Seattle: 2301 6th Ave (Insignia Towers)

[TheBellevueBoss]

whaaaaa......all those apts that went condo are being delivered back to the market as apts, which adds investory to existing supply.....its the yo yo effect.....

I perosonally feel that the class B properties are well positioned....the class A market, especially in city will be flooded in 2 years or less with the addition of the ground up apt construction and new condos that are being rented out.....we can enjoy increasing rents for the next 12 months but we will see a correction....cap rates are already on the move up.....not a bad time to unload if you looking to cash out at the top of the market while financing is still available for apts buildings via Fannie Mae...guess, that is only a considertaion if you want to roll your equity into something else, hopefully at a discount....

[CityView Jim]

Someone must have heard me!

Friday, September 21, 2007

Condos to apartments? Times sure are a-changin'As rents rise, some developers switch plans

Puget Sound Business Journal (Seattle) - by Jeanne Lang Jones Staff Writer

Several Seattle-area developers have quietly shelved early plans for high-rise condominium towers and plan to build apartments, instead.

That's good news for Seattle renters -- who've had a harder time finding units to lease thanks to a recent spate of condo conversions that removed thousands of rental units from the market.

To be sure, condo conversions continue -- sometimes prompting tenant protests, such as the current one at Ballard's Lock Vista -- but rising area rents are driving at least a handful of developers to switch their plans from selling units to renting them.

In recent months, Harbor Properties, Security Properties and Opus Northwest each proceeded with apartments after initially considering condominiums.

Security plans more than 600 moderately priced rental units in two separate 40-story apartment projects in the Denny Triangle near downtown Seattle, while Harbor is building the 81-unit Landes apartment complex on First Hill. Opus recently opened M Street, a 220-unit mixed use project, also on First Hill.

That's nearly 1,000 new residential units near downtown Seattle making the switch from condos to apartments.

Here's the whole article: http://www.bizjournals.com/seattle/s...24/focus2.html

[CityView Jim]

But wait, was M Street ever considered condos? I though that was apartments from the get-go.

[TheBellevueBoss]

M Street was condos intially....and the article is half correct....rents will dip when the conods are re-apartmented as luxury rentals and all of the ground up construction is delivered to the mrkt....plus we have seen a few condos sold off as apartment conversions.....

we are going to see concessions return to the market across class A in city properties from increased inventory and developer competition to stabilize properties.......sooner than later we see rents dip as well....

my projections are 12 months out though.....

[SeaGuy]

Some of these will open as apartments with year to year leases, and then convert to condos when the market is stronger. This has been done here in the past quite a bit.

[TheBellevueBoss]

Good point. Sure why not, as long as the for sale housing demand is there and unit/building quality can compete.....

Olivian? Maybe but that is not Hanovers general investment guideline....

Aspira? Doubt it, looks like they are building this with the renter in mind.

others, we shall see.....

[CityView Jim]

This one may wait a bit longer than we thought. Here's an except from an article in today's PSBJ:

Ryan Bosa, owner and president of Embassy Development in Vancouver, British Columbia, is waiting to build 643 condominiums in two towers at 5th Avenue and Battery Street. He thinks the Seattle market is undervalued, and was just hitting its stride when the subprime crisis swept across the country.

At "the first signs that there is some confidence in the market, we will get going," Bosa said. "It could be by the end of summer or by the beginning of next year."

[TheBellevueBoss]

they are still advertising as condos.....

[Dancer]

Ha ha ha... This is all kinda funny. Reading these threads is almost like watching a soap opera at times. They better do something! All that steel sitting on the site is teasing us like a clear cookie jar just out of reach.

[CityView Jim]

OK, it's been mentioned that generally the major difference between condo and apartment construction is the finishes. Being that for a project this size we're talking 2-3 years out, why not start now and make that a late decision.

Those in the know, is that unfeasible? I know if the decision is condo that they lose serious marketting time. But if the market turns around in that time frame (which I TRULY believe it will), they may be the only show in town as far as new hi-rise construction downtown.

[blackc5]

Condos or apartments, I do hope the Trader Joes stays on for this location. That would be a very nice addition to downtown.

Cityview Jim, I would think, in my totally unprofessional opinion, that that could be quite possible for a building like this. Get started, building very high-end apartments switching to medium/high-end condos if the market supports it at some point. I would guess the biggest issue to be pre-sales time since condo projects surely like to have as much time as possible to sell before the building is finished. I would guess a 1-year min before closing, with them preferring quite a bit more, especially for a project with this many units.

[WESTSEATTLEGUY]

Wierd. They do advertise like CRAZY for this. I'm seeing it everywhere.

