The Encore Condos in Downtown Nashville Sold Out

Encore Condos Retail Space

Encore condos in Nashville
Less than 2 months after the trendy Music Row Rhythm condos sold out, the Encore becomes the latest high-rise condo development to join the growing list of sold out developments. The 333 unit development, built in partnership between the Novare Group of Atlanta and Tony Giarratana of Nashville, broke ground in mid 2006 and was completed in the second quarter of 2008. In that first year of operation, 214 condos closed (64.26%) at an average price of $301.55 per square foot. As the economy grew weaker, so did the sales volume and pricing in the Encore reaching an all time low of 26 condos sold in 2010 (22 developer owned, 4 private resales). In 2011, the Encore turned the volume corner, but the developer allowed prices to slip to their lowest point by selling 36 condos (26 developer owned and 10 private resales) at an average price of $252.72 per square foot. Contributing to the 2011 price weakness is the fact that half of the resales were distressed sales.

Finite Supply Will Lead to Higher Condo Prices

Now that the developers have zero condos left to sell, true market forces will return to the Encore. Currently, there are 15 resale opportunities listed on the MLS which represents only 4.5% of the entire building. Of those 15 condos, 4 are MDHA income restricted condos leaving 11 market value resales. Of those 11 resales, 3 are currently under contract with another 2 working offers. Moreover, with an average asking price of $293.06, prices have already begun to increase rather significantly. Granted, the final sales price will not be as high as the average listing price, but it is clear that a finite supply of condos in the Encore will result in prices that will soon approach and surpass 2008 highs.

Encore Condos for Sale

Encore Gains Multiple Retail Tenants

It has been several months since celebrated chef Deb Paquette announced her latest venture called Echo (now named Etch) in the Encore, but there are also two more restaurant/coffee tenants readying to make similar announcements. While I am not at liberty to name these tenants directly I can describe one as a high end sushi restaurant that features a rather large and trendy bar. This restaurant will be located next to Etch and be similar in size. The other tenant can be described as a successful local coffee and deli provider who is opening another location. There is no doubt that the impending completion of the billion dollar convention center and hotel complex will contribute to increased retail space leasing activity which in turn leads to an enhanced living experience in the Encore.

Advice and Recommendations

As a condo owner in the Encore and a broker who has represented more than 40 clients in the building, I am in the unique position of being the all time leading outside sales leader as well as an Encore insider. I have crunched the numbers and can steadfastly predict an increase in Encore condo prices over the next 2 years. Buyers who have been on the fence about a purchase in the Encore should have a sense of urgency. Sellers who are considering selling their condo, especially those on higher floors, need to understand the defined finite supply of condos and consider raising their asking prices to match the market. There are no new condo buildings under construction in Nashville and only the Laurel in the Gulch is planned to break ground at some point later this year.

Should you or someone you know be considering making a purchase or selling their condo in the Encore, please contact me. Having sold over 250 condos since 2006, I am the most successful condo broker in Nashville. Put my 10 years of experience to work for you and let me guide you to the most successful and profitable transaction possible.

Grant Hammond, Broker, ABR, SFR, ePRO
Call or Text: 615-945-7123
Encore@GrantHammond.com
View Available Condos

encore condo building nashville

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Future Home Demand in Nashville Jumps, Significantly

nashville-market-demand

Realizing that predicting the real estate market is a dangerous enterprise at best, I feel confident in the simple science behind my prediction that future Nashville home demand will jump significantly in 2012. Before I explain why, let me first explain how I build the total demand curve. I define total demand as the number of homes purchased in a particular month plus the number of pending home sales reported in that same month (some have included the number of residential building permits issued as well, but for the purposes of modeling an actual demand, not a confidence factor, I prefer to keep my curve based purely on the demand side). In my opinion, actual sales and pending sales added together give a real time look into the future health of the market, but rooted in reality. Think of the actual sales figure as the anchor that helps stabilize the sometimes unwieldy predictive value of the pending homes figure. Further, understanding that seasonality plays a role in the Nashville market, I have broken the “demand season” into several separate segments.

Nashville Real Estate Market Demand

As you may have noticed, I have purposefully left out mortgage rates as I believe rates and affordability, to a great extent, will have no bearing upon new purchases for the balance of 2012. For the micro economists out there, yes I realize that it is impossible to hold all other factors constant to specifically measure pure demand in a market as complex as real estate, but bear with me as I strip down purchase demand into its purest state.

