condo projects

Last week, the Statesman wrote a very strongly worded article suggesting the impending collapse of the downtown condo market.

The article was based on the following assertions:

- With mortgages tough to get and consumer confidence eroding, it is a tough time to sell real estate
- The capital markets are a mess, making it difficult for new projects to get the financing they need to get off the ground
- Sales absorption has slowed as the economy has weakened

The Magnolia, a $40M, 5-story, 139 unit condo project on South Lamar has been cancelled after a lender foreclosed on the property.

The story of the Magnolia sheds much light on what can go wrong with a condo project, especially in an unforgiving market.

When a restaurant or retail store closes, most people assume that it was ill-conceived or poorly run or a bad location or simply a bad product.

Rarely do people say “I told you, people don’t want to shop” or “the business of eating out is destined for an ugly demise.”

The developer of the 290 room Hotel Van Zandt and the 55 luxury Residences at the Hotel Van Zandt have announced that they are abandoning plans for the condo portion ofthe project.

Over the last five years, Austin has experienced an unprecedented condo building boom. With many projects underway, the first two in the current wave are nearing completion.

With many of the new downtown Austin condo projects, it is not uncommon to see prices in excess of $500, $600, or even $700 per square foot.

As the price of new projects has doubled or tripled from the days of the Nokonah, the prices for older downtown projects have not escalated at the same rate.

Since many of the large new condo projects are being privately marketed through in-house sales agents, the only way to get unit details and pricing is to schedule a meeting and visit the sales center.

Recently, however, the Four Seasons Residences has added a number of units to the Austin MLS -- making the details publicly available for the first time.

Every now and then, someone takes all of the fancy models of new condo projects, shrinks them to their proportional size, and lines them up in there approximate position in the sky.

While not perfect, this latest attempt is up-to-date with most of the recently announced projects. When shown this way, it is amazing to think that the skyline in 2010 will essentially be all new.

Here is the image:

The market for downtown condos is very active but quite different from the single family home market in two key facets.

First, downtown condo owners who want to sell are currently competing with new units entering the market.

If too many units come on at once, downward pricing pressure may ensue. That said, developers are very good at controlling prices and surprisingly patient.

However, it's important to note that condo projects are more commodity-like than single family houses in established downtown neighborhoods.

As new downtown Austin condo projects are announced, we add them to AustinTowers. Over the last week we've added three full new profiles for recently announced projects.

This brings the total number of projects covered by AustinTowers to 36!

The new profiles are:

1155 Barton Springs

A lot of money is being spent on downtown development -- more than $2 billion in condo projects alone at last count.

And while it is technically outside of downtown, it seems another $750 million mixed use development is about to break ground.

The project will develop 2.75 million square feet across 22 prime central acres near downtown Austin.