price appreciation over the past few years.

Condo Conversion Planned for Former Detroit Office Buildings

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The Pagan Organization has purchased the Book Tower and Book Building in downtown Detroit and plan to convert a portion of both properties into luxury condominiums. The New York investment and development group led by Ricardo Pagan, acquired the buildings for an undisclosed price. Book Tower is a 38-story office building built in 1928 and the Book Building has 13 stories and was also built 1928. 

Turn Here Video of Coconut Grove

Hotel-condo idea a win-win?

Brought to you by

Donna Hogan

Adding and selling living quarters offers a perfect solution for developers trying to finance a new or redeveloped hotel. And it gives well-heeled consumers the opportunity to live in a resort atmosphere - full time or just for vacations. It sounds like a win for everybody, said Jim Butler, a L os Angeles based lawyer who specializes in the legal aspect of condo hotels. But the hardly-new-butsuddenly-the-rage concept generates a plethora of legal and financial consequences, he said.

For consumers. For developers. Even for towns and cities dependent on hotel revenue to pay for roads, parks and other municipal services.

Paradise Valley, a town of panoramic mountain vistas, multi-million dollar homes and no shopping malls, is totally dependent on the resorts and the high-end restaurants and boutique retail shops that go along with them to fill coffers with bed tax and sales tax collected from hotel guests.

Every luxury hotel room developed or redeveloped instead as a luxury condo means a big chunk of lost bed tax - charges added to hotel tabs.

Three so-called mixed-use resorts - Montelucia, Mountain Shadows and Ritz-Carlton - are currently in various stages of development in Paradise Valley. But the typically laid-back town government has gotten aggressive about preserving its income.

"We addressed it with Montelucia through a development agreement," said Tom Martinsen, town manager. "The resort will pay the town 'in lieu bed and sales taxes' each year, guaranteeing the town a stable flow of revenue. We expect to do the same with Mountain Shadows and Ritz Carlton."

The geographically small town is such a desirable spot for resort developers, Paradise Valley can gain such accords by withholding approvals, Martinsen said.

But even for cities with more diverse revenue streams, the loss of bed tax is still a concern.

"As an industry there is a lot of confusion about whether condos add or take away from (tourism revenue)," said Rachel Sacco, president of the Scottsdale Convention & Visitors Bureau. "But what we do know is most developments and redevelopments now include condos. We're looking at how it will play out."

So are the industry trackers, trying to make new rules for the hybrid hotel developments.

"It can be disastrous if not done right," Butler said. "The front-end structure determines whether a project will be successful or not. You have all the issues with a hotel and all the issues with condos. And when the two intersect, it creates problems that don't exist in either world."

Besides the liability, security and "common area" maintenance rules that real estate experts for condos or hotels are used to dealing with, a condo hotel developer has to determine, before selling the first residential unit, how the units will be controlled and marketed.

For example, the Securities and Exchange Commission says if a person buys a hotel suite as an investment it's a security - just like a stock share - and has to be registered and sold by a securities broker, Butler said. If it's sold as a home, it's considered real estate and is bought and sold like any other housing purchase.

If it's marketed as both - a place to live for a few weeks a year and add to the hotel pool to be rented to overnight guests the rest of the time, it is still considered a security and can cause huge problems for the purchaser, Butler said.

"It just doesn't work as a security, and that makes marketing difficult," he said. "They can't even tell you about the rental program, although once a unit is purchased they can offer one."

And what about those purchased with plans to rent the rooms most or all of the year? For such a business model to be effective, a hotel needs to know exactly how many rooms it has to sell at any time, especially for meeting planners, who book months, sometimes even a year or more in advance.

That means the hotel needs control over when an owner can use his own property, Butler said.

And just about everything else, such as decor and furnishings.

"If you wanted to put pink carpeting or weird decor in your condo, it wouldn't work in a hotel environment," Butler said. "If you are a guest staying at a W or a Westin, you expect a certain image."

Camelback Inn in Paradise Valley, which has been a condo hotel since 1972, has a structure that works well, said Clark Albright, director of sales and marketing.

Owners let hotel management know nine months in advance during peak months and three months ahead in the off-season if they plan to use their casita, he said. Marriott controls all the furnishings and a board made up of owners approves all capital expenditures, he said.

3 Greenwich, Conn., Multifamily Properties Sell for $50Mln, to Go Condo

Brought to you by

Jill Ambroz,

Prescott Capital Management LLC has acquired three newly-constructed townhouse projects in Greenwich, Conn., for about $50 million, with plans to convert the properties to condominiums.

The properties include two buildings near Greenwich Avenue, 17-unit Milbank Commons, and Field Crest, with seven units, and Holly Hill, which has 10 luxury units off of West Putnam Avenue.

Prudential Connecticut has been tapped to market the units for sale.

Prescott Capital Management is a unit of New York real estate merchant banking firm, The Prescott Group LLC, which two years ago lined up equity for investments from the family of Gordon P. Getty

Anaheim, Calif., Mixed-Use Condo Project Secures $17.2Mln in Financing

Brought to you by

Jill Ambroz,

A venture between Urban West Strategies and St. Clair Meyers Partners has secured $17.2 million in financing for a mixed-use development project near the Platinum Triangle in Anaheim, Calif.

Five Mile Capital Partners is providing the two-year, fixed-rate loan. Holliday Fenoglio Fowler LP arranged the financing.

The proceeds from the loan will be used for the acquisition and entitlement process of the property.

The venture plans to redevelop an 11.8-acre site at 593 West Ball Road into a 449-unit residential condominium project with retail space and underground garages. The project, to be called Parc Anaheim, will replace a 296-space recreational vehicle park. All existing structures will be razed.

Developer Urban West Strategies has projects underway throughout Orange and San Diego Counties in California. St. Clair Meyers Partners is an Orange County developer with projects in California and Arizona.

Morgans/Hudson Venture Pays $110Mln for Miami Apartments, Plans Hotel Conversion

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A joint venture between Morgans Hotel Group Co. and an affiliate of Hudson Capital has paid $110 million for a Miami apartment property that will be converted into a 342-room hotel.

Upon completion of the $60 million transformation, the hotel will be the fourth property to operate under Morgans' Mondrian brand. The other hotels are in Los Angeles, Scottsdale, Ariz., and Las Vegas. Morgans will oversee the hotel's management.

The Morgans/Hudson Capital venture will fund the purchase and renovations with $124 million in financing provided by Eurohypo AG. The financing carries a rate of 300 basis points over Libor.

