Map: Uptown condo development
Posted: Saturday, Mar. 06, 2010
uptown vision is
delayed as condo sales sag
With condo demand flagging, plans for a center city fueled by a population boom will have to wait a little longer.
|March 08, 2010|
- Map: Uptown condo development
- Building by building: Update on condo construction
- Two views: A buyer, a renter
- Two residents' experiences
Luxury condos on top of boutique hotels. Penthouses with elevators for owners' cars. Predictions that more than 17,000 residents would live uptown today, about double the number at the start of the decade.
Developers announced at least 20 condo high-rises for the center city during the mid-2000s, earning
Then the recession hit and, as with much of
Instead of 20 towers, eight have been built.
Of two roughly 50-story high rises, one made it out of the ground, but the Vue faces obstacles in a market dominated by first-time homebuyers and speculators looking to buy cheap.
Condos that once sold for around $400,000 are now on the market in the mid-$200s. Average closing prices have fallen to levels last seen in 2003, according to one analysis.
Uptown's population has stayed flat - estimated at about 11,000 residents, the same number cited by uptown boosters four years ago.
On the brighter side, falling prices will make uptown more affordable. And developers finished marquee projects - notably the EpiCentre entertainment complex and Wells
The center city's housing market is also expected to rebound faster than the
A healthy downtown is important because it can help attract new companies to the region, said Michael Smith, president of
"It's the living room for a community," he said of uptown. "When someone wants to know how healthy
The vision for what uptown could become isn't dead, experts say. But the dreams have been pushed back five to 10 years, they estimate.
"It's not so much the financial crash has dashed the hopes of Charlotte's uptown for being a great neighborhood," said Peter Compton, a real estate economist with PPR, part of Bethesda, Md.-based CoStar Group. "It's delayed it."
David Furman, one of uptown's most bullish believers and active developers, remembers the early warning signs in 2008.
His 202-unit, $73 million condo high-rise, TradeMark, was about 95 percent sold when people started having trouble closing.
At the same time, buyers at another condo project, 184-unit Quarterside in First Ward, tried to get out of their contracts, he said. As sales dropped, his company aggressively marketed the building but didn't get any nibbles.
"I thought, 'We're screwed,'" he recalled.
He later converted Quarterside to rental units to cut his losses, one of three condo projects to do so last year. He says the 28-story TradeMark is "stable" and he is renting out some units that didn't sell until the market improves.
"It was booming beyond what was sustainable," he said of uptown's condo market, which grew rapidly in the mid-2000s before tapering off last year. "I still think there is a thirst for urbanism. Downtown is feeling the same pain as everywhere."
Optimism for the center city blossomed during the mid-2000s as
Between 2004 and 2007, developers announced plans that would have created more than 3,000 condos in the 20 planned towers. Proposed investment topped $3.6 billion.
Developers were betting on bank employees and other finance-related workers to snap up the units. Upscale eateries also moved in to cater to the new residents, adding to uptown's allure. The banks were also racking up record profits at the time and announcing new building projects of their own.
By fall 2007, work had started on four towers - two of which have since been canceled.
One project that made it up, Catalyst, converted to rentals because condos weren't selling. Rents start at $1,100 a month. The other tower, The Vue, is expected to be completed in fall, and some residents might move in this summer.
By January 2008, however, developers were canceling plans, citing an uncertain economy.
Uptown's future took another hit as thousands of banking and finance workers lost their jobs amid the banking industry's meltdown. Wachovia was sold to San Francisco-based Wells Fargo & Co.
Currently, about 1,100 units are under construction and less than 50 are built but vacant in uptown, according to national industry tracker Metrostudy.
Compton, the economist, estimates uptown has a five-year supply of condos available.
Bill Miley, Metrostudy's Charlotte market manager, said a significant number of the units coming online will probably convert to rentals.
"Developers really jumped on the bandwagon because the towers that were the first ones finished sold out and did very well," Miley said. "Unfortunately, all the ones now under construction are going to have a hard time.
"Uptown is going to become more affordable," he said. "(Owners) will have to lower prices to get rid of inventory, make them rentals or give them back to the bank."
Sales prices have fallen
Real estate analyst Emma Littlejohn said uptown condos on average may have lost 20 percent to 25 percent of their value during the past two years.
Some have lost more. A two-bedroom, two-bathroom unit at Fifth and Poplar Condominiums that sold for $427,500 in 2007, for example, is listed for sale at $285,000 - a one-third drop.
The good news, Littlejohn said, is she believes there is demand for both condos for sale and rentals.
"The housing will be occupied," she said. "People want to live downtown."
She also said
Uptown has one eyesore - the rusting skeleton of the failed high-rise The Park at Third and
"It's not like we got caught with 10 towers all the way up," Littlejohn said.
Uptown boosters, however, got a scare last fall when The Vue's general contractor stopped work because it hadn't been paid. The Chicago-based developer, MCL Cos., had fallen behind on its payments but renegotiated with its lenders. Work resumed more than a month later.
Dan McLean of MCL Cos. has said he believes sales will pick up once buyers can tour finished units, and he is counting on empty nesters and others looking for second homes to purchase units.
He has said about half of the 409-unit building at Fifth and Pine streets is pre-sold. He has said he won't convert to rentals.
Prices start at around $280,000, the same as when MCL took over about three years ago.
Closings for new and existing uptown homes hit a high of 533 in 2006 before they fell to 153 last year, according to an analysis of transactions through the Carolina Multiple Listing Service from 2003 through 2009 by the Charlotte Regional Realtor Association. The listing doesn't include private sales and some new construction.
Average sales prices rose steadily from about $260,000 in 2003 to a high of nearly $350,000 five years later before falling back to around $260,000 last year, according to the association. The drop is largely due to sales at Fourth
Newcomer Leeanne McManus bought one of those condos a year and a half ago after she moved to
A wireless telecommunications project manager who works from home, McManus wanted to be within walking distance of restaurants, entertainment and the library.
"When this deal came along," she said, "I jumped on the opportunity to live uptown, without breaking the bank."
Growth could help
Charlotte's population is expected to grow faster than the nation's on average - about 2.4 percent a year during the next five years, according to CoStar Group, which studies real estate markets in the
While that's less than past growth rates, it's higher than the 1 percent growth expected for the country as a whole,
Compton said uptown is also likely to see new jobs first, compared to the rest of the
Veteran real estate appraiser Fitzhugh Stout agrees with
He expects to see some high-end restaurants close in the center city and be replaced by more moderately priced ones. He doesn't anticipate much retail moving in anytime soon.
Uptown's housing recovery could take five to 10 years, he said. While he's "very" upbeat about uptown, Stout said, "it may be a while before we see any significant appreciation."