For the past 9 years, the average total demand has increased 10.94% between the months on March and June with June being the peak of seasonal total demand. If that same trend were to hold true, the total demand in June 2012 would rise to roughly 4,500 homes. This is a level last achieved in April 2010. If you recall, this was also the period in which the Government back first-time homebuyer credit expired creating an artificial demand. Having already achieved a total demand greater than any month in 2011, it is my conclusion that the Nashville real estate market demand has not only recovered, but may see significant price increases within the next 18 months.

Looking at the More Recent Demand Trend

When we strip out the 2 years of governmental meddling as well as 2003 and 2004 and only consider the 5 most recent years of pure market forces, the average total demand has increased 13.78% between the months of March and June. This more realistic view would predict a demand of almost 4,600 homes, a level not seen since the seasonal highs in 2008. More importantly, this level of demand is similar to what was achieved in the first quarters of both 2004 and 2005. While it is too soon to predict the next boom, I do feel that Nashville is firmly entrenched in a steady recovery that will lead to price increases.

Adding to the strength of the recovery is the fact that the Millennial generation (born between 1980 and 2005) has been graduating from college and graduate school for several years. This is significant as the Millennial generation, sometimes called Echo Boomers are the largest generation of Americans, ever. Millennials are 1.3 times larger than the Baby Boomers and over 3 times larger than Generation X, my generation. Millennials have many of the same values as their parents with home ownership being a focus and main definition of their self worth. It stands to reason that as this generation comes of age, so shall the real estate recovery.

Nashville Market Gains Confidence

In speaking with several colleagues at REBAR last week, almost all report the number of multiple-offer situations and “bidding wars” having increased significantly in recent months. Moreover, 8 out of 10 polled Realtors reported an increased confidence among their buyers and 7 out of 10 reported an increased confidence among their sellers.

Further, having the confidence that mortgage rates will remain relatively low through late 2014 due to the Central Bank’s decision to hold short-term interest rates near zero for the next 28 months, has set the stage for a 28 month purchase window. Buyers are certainly not in a rush, but most now operate with the understanding that purchasing a home within the next two years represents their best chance at optimizing the affordability factor. However, as many begin to see increased pricing in the more desirable areas of Nashville, many will pull the trigger in 2012 to further optimize that transaction. Areas like 12th South, Green Hills, Vanderbilt and the Gulch have already seen significant price gains in the past year.

Work with Grant Hammond

I have a true passion for real estate. Each transaction becomes personal and every deal is negotiated as if it were my own. I would never advise one of my clients sign a purchase or a sale I did not believe in. Many of my clients describe my real estate practice as professional, thorough, and detailed oriented and some have even called me anal and slightly obsessive. I feel all are compliments. But, the one trait I possess that very few agents have is the ability to walk away from a deal. In that I mean, I am financially in a position that allows me to advise my clients to walk away from a deal that is not perfect and continue looking for the best property or wait for a better offer. It has always been and always will be my goal to put my clients in the best position to succeed.

Grant Hammond, Owner/Broker, ABR, SFR, ePRO
Call or Text: 615-945-7123
Grant@GrantHammond.com

Real Estate Success

Navigate back to my Nashville real estate home page to see additional articles I have authored.

Icon in the Gulch 2011 Condo Sales Review

Icon Condo Lobby

The Gulch in NashvilleIt has been just under 4 years since the Icon in the Gulch first opened its doors. One may have suspected there to be quite a lot of distress in a 418 unit condo building, but the opposite is true. The Icon had its best sales year since 2008 selling 105 total condos in 2011 – 88 developer owned condos and 17 resales. The $282.15 average sales price per foot was almost exactly what I predicted 12 months ago ($281.87 was my prediction). The developer spent much of the year focusing on selling their remaining units on the back side of the tower as well as their remaining inventory in the mid-rise section of the building leading to these lower prices. However, as a result of their 2011 focus, the developer now mostly has premium view condos on mostly higher floors which will lead to higher pricing. Of the 48 condos remaining to sell, 35 are in the tower section of the building. My 2012 prediction for average pricing tops $300 per foot, $309.41 to be specific. This prediction represents an almost 10% increase over 2011.

I was involved in more than a dozen sales in the Icon in 2011 and suspect that number to increase in 2012 as I begin to focus my efforts on helping sellers maximize their value. In the past month, I have been involved with 3 resales in the building, all over $325/ft. I have represented a seller, a buyer, and in one case, I facilitated for both the seller and the buyer. Both of my sellers have achieved a sizable profit and my buyer a significant discount.