The 16-story Mondrian will have a mix of studios, one- and two-bedroom rooms, and four penthouse suites. The venture could sell the units as hotel condominiums. Amenities include restaurants, meeting and event space, a spa, and boat slips for guests to park yachts and sailboats.

Corus Provides $142.5Mln for Philadelphia Condo Project

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A joint venture between P&A Associates and Thomas Properties Group has lined up $142.5 million in construction financing for The Murano, a 302-unit condominium tower in Philadelphia.

The venture received the financing from Corus Bank, a Chicago lender. The fixed-rate loan carries a three-year term, but can be extended for up to one year.

The 43-story Murano will sit at the corner of 21^st and Market streets in downtown Philadelphia. It will have a 304-space parking garage and ground-floor retail.

San Francisco, Boston, and Other 'Superstar Cities'

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Peter Coy

Economists have twisted themselves in knots trying to explain why housing prices in cities like San Francisco and Boston are so high. One theory says that the cities have better amenities. Another says that moving to these cities makes workers more productive (presumably because of the higher quality of their colleagues) so people will pay more to live there.

Lately, though, three economists from Philadelphia and New York have been pushing a completely different argument, which is a version of the old riddle about what happens when an irresistible force meets an immovable object.

The irresistible force, in their telling, is rapidly rising incomes in the top tier of the U.S. population. Their immovable object is the supply of buildable land in "superstar cities," which are mainly along the coasts where there isn't much room to grow.

Simply put, a certain percentage of rich Americans would like to live for whatever reason in, say, San Francisco. But at some point, there's no more room to build there. So the arrivistes have to pay a premium to move in. Prices go up. The number of rich Americans keeps going up and the number of houses in San Francisco doesn't. So the rich newcomers are pushed out by even richer newer-comers. And before you know it, people are paying millions of dollars for houses that would go for $150,000 in Rochester. (Pictured is a house you won't find in Rochester. It's a Spanish-style home in San Francisco on the cliffs above China Beach, going for $23.5 million, offered by Alain Pinel, Realtors.)

What goes for San Francisco goes for other superstar cities such as Los Angeles, Boston, New York, and Seattle, say the authors: Joseph Gyourko and Todd Sinai of the University of Pennsylvania's Wharton School and Christopher Mayer of Columbia University's Graduate School of Business.

The authors sum it up this way: "Living in a superstar city is like owning a scarce luxury good."

Their theory implies that the price gap between superstar cities and the rest could get even bigger in coming years if incomes of rich Americans continue to rise and the supply of houses in the cities remains fixed. The U.S. population will simply re-sort itself again, with the richest supplanting the slightly less rich from their homes along

Developers nix or delay condo projects as sales slow, costs rise

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Deborah Yao

 

PHILADELPHIA - More and more developers are canceling or delaying condominium projects as home sales slow, construction costs soar and lenders balk at financing units that might not sell.

What's making the situation worse is a glut of high-priced condos and too few people who can afford them.

SOME COULD BECOME RENTALS: It's called "reconversion"

In Philadelphia, a city cluttered with condominium construction, Old City 205 aspired to shine as an ultramodern residence for the well-heeled with its zinc and glass facade, loft-style homes and windows that span floor to ceiling.

But the $40 million project in Philadelphia's Old City neighborhood won't break ground after the housing market softened and increasingly picky buyers balked at its price tags from $400,000 for a studio to over $2 million for a three-bedroom penthouse.

Brown Hill Development, the company behind the project, saw the slowdown in home buying and decided it didn't want to be left with unsold units, said partner Greg Hill.

"We've gone through the biggest real estate boom in the last eight or nine years and some of these projects haven't started yet. Do you think they're going to start building now?" said real estate executive Allan Domb, dubbed Philadelphia's "condo king."

In Las Vegas, projects nixed include high-profile developments such as Aqua Blue, a $600 million, 825-unit luxury condominium-hotel resort that counted former basketball superstar Michael Jordan as an investor; the $3 billion, 4,400-unit Las Ramblas resort, backed by actor George Clooney; and Ivana Las Vegas, a $700 million, 945-unit tower named after Donald Trump's ex-wife.

Related Las Vegas, one of the two developers for Las Ramblas, cited rising construction costs and slowing sales for the cancellation.

In South Florida, canceled condo developments include 1390 Brickell Bay and ICE in Miami, Fort Lauderdale's The Waves Las Olas, and Promenade in Palm Beach County. WCI Communities, a luxury home builder based in Bonita Springs, Fla., said in June that new orders for its high-rise condominiums fell 84% in the second quarter. The company will now go forward with only three to five condo projects in 2006, down from as many as 15 to 17, mostly in Florida.

With housing sales looking increasingly anemic, it's not surprising that developers are bailing out.

Domb in Philadelphia said he's gotten half a dozen phone calls the past four weeks from developers asking if he would like to buy their properties.

In May, the volume of apartment-to-condo conversions plunged to $334 million from $1.65 billion a year ago, said Gleb Nechayev, senior economist at Torto Wheaton Research, a real estate research firm in Boston owned by CB Richard Ellis. The all-time high was $4 billion last September.

Builder confidence, measured by the National Association of Home Builders/Wells Fargo Housing Market Index, fell in June to its lowest level since April 1995. Confidence took a hit due to rising mortgage rates, high home prices and investors and speculators fleeing the market.

The index surveyed builders of single-family homes, where the sales decline hasn't been as severe as for condos.

Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach, Fla., said desperate developers with finished condos are offering incentives in South Florida.

Freebies range from one year's free mortgage to the use of a yacht or upgraded kitchen packages. McCabe thinks some developers might even sell condo units at cost if sales continue to weaken.

McCabe believes the condo market, especially the luxury end, is at risk of a crash. Over the next few years, he sees prices falling by double-digit percentages.

The luxury condo surplus is to blame. McCabe said about 25,000 condos are under construction in Miami-Dade County, with two-thirds costing $700,000 or higher; another 25,000 units have gotten building permits and 50,000 have been announced for future construction.

McCabe said the median household income in the county qualifies local buyers for a $225,000 home, so the luxury units are targeted mainly toward affluent, out-of-state buyers.

Meanwhile, speculators have driven up prices by flipping units, he said. But they're now leaving the market - driving down demand - and putting up for sale properties they own, adding to the glut.

Aside from Miami, he said areas at risk include Boston, San Diego, Las Vegas, Seattle, Chicago, Orlando, Washington, D.C., and Manhattan.