[mhays]

The financing scenario is different for condos vs. apartments. In theory financiers ought to like the nimbleness of making decisions midstream, but my understanding is they don't. Perhaps one of our broker members can go into that.

[flotown]

Correct me if I'm wrong, but Bosa develops only condos, correct? If not, I suppose they could try to compete with Hanover and go for the 3,000-5,000 per month rents. That market is not currently supported in places like, say, bellevue, but that hasn't stopped Hanover as of yet. That said, that company is a fully integrated design/build/construct/manage group that has financing partners, namely pension funds, with patient equity. Condo developers typically has less relationship of these sorts

[TheBellevueBoss]

Originally Posted by mhays

The financing scenario is different for condos vs. apartments. In theory financiers ought to like the nimbleness of making decisions midstream, but my understanding is they don't. Perhaps one of our broker members can go into that.

Traditional banks are not open to that at all...although, it could be feasible in some markets and cylces (like the one that we are in)....I think BofA already took this deal on...as condos.....I think BOSA is very partial to building condos...I think they are better off as condos anyway, economically.....they will be missing the market with luxury apts.....I think condos will be right on time for the single family rebound in a couple of years, especially downtown...and they will beat AVA and other projects waiting on the fence to market.....we all read the article on the front opage of the psbj this week...some "experts" anticipate a shortage of downtown condos by 2010.....

in my opinion we are approaching the end of the apt development cycle..there is always somebody that shows up late to the party and misses the show, it won't be much longer to find out who.....although we are still looking at several deals and taking them on, both ground up and value added plays.....still a bunch of apt/mixed use projects just months away from ground breaking on Capitil Hill....pretty cool stuff coming to the Hill.....the face of the neighborhood is changing quickly....

[SteveM]

Originally Posted by TheBellevueBoss

still a bunch of apt/mixed use projects just months away from ground breaking on Capitil Hill....pretty cool stuff coming to the Hill.....the face of the neighborhood is changing quickly....

Are you able to talk about which projects these are? Specifically, is there reason to believe the QFC project will be a go? That would be great news for the neighborhood...

[Capitol Hill]

Originally Posted by SteveM

Are you able to talk about which projects these are? Specifically, is there reason to believe the QFC project will be a go? That would be great news for the neighborhood...

From my informants (NOTHING THAT IS PROPRIETARY) 523 Broadway (old QFC block) should begin demolition soon. This is a Seattle soon, which, given the glacial pace of things, I'll say...oh...I dunno...within the next 90 days?

If they haven't begun demotolition of the old QFC block, any aspect of it, I'll do whatever somebody dares me to do.

As long as its legal.

Or I can't be caught.

[TheBellevueBoss]

Broadway on Broadway willl be breaking ground next month.....6 or 7 story mixed use on Boadway adjacent to the seattle central book store that currently serves as a a parking lot.....looks alright, not bad.....ground floor retail, office, and market rate apts....asking about $2.60 per sq ft on the apts....at least $40 NNN per sqft on the retail space, they want to attract restaurants...but at $40 per sqft, that will be tuff NOT to get a national credit retailer......

I'll get back to you on the others tomorrow when I have more time.....

[TheBellevueBoss]

Embassy delays starting condos




Image courtesy Embassy Development Corp. [enlarge]
Embassy Development is delaying the first of two 41-story condo towers in the Denny Regrade due to a sluggish market. British Columbia-based Embassy Development Corp. is delaying the start of construction on the first of two 41-story condo towers in the Denny Regrade due to a sluggish market.

“We're looking at maybe getting started up this fall (depending on the market) or maybe early next year,” said company President Ryan Bosa.

Embassy had planned to get under way in March of this year, but the national housing slowdown has put a damper on what should be a good market given its strong job growth, he said.

Embassy in November of 2007 spent $49.9 million — or $596 a square foot — for the full-block development site between Battery and Bell streets, and Fifth and Sixth avenues.

It plans to build the 643-unit project in two phases, with construction on the second tower starting about a year after the first. Embassy will be the general contractor for the buildings, which take 37 months each to complete.

“Thankfully we don't have any money into (the project) other than the land and some design fees,” Bosa said. His firm doesn't typically have construction loans in place until it needs them, he said, “(but) when I'm ready to go, my bank is ready to go.”

While Bosa thinks Seattle condos are “very reasonably priced” compared to those in other big West Coast cities, Embassy doesn't want to get the timing wrong.

“You don't want to be sitting there with 300 condos that you're struggling to sell,” he said.

[Seattle FTW]

early next year = 2010

we won't see that entire block developed for another 7 years!