Fresh life for downtown’s condo projects
Northern Nevada Business Weekly
Aug 06, 2012 :
Fresh life for downtown’s condo projects
Rob Sabo, 8/6/2012
Condo sales are reheating in downtown Reno.
Just as the single-family residential real estate market has finally found its legs in northern Nevada, sales of downtown condominiums are trending upward in sales as well as pricing.
Eager developers jumped on the condo craze in the mid- to late 2000s and flooded the downtown market with hundreds of new condominium residences. For the most part, though, they missed the real estate bubble and brought their properties online just as the northern Nevada housing market began its long downward slide.
The majority of downtown condominiums sat dark for years.
Major condominium properties developed in downtown Reno include:
• The Palladio, an entirely new property at the site of the old Riverboat casino
• The Montage, a complete renovation of the old Flamingo Hilton/Golden Phoenix property
• The Residences at Riverwalk Towers, a remodel of the old Comstock Hotel
• The Belvedere, a conversion of the old Sundowner property.
Helen Graham, president-elect of the Reno-Sparks Association of Realtors, says from January through July 2012 the downtown area saw 80 condo sales totaling $9.18 million.
Kathie Bartlett, former sales manager for the Palladio and Realtor with Dickson Realty, says the 13-story building that opened in June 2007 originally was entirely pre-sold, but the majority of potential buyers walked away from the project once the local real estate market crashed. Only 28 buyers continued with the project and purchased units.
The Palladio has 92 units on floors 5 through 13, with two floors of commercial space that’s almost entirely leased. Tenants include Campo, the Ole Bridge Pub, Subway and JB Mapes & Co. Bistro.
The Palladio sold out in the second quarter of 2012. Units ranged in price from $225,000 to over $900,000 before the market correction. More recently, a smaller 656-square-foot unit overlooking First Street sold out of foreclosure for $89,900, Bartlett says, while the most expensive sale was a remodeled 3,327-square-foot unit that sold for $1.55 million. The average sale price at the Palladio was $295 per square foot.
The bulk of sales — about 65 percent — are empty nesters, she says, while another 20 percent are young professionals. The remainder of buyers were investors.
Bartlett says there are three reasons the building sold out after the market correction: It’s right near the Truckee River; it’s a brand-new building; and it’s smaller size made it more appealing than neighboring condo properties.
Samantha Reveley, sales manager of The Montage, says condo sales have never fared better at the property. Reveley closed eight sales in July and has another 13 set to close in August. Since the start of the year, she says, 42 condo units have sold at The Montage, and the property will be at 50 percent occupancy the first week of August.
“That is a big deal for us,” Reveley says. “We are a success story. We have sold over 150 units in two years, and that is pretty amazing for Reno.”
The Montage has 23 residential floors and 376 total units. The first floor commercial spaces on the north and south corners have been vacant since the property was completed in 2008.
The majority of sales at The Montage have occurred after the market correction in pricing — only 33 units were purchased when the building first opened. Studios at the property originally were priced in the mid $250,000 range; today they sell for about $80,000, Reveley says. Those premier penthouse units priced between $1 million and $2.5 million in 2006. The last three penthouse units that sold at the Montage averaged $425,000.
But pricing is trending up as demand for condominium living at The Montage increases. Reveley says the property’s owner, ST Residential of Chicago, has raised prices at the property five times.
Most sales occurred after the property went into foreclosure. ST Residential picked up the property from the FDIC when its former owner, Corvus Bank, failed, says Reveley, who also lives at The Montage. The property was originally developed by L3 Development.
Some purchases at The Montage are from investors, Reveley says, while others are from current residents picking up a second property to use as a guest unit or investment property. The majority of sales, though, have been to young professionals who prefer the downtown and midtown scene, and empty nesters who prefer the convenience of living in a managed property.
The association of Realtors’ Graham says The Montage definitely is the main player in downtown condo sales for 2012. One reason why sales have picked up at the property, she says, is because lenders are more willing to finance purchases.
“They seem to be on quite a roll,” Graham says. “The biggest game changer was their ability to get loans.”
Reveley expects sales at The Montage to continue, and the property should sell out in the next few years. An increased head count in the downtown core may help lure additional businesses to the area, she says.
“Now that we are half sold and are on such a good trend, hopefully that inspires more businesses to move downtown. We look forward to getting our retail spaces filled up and more people living here full time.”
Graham says that the changing face of Reno’s downtown, along with lower pricing and the availability to fund condo loans, is helping spur sales.
“We are seeing a lot of young people who don’t want to be in suburbia,” Graham says. “They want to walk downtown and be around other things. There has been a change to more urban living.”