A big part of the problem is that many condo projects are priced high, in part because developers have to recoup the high prices they paid for land. But most buyers can't afford it.

"The sweet spot of the market is probably $250,000 to $700,000," Domb said. "That's what the majority of the population can afford. Many condos are priced higher. That's part of the problem."

Tell that to The Donald. Real estate mogul Donald Trump told the Associated Press that he's going ahead with his 45-story waterfront luxury high rise called Trump Tower Philadelphia.

"It's doing fine," Trump said. "It's been intense. So many people want to move there."

He said that doesn't surprise him, because his name sells.

Austin Post Office May Go Condo

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Kirk Ladendorf, Kate Alexander

The U.S. Postal Service is seeking development proposals for its downtown site, opening up new possibilities for more residential development.

The Postal Service has set an Aug. 20 deadline for proposals for the site at 510 Guadalupe St. between West Fifth and West Sixth streets.

Already, one developer says it's very interested, and city officials say they expect more will make a bid for the block, especially given the shrinking supply of downtown land that doesn't have height restrictions.

"We absolutely plan to respond to it," said Billy Holley, a developer for Austin projects at Novare Group.

The Atlanta company, with local partner Andrews Urban LLC, is building the 430-unit condominium tower called 360 at Third and Nueces streets. The developers also are partners in a planned major renovation of the Austin Music Hall.

"Our goal is to support Austin's vision for a diverse and vibrant core, so it's definitely something we'll pursue," Holley said.

Mayor Will Wynn said he has been lobbying postal officials in Washington to put the land up for redevelopment, to help achieve the city's goal of having 25,000 people living downtown within 10 years.

"No block in downtown Austin has been more underutilized than the one occupied by our current post office," Wynn said in a statement Thursday. "I have desperately wanted to see it play its rightful role in the revitali- zation of downtown."

The post office, completed in 1996 at a cost of $6.2 million, is two stories high and occupies about a fourth of the block, with the rest used for parking. It's north of Republic Square Park.

"This is a prime piece of property that, if put in private hands could generate a building of high value to downtown and to the city and could build a great deal of tax base to the benefit of everyone," said Charles Betts, executive director of the Downtown Austin Alliance.

The Postal Service says that any proposals must include a plan for building a new post office on part of the property or within a block.

There will be plenty of interest, Council Member Brewster McCracken said, because the site isn't affected by the Capitol view corridor law, which limits development on some downtown sites to protect views of the Capitol from certain vantage points.

Some downtown leaders say they'd be happy to see something replace the post office, which has been criticized as an unattractive design.

"It's about time that something happens with that site," said Kevin Burns, owner of Urbanspace Realtors LLP and vice president of the Downtown Austin Neighborhood Association. "It's a hideous block."

The block is pivotal to creating a vibrant downtown, Burns said, because it serves as a link between the high-rise residences on the west end and along the Congress Avenue corridor.

"We should have something spectacular there," he said.

Lowe Venture Plans $300Mln Mixed-Use Development in D.C.

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Condo Project Planned for Downtown Indianapolis

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Eric Martin

 

Mass Ave. has long been a powerful draw for boutique shoppers, fans of the performing arts and people seeking trendy dining, but lately the allure and size of the street's residential developments have been getting a lot bigger.

 

Large luxury condos are making their way to the avenue and will take up the majority of a new 10-story building planned at the street's south end -- a development that will continue a condo boom that is expected to create more than 1,100 Downtown units by 2010.

 

The building, known as Three Mass Ave, will stand adjacent to and south of McNiven's Restaurant and Bar on what is now a parking lot bordered by New York Street. The first floor will hold 19,000 feet of retail space, perhaps including a wine shop, organic grocery store or sidewalk cafe. The upper nine floors will house 46 residences, some with two stories. Units will be priced from $400,000 for two-bedroom, two-bath condos to $2 million for custom-built penthouses. The project also will have one or two levels of underground parking.

 

The building will be designed by Schmidt Associates and developed by Halakar Properties and Pillar Investments LLC. Contractor Keystone Construction should break ground by March at the latest, and tenants could start moving in by early 2008.

 

The developers declined to reveal the price they are paying to acquire the land from Horizon Partners or the estimated cost of construction. They did say they are not seeking tax abatements, and Terry Sweeney of Indianapolis Downtown Inc. said the property taxes on the project will help Center Township, where about half of all structures are tax-exempt.

 

The building will rise four floors above most of Mass Ave.'s century-old rustic brick structures. In order not to obscure views of the sky for Mass Ave. pedestrians, Schmidt designed the building so that floors seven through 10 are each a few feet smaller on the outside. But Robert Shula, a member of the Metropolitan Development Commission, worries that the building's top could become an eyesore.

 

"I can understand how the first six floors blend into the neighborhood, but it looks like Flash Gordon did the top of the building," he said at a Wednesday hearing about the building. "I don't understand why it has to be so futuristic."

Style didn't stop Shula from joining the majority of commission members in a 5-1 vote Wednesday to allow the development to proceed. Scott Keller, a former developer and City-County Council member who represents the district that includes Mass Ave., said the design is a good compromise because the land is too valuable to make a shorter residential building economically viable.

 

Although the least expensive residences will cost twice the price of the least expensive lofts at One Market Square, a 208-unit project nearby that has sold slowly, demand on Mass Ave. seems to be high. Sheri Barnes, an agent with Re/Max Preferred, said she has sold 11 of the 23 units at 757 Mass Ave., another new project, for $290,000 to $1.2 million -- without even showing buyers a model. She also manages sales for a building at 707 North St., three blocks east of Mass Ave., where two penthouses have presold for $800,000 to $1.2 million. Beilouny Luxury Properties, which owns both buildings, plans to break ground on the 23-unit project on North Street this fall.

 

"With our new stadium and all the positive things happening Downtown, I think we're catching up with the bigger cities," she said.

Halakar President Todd Maurer says he, too, has interested buyers who think the price is worthwhile.

 

"These are going to be in a high-class neighborhood with stainless steel appliances and granite countertops," he said. "It's the life you want to live."

The units will range from 2,000 to 5,000 square feet, with balconies ranging from 100 to 2,000 feet. Amenities, including a rooftop garden, will be incorporated into the design.

 

Michael Harrison, housing and economic development coordinator for the Riley Area development corporation, said these projects are helping meet the area's goal of increasing Downtown's population from 20,000 people in 2003 to 40,000 by 2020.