Let me put my unmatched research to work for you in the Icon. As a buyer’s agent, I know how to negotiate with the developer, I know where the weak points exist and how to exploit them in your favor. As a listing broker, I know how to position your property to achieve its maximum sale price. My extensive knowledge and decade of experience means that I know how to avoid the mistakes a less experienced agent will make. I enlist the services of the best photographers, collateral marketing material partners and condo stagers, all at my own expense. In short, I guarantee you success.

Direct Line: 615-945-7123
Email: Icon@GrantHammond.com

View current condos listed for sale in the Icon

Icon Condos Sold in 2011

Icon Condos Sold in 2011

(note: the blue highlighted transactions are resales)

Navigate back to my Nashville real estate home page to see additional research I have posted this year.

Nashville Area Luxury Home Sales Analysis

Nashville Luxury Home

Luxury Home in NashvilleAs 2011 draws to a close and I listen to traditional media pontificating on the woes of national home sales, I am again reminded of how fortunate I am to live and work in Middle Tennessee. Many have made the argument that luxury home sales ($500,000 to $2,000,000) have suffered most during the economic downturn and that may be partially true, but my analysis below proves that Williamson County has not only fared the best, but has recovered the quickest. The volume of luxury and ultra luxury home sales ($2,000,000+) has not already bottomed out, but did so in 2009, two years ago. This information comes to a surprise to many who have been misled by our local media who continue to report that luxury housing levels remain near record lows. I also make the argument that average price is not the best indication of heath for a real estate market. Rather, volume and velocity combined are better indicators of heath, trend, attitude and sustainability.

Total Luxury Homes Sold

For the sake of this analysis, I have limited the definition of a luxury home to a home with a minimum of 2,750 heated square feet, a lot size not to exceed 5 acres and a price between $500,000 and $2,000,000. What I find most interesting in this graph is the absolutely precipitous fall of home sales in Williamson County during 2008 and 2009. During that 2 year period alone, Williamson County gave back all of the gains made since 2003. However, since 2009, Williamson County has returned to 2005 levels by increasing sales by a whopping 183.6% over the last 2 years. By comparison, Davidson County was not as acutely affected during 2008 and 2009, but it too has seen luxury home sales return to 2005 levels.

In the case of Williamson County, the trend is quite conclusive. The volume of luxury home sales is escalating and is well on its way to reaching pre-bubble levels. In Davidson and Sumner Counties, the trend is not as bullish. Both have made progress since 2009, but each has recorded modest annual gains.

Luxury Homes Sales in Tennessee

Total Ultra Luxury Homes Sold

For the sake of this analysis, I have defined an ultra luxury home to be a property with a minimum of 5,000 heated square feet and a price to exceed $2,000,000. Due to the lack of volume, it is difficult to render any concrete conclusions, but I was a little amazed to see Williamson County consistently out sell Davidson County in this market segment. Perhaps coincidental, but the ultra luxury sales market appears to have followed the same trajectory as the luxury sales market. So much for the argument that the ultra rich were the only ones spending money during the recession.

Ultra Luxury Home Sales Nashville

Total Luxury Homes Sold by Population and Households

Taking the analysis one step further, I find it helpful to compare the total number of luxury home sales to consistent and measurable baselines. These serve as a backstop for the trend. The first two are total population and total households for each county as provided for by the US Census. As you can see below, while Williamson County does outperform Davidson and Sumner Counties, it is also more volatile for its size. This leads me to believe that Williamson County could be more price sensitive and experience greater price highs and lows. Regardless of price, you can clearly see Williamson County gaining momentum since 2009, accelerating in 2010.

Nashville Luxury Home Sales by Population

Nashville Luxury Home sales by Households

Total Luxury Homes Sold by All Home Sales

To first understand why this statistic is important, you must first subscribe to the theory that no matter how many homes are sold, the grouping of price points is important. In simpler terms, one can measure the healthiness of a particular market segment during any economic climate by simply comparing that segment’s sales to the overall sales over a period of time. In order to make this analysis we first need to look at all single family home sales over the past eleven years:

Total Number Homes Sold Tennessee

The first item that jumps off the graph is that Williamson County is the only County that has made a significant recovery in total home sales since 2009. Davidson County appears to be bottoming and Sumner still has progress to make. The second interesting fact is that not one of the counties has returned to 2000 total volume levels. This is troublesome as it indicates weakness in the below luxury home price points. Joe the Plumber is not buying homes. This leads me to believe that, as an economic indicator, the segmentation of our population has true merit. Perhaps the 99% have a point.

