ATLANTA | Construction Thread V

[gttx]

Some good info on the 10 Terminus Place project....with some dreadful news about the Atlanta condo market thrown in - from the ABC:

____________________________________________________________

Cousins Properties Inc. thinks it may have found the answer to survive Atlanta’s worst condo market in a generation.

The Atlanta-based developer is launching a buyer-incentive program at 10 Terminus Place, its 32-story condo tower in Buckhead that opened last fall. The incentives include guaranteeing the value of the condos — which average between $600,000 and $800,000 — for the first three years and allowing buyers to walk away during that same time with no damage to their credit.

“We’re taking all the risk out of the equation,” Cousins CEO Tom Bell said. “We’re also letting people see how much confidence we have in this market.”

Ten Terminus is one of 35 condo projects in the hard-hit Buckhead market, where just slightly more than half of 3,061 units were sold at the end of last year, according to real estate market research firm Haddow & Co.

Only 13 of 137 units sold since the 10 Terminus was completed in 2008. Seventeen units are under contract.

The condo market’s struggles are affecting even the high-end units in Buckhead such as those at 10 Terminus, John Williams’ The Mansion on Peachtree and Regent Partners LLC’s Sovereign at 3344 Peachtree.

Of the 11,237 condos available within the intown Atlanta market last year, less than half were sold, according to Haddow & Co.

While other residential developers have offered discounts and lease-to-own programs to spur sales, Cousins is one of the few in position to give buyers the benefits of full ownership from the start of their initial down payment.

The condo tower is one of three buildings rising at Terminus, the 10-acre mixed-use development Cousins launched in 2006. While Cousins carries debt on the two office towers, it does not have a mortgage loan on 10 Terminus, allowing the company to offer steeper concessions.

“What makes this unique is that there is no construction loan,” said David Haddow, president of Haddow & Co. “I’m not saying they are the only one in this position, but they are certainly one of the few. This also obviously shows they believe in their product and Buckhead.”

The 10 Terminus buying incentives begin March 20.

Cousins will finance the condos for a 5 percent down payment. Banks are often requiring 20 percent down payments. Cousins will offer the condos at a 4 percent interest rate versus the typical bank interest rate of at least 6 percent.

One incentive targets people who want a new condo, but can’t buy one because they’re struggling to sell their homes. It’s one of the biggest challenges facing 10 Terminus, Bell said. Buyers who put 20 percent down on a 10 Terminus unit, however, can move in with no payments for a year while they try to sell their homes.Cousins will offer the incentives on up to 25 condos initially, then re-evaluate the program.

The company is just one of many developers fighting slow sales amid the U.S. housing slump.

Cousins originally planned to sell out 10 Terminus by the end of this year, but a tight lending market forced the company to reset its goal to the end of 2011, a move that reduced its rate of return on the $80 million tower by at least 4 percent. Cousins also took a $2 million write-down on the project earlier this year.

Ten Terminus is the only condo tower that Cousins has in its portfolio.

Last August, Cousins and development partner The Related Group sold the last residences at 50 Biscayne, a 54-story, 528-unit luxury condominium tower in Miami, for $30 million, getting out of one of the toughest condo markets in the country.

[cybele]

That's really not a bad deal. Say you buy a 2BR unit for $800,000. All you have to do is put down $160,000 in cash, and you've got no mortgage for a year. And then, if you're financed at 4%, your payments are still probably less than $4500 a month including the mortgage, taxes and association fees.

[gttx]

Originally Posted by cybele

That's really not a bad deal. Say you buy a 2BR unit for $800,000. All you have to do is put down $160,000 in cash, and you've got no mortgage for a year. And then, if you're financed at 4%, your payments are still probably less than $4500 a month including the mortgage, taxes and association fees.

Agreed. I thought it was interesting that Cousin's didn't have a construction loan for 10 Terminus. Did they put up the equity themselves, or did they have private investors? The article doesn't mention anything.

In any other climate the risk they are taking would be insane, since they are essentially acting as the bank, and giving people mortgages with exceptionally loose terms (isn't this how we ended up here to begin with?). I'm not sure what "guaranteeing the value of their condos" means, but that could end up putting the company in a major bind in 3 years if the market doesn't turn around as most people hope it does.

[micropundit]

Originally Posted by gttx

Agreed. I thought it was interesting that Cousin's didn't have a construction loan for 10 Terminus. Did they put up the equity themselves, or did they have private investors? The article doesn't mention anything.