DSF Cancels Condo Conversion in Baltimore

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Lorraine Mirabella

 

When they learned that their apartment building at 3900 N. Charles St. would turn condominium, many residents reluctantly packed up and moved, scrambling to find new homes in the sought-after neighborhood. Some elderly tenants gathered paperwork to show that they legally qualified for six more years as renters. A handful made offers to buy.

Now, five months after registering to convert the building to condos and adding a private screening room, a health spa and a library, the owner is abandoning the conversion because of slow sales. DSF Group of Boston plans to market the units it had offered for $185,000 to $300,000 as luxury rentals.

"It's really what the market wants, and it's as straightforward as that," said Art Solomon, chairman and chief executive of DSF, which bought the 232-unit building in North Baltimore's Tuscany-Canterbury neighborhood in January from the Harry and Jeanette Weinberg Foundation.

DSF has taken 35 to 40 reservations since starting the marketing campaign for the Halstead at Guilford Condominium in April, Solomon said.

The abrupt switch - the first halting of a condo conversion in the state in at least three years - was made at a time when the once red-hot housing market is losing steam, as buying power is eroded by rising interest rates, soaring energy costs and record home prices.

Home sales in Baltimore and the five surrounding counties have fallen each month since October from year-earlier levels, and the number of unsold properties has been piling up: The number for sale in June was more than twice the number a year earlier.

In addition, developers, in the belief that a city that once shunned condos is ready to embrace them, have been adding hundreds of units in the region as the overall market has weakened, and more are in the pipeline.

And nationwide investors, intent on cashing in on rising real estate values, had been snatching up units in hot markets, fanning demand and fueling fears of overbuilding.

In the Baltimore area, about 5,000 condos - 1,300 of them in the city - were for sale at the end of June, nearly double the 2,800 that were for sale six months earlier, according to Delta Associates, an Alexandria, Va.-based real estate information firm. Developers plan to market 5,024 new condos in the area over the next three years, 2,053 of them in the city, Delta reports.

Nationally the market for condos has slowed significantly over the past six months, with more for sale now than at any time since the early 1990s, said Celia Chen, director of housing economics for Moody's Economy.com. Overall sales were down 10 percent as of June 30 from June 2005, while prices have remained flat.

Because prices had risen so fast, and mortgage rates have climbed, "the affordability of housing is eroding in many areas," Chen said. "It's becoming more difficult for people to buy houses."

With so many new condos coming on line in a slowing market, conversions of older buildings face stiff competition, experts said.

"If it's in an area with a lot of competition, where there are new condo projects as well as conversions, a plain vanilla building ... would be a project that wouldn't work," said William Rich, a vice president of Delta Associates.

The 3900 N. Charles building was one of 28 condo conversions registered with the state this year, according to the office of the Maryland Secretary of State. Staff members said DSF's about-face was the first in at least three years.

Though the Halstead is the first Maryland conversion to be called off, there have been several in Northern Virginia, where there has been a condo building boom.

The 574-unit Park Center in Alexandria began a conversion in October but pulled back during the second quarter of this year. The developer, Monument Realty of Washington, also halted a conversion this month at the 256-unit The Prime in Arlington County after receiving 52 contracts.

At the end of June, about 13,300 condos - 3,800 of them conversions - were for sale in Northern Virginia, up from 9,600 a year earlier, Delta Associates said.

"The supply is exceeding demand," said Robert Stein, president of RMS & Associates, a condo converter and developer based in McLean, Va. "If the supply exceeds the demand and the price points are too high, people are going to be resistant to buying a condo right now because they're worried about the economy and international events and interest rates and gas prices."

Real estate agents, too, say they are seeing the impact of more condos in a softer market.

"There's so many more condos because so many of these apartments are converting to condo, and these are places we didn't have two years ago," said Amy Ruth, a real estate agent with ReMax American Dream in Lutherville who has been selling homes in the area for 26 years.

"Add that to the market slowing, and of course it's going to slow the sales. It's not horrible, and condo sales haven't stopped, but it's slowing."

Ruth said she nevertheless was surprised by the sudden change at 3900 N. Charles, where one of her clients was ready to put down a deposit on a unit.

"I was just shocked, because there was no indication," she said. "The condos were nicely done, in a nice location with beautiful views. I thought they would do so well."

The abrupt change in plans has thrown the lives of many of the 14-story building's tenants into turmoil. Since they were notified of the condo plans in February, people have been moving out almost daily for the past few months, current residents say. Others have committed themselves to new leases elsewhere and are preparing to move.

Barbara Ruland and her husband hated the thought of leaving their bright, 11th-floor apartment at 3900 with its views of downtown, but they had no interest in buying. They moved across 39th Street to the Ambassador on July 12.

"They were expensive, and they weren't fixing any major systems," said Ruland, a part-time worker at Wegmans supermarket in Hunt Valley. "They put a lot of money in stuff on the first floor we'd never use - a bar/lounge, billiard rooms and a little projection room. We made a decision to move and spent a fortune in moving."

Ross Waldsachs, a 79-year-old retired state worker, had lived at 3900 for 26 years. After the conversion was announced, he moved in February to an apartment in Towson.

"It's been a trauma for me; I did not want to move," said Waldsachs, adding that he had become accustomed to the spaciousness of his two-bedroom apartment.

"Now we find out it's going back to apartment living. All of these people have been displaced. I can't get out of this lease and go back."

Corus Lends $127Mln for Los Angeles Mixed-Use Project

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An affiliate of Koar Institutional Advisors has lined up $127 million in construction financing from Corus Bank for Solair Wilshire, a mixed-use project in Los Angeles.

The Beverly Hills, Calif., firm is constructing Solair Wilshire through a joint venture with the Los Angeles Metropolitan Transit Authority. The project will be at the intersection of Wilshire Boulevard and Western Avenue next to the Red Line subway station.

Solair Wilshire will include 186 residential condominium units, 40,000 square feet of retail space and a 578-space parking garage. It will also include a library, business center and 20,000-sf garden.

MGM Mirage Seeks to Add 2,500 Condo Units to Las Vegas Market

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Mike Kalil

Southern Nevada's overall housing market may no longer be sizzling, but the Strip's biggest gaming player believes demand will continue for luxury condominiums with a Las Vegas Boulevard address.

MGM Mirage is seeking initial county approval this week for two high-rise tower projects that would add some 2,500 condos to the south end of the Strip.

