With the cancellation of 1Brevard, uptown’s first planned new condo tower since the real estate crash and recession, it might be a while before another developer tries to build a for-sale high-rise.
It’s a stark contrast with the mid-2000s, when condo towers such as the Vue, Avenue and Courtside popped up across uptown. Now, it’s apartments that dominate new development, with a record number of new rentals under construction – and even the 51-story Vue is now apartments after the condos didn’t sell and the tower was foreclosed on and sold to new owners.
2,615Condo building permit applications filed in Mecklenburg County in 2006
12Condo building permit applications filed in 2015
But developers believe there is a strong market for housing for sale in and around uptown, waiting for the right project. They point to townhouse developments in South End, Dilworth, just north of uptown and Wesley Heights, where interest is strong and units are selling fast.
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“In areas surrounding downtown, there are thousands of apartments. The amount of for-sale product is infinitely less than that,” said Bart Hopper, head of Hopper Communities. He sold 23 townhouses at SouthPoint, on Youngblood Street in South End, and opened a second phase of the project before construction kicked off.
“I think that there’s plenty of demand in the market,” said T.J. Larsen, a real estate agent and founder of My Townhome. He was in charge of lining up pre-sales for 1Brevard.
Although he declined to comment specifically on 1Brevard, Larsen echoed Boston-based developer Gundolph, LLC, which said “there is no pre-sale market of any depth for a condominium tower of this size and scale” when announcing the cancellation. The 1Brevard tower would have been 31 stories with 174 units.
“I see, definitely, an interest to move to uptown. I see a lack of inventory, especially at the high end,” said Larsen. He also pointed to townhouse strength as an example of interest in for-sale housing. “The huge appetite for those is definitely hitting something in the market,” said Larsen.
The reasons behind 1Brevard’s cancellation have more to do with the tower’s price and location than a lack of demand in the for-sale market, said David Furman, one of uptown’s most prolific pre-recession condo developers. His projects from the mid-2000s include the 28-story Trademark building at Trade and Poplar streets and the 17-story Courtside building near Time Warner Cable Arena.
“I think there’s a huge condo market there ready to be tapped, but it’s got to be the right product,” Furman told me. “There’s a market. No one has addressed it since 2007, 2008. There really is not product out there.”
He recalled touring the 1Brevard site at Fourth and Brevard before the project was announced, and he was skeptical many buyers would pay top-dollar to live next to the uptown transit center, with buses idling at all hours.
“I thought the product was really nicely done,” said Furman. “It’s just a bad site and it was overpriced.”
Back in the day when we were selling condos like crazy, we didn’t want to believe that a lot of that was going to flippers and investors. But it definitely was.
Developer David Furman
One factor: Uptown land is more expensive, which leads to high-rise towers with higher prices. You can see the difference when you compare 1Brevard with a South End townhouse project.
Prices started in the $400,000s at 1Brevard, and went up to a $7 million penthouse. A two-bedroom, 1,853 square-foot condo was listed for just over $1 million, yielding a price per-square-foot of $561. The townhouses at SouthPoint are in the mid-$200 per-square-foot range.
Emma Littlejohn, a real estate marketer and consultant who worked on the 1Brevard project, said that’s a function of the more expensive sites uptown.
“You’re going to have to do a high-rise project,” she said. “Land prices dictate mid-and high-rise only, which doesn’t allow for lower price points.”
Another issue 1Brevard had that townhouse projects don’t face was the need to pre-sell dozens of units before construction started. That meant convincing buyers to make a deposit without a guaranteed construction start or completion date. Townhouse projects can be built in phases - unlike a high-rise tower - and offer much faster construction turnarounds.
“Delivery time, we’re talking six to 12 months,” said Hopper, who plans to start construction at SouthPoint next month. “They might be talking two to three years.”
Larsen said it was easier to pre-sell condo units before the recession, when many went to investors and owners could be confident prices would appreciate between the time they bought and when the building actually opened.
“It’s hard to tell how much of that was true buyer demand and how much was investor demand,” Larsen said of then pre-recession condo market. “Some projects take two or three years to complete and investors are happy to wait for that.”
“Back in the day when we were selling condos like crazy, we didn’t want to believe that a lot of that was going to flippers and investors,” he said. “But it definitely was.”
Now, Furman said he’s looking at sites for possible for-sale projects uptown. But he doesn’t think he’ll be building a new condo tower anytime soon – Furman said a project with 40 to 60 units will be much easier to get off the ground.
“I’m not the guy who's ready to do 200 units in a high-rise for sale,” said Furman. “That would be hard.”