Residential development in downtown Little Rock is shifting from condominiums for sale to loft apartments for rent, reflecting a national trend.
Two major players in downtown revitalization, Jimmy Moses and Rett Tucker,completed the 18-story 300 Third tower and the 19-story River Market Tower in 2007 and 2009, respectively.
As it turned out, the two projects bridged the national housing collapse of 2008.
Eighty-three percent of the 97 condominiums in the $40 million 300 Third sold in the first year, according tothe Pulaski County assessor’s office website, including 10 that were presold in 2006 as homebuyers anticipated the project.
By contrast, the $60 million River Market Tower, completed two years later, saw only 20 of 132 units sold in the first year. And since then, the total has risen toonly 52, or 39 percent, of the residential units.
Condominium construction across the country boomed in 2006 and 2007, reflecting the general housing trend, said Ed McMahon, senior resident fellow at the Washington, D.C.-based Urban Land Institute.
But in 2008, tens of thousands of condos were empty and are “just now being absorbed,” McMahon said.
“There is a now a pent-up demand for apartments,” Mc-Mahon said. “I think there’s going to be a market [again] for condominiums in downtown Little Rock.”
The towers will be the lastcondos Moses and Tucker will construct in downtown for a while, Tucker said in an interview Tuesday.
In November 2006, Moses and Tucker envisioned they would build 1,000 condos in downtown. Today, the number is less than half that, including projects by several other developers.
Tucker - looking ahead at plans for their next tower months before the first was completed - said at the time that their plans and those of others didn’t look like “any formula for oversaturation.”
Moses and Tucker began their condo-building push with 16 units in the mixeduse Capital Commerce Center at 210 River Market Ave. in 2002, followed in 2004 by 24 units in the First Security Center, a mixed-use building at 521 President Clinton Ave., and 20 more units at Rainwater Flats at 515 E. Capitol Ave.in 2005.
Yet, the national housing-market collapse, which helped plummet the country into its worst economic downturn since the Great Depression of the 1930s, would foil that vision.
“We got caught by the recession,” Tucker said Tuesday.
“The market needs to absorb the inventory that we have now” before before he and his partner will build another downtown condo, Tucker said.
However, they will not change their marketing strategy for the unsold units in the River Market Tower, he said.
“Our financing’s in place, and … the biggest thing is there is no new supply being added,” he said. The property taxes that Moses and Tuckerowe on the unsold units in the River Market Tower in 2013 total $193,474.43, and the partnership is current on its payments, according to the Pulaski County treasurer’s office.
Tucker said that it would take up to 2½ years to sell off the River Market Tower condos. But he said sales for 2013 could rival first-year sales. As of the week ending June 14, nine units had been sold, according to county records. Twenty residential units were sold in 2009.
Others who invested in building downtown condos, whether in a mixed-use project or not, had to adjust to the housing crisis in which sales cratered after the overvalued market went into a major correction.
Tower Investments LLC of Woodland, Calif., unveiled Lafayette Square, which was to encompass most of a squareblock whose boundaries were to be Sixth Street and Capitol Avenue and Louisiana and Main streets. Work began in January 2006, but sales lagged and the developer had to drop prices and offer lease-to-buy deals two years later. Eventually, the project was scaled back to the Lafayette Hotel.
Since the change in marketing, 13 of 30 condos have sold, according to county records. Tower Investments did not return a call seeking comment on sales and the status of the other condos.
Last year, a group of investors, Main Street Lofts LLC, bought four of the buildings on Main Street from Tower Investments and is moving forward with a mixed-use project called Main Street Lofts, which includes living space - apartments for rent - along with commercial and retail space.
Scott Reed, managingpartner of of the Main Street Lofts LLC investor group, has separately renovated the old Gus Blass Co. building at 315 S. Main and opened Porter’s Jazz Club at street level, though that has been replaced by Montego Cafe. Reed said he expects 32 apartments in the K Lofts above the cafe to be open late this year.
Moses and Tucker, likewise, have gone the apartment route with their Mann on Main project, scheduled to be completed next month. Tucker says lease signings are brisk for the apartments, retail and office space.
The recession, which officially ended in June 2009 and has slowly loosened itsgrip on the economy, did not prevent some high-dollar purchases in the Little Rock market.
The average price per square foot for units in 300 Third and River Market Tower is about $300.
Joe Johnson, a former basketball player for the University of Arkansas who is a member of the Brooklyn Nets of the NBA, bought a 4,286-square-foot condo on the 14th floor of 300 Third for $1.19 million in December 2006 and still owns it.
Stephen LaFrance, who sold USA Drug, a Pine Bluffbased chain, to Walgreen Co. last year for $438 million, bought a 3, 022-square-footunit on the 16th floor of the 300 Third tower on May 15 for $1.45 million, making it the most-expensive condo sold in downtown Little Rock in total value. LaFrance died on June 5.
That’s $479.81 per square foot.
Yet, the top per-foot price - $584 - appears to go to a 1,540-square-foot condo at 5 Statehouse Plaza in a $900,000 sale by developers Gary and Brad Canada in August 2009 to Haley Revocable Trust. The condo is one of 12 in the Residences of Building 5, 11 of which have sold since the high-rise units started coming on the market in 2007.
Front Section, Pages 1 on 06/23/2013