The company has not formally announced either proposal, and a spokesman said their likely development dates remain undetermined. But documents filed with Clark County provide architectural renderings and details of both projects.

The Clark County Planning Commission is scheduled tonight to consider approval of MGM Mirage's plans for The Place at Mandalay, a proposed 520-foot tower with 1,344 units that would rise on the northwest corner of the Strip and Mandalay Bay Road, only feet from Luxor's pyramid.

On Wednesday, the company will ask the Clark County Commission to approve plans for two additional high-rise towers behind MGM Grand that would add 1,152 more condos to the 1,700 hotel-condos that are there or are now under construction.

MGM Mirage was already betting big on Strip condo development before proposing The Place at Mandalay and what amounts to a nearly 70 percent expansion of the high-rise hotel-condo projects at MGM Grand.

Some 1,650 condos are planned within the company's $7 billion Project CityCenter, the massive mixed-used development slated for 66 acres on the west side of the Strip between Monte Carlo and Bellagio.

"While our first order of business is Project CityCenter, it is not the end of our plans in Las Vegas," Gordon Absher, an MGM Mirage vice president, said Monday. "Having projects in a development pipeline assures us an ability to meet the variety of commercial property needs of the future.

"There will be other MGM Mirage projects beyond these," Absher also said.

This week's agenda items, Absher said, are "initial steps on a lengthy road" and "part of an orderly process in a companywide master plan for future development."

MGM Mirage owns 831 acres on the Strip, many of which are undeveloped or underdeveloped.

County officials appear poised to support the projects.

"I think it's a good thing. The trend is to have more vertical development," said County Commission Chairman Rory Reid, who represents the district where both projects would be built. "Sprawl is not necessarily a good thing."

The shift from people renting rooms on the Strip for a few nights to owning them permanently will not necessitate a big boost in municipal services for these new property owners, Reid said.

Planners and developers project that condominiums in the resort corridor will be used much like hotel rooms: mostly rented out to tourists for brief visits.

"The owners will use them on a periodic basis, and when they're not they'll put them into a (timeshare) pool," Reid said. "(Owners) are not going to live full time there. A lot of people are buying them as vacation homes or investment properties."

Although it would be located on Luxor's property, architectural renderings submitted to the county for The Place show its exterior design retains the metallic gold-on-white motif of nearby Mandalay Bay and The Hotel at Mandalay.

"Architecturally, it's going to look like Mandalay even though it will be pretty much adjacent to Luxor," said Anthony Molloy, the county principal planner working on the project.

The two additional towers on the MGM Grand site will retain the sleek white look of the Signature towers already under development there, according to renderings.

The Las Vegas market for single-family homes has slowed as the inventory of homes for sale pile up, but county planners say they see no signs that demand for luxury condos on Las Vegas Boulevard is waning.

"The market is fairly healthy and people continue to come in with applications," Molloy said.

The Planning Commission on Thursday is scheduled to consider plans for yet another mixed-use condo project on Las Vegas Boulevard. But the hearing for the proposed R Resort several miles to the south at the boulevard and St. Rose Parkway is likely to be moved to September, said project consultant Greg Borgel.

R Resort principal Ray Shapiro, a local businessman who operates restaurants and convenience stores, has submitted plans to the county showing a 1,500-room hotel, 720-unit condo tower and an 85,000-square-foot casino there.

He could not be reached Monday.

Mixed-Use Development Coming to Houston

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Jennifer Dawson

A hip and trendy new mixed-used development is getting a mixed reception in a unique shopping and entertainment district dating back to the 1930s.

Rice Village is slated for its first new urban development project in more than 10 years.

Lamesa Properties Ltd., one of the largest property owners in the area, plans to develop midrise condominiums with offices over street-level retail space.

Lamesa estimates the project cost at more than $100 million.

Plans call for demolition of roughly four acres occupied by old buildings with tenants such as Walgreens and Nit Noi restaurant.

Lamesa also wants to seal off a segment of Bolsover Street to create a public market setting where residents, office employees and shoppers can congregate.

The proposed project and street shutdown is a subject of debate among members of civic clubs active in the Rice Village area.

The City of Houston will have the final say on whether the development stretches across part of the thoroughfare.

Lamesa has owned most of the four-acre tract for three decades, and put the complete package together by acquiring other bits and pieces over the past five years.

Real estate broker Jeff Peden with Cushman & Wakefield of Texas Inc. says the land price would probably be "off the charts" if bought today.

Peden estimates Village land might go for $70 to $80 per square foot, putting the value of four acres at $12.2 million to $14 million.

"That land is so highly sought after," Peden says. "Plenty of developers would love to put in office, retail, residential. The demographics are so good."

The median household income within one mile of the project was $104,006 in 2005, according to Lamesa.

Those deep-pocketed shoppers are loyal to the Village, which originally was established to cater to Rice University students, and now has more than 300 shops and dozens of restaurants in a 16-block area.

It takes a village

Lamesa's development site is just north of Rice Village proper in an area bounded by Morningside, Dunstan, Kelvin and Rice.

Residents in some civic clubs are making an effort to keep Bolsover open to traffic. A petition with at least 75 names will be presented to the Public Works Department opposing a city sale of the street's right-of-way to Lamesa.

Other civic clubs have voted in favor of the deal. On July 10, the Southampton Civic Club board voted to send a letter of conditional approval of the project to the city, as long as Lamesa sticks to the current development plan.

Some residents contend the project's height clashes with the Village character and hope the development fails to get off the ground.

Preliminary plans include buildings taller than existing structures in the pedestrian-friendly shopping mecca.

Prolific condo developer Randall Davis is consulting with Lamesa on the residential section, which will be six or seven stories high with 250 units and underground parking.

Sources say participation of Davis, a high-quality product and proximity to Rice University and the Texas Medical Center mean that Lamesa probably won't have a problem moving the residential units.

Blake Tartt III, a retail broker not involved with the project, says Lamesa also won't have trouble filling the 100,000 square feet of retail in the works.

"There's a tremendous pent-up demand from national retailers and restaurateurs to get into the Village," says Tartt, president of New Regional Planning Inc.

Julie Tysor, an area resident and Lamesa's point person on the new project, wants to attract a boutique grocery store, a few restaurants and high-end soft goods retail tenants that would complement current retailers in the Village.

"The Village is ripe for some redevelopment," says Tysor. "You can look at that site and see that it needs to be something other than what it is."

A moving study

The project will be built in two phases, with first-phase construction slated to begin as soon as early 2007.

