Charlotte's Best Spot To Build

It Probably Will Not Look Like This

On the heels of the successful selling of the renovated Metropolitan LIfe Building turned into condos, a bold announcement was made for a new development across the street, 300 South Tryon. It was to be a mixed use facility, commercial and residential on top.

Pre-sales were brisk as people were lining up to buy these units, many which would have looked out over the then proposed Third Ward Park. The setback from Third Street was to have been wide enough, 25 feet, to allow for a grand entrance to the park.

We all remember what happened in 2008 don't we?

So now it is 2012, and we have been the site of the Democratic National Convention. The North Carolina Music Factory has proven to be a hit. Epicentre, despite the developers difficulty has been a success. The Romare Bearden Park in the Third Ward is under construction, and across from the park, BB&T Stadium is changing the face of Graham Street. Indications are that there will be a hotel out in Left Field, and Childress Klein has designed a 21 story apartment building to flank The Catalyst.

The location of the 300 South Tryon bulding is absolutely prime for development.

From a people point of view, there will be somewhere around 1,000 people living within 1 block of the park. They all have friends, so maybe double the number of people who will have an interest in that area. It is safe to assume that other developments will follow.

But getting back to the spot where 300 South Tryon holds, it will have frontage on Tryon as well as frontage on the new park, and the emerging Third Ward, the best of both worlds. It is for this reason that I believe it will be the next major project in Charlotte.

Virtues Of Positive Thinking

Let me first say this is totally copied from a blog report I get weekly.  I have contacted the source and have asked to be able to link this directly to my blog and have not heard back yet. 

The reason I am posting this here is that the views and research that is being done here mirrors my beliefs and is very well stated.  I did not want to take credit for it directly.

Signs of positive growth are springing up all around us.  The only fear we are experiencing is being put there by our political representatives. 

Read this and enjoy.

