GONE URBAN

More inner-city condo and town-house developments will soon be ready for converts to downtown living

SANDRA BAKER, PHOTOS BY JOYCE MARSHALL AND RALPH LAUER
STAR-TELEGRAM STAFF

FORT WORTH -- In the past several weeks, Margaret Bunten has been busy shopping for appliances and bathroom fixtures, the finishing touches she needs for her development, the Kress Building Lofts, in downtown Fort Worth.

A model is ready for interested renters to view in the renovated 1930s building. The apartments are scheduled to be completed by the end of next month, when tenants can begin moving in, she said.

The Kress Lofts, 501 Main St., is one of four downtown residential developments that will become ready for occupancy in the coming weeks. If the downtown residential market is as strong as the developers and others say it is, the nearly 500 units that compose the four projects are expected to lease and sell quickly.

"Fort Worth is really in the first inning of the whole condominium downtown residential trend," said David Porter, president of Dallas-based PNL Cos., which is redeveloping the Charles D. Tandy Center at Third and Throckmorton streets. One of the complex's towers, One City Place, will have 180 owner-occupied condos, and the other building, Two City Place, is being renovated into office space.

PNL plans to begin demolition work inside the residential tower in September, but it will be several months before those condos are available. The developers will begin pre-sales in October.

Andy Taft, president of Downtown Fort Worth Inc., a nonprofit group that promotes downtown development, said demand for downtown living remains strong. A recent market study found a need for more than 4,000 for-sale units and more than 3,000 rental units during the next 11 to 19 years.

"The trends look very good right now," Taft said.

Inventory figures indicate that there is indeed demand. In June 2005, the inventory level of town houses and condos was 17.3 months, meaning it would take that long to sell all the available units. A year later, it was down to 7.8 months, according to figures compiled by Downtown Fort Worth Inc. from National Association of Realtors reports.

A couple of proposed projects have pulled away from the residential market. A proposed 60-story office-condo tower at Seventh and Calhoun streets has dropped its condo plan because they would have required too high a price tag. Developers say they're redesigning the building to about 30 stories of office space. Likewise, the owner of the Transport Life building on Seventh Street has switched plans from residential to office space.

But many downtown developments are being completed and are filling up with residents.

The Cotton Depot, at 555 Elm St. on the east edge of downtown, began taking tenants a year ago. Today, the 210-unit apartment community is 92 percent leased, which is about what was expected, said developer Printice Gary with Carlton Residential Properties.

"We're right on schedule," Gary said. "There's not much of a gap [in time] when units are leased and the tenants move in."

Owners have begun moving into the 58-unit Neil P at Burnett Park, the condo conversion of the historic Neil P. Anderson cotton exchange building on West Seventh Street. Four buyers are in, and about 14 more are expected to move in the next 45 days, said Matt Herring, a partner in Amicus Interests, the project's developer.

Herring said he anticipates that the remaining units will sell in the next six months.

Samantha Mulvehill, marketing director for Williams Trew Property Management in Fort Worth, which handles the leasing of condos for owners in The Tower, said leasing at the high-rise slowed in April, May and June. But the pace has picked up in recent weeks, which she attributes to growing awareness of the options now available downtown.

A few months ago, her company had 30 units to lease, but that has decreased to two, she said. Some of those leases went to executives in the oil and gas industry, which has been expanding its downtown presence and work force this year.

"People have caught on about downtown living," Mulvehill said. "It's caught on with people that they can lease in The Tower."

Marketing the various developments -- as well as living the downtown lifestyle -- is going to be the key to continued success, the developers say. In April, Downtown Fort Worth Inc. sponsored a tour of the downtown developments, and turnout was more than expected.

The developments in Uptown, on the north edge of downtown, were included in that tour, and developers there are now planning a similar event in October, said Tom Struhs, who is developing Pecan Place Townhomes, 612 E. First St.