However, as we make the comparison of luxury homes sold to all single family home sales, you will note significant growth, even during the recession. It’s amazing to think that 1 out of every 5 homes that sold in Williamson County in 2011 was a luxury home, but that is exactly what occurred. This is the same level achieved in 2006. What may be more astonishing is that in Davidson County, the percentage of luxury homes sold has never been higher. The takeaway is clear, the purchasing power lies as the top of the spectrum and that market segment is shouting that they feel confident in the Nashville economy.

Nashville Luxury Home Sales by Total Sales

The foregoing analysis coupled with historically low jumbo mortgage rates leads me to believe that potential buyers of luxury properties should step into the market now. Likewise, those sellers who have postponed listing their properties may find motivated buyers anxious to buy in at this time.

Did you know that you can accurately calculate the current market value of your home? I use 3 different data sets and personally review prior to final presentation. I hope you find it useful in your quest to refinance your mortgage, update your insurance coverage or in evaluating the opportunity to sell your home.

Contact me for a private and confidential consultation.

State of the Gulch Real Estate Market

The Gulch Nashville

The Gulch in NashvilleIf you live in the Gulch you may be acutely aware of the new and proposed activity, but for the rest of Nashvillians, it may be difficult to see just how much is happening. Since the beginning of the year, 3 new retailers have opened their doors and 2 more are planning on opening by Spring of next year. While that may not amaze the skeptics, one must realize that the lower Gulch is no larger than 3 square blocks. Additionally, these new tenants are paying well over $20/square foot, putting the Gulch on par with rents in Green Hills. Retail is not the only hot property type in the Gulch, multifamily apartment activity is crackling. There is a 302 unit multifamily project under construction, a 305 unit development announced and 2 others in some phase of their due diligence. All of this combined activity has led the two condo projects in the Gulch to sell more condos this year than any other area of downtown. Despite the Velocity converting to apartments, the Terrazzo and Icon have outsold everyone else.

Gulch Retail Space

The newest retailers are Two Old Hippies who have taken over the old Provence space in MarketStreet’s redevelopment project on 12th Avenue, Sweet CeCe’s frozen yogurt who has taken space in front of the Turnip Truck and Apricot Lane who has done the same. Both Two Old Hippies and Apricot lane are rather high end stores attracting many in Nashville’s music scene. Bar Louie, a 50 location operation, has just announced plans to take 8,000 square feet in the bottom of the Velocity and a 24 hour diner concept from New Orleans will be announced in the Icon on the Division Street side. There are several rumors of prospective retail tenants swirling through the chatterbox about the remaining space in the Velocity and Terrazzo, but no concrete details just yet. It appears to be only a matter of time before these remaining spaces fill up.

Gulch Multifamily Apartments

Murcury View Lofts in GulchFor the last decade, the 32 unit Mercury View Lofts enjoyed the benefits of being the only market rate for rent product in the Gulch. This fact led to 100% occupancy rates for the Gulch and never gave us a true indication of demand. In March of this year, Pollack Partners of Atlanta purchased and converted 220 units in the struggling Velocity condominium project to apartments. Pollack began their leasing effort in April and have already leased 85% of their units at a stabilized rent of $2/foot. This unprecedented absorption of 40 rental units per month has amazed even the biggest Gulch advocates.

Eleven North is now under construction on the far north end of the Gulch, appropriately enough, at the intersection of 11th Avenue North and Charlotte. This 302 unit multifamily development is the result of a partnership between TriBridge Residential and Stonehenge DCM, both of Atlanta. If you recognize the name TriBridge, you should, they partnered with Tony Giarratana in 1997 to build the 24 story Cumberland apartment high-rise. Eleven North will be a 4 story elevated building served by 445+/- surface parking spaces hidden from the street. This project is being built in two phases, the first will deliver in Spring 2012 and the second in Fall 2012.

Pine Street Flats ApartmentsNewly announced Pine Street Flats is a 305 apartment development located between The Icon and Velocity in the heart of the lower Gulch. This project will be developed by MarketStreet who already owns the land. A 6 story wrap style project, Pine Street Flats will feature structured parking, pool, fitness center, grilling area, cabana and club room. At the moment debt financing has not been identified, but it is likely that construction will begin in Fall 2011 and finish in Spring 2013. These 1 and 2 bedroom apartments are expected to rent between $1,000 and $2,000/mo.