Each phase will take 18 months to build and include residential, office and retail components.

Robert Williams, a resident of Southampton Place, is concerned the higher density will make already bad traffic congestion even worse.

Williams says a traffic study used by the city to evaluate the project was arranged and funded by Lamesa.

He says the study was conducted after Lamesa stopped renewing leases on company properties in the area. Lamesa's Tysor says the move-out began two years ago in anticipation of this deal.

Williams is also concerned that the project will have inadequate parking.

"They have an urbanization vision, which is fine," Williams says. "But I don't think appropriate for the Village. It's way out of character."

A successful project will generate more traffic, says retail broker Tartt, but it just comes with the territory.

"Any time you add that amount of density, you're going to add traffic," says Tartt. "It's just part of what's happening in Houston."

Les Appelt's Lamesa

. A brokerage firm launched by Les Appelt in 1949 changed names over the years and operates today as Colliers International.
. In the early 1970s, Appelt formed Lamesa Properties Ltd., an entity of roughly 40 limited partners with a portfolio of assets inside the 610 Loop. Lamesa Corp., the general partner, is owned by the Appelt family.
. Appelt also founded the Appelt Co., the management company for Lamesa Properties. Appelt Co. is now owned by Julie Tysor and Gary Clayton, the firm's chief financial officer.
. Tysor carries the titles of vice president of Appelt Co.; vice president of Lamesa Corp.; vice president of Colliers International, where she does a limited amount of brokerage work; and president of the University Place Association, a "super neighborhood" created by the City of Houston that encompasses several civic associations in the Rice University area.
. Appelt lives in Bastrop and is no longer involved in the day-to-day operations.

Lamesa's Building Blueprint

. 250 residential condominiums for sale, designed by Randall Davis Co.
. 100,000 square feet of retail space
. 50,000 square feet of office space
. Village square-type plaza in center
. Underground parking for residents
. Commercial properties designed by Ziegler Cooper Architects

Chicago Developer Plans St. Louis Condominiums

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Petra Breyerova

 

Seeing an opportunity in moderately-priced condominiums, Chicago-based
developer Silverstone Communities is entering the St. Louis downtown area
housing market.

This month, its new division, Silverstone Communities-Midwest LLC, acquired the
former Bethesda Town House senior apartments located at 60 Plaza Square from
private investment group Dharbaj Holdings LLC for an undisclosed price.

Silverstone plans to transform the vacant 13-story building into 127 units of
moderately-priced condominiums.

Prices will range from about $80,000 for a studio to around $200,000 for a
two-bedroom, two-bath property.

Rising demand and the improved downtown property market has created a shortage
of affordable condominiums, said Kevin Farrell, senior director of economic and
housing development at Downtown St. Louis Partnership, a nonprofit group that
supports downtown area development.

"Anything that would be priced under $100,000 or even $150,000 at this point is
very tough to find (in the downtown area)," he said.

In 2001, condos averaged about $75 a square foot. Today, prices typically range
from $175 to $210, and can exceed $300 per square foot in some projects,
Farrell said.

The 60 Plaza Square project pegs its condominiums at roughly $180 to $190 per
square foot.

When the 60 Plaza Square project is completed, it will include a fitness
center, library and 4,800 square feet of commercial space.

Silverstone is selecting a local architect and a contractor next week to carry
out the $4 million renovation, which will start in August, said Stephen Anrod,
the division's president. The building, built in 1961, was designed by St.
Louis-based Hellmuth, Obata & Kassabaum Inc.

The division plans to start selling the condos this fall, with the first units
available in late 2006 or early 2007.

Total project sales should reach $18.5 million, Anrod said.

Targeting young professionals and first-time house buyers as potential
customers, Silverstone sees a niche for moderately-priced condominiums in the
downtown area, which encompasses the Downtown and Downtown West neighborhoods.

Overall, the downtown area residential market continues to pick up steam with
$807 million invested in from 1999 to 2005 in condominiums and apartments.

This year alone, investment is expected to reach $655 million, with most of
that coming from projects set to start later this year, according to the
Downtown St. Louis Partnership. Currently, there are about 800 condominiums
under construction in the downtown area.

Because of the trend, the partnership projects the downtown area population to
increase to 17,000 in 2010 from its present level of about 10,000. The area
population was 8,300 in 2000.

Chicago Developer Plans St. Louis Condominiums

Brought to you by

Petra Breyerova

 

Seeing an opportunity in moderately-priced condominiums, Chicago-based
developer Silverstone Communities is entering the St. Louis downtown area
housing market.

This month, its new division, Silverstone Communities-Midwest LLC, acquired the
former Bethesda Town House senior apartments located at 60 Plaza Square from
private investment group Dharbaj Holdings LLC for an undisclosed price.

Silverstone plans to transform the vacant 13-story building into 127 units of
moderately-priced condominiums.

Prices will range from about $80,000 for a studio to around $200,000 for a
two-bedroom, two-bath property.

Rising demand and the improved downtown property market has created a shortage
of affordable condominiums, said Kevin Farrell, senior director of economic and
housing development at Downtown St. Louis Partnership, a nonprofit group that
supports downtown area development.

"Anything that would be priced under $100,000 or even $150,000 at this point is
very tough to find (in the downtown area)," he said.

In 2001, condos averaged about $75 a square foot. Today, prices typically range
from $175 to $210, and can exceed $300 per square foot in some projects,
Farrell said.

The 60 Plaza Square project pegs its condominiums at roughly $180 to $190 per
square foot.

When the 60 Plaza Square project is completed, it will include a fitness
center, library and 4,800 square feet of commercial space.

Silverstone is selecting a local architect and a contractor next week to carry
out the $4 million renovation, which will start in August, said Stephen Anrod,
the division's president. The building, built in 1961, was designed by St.
Louis-based Hellmuth, Obata & Kassabaum Inc.

The division plans to start selling the condos this fall, with the first units
available in late 2006 or early 2007.

Total project sales should reach $18.5 million, Anrod said.

Targeting young professionals and first-time house buyers as potential
customers, Silverstone sees a niche for moderately-priced condominiums in the
downtown area, which encompasses the Downtown and Downtown West neighborhoods.

Overall, the downtown area residential market continues to pick up steam with
$807 million invested in from 1999 to 2005 in condominiums and apartments.

This year alone, investment is expected to reach $655 million, with most of
that coming from projects set to start later this year, according to the
Downtown St. Louis Partnership. Currently, there are about 800 condominiums
under construction in the downtown area.