In any other climate the risk they are taking would be insane, since they are essentially acting as the bank, and giving people mortgages with exceptionally loose terms (isn't this how we ended up here to begin with?). I'm not sure what "guaranteeing the value of their condos" means, but that could end up putting the company in a major bind in 3 years if the market doesn't turn around as most people hope it does.

It's not like they have a wide range of options here.With the Emory expansion(s) on hold Cousins has nada on the books for the immediate future and developers are like sharks: if they stop moving they're dead.

[NYClife2005]

Originally Posted by micropundit

The news about new skyscrapers in Atlanta is going to be very ,very sparse this year. Folks, the conditions on the ground are bad and they won't be getting any better anytime soon.

So when this baby announces , there could be cause for joy on this board. But untill then, you might want to find another hobby.

I'm sorry but i gotta say this - are you an expert? do you have real estate connections or high up governmental connections that could possibly assist you in KNOWING what's NOT gonna happen & when? I mean seriously all this pesemism i feel makes it worse. Have you forgotten about the 1.5 BILLION dollar SOB project STILL going? Or the crappy but still possible soon Tokyo Inn downtown? Or the upcoming (hopefully soon) 700 foot tall 50 Allen Plaza that doesnt depend on the mortgage/condo crisis? How about the fact that we've yet to see Phipps Tower with its glass, or 12th & MT top off? Not to mention all the restaurants & retail that's inevitably going to open in these newer buildings.

Point is saying, "there COULD BE joy on this board IF/WHEN 1400 lifts off" is like saying we're only gonna enjoy food IF we have pizza - doesnt make sense. Besides recomending that people NOT post on here will only result in fewer posts which results in everyone who does care about it getting bored with it & leaving - which KILLS the thread. Lets not do that.

[gttx]

Originally Posted by micropundit

It's not like they have a wide range of options here.With the Emory expansion(s) on hold Cousins has nada on the books for the immediate future and developers are like sharks: if they stop moving they're dead.

I agree - it's a move to start selling these units and produce positive cash flows this year, which they desperately need. I imagine the rationale is that, if they can make it to 2012, they will have other projects starting that might offset any losses they see via this program.


NYClife2005 - there is a lot to be happy about here, since the projects we have seen completed or near completion in the past year have really redefined this city. Unfortunately, development junkies are whores for new and different. And we hate to see good projects get stalled or canceled, which is about all that is happening at the moment (apart from construction that has already been financed).

I have to agree with micropundit here, though. No project is immune from this mess, since the real problem is not selling condos or finding tenants (although that is a huge problem), it is securing financing. Without available (and relatively cheap) credit, developers cannot get permanent financing and therefore cannot secure a construction loan. And when these projects get leveraged anywhere from 50-80% (four years ago that could have been as high as 95%), that financing is a deal breaker. The one glimmer of hope might be Tivoli's 1138 project, since they were trying to secure huge amounts of private equity from a number of sources in Asia - although even that probably won't happen for at least a year.

I have to say that the future looks bleak for SOB as well, although you stated otherwise. Two hotels have already pulled out of the project, and I think we will start seeing retailers leave in the next few months. Retail nationwide has been hit hard, but high-end stores have been hit the hardest, many of them down 30-40% year over year. That doesn't bode well for a development predicated on the notion that people will embrace complete extravagance.

Perhaps we could all be more optimistic. After all, there is a lot of great development to be happy about. But in the short-term, I think realism might rule the day, and that means that we should face the fact that real estate is an incredibly volatile asset at the moment...and that good news for a few months might be stories of developers and retailers avoiding bankruptcy.

[NYClife2005]

Anyone watch HGTV? Seems EVERY time they do an Atlanta House Hunters they always go into far off suburbs that DONT always do a great job representing the city - Tucker, Decatur, Fairburn, & some places ive never even HEARD of.

Not to mention when they "show" Atlanta by briefly describing the city they always show Atlanta from the DOWNTOWN area - nothing much else. They show Turner Field, the Capital, Underground, views of downtown from the SOUTH, all in all making ATL look undeveloped, boring, ghetto, & UNsophisticated.

Frankly it pisses me off b/c it turns off prospective buyers from bigger cities. New Yorkers & yankees in general think the south is backwards & conservative & that view is ATTACHED unjustly to Atlanta. If you live in LA & want a cheaper city - you're gonna want a city that's got VIBRANCE & SOPHISTICATION - not "southern charm" & redneck/ghetto views of your city. But THIS is how we're represented all too often & i believe its the city's fault. They frankly need to fire some people in the "marketing" department who continue to market ATL as a "southern small town, with UNsophisticated charm" & do a better job showing ATL for what it's become, therefore helping us grow.