"We're disappointed in the amount of [pedestrian] traffic," Struhs said. "If we all work together and sell the lifestyle of living downtown, it shouldn't be so difficult."

Struhs says 17 of 28 planned units in Pecan Place are in some phase of construction or completed. They should be finished by the end of the year, he said. Five owners have moved into their town houses, and two more are sold, he said.

Nearby at 600 E. Bluff St., developer Main Street Living is about six weeks away from having a model ready in the 40-unit Palisades townhouses. Dan Fuqua, a managing partner, said that they anticipate construction being completed by the end of the year, and that they are just now thinking about marketing the units, which will begin at $299,000.

At that, 25 percent of the units have been spoken for, and people have put down small deposits, he said.

"That's a good sign. Uptown is gaining momentum," Fuqua said. "We've tried to keep a low profile and not get heavily into pre-sales. There's more value in a product when you have something to see."

Likewise, the nearby Lincoln Trinity Bluff, a 304-unit apartment project of Lincoln Properties in Dallas, has opened a leasing office at 1515 Weatherford St. Construction began 14 months ago, and the first units are expected to be available in November.

Holin Barber, regional marketing director for Lincoln Properties, said that they have done minimal advertising in apartment guides, but that they expect to have a number of leases in hand in the next few months.

"We've actually had a lot of calls," Barber said. "With the kind of feedback we've been getting, it might be feasible. I've been impressed with the number of calls from people who are calling out of curiosity."

Bunten is just as hopeful. She is now displaying a large banner on the side of the Kress building, which has drawn inquiries.

Bunten said she's hoping to tap into the corporate market and push her 24-unit development with downtown businesses that might need flexible executive leases.

"Once we get the word out there and get people in to take a look, it's such a beautiful building," Bunten said.

DOWNTOWN CONDO FACTS

$327,486 average sales price for a condo or town house

$230.46 average price per square foot

95.2 percent priced between $100,000 and $600,000

61.9 percent priced between $100,000 and $300,000.

Sellers, on average, are getting 97 percent of their asking price.

SOURCE: Downtown Fort Worth Inc.

LINCOLN TRINITY BLUFF

701 E. Bluff St.

304 apartments

573 to 1,447 square feet

Monthly rental is $795 to $1,830

www.lincolnapts.com

PALISADES

600 E. Bluff St.

40 town houses

1,875 to 3,000 square feet

$299,000 to $500,000

www.palisadesfw.com

PECAN PLACE TOWNHOMES

612 E. First St.

28 town houses

1,694 to 2,653 square feet

$299,500 to $546,500

www.uptownfortworth.com

KRESS BUILDING LOFTS

501 Main St.

24 loft apartments

800 to 1,425 square feet

Leases starting at $1,500 a month

www.thekressbuilding.com

Condo projects flop across the U.S.

Developers nix or delay plans as sales slow and costs rise

02:00 PM CDT on Sunday, July 30, 2006
Associated Press

PHILADELPHIA – In 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.

Too bad no one will get to move in now: 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, noticed slower traffic and decided it didn't want to be left with unsold units, said partner Greg Hill.

From coast to coast, developers are nixing or delaying condominium projects as home sales decelerate, construction costs soar and lenders start to balk at financing units that might not sell. What's making it worse is the glut of high-priced condos and too few people who can afford them.

"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 Michael Jordan as an investor; the $3 billion, 4,400-unit Las Ramblas resort, backed by 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, had 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 Inc., a luxury home builder based in Bonita Spring, Fla., said in June that new orders for its high-rise condominiums fell by 84 percent 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 looking increasingly anemic, it's not surprising that developers are bailing out.

Domb said he's gotten about half a dozen phone calls over 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, hit last September.

Builder confidence, as 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 plenty of 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 units at cost if condo sales continue to weaken.

McCabe considers the condo market, especially the luxury end, 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, Fla., 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 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 added interest has been high for the project, which he said doesn't surprise him because his name sells.