Next week the remaining developer owned condos in the Rhythm at Music Row will foreclose. This foreclosure will mark the end to a rather unconventional chapter for downtown Nashville high-rises and usher in a new, more welcomed chapter that will see market forces driving value.
On Tuesday, September 6th, Cadence Bank and Pinnacle Bank will take possession of 47 unsold condos in the Rhythm. Each bank will take control of their proportionate share of condos (Cadence Bank 39%, Pinnacle Bank 61% roughly) and plan to offer these condos to the public at reduced prices. There is no confirmation on initial pricing, but my estimates place the current value of the unsold condos at $235/ft in aggregate. One hurdle that must be overcome is the fact that the Rhythm will immediately lose FHA approval upon foreclosure. This will hurt the marketability of the condos by reducing the financing options available to new purchasers. But, there seems to be a plan. I have learned that Pinnacle Bank plans on immediately reapplying for FHA approval via HUD once the foreclosure is complete. The result will be a 30-45 day delay in a new purchaser’s ability to use a low down payment, FHA backed loan to purchase. It is my belief that each bank will allow a longer closing time in their contracts to make up for this delay, making it a moot point.
The long story short is that this foreclosure will offer condo buyers a value that has not ever been seen before in the Rhythm. I suspect there is a pent up demand for these condos as many buyers have been lying in wait for just such an opportunity. As a result, I cannot imagine a scenario, if priced correctly, where these remaining 47 condos take more than 9 months to sell.
Which Condos will be Available?
There is a complete mixture of 1-2 bedroom condos with all views on all floors from the 5th floor to the Penthouse. In my personal spreadsheet I show about 82% being 1 bedroom condos. I also show several of the premium view condos being available as well.
Is This Bad for the Rhythm?
Not at all. In fact, it may be the healthiest outcome for the Rhythm. There is no doubt that the remaining developer inventory (47 of 105 condos) has held true market forces at bay. Many buyers did not purchase in the Rhythm assuming there would be a better time to purchase in the future. This killed the momentum of sales and stunted the building’s true value. Once these remaining condos are sold, even at lower prices than market, market forces will be allowed to return. It is an imposed correction that we have seen proven many times in buildings like the Adelicia and Terrazzo.
When Can I Make an Offer?
Now. I would not wait until after the official foreclosure proceedings, you’ll be competing with too many others. If you are looking for the best view or highest floor, you better put eyes on this project asap. Contact me for complete details and to make an appointment to view these luxury high-rise condos in person.
Email: Rhythm@GrantHammond.com
Phone: (615) 945-7123