Looking forward, Ray Hensler, developer of the ultra successful Adelicia high-rise, has been tweaking his proposed “renter by choice” high-rise that may be ultimately located on Eakin’s Universal Tire site on the corner of 12th Avenue and Laurel Street. This would be the first high-rise rental project constructed in Nashville since Tony Giarratana completed The Cumberland in 1999. Hensler’s project would soar 20 stories and offer up to 250 luxury condo-style apartments at rents that begin in the lower $1,000’s and reach as high as $5,000. Before the skeptics begin clearing their throats, let me remind you that private owners in the Adelicia, West End, Icon, Terrazzo, Encore and Viridian have been achieving similar rents over the past half decade. Hensler’s high-rise will be highly amenitized and set a new rental standard in Nashville.

There also seems to be activity on the failed Griffin Plaza site in the heart of the lower Gulch. While no details are available, it appears as though several out of state developers are taking a hard look at constructing a high-rise rental project in this location. The Griffin site is located directly across the street from the Turnip Truck, the Gulch’s own organic grocery store and would seem to be perfectly located.

Gulch Office Space

Let me start by saying that currently there is not a plethora of office space in the Gulch, but there’s also not much vacant either. Offering approximately 80,000 square feet, the Terrazzo is the largest office building as well as the newest. Signing 4 leases in 2011, this building is now essentially full, which amazes me given the fact that this Class A space delivered during the recession and is not cheap. It should also be mentioned that the Terrazzo is a mixed use building that houses 117 luxury condos, 4 of which remain available for sale.

The Bohan Building is a 60,000 square foot building with one 8,000 square foot vacancy on Demonbreun Street (Old Lyric Street space) and the McGavock building is a 52,000 square foot development with one 9,000 square foot vacancy (currently being negotiated). Both office buildings are considered Class B office redevelopments.

Looking to the future, Eakin Partners have a conceptual 350,000 to 400,000 square foot Class A high-rise located on the corner of 12th Avenue and Demonbreun. This is the location of the old Universal Tire, a site that Eakin purchased in February 2006 for $6.25 million. According to my sources, it would take 50-60% of the building being preleased in order to begin construction. Rumor has it that this site has made the coveted Waller Lansden Law firm relocation top 3 list, but I have no way of confirming this intel. I will say this though, it makes a ton of sense for Waller Lansden to choose this location. Once the Music City Center is completed, Demonbreun Street will become a new gateway boulevard into downtown Nashville. Highly visible, this site offers unparalleled walkability and livability, a combination not yet found in Nashville. This site makes more sense than either Alex Palmer’s site or Lionstone’s site. Of course, I am assuming the price tags are all the same.

Condos in the Gulch

Inside a Bedroom in IconWhere once there was a “glut of Gulch condos for sale” (thank you Tennessean for that rather calamitous phrase) now there are few. The 419 unit Icon is down to 65 unsold condos and the 117 unit Terrazzo is down to just 5. During 2011, both buildings have averaged a combined 10.3 closings per month. This gives the Gulch 7 months of unsold developer inventory remaining. Add this 7 months of inventory to the 1 month of resale inventory plus an unknown shadow inventory and you’ll most likely arrive at a net aggregate of one year’s worth of inventory. In other words, it will not be a buyer’s market by this time next year. Buyers waiting for the bottom of the market better start making moves now, least ye be left out in the cold. Sellers, your wait is almost over. Calculations show that prices will begin to rise in earnest as soon as January 2012 and likely will continue for the next several years. The Gulch is poised for quite a good run.

As the broker who has sold more condos than any other broker in Nashville, I look forward to the opportunity of aiding you in either purchasing or selling. Contact me for a private consultation.

5 Best Condo High-Rises in Nashville

Best Nashville High-Rise Condos

The Adelicia – The finishes, floor plans, design, construction materials and location all speak for themselves in this building. Famous residents like Simon Fuller and Taylor Swift have only added to its reputation (and price).

The Icon in the Gulch – While many did not expect it, it happened. The Bristol Group’s first high-rise effort is a combination of great location and great community. Most would describe the feel as trendy decadence with incredible panoramic views of downtown Nashville.

The Terrazzo – The finishes are perhaps the highest end in Nashville, but its Interstate location and lack of views knock this building down a notch. The Terrazzo is Nashville’s only LEED certified residential high-rise condo building.

The Rhythm at Music Row – Some have been skeptical of this building, but I am not at their current prices. These are some of the trendiest boutique condos in Nashville and they feel like they march to the beat of a different drummer. That’s just cool.

The Encore – The finishes, floor plans and design are above average, but being 2 blocks from more Nashville attractions than any other building makes the Encore worthy of this list. This building features true walk ability to NFL, NHL, Country Music Hall of Fame, Music City Center, Ryman, honky tonks and more.

Cross reference this list with the 5 largest condo developments in Nashville.

adelicia condos nashville

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