Virtuosity Sometimes our timing is uncanny. Or perhaps it is because we present so many opinions, a few coincidences are likely to happen. Regardless of the reason, a few weeks ago we started focusing on the elusive virtuous cycle. We concluded that the cycle must start with real estate and we indicated that there were signs that this might finally be taking place. Well, a few days ago, this quote appeared in a Wharton publication: Is this the start of the long-awaited and elusive housing recovery -- one that would bring a stronger economy overall? Or is the market just taunting us as it bumps along the bottom? 'It's for real. This is absolutely for real,' says Susan Wachter, professor of real estate at Wharton. The market, she says, is poised to enter a 'virtuous cycle' where positive trends will spur more positive trends. 'This market recovery will continue,' she added.  (See more from article in Real Estate News below.) That is not to say that one person's opinion solidifies the deal. However, it appears that others are taking notice of the rebound that is taking shape. If we want confidence, positive remarks in the media from experts such as Susan Wachter are very important -- certainly more important than our comments. And we certainly do need additional confidence as we build another leg in the virtuous cycle. The employment report released on Friday showed that the recovery is continuing but we could still use more momentum. The drop in the unemployment rate from a high of just under 10% to 7.8% in a period of just under two years is significant. The road to an even lower unemployment rate must be underpinned by a stronger real estate recovery as part of the virtuous cycle. Perhaps it has already begun.   By the less-demanding standards of the past few years, the latest housing figures look pretty good. On September 25, the Standard & Poor’s Case-Shiller Home Price Index showed a 1.2% price gain in July compared to a year earlier. Prices have risen for three consecutive months. The National Association of Realtors (NAR) reported on September 26 that sales of existing homes had risen by 9.3% in August, compared to a year earlier, and that the median price of existing homes sold was up 9.5% over the past year. NAR and Case-Shiller use different methodologies. For the 12 months ended in July, sales of newly constructed homes were up about 25%, though the total was still only about half of the 700,000 units considered healthy. Experts are especially impressed that prices of the least-expensive third of homes lead the gains, going up a full 1% between June and July. Those homes had received the worst drubbing in the recent housing market collapse. Is this the start of the long-awaited and elusive housing recovery -- one that would bring a stronger economy overall? Or is the market just taunting us as it bumps along the bottom? 'It's for real. This is absolutely for real,' says Susan Wachter, professor of real estate at Wharton. The market, she says, is poised to enter a 'virtuous cycle' where positive trends will spur more positive trends. 'This market recovery will continue,' she says, predicting that rising prices will prod potential buyers to buy before prices go up more. That demand will nudge prices up, drawing in even more buyers. 'I have been optimistic about this market for six months or a year,' she adds. Several factors have combined to strengthen the market, Wachter says. Extraordinarily low rates have allowed millions of homeowners to reduce their monthly payments by refinancing. Moreover, Wachter notes, unemployment, while still high at over 8%, is not rising, and fewer workers feel the threat of layoffs. The stock market has been very strong, making those with investments feel wealthier. Worries about a shadow supply are easing. 'People are less likely to walk away when they see prices rising,' she says. Source: Knowledge at Wharton More than 20 million rental households spent more than 30 percent of their income last year on rents. In fact, more than half of those renters spent at least half their income on housing, “severely burdening” their finances, according to Census data. Rents have been on the rise the last few years as demand surges. In the past seven years, median rent payments have soared nearly 20 percent from $728 to $871. Some markets have seen double-digit increases in rent in just the last year, such as in cities like Houston, Seattle, and the San Francisco Bay area where strong job markets are fueling high demand. 'More demand with little new supply means rising rents and shrinking vacancies,' says Jed Kolko, chief economist with the real estate Web site Trulia. Source: USA Today Investors have a new target in real estate: undeveloped land. They're snatching up undeveloped land heavily discounted in bankruptcy proceedings from developers and banks that foreclosed on the builders once they ran out of money for their projects, Reuters reports. The investors then resell the land for up to 20 percent or more returns on their investment. Or, in a buy-and-hold strategy, the investors partner with homebuilders to develop the land. 'We are coming out of the mother of all housing cycles, and residential land is the best way to play the ultimate recovery,' Michael Barr, a Paulson & Co. portfolio manager, told Reuters. 'Land is the highest-returning component of the homebuilding equation.' Investors find the most attractive land to buy is a parcel that already has all the planning permissions in place to start construction. Otherwise, the approval process for building on the land from local and state agencies can be costly and timely. Source: Reuters <

Adding To The Rental Market

Investors would often purchase multiple units in a building, and then resell them before taking ownership, a neat trick during that time.  When the recession hit, many investors found themselves with excess inventory and no buyers to take it, they then turned to the rental market.

Others who purchased found themselves out of work as a result of the recession, and were left with having bought high, and now having to sell low.  The problem with that is that often it means that the seller would have to bring cans TO closing, not a very attractive proposition for most.

Some developments such as 210 Trade Street stopped construction, and others such as 300 South Tryon, and One Charlotte never started construction.  Then there is The VUE, a condo project that has shifted to a rental project.  The result of that is that from the over 400 units per year just 5 years ago, we will see 67 units from the SKYE condos hit the market in 2013.

Developers are finding that funding sources for new construction condo projects is very difficult to get,while multifamily projects do not share the same problems.  Rental rates in general are rising, and developers are taking advantage of that market.

All that is forcing the existing condo market to become the only choice for many looking to buy downtown today. 

Three separate projects are either currently underway,or will be shortly.

First, the Fountains. This development is taking the triangular shaped piece of land on the corner of McDowell and Stonewall Streets across from the Blake Hotel and developing it into over 200 apartments that will have an incredible view of the city skyline.

Second, another 250 unit apartment development at the intersection of Johnson & Wales Way and Fourth Street near the Doubletree Hotel.  Work is underway to realign the roads to allow the project to go forward.

Third, previously mentioned here is the Childress Klein 21 story tower with 250 apartments next to the Catalyst and overlooking Romare Bearden Park.

All exciting, and all happening now.