Condos are making a comeback. But only on the high end.
That’s the message from Atlanta Fine Homes Sothebys International Realty’s Christa Huffstickler during our 2016 Multifamily Forum at the Cobb Energy Centre yesterday. Christa tells us she’s working with more multifamily developers looking to rejigger potential projects by converting some units into condominiums. The half-and-half approach, she says, is a strategy to get financing that’s becoming more scarce.
“We know that there will be some condo announcements and offerings coming to market. There are some very ambitious people,” Christa told our audience of more than 350 attendees. But for now, developers are focused on the luxury condo market, where units can start at $1M. She says there’s a pool of buyers seeing housing in pricing between $600k to $1M, “and there is nothing for them. The challenge with even the new projects we announced…everything is trending toward the very expensive, very high-end luxury base.”
Christa was part of a panel that included Hunt Mortgage Group’s Keith Morris, CFLane’s Brooks Castellaw, Institutional Property Advisors’ Brian Murdy, Colliers International’s Will Mathews and Franklin Street Real Estate Services’ Jake Reid. Brooks says size is becoming a desirable option—the bigger the unit, the better. For instance, its Ardmore & 28th project has eight townhouses that already have leased six of the units at $4,500/month. Its Olmstead Chamblee project now underway will have 10 townhouse units as well. “I think there’s a great demand for larger units,” he says.
During his keynote address, US Department of Housing and Urban Development regional center director Ruben Brooks told our audience that there is evidence of a multifamily slowdown in the Southeast. Last year, HUD saw $2B in transactions, down from $3.2B the year before. “we’re seeing a slight …slowdown, which is probably a sign of things to come,” Ruben says.