Because of the trend, the partnership projects the downtown area population to
increase to 17,000 in 2010 from its present level of about 10,000. The area
population was 8,300 in 2000.

Fla. Hotel Sells for $71.7Mln to Condo Converter

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Signature Communities, a Naples, Fla., homebuilder, has paid $71.67 million for the Vanderbilt Inn on the Gulf, a 147-room hotel in Naples, Fla.

Signature is expected to redevelop the unflagged property, which is slated to be 72 residential condominium units.

The property was acquired from a partnership, Vanderbilt Beach Associates, which was advised by Cohen Financial of Chicago.

Vanderbilt had hired Cohen in 1999 to explore strategic and financial alternatives for the property. At the time, however, Vanderbilt Beach was not ready to pull the trigger on a sale. So, working with Cohen, the partnership improved the property's entitlements, which included allowing for taller structures, among other things.

Two years ago, Cohen was formally tapped to offer the property for sale. Cohen specifically sought condominium converters because of the property's value to such developers. The property was placed under contract with Signature last year, nearly a year before final development plans were approved by municipal authorities. Since then, Signature has been pre-selling units to prospective buyers.

"We strategically targeted condominium developers who were focused on adding beach front properties to their portfolios," Rick Tannenbaum, managing director of Cohen, who spearheaded the transaction, said. "As a result, the sale achieved a record price for gulf-front land in Collier County."

Hollywood, Calif., Land Sells for $19.8Mln

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Orest Mandzy

A Los Angeles development venture has paid $19.8 million for a collection of land parcels in Hollywood, Calif.

The venture, CSGF Pacific ABS Hollywood partners two developers with a financial partner and was arranged by Madison Partners of Los Angeles. Madison also arranged for the purchase of the three parcels, which total 2.3 acres and were acquired from from three separate owners.

The development venture is expected to construct a mixed-use project, which would include residential condominiums and retail space, on the site.

The three parcels, which are just west of the junction of Hollywood Boulevard and Western Avenue, are:

- 5512-20 Hollywood Boulevard, which was purchased from Holly Tree Village Partners and FLJC Co.;

- 5530 Hollywood Boulevard, purchased from a local partnership and

- 5544-50 Hollywood Boulevard, which was purchased from Alexander Becker Carpets Inc. and the Becker Revocable Trust.

Consumer interest in second homes grows

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When it comes to second homes, Americans remain fairly bullish, with sizable numbers saying they plan to purchase second homes soon and wouldn't mind flying -- not driving -- to reach them, according to findings of a new consumer survey by HomePages.com, operated by HouseValues.

The HomePages.com survey of more than 1,300 adult consumers found that 21 percent say they are considering purchasing a second home within a year, while another 42 percent said they're considering buying within the next two to six years.

Interestingly, nearly one-third (29 percent) of those considering purchasing second homes don't consider its proximity to their current homes a major factor, saying they'd be willing to fly to reach them.

"Vacation and investment homes remain a strong and prominent part of the real estate market, both as a means of providing an escape and providing supplemental short-term and long-term income," said Ian Morris, chief executive officer of HouseValues.

Indeed, a quarter (25 percent) of respondents said they are considering a second home for investment purposes, while 22 percent said they wanted one for "enjoyment" such as weekend getaways, vacations and family use.

In terms of proximity to geographic features, 40 percent of respondents said features such as water or mountains would not be a factor because "it's an investment property." Among those who do consider geography an important factor in where they buy, 36 percent listed proximity to water as key, followed by mountains (17 percent), golf courses (5 percent) and the desert (2 percent).

Although 29 percent said they would be willing to fly to reach a second home, the largest percentage -- 43 percent -- said they'd prefer it be within a one-hour drive of their primary residence. Nineteen percent said they'd be willing to drive up to two hours, while 9 percent said they'd be willing to make up to a six-hour drive.

Asked what factor would most likely cause them not to buy a second home, 32 percent of respondents listed rising home prices, followed by rising mortgage rates (18 percent) and job insecurity (12 percent). Thirty-eight percent listed a variety of other factors.

The online survey respondents comprised 65 percent women and 35 percent men visiting HomePages.com and JustListed.com. The survey was the latest in an ongoing series of informal polls conducted by HouseValues via the company's national HomePages.com consumer real estate Web service.

Condo Conversion Slated for Kansas City Apartments

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A south Kansas City apartment complex popular with successful singles in the 1970s is finding new life as an entry-level condominium development that welcomes young families.

Developer Mark Ledom is converting the former Mews A partments at Lydia Avenue and 97th Street into 270 condos, town houses and twin villas. Prices range from $79,900 for a one-bedroom condo to $124,900 for a three-bedroom villa with a two-car garage, and if that's not enticing enough, he'll throw in a subcompact car to seal the deal.

Monthly homeowner fees range from $100 for a one-bedroom condo to $150 for a three-bedroom, two-bath town house.

"I originally looked at it as an apartment complex to clean up and convert back to conventional rental property," Ledom said. "The more I looked at how beautiful the area was and the strength of the neighborhood, I thought it would be a beautiful opportunity for homeownership with a concentration toward first-time buyers."

The 382-unit Mews complex had fallen far from its heyday when Ledom learned last fall that Fannie Mae had foreclosed on the previous owner and was selling the property.

When it opened in 1970 and through much of the 1980s, it was a popular residence for professional athletes and other movers and shakers. The complex had already begun to deteriorate, Ledom said, when in 1994 it was sold to a Florida buyer who converted the apartments into 100 percent low-income housing.

"From there, the property went down," he said. "It was the black eye of the neighborhood."

Ledom declined to say how much his company, Diversified Asset Management, paid Fannie Mae, but the price was low enough to allow him to spend $8 million to completely renovate the 150 units in the first phase and offer buyers good value. The total value of the development is estimated at $30 million. His partners are Bill Miles and Royal Horlick.

The complex has been renamed Linden Woods ( www.lindenwoodskc.com), and includes a clubhouse, a resort-style swimming pool and a tennis court. A playground with the type of colorful plastic apparatus found at an elementary school is evidence, though, that this place is not just for singles.

Linden Woods also borders a wooded ravine and is near the Indian Creek Trail, a bicycling and walking path that stretches deep into Johnson County. Interstate 435 and U.S. 71 are relatively close by, and Ledom estimated that Ward Parkway Center was about 1� miles away.

"Our target market is first-time homebuyers, people looking for a maintenance-free lifestyle who like south Kansas City but want less responsibility," he said. "We want to make this a community."

