On the downtown condo market
Interesting post by Joe Peffer at Columbus Real Estate Notes:
In the wake of a hugely successful City-Hop, One must still ask the question: Is the notion of first time buyers and young professionals snatching up all those groovy urban digs just a media-induced smoke and mirror trick?
Yes, it is, for the most part. Baby Boomers and Empty Nesters have been the bulk of the buyers in the Downtown Columbus Condo market so far and they probably will be for the foreseeable future.
He point to this article in the Other Paper in which he’s interviewed.
The suburban slump has created a vicious cycle, said Rob Vogt, a partner at Vogt Williams & Bowen, a Columbus company that provides national real estate market-feasibility information.
“The profile of the buyers Downtown tends to be empty nesters who are moving from the suburbs,” Vogt said. “When you’re trying to sell your $400,000 house in Dublin and there’s no buyer, you’re not going to be able to close on your condominium Downtown.”
With most Downtown condo price points traditionally starting near $350,000, Vogt said developers made the mistake in the first round of building of bypassing many first-time home buyers.
“The lion’s share of the market isn’t being served by the current supply of Downtown condos,” he said.
So you just start building cheaper ones, right? Joe Peffer, a buyer’s agent specializing in urban real estate for Coldwell Banker, said it’s not that simple because young buyers’ expectations of a luxurious Downtown pad clash with their limited bank accounts.
“For $250,000, they want to buy excitement, and all the upgrades have to come standard,” he said. “It can happen, but they certainly won’t get more than seven to eight hundred square feet.”
Speaking of downtown condos, Cap City Savvy dissents from the hoopla surrounding the announcement of “the new downtown neighborhood“:
So why aren’t I doing backflips like everyone else about this project?
1) We only get one chance with all of our surface parking lots. They’re a blank canvas and leave us with huge potential. Residential doesn’t just go away. You don’t get any mulligans. You can’t just kick residents out and decide that you want to build something with more density.
2) The project is being pitched as “affordable”, which combined with the favorable city financing package (in addition to the tax abatements), makes me think that there might be some handshake deals going on here. Look at it this way, when is the last time you heard of a developer selling units below market rate? One bedroom units for $150k with private greenspace in a premium location don’t make sense. Developers letting things go below market rate doesn’t smell right.
3) Density brings amenities like corner markets, clothing shops, restaurants, etc… We’re not helping ourselves much in that regard by only adding 260 units on 9 city blocks.
It does seem a bit un-downtown-like.
On the other hand, sopping up 9 city blocks takes a lot parking out of play. This shrinks the supply of downtown land, increasing its value. The next project will be denser.
In a high-rise building, you would be lucky to get a few $150k units (probably studios). If you want affordable downtown, its not going to happen much without government intervention. I don’t think that is necessary in Columbus. Those $150k units could be built in the near downtown neighborhoods like Old Towne East and Franklinton.
Overall, I’m just glad they are taking out 9 blocks of parking lots.