Welcome Back, Condos!
When apartments are hot, build condos. —Ancient Roman proverb
In case you don't believe us that it's about that time in the cycle, we've traveled to both coasts to meet the condo market's movers and shakers.
LA-area Colorado Commons, in the San Gabriel Valley foothill community of Monrovia, is answering the market's siren song and converting to condos. (Built as townhomes in '08, then switched to rentals, the only comparison for such a dramatic career arc is Matthew McConaughey.) Johanna Gunther—SVP with Polaris Pacific, the firm handling marketing and sales—tells us as leases expire, units are being upgraded for sale, with existing tenants getting first crack. The project launched sales with a grand opening on May 17. When an apartment complex goes condo, she says, there's not a huge percentage of renters who decide to purchase—about 10% is a general rule of thumb, depending on the market. (As the saying goes, why buy the cow when you can get the milk for a monthly rent.)
No closings occurred the first time around, so Colorado Commons was never a "broken condo" deal. Barker Pacific Group, which developed the project with PCCP as its equity partner, changed the use upon completion but retained ownership, something Johanna calls rare. Today, developers are once again looking at condos as an exit strategy. People who either own or are thinking of buying an apartment building are asking what they could sell it for as condos and what they would need to put into it renovation-wise, versus how it works out financially as apartments. Fun fact about Monrovia: Samson the bear once visited residents' hot tubs until captured and relocated to an Orange County zoo. (Reached for comment, Samson had little thought on renting vs. owning. But he does like honey.)
Flying over to Atlanta, The Loudermilk Cos' Robin Loudermilk is breaking out the city's first new Intown condo project since the recession. Robin says he feels the glut of for-rent multifamily may be a little overheated. “It just felt like condos are what we needed down [in Midtown], and larger units.” (Targeting those wanting an upgrade in the same neighborhood.) The project (rendered below), at Peachtree and 7th streets, will be 20 units that will begin in the $700ks (floorplans from 1,800 SF to 2,800 SF). Loudermilk is the first out with condo (with delivery next fall), but not the only one planned.
John Weiland's One Museum Place—also in Midtown—will hit the market in two years with $1M-plus condo units. (Sounds like it will be a good place to camp outside if you want autographs from famous Atlantans.) And that's on top of The Atlantic's 324 remaining units for sale and Crescent Heights converting back to for-sale with more than 300 units, according to Haddow & Co (which tracks multifamily stats in Atlanta). But with more than 3,000 units of apartments either under construction or proposed for Midtown, we smell a new bedroom community.