Renovation work began last winter, and several model units are available for inspection. Ledom said the project had 50 reservations so far. Construction of the second phase, which will include 120 condos, will begin when 90 percent of phase one is sold.

As an incentive to buyers, the developer is offering $10,000 in the form of a a 2006 Suzuki Reno, or toward paying down debt, or purchasing furnishings from Best Buy and/or Crowley Furniture.

Chuck Loomis, president of the Linden Hills Neighborhood Association, said his group was pleased with the purchase and renovation of the aging complex.

"The neighborhood is 100 percent behind the project," he said. "We had 15 or 20 years of friction with the ownership of the low-income housing.

"We're happy with the progress that's been made and hope it goes to homeownership so people have an incentive to take care of that project."

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$500m downtown project gets initial OK

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Prominent developer Ralph Sanchez and the principals of the Ponce Circle Development are sparing no expense in an attempt to get the $500 million Old Spanish Village project approved by the Coral Gables City Commission. And it appears to be working.

     At the July 11 meeting, developers presented videos, scores of printed materials (including a coffee table book) and had numerous consultants waxing poetic about the virtues of the massive 6.5 acre project which encompasses three full city blocks bounded by Ponce to the west, Galiano Street to the east, Palermo to the north and Malaga Avenue to the south.

     So far their efforts have paid off handsomely considering the city commission not only approved six applications, with 4-1 votes, to clear the way for the project (including the first reading of a change of land and zoning as well as a site plan review) at the meeting but even the sole commissioner who voted against the project, William Kerdyk, Jr., left the meeting impressed with the project's presentation.

     When the commission wasn't gushing in praise of Sanchez and the development effort, it was busy ignoring staff recommendation from Planning Director Eric Riel.

     Riel admitted that the project met several city objectives with its proposed planned area development (PAD) but that there were too many inconsistencies to allow it to move forward as is.

     Specifically, Riel said that the project did not sufficiently address traffic, parking and landscaping issues with enough zeal and provided too little green and open space.

     He also said the project did not address the issue of affordable housing which has been sorely lacking in the city.

     The director did present an alternative staff recommendation which would include 20 percent more green space, payment to mitigate the loss of 34 parking spaces and the addition of 75 more visitor parking spaces for the project, but that proposal was largely ignored by the commission.

     "The project is consistent with the Charrette and does include aspects to preserve historic buildings but mostly our objections come from the lack of open space, parking and other additional improvements," he said.

     In his closing remarks, Riel practically conceded defeat when he described the project  as a "good project" which probably would have received his staff's recommendation had it not been for a single family home smack dab in the middle of the project whose owner refused to sell to developers.

     Riel had as much luck convincing the seemingly awestruck commission to vote against the project as he had trying to do the same with the city's Planning and Zoning Board, when they approved the project 4-1 on June 14.

     After Riel had his chance, developers commenced their comprehensive presentation with historical expert Arva Moore Parks and architect Jorge Hernandez to sell the project.

     In researching the site of the project, which was once part of the historic Arts and Crafts Section of the City, and comparing them to current plans, Parks said that she was struck by a vision of the community that city founder George Merrick originally intended.

     Hernandez was equally effusive saying that Park's mere involvement in the projects spoke to the developer's vision.

     He went on to describe the specifics of the project saying it was broken down into four quadrants: the 2801 block which will include a 15-story building along Ponce, 6-story apartments buildings along Palermo and Sevilla Avenues and 3-story townhomes on Galiano Street; the 3001 block which will be built out nine stories throughout the front side with townhouses in the rear; the assemblage of townhouses along the southeast section of the project, all of which are three stories high; and the existing historic Arts Center Building which is being completely renovated.

     The project will include retail and commercial components along the ground floor of the Ponce buildings but is mostly residential in nature. The total development of the project is 895,815 square feet, slightly less than what developers say they could develop as of right commercially. There are a total of 458 units in the entire PAD.

     Developers said they agreed to add 50 parking spaces to the project bringing the total to 1070, almost 100 more than what was required by code.

     At the meeting developers also paraded out a virtual army of lawyers including two of the city's most experienced development lawyers, Laura Russo and Zeke Guilford, to make sure the project went through.

     Russo said the project used George Merrick's vision as its organizing principal while another heavyweight attorney Jeff Bass eviscerated Riel's claims that the project represented an example of spot zoning.

     "This is not spot zoning or reverse spot zoning and the fact that (Riel) anchored his comments (by saying that) means that he derived an erroneous legal conclusion and does not constitute a substantive professional (opinion)," Bass said.

     Mayor Don Slesnick acknowledged that he was troubled by staff's recommendation and the fact that its own board overruled its decision.

     "The Planning Department staff had their chance but that is not what Planning and Zoning Board wanted," the mayor said.

     Numerous citizens also chimed in with opinion on the project with most, including members of the Coral Gables Chamber of Commerce, expressing their support.

     Others, including Orlando Capote, owner of the single family home in the middle of the project, expressed reservations but even they did not seem to be put off by the project.

     Nearby resident Maria Puente said her biggest concern was the density and height of the proposed buildings and that some of the rendering put forth by developers were misleading in their scale. Still, Puente said the area was in need of revitalization and would be amenable to the project with some revisions.

     "The area could use some redevelopment and we do want it to grow but I think there needs to be a little more work," Puente said.

     As the discussion on the developer's applications dragged on, the commission's eventual approval seemed more and more likely.

     "I came to terms with the fact that the city is changing a long time ago," said Vice Mayor Maria Anderson. "It's not 'if' we are going to grow it's how we are going to grow."

     I think this is a catalytic project and it is going to change the city in a very positive way."

     While Kerdyk was impressed with aspect of the project and the lengths that developers went to the sell their vision, his troubles with the project's density would not allow him to give his support.

     The commissioner also feared that the conversion of single family homes to commercial might set a dangerous precedent in the city.

     "I can't recall that it ever happened here. Philosophically I have an issue with that. If developers can come in and rezone property what's to stop them from doing it (elsewhere)," Kerdyk said.

     Like Riel, Kerdyk acknowledged that aspects of the project were positive but insisted that a project of this magnitude should be driven by the city not a developer.

     "I want the dog to wag the tail - not the tail to wag the dog," he said.

     Commissioner Ralph Cabrera agreed in theory but said that reality teaches a different lesson.

     "You're right, we should do it, but guess what we didn't. And somebody with vision and the financial resources did," he said.