Condos Are King in Downtown TC

bn-cover“The condo market is alive and well.” That’s according to Perry Pentiuk of Leland-based Venture Properties, who markets properties of all stripes around the area. And it’s echoed by numerous other real estate professionals, who in many cases are selling condo units as fast as they can be built – and faster.

The Windward development on Randolph, adjacent to Bay Bread, could be Exhibit A. According to Bob Rieck of Coldwell Banker Schmidt Realtors, who with his wife, Tia, represents the development, the six units in phase I have all sold, and one of the four units in phase II has sold, at an average price of $500,000. Rieck said the development’s proximity to both downtown and West Bay made it an easy sell.

The Riecks also market numerous other condominium developments, such as Crystal Cove, which borders Boardman Lake, and North Wind, located across the street. Units at the former were priced between $340,000 and 350,000, while the latter came in around $265,000. They were all listed and sold within a year.

“That was one of our most successful developments,” said Rieck.

They’re also working on Radio Centre III, the five-story, mixed-use building on Park Street across from Sorellina Italian restaurant downtown. The finished units are starting from $525,000 to $625,000. The 2,700 square-foot commercial unit on the ground floor is listed as a white box (before interior walls, utility installation and finishes) for $799,900. Capri in Old Town will begin construction in the spring, with 32 units residential planned.

What those developments all have in common, besides the Riecks and the fact they are being built by Socks Construction, is a location in or near downtown.

“Downtown is leading the way,” said Rieck. He said people want to be able to walk to their destination, whether that is a shop, restaurant, the bay or other community attractions.

That seems to hold regardless of the price. Pentiuk compares it to the attractions of the big cities.

“It’s not quite Manhattan, where it’s quiet and serene, then when you get out of the elevator, BOOM! But that’s what buyers (want).”

7th-streetPentiuk knows whereof he speaks. After 17 years of living in single-family homes on Old Mission Peninsula and a similar amount of time in Leelanau County, today he’s a resident at The Village at Grand Traverse Commons. This year he has sold three condos at Washington Place and a white box penthouse at North Park 101.

Judy Porter of Real Estate One said condos are often an optimum choice for those who don’t have the desire or time to do all of the work necessary to keep up a home.

“They’re a good product for our area,” she said. “Retirees and professionals who don’t want to do home maintenance – it’s a great option if they can get used to living in a community.” She noted buyers need to keep in mind that the purchase price is not the only money they will be spending. Home Owner Association fees add to a monthly mortgage and can make what seems a good price more daunting.

“Condos are affordable, but association fees play into how much you can spend,” she said.

Mike Wills of Midtown Development represents Uptown Riverfront & Citywide Townhouse development, three buildings of five units each, on State Street. Four of the five units in phase I are sold and occupied, as is the case for phase II. The third Cityside building, offering a combination of commercial space on the first floor and upper-floor residential space, will be ready in early 2017. One special attraction: rooftop decks and green