[cybele]

Originally Posted by NYClife2005

Anyone watch HGTV? Seems EVERY time they do an Atlanta House Hunters they always go into far off suburbs that DONT always do a great job representing the city - Tucker, Decatur, Fairburn, & some places ive never even HEARD of.

Not to mention when they "show" Atlanta by briefly describing the city they always show Atlanta from the DOWNTOWN area - nothing much else. They show Turner Field, the Capital, Underground, views of downtown from the SOUTH, all in all making ATL look undeveloped, boring, ghetto, & UNsophisticated.

Frankly it pisses me off b/c it turns off prospective buyers from bigger cities. New Yorkers & yankees in general think the south is backwards & conservative & that view is ATTACHED unjustly to Atlanta. If you live in LA & want a cheaper city - you're gonna want a city that's got VIBRANCE & SOPHISTICATION - not "southern charm" & redneck/ghetto views of your city. But THIS is how we're represented all too often & i believe its the city's fault. They frankly need to fire some people in the "marketing" department who continue to market ATL as a "southern small town, with UNsophisticated charm" & do a better job showing ATL for what it's become, therefore helping us grow.

Atlanta's main drawing card is its fantastic suburbs. That's why 90% of people move here. If they wanted a dense, urban environment or a big central city, they could find that in plenty of other places.

[ATLmangum]

Originally Posted by cybele

Atlanta's main drawing card is its fantastic suburbs. That's why 90% of people move here. If they wanted a dense, urban environment or a big central city, they could find that in plenty of other places.

Cybele, you are probably going to piss off some people with that statement, but the truth hurts. If you have to rely on a car in order to live, then you do not live in a urban city. I'm not saying that you can live in a place like Chicago or New York and not need a car, but try not using your car in Atlanta for 2 weeks and see how easy your life is.

Until Atlanta gets a "working" public transportation system, Atlanta will never be able to embrace a true urban environment.

[jpk1292000]

Originally Posted by ATLmangum

Cybele, you are probably going to piss off some people with that statement, but the truth hurts. If you have to rely on a car in order to live, then you do not live in a urban city. I'm not saying that you can live in a place like Chicago or New York and not need a car, but try not using your car in Atlanta for 2 weeks and see how easy your life is.

Until Atlanta gets a "working" public transportation system, Atlanta will never be able to embrace a true urban environment.

I certainly agree that Atlanta's public transportation system needs vast improvement to allow the growth of a denser urban environment, but the impression that many Northeasterners have of Atlanta is usually quite wrong. I know. I grew up not far from Philadelphia. There are plenty of old industrial areas in eastern PA that are far more "backwards" and "run down" than Atlanta. In fact, this is one of the reasons I moved away from that area. Yet, so many people in that area think that metro Atlanta is a redneck backwater when, in reality, it isn't.

[Labtec]

Originally Posted by NYClife2005

Anyone watch HGTV? Seems EVERY time they do an Atlanta House Hunters they always go into far off suburbs that DONT always do a great job representing the city - Tucker, Decatur, Fairburn, & some places ive never even HEARD of.

Not to mention when they "show" Atlanta by briefly describing the city they always show Atlanta from the DOWNTOWN area - nothing much else. They show Turner Field, the Capital, Underground, views of downtown from the SOUTH, all in all making ATL look undeveloped, boring, ghetto, & UNsophisticated.

Frankly it pisses me off b/c it turns off prospective buyers from bigger cities. New Yorkers & yankees in general think the south is backwards & conservative & that view is ATTACHED unjustly to Atlanta. If you live in LA & want a cheaper city - you're gonna want a city that's got VIBRANCE & SOPHISTICATION - not "southern charm" & redneck/ghetto views of your city. But THIS is how we're represented all too often & i believe its the city's fault. They frankly need to fire some people in the "marketing" department who continue to market ATL as a "southern small town, with UNsophisticated charm" & do a better job showing ATL for what it's become, therefore helping us grow.

I've seen quite a few episodes of Atlanta where the people are wanting to move into the city from the suburbs. Suzanne Whang even says Atlanta has a mix of big city sophistication along with a southern city charm.

[cybele]

What's wrong with suburbs? We should be proud of them!

[Atlwest281]

I think the reason why there is more focus on the city is that for the most part suburbs are ubiquitous. Same restaurants same stores similar looking schools houses churches etc etc. Cities in general provide more variety and more umpf. Not to mention suburbanites take every opportunity to down talk cities and the residents who chose to live in them not realizing that with out the cities they detest there areas would cease to exist in there current forms.
Yes we should be proud of suburbs because there is a lot of fantastic people who provide a great picture to a metro fabric but, we should equally celebrate the cities which like it or not anchor the suburbs. Lord im wordy today lol

On a side note I hope everyone was able to enjoy the fantastic weather and day!!!

[cabasse]

the majority of our suburbs were terribly planned, shoddily constructed and generally very wasteful of dwindling resources - that's what's wrong with them. traffic here is worse than in other cities because of the road system and sporadic nature of development, compared to even places like dallas or cities in florida. what exactly is to be proud of? most of the cheap shit won't last 50 years. (that obviously goes for stuff intown also but on the contrary land values will continue to rise) the fact that our burbs were thrown up so quickly seems to be reflected in how quickly people are moving back in, even compared to those previously mentioned. (outside miami)

[sevensixtwo]

Originally Posted by NYClife2005

Or the upcoming (hopefully soon) 700 foot tall 50 Allen Plaza that doesnt depend on the mortgage/condo crisis?

Good point NYClife2005, it doesnt depend on the mortgage/condo crisis. Maybe you should stop enjoying your own magnificence and catch up on current events. I mean, HELLO!, credit crisis, duh.

[NativeAtlantan]

Originally Posted by cybele

Atlanta's main drawing card is its fantastic suburbs. That's why 90% of people move here. If they wanted a dense, urban environment or a big central city, they could find that in plenty of other places.

Wow, I had a really long post to call you out on this but thought better of it. I am just chalking it up to the fact that not everyone thinks things through before they post.

It's okay, I understand.

[eddie21]

Until Atlanta gets a "working" public transportation system, Atlanta will never be able to embrace a true urban environment.


Yes!!! So true. Without it, Atlanta will continue to struggle.

[A-town]

[cybele]

Originally Posted by cabasse

the majority of our suburbs were terribly planned, shoddily constructed and generally very wasteful of dwindling resources - that's what's wrong with them. traffic here is worse than in other cities because of the road system and sporadic nature of development, compared to even places like dallas or cities in florida. what exactly is to be proud of? most of the cheap shit won't last 50 years. (that obviously goes for stuff intown also but on the contrary land values will continue to rise) the fact that our burbs were thrown up so quickly seems to be reflected in how quickly people are moving back in, even compared to those previously mentioned. (outside miami)

There are some crappy suburbs but on the whole we are blessed with many beautiful, well built suburbs. They stretch from the intown neighborhoods to the far exurbs.

My point is simply that we spend an awful lot of time beating ourselves up about Atlanta's supposed shortcomings, as if density and highrises were some sort of gold standard, and anything else should be held in contempt. The reality is that our suburbs offer a great quality of life. They're our biggest drawing card and most people find them quite satisfactory.

For folks who seeking a dense, Manhattan style environment, Atlanta is probably not high on their list of choices. But that's not the only way to have a great city!

[Muskavon]

Originally Posted by NativeAtlantan

Wow, I had a really long post to call you out on this but thought better of it. I am just chalking it up to the fact that not everyone thinks things through before they post.

It's okay, I understand.

It may be a sad thing, but not all that unrealistic. People aren't transferring from Cleveland to live downtown ATL. Sorry, I know we want them to, but about 120,000 new arrivals to the suburbs each year according to the census prove us wrong...they want the dog in the grass yard in the culd-a-sac with the 2.5 kids with the warm weather and no crime. People aren't begging for the Atlanta transfer papers so they can live in the 3rd story of some brick/cobblestone thing you've re-done for them near Five Points. Ok, maybe young single people are if you make them do enough shrooms. Preferably midtown (at least) even for them and they practice the same lifestyle. He's not out of line to say no one is begging to move from Cleveland to Five Points. You need to sell the next generation of kids on that nirvana, 'cause very few of mine is looking at that as a good place to move after we move up the ladder. Guess why the office buildings span out from Buckhead even? Guess. Correct...to make them further away from Five Points, where all our out-of-towners wish to retire. To make it a challenge for them to get to their new workplace, lol. Please. I'll ammend what the guy said to make it more acceptable and realistic according to the numbers....5% of the people on Earth who relocate to Atlanta do it in order to live in DT or MT. Not 10%. He overfigured that concept.