Faced with sagging sales in the aftermath of the national real estate collapse of 2008, Moses Tucker Real Estate adopted a plan to make it easier to market high-dollar condominiums in its River Market Tower after it opened in 2009.
The plan calls for an initial payment of 1 percent to 2 percent of the market value of the condo, followed by monthly payments more or less the equivalent of mortgage payments for the next 12 to 18 months, said Jimmy Moses, a partner in the firm. It can lead to permanent financing and ownership,though not in all cases, Moses said Monday.
About half of the 100 occupied condos in the 132-unit, 19-story tower are a result of the plan, Moses said.
Thirty-seven of those occupied units are still in the “purchase plan,” and may or may not result in actual sales and permanent residency, Moses said. About a fourth of the 63 condos that have actually been bought had been in the purchase plan, according to Moses.
He said he and partner Rett Tucker decided on the strategy after visiting Portland and Seattle, cities that have inspired much of their downtown efforts in recent years, and talking with developers there about how to handle what Moses called a “terrible market.”
On Friday, Tucker said in a phone call that his company had not done a good job of communicating the occupancy rate of River Market Tower. He said with actual sales of 63 units, 37 in the installment sale program and two under contract for sale, the occupancy rate was 77 percent. Later that day, Moses followed up with an email that included those same figures.
Asked in a June interview whether Moses Tucker would resort to a lease-purchase op-tion, and possibly cut its prices, Tucker said no. He did not mention the purchase plan.
An Arkansas Democrat-Gazette article published June 23 showed the marked contrast in sales in the two condo towers Moses Tucker has built in downtown Little Rock. The 18-story 300 Third had sold 80 of its 97 residential units by the end of 2007, its year of completion. The River Market Tower sales totaled 20 at the end of 2009, its year of completion. Sales figures taken from public records as of mid-June 2013 showed a total of 52 units sold at River Market Tower.
Moses said that none of the condos sold in 300 Third were done through the purchase plan.
Average sales price for both towers was $300 per square foot.
The Moses Tucker plan is akin to a lease-purchase agreement, according to Bruce Lindeman, professor of finance and real estate at the University of Arkansas at Little Rock.
Lindeman said the Moses Tucker plan sounded like “a test-drive for a year or a year and a half.” Lease-purchase agreements likewise are typically for 12 to 18 months, Lindeman said.
The advantage is that the Moses Tucker plan probably has lower monthly payments, Lindeman said.
“The high-end market in Little Rock is as stale as last week’s doughnuts,” he said. “I would bet a large sum of money that [Moses Tucker] have reduced their prices.”
Tucker said in the June interview that Moses Tucker would not build a condo in downtown for up to 2 ½ years. Moses said on Monday that “the bankers” don’t think it’s a good idea either.
Meantime, the downtown living model of choice has shifted from condos for sale to loft apartments for rent.
Moses Tucker has just built and leased all of its 19 loft apartments in its Mann on Main mixed-use development. Scott Reed, a Portland, Ore.-based developer,and his partners are committed to building about 160 loft apartments on Main and the 200 block of Capitol Avenue.
Business, Pages 25 on 08/07/2013