Developer Owned Condos in the Icon Fly off the Shelf

Terrazzo and Icon Condos in the Gulch

Terrazzo and Icon Condos in the GulchYou read the headline correctly, the condos in the Icon are selling both faster and for higher prices than at any time since 2008. In the first 18 days of March, the Bristol Group has sold 12 condos with a total transactional value exceeding $5 million. Think about that for a moment, let it sink in. Phrases like “condos fly off the shelf” and “condos sell at record pace” are not meant to roll off the tongue anymore, right? Wrong. If you have not been reading my reports or have been listening to the general media conjecture, you may think that all condos are doomed to devalue in perpetuity. The Icon in the Gulch is not only not doomed, it will also not have any unsold developer inventory before you have time to say, “Sally sells seashells by the seashore” 5 times.

In just the last 2 years, my shows the developer selling 168 condos in the Icon. True, the prices are not has high as what the condos originally presold for in 2006, but you may be surprised to learn that the downtown facing condos in the tower section of the building have sold for an average of $337.52/ft during this time. Even I was not so bold as to predict that level of success. Isn’t the downtown market supposed to be outrageously overbuilt and flooded with inventory? Poppycock (thank you Mr. Lanier of 9th grade Algebra for introducing me to this wonderful word. See Mom and Dad, your exorbitant tuition at MBA really did pay off in the end). The good buildings are selling and are selling well.

The Downtown Nashville Condo Goes Boom, Not Bust

Rewinding the clock 3 years to 2008, it certainly appeared to all that the condo market in Nashville was overbuilt. The Icon (419 condos), Terrazzo (117 condos) , Encore (333 condos), 5th & Main (129 condos), the  (72 condos), Velocity (265 condos) and Rhythm at Music Row (105 condos) had just been delivered. It was the beginning of the Great Recession and speculative pre-construction buyers ran for higher ground. Mortgages were becoming difficult to obtain and interest rates seemed high all of a sudden. Admittedly, it was an interesting time that seemed more dire than possible. Up was down and down was up. What very few realize in such times is that there is always light at the end of the tunnel, there is always an out. Fast forward to the present and the picture is very different.

The truth of the matter is that despite a recessionary economy, despite a historically weak national real estate market, Nashville has not depressed nearly as far as what was believed. On the flip side of the coin, we also did not skyrocket as high during the 2004-2007 bubble. Of the 1,400 new condos that were delivered in 2008, we only have 388 left to sell. Our market absorbed over 1,000 new condos during what was arguably the most difficult period in time to sell real estate in recent memory. Granted, the 220 condos in the Velocity were purchased by an Atlanta firm and converted to apartments, but that is still inventory absorption. If you prefer to subtract the 220 Velocity condos from the number of condos absorbed, the downtown market sold 781 developer owned condos. This would in turn calculate and predict the absorption of the remaining 388 unsold developer owned condos within the next 24 months. Based on this rate, the downtown Nashville market will need new condos in less than 2 years.

Grant Hammond is Your Best Bet

Again, is Grant Hammond writing these headlines in order to sell me a condo? Is he using the normal real estate broker huff and puff to make more money? Let’s state fact, I am a real estate broker who specializes in the downtown Nashville condo market. I certainly understand that from the outside looking in, my analysis could appear self-serving; however, it simply isn’t. I openly analyze and publish said analyses freely on my website for all to see, scrutinize, criticize and use without barrier. I have been doing so since 2005. I have never password protected or made anyone contact me in order to view this information. In fact, many have used this information, other real estate agents included, in order to purchase a condo. I point all of this out to state this: my analysis is factual, accurate and you are free to use another real estate agent if you wish. I simply think you’d be better off using the expert’s expert. I possess the ability to optimize your purchase in any of these buildings and to squeeze every single penny out of these developers. After all, even some developers call me for advice. I can also keep you from making a mistake when it comes to resale value.

Another myth I’d like to debunk is many people believe that if they do not use a real estate agent to help them buy a condo from a developer, they will get a better deal. It does seem reasonable that if the seller does not have to pay a commission to a buyer’s agent, there should be more room to discount the condo price; however, this is untrue. The seller has already agreed (in their listing agreement) to pay a commission whether or not a buyer’s agent is present, the selling agent’s company simply keeps the entire commission. The buyer does not gain an edge. Additionally, in this case, you have no representation. The person sitting across the table from you works for the seller only. They owe you no fiduciary responsibly nor do they have to look out for your best interests. You have no one advocating for you in the transaction and that is where you lose your advantage. You have everything to gain by having a buyer’s agent and nothing to lose.

Should you be in the market to buy or sell a condo in Nashville, I look forward to the opportunity to work with you. I am confident I will bring value, clarity, expertise and savings to the table.

You can always reach me at 615-945-7123 or Grant@GrantHammond.com

Pollack Partners to Buy and Convert Velocity Condos to Apartments

Velocity in the Gulch Nashville

Velocity in the Gulch NashvilleThe Nashville Business Journal is reporting that today, multi-family developer and operator Pollack Partners from Atlanta, will buy the remaining 220 unsold condos in the Velocity in the Gulch for $24.5 million. While it has not been announced publically, Pollack Partners will be converting the condos into apartments, potentially leaving the current 43 Velocity condo owners out in the cold.

The Velocity will become the second major Nashville condo project to be converted to apartments, Rolling Mill Hill was bought and converted by Chartwell Hospitality earlier this year. The Velocity will also become the fourth major Nashville condo project to be purchased at a distressed price. In late 2010, California based Alvarez & Marsal Capital purchased the 65 unit Belle Meade Court project and just last month ACG Equities from Chicago bought the 5th & Main project, both have remained condo.

According to Pollack Partners’ website, the company has bought more than 35,000 residential units valued at more than $3.2 billion over the past three decades. What does not remain clear is how the transition from a condo project to an apartment project will be executed.

How Velocity’s Sale Will Affect the Nashville Condo Market

In its purest and simplest form, taking 220 condos out of unsold developer inventory represents a huge reduction in overall condo inventory. In fact, this reduction cuts that inventory segment in half. Between the Icon in the Gulch, Terrazzo, Rhythm at Music row and Encore there are now 226 unsold developer condos, down from of 446. Adding together current condo resales and unsold developer inventory, Nashville now has under 450 urban condos on the market for properties built after 2005 (includes 17 urban condo projects).

Again, this underscores the importance of working with a buyer’s agent who knows and understands the dynamics of downtown Nashville real estate. I am one of the very few agents who can keep you from making a very costly mistake. Call or email me to start learning more about how to make the best buying decisions: 615-945-7123 or Grant@GrantHammond.com

5th & Main Condos Resume Sales in April

5th & Main Condo Sales Matrix

5th & Main Condo SalesAs I first reported on February 27th, today new owner ACG Equities announced the 5th and Main condos will remain condos and not be converted into apartments. The Nashville Business Journal reports that ACG Equities will resume condo sales in April with “bold new pricing”.

Considering ACG Equities was able to acquire the remaining 120 condos, retail and office space for approximately $14.5 million, I would suspect the new condo pricing to be in the $145/ft neighborhood. Sales in the $145/ft range would most likely net ACG a $65/ft profit over acquisition cost. If you are considering purchasing a condo in 5th & Main under the new pricing structure, it would be my privilege to work for you. In an effort to prove that I am not only the most informed, but also best equipped broker to represent and negotiate on your behalf (at no cost to you), here is just a portion of my exhaustive analysis. This is the pricing just prior to ACG’s procedural foreclosure:

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5th & Main Condo Sales Matrix

Inexplicably, ACG has engaged the original sales team to continue with condo sales, missing an opportunity to fully renew a rather miserable development reputation of underachievement (I did not pursue the listing – I am an exclusive condo buyer’s representative).

Contact me privately to discuss your options and my strategy in 5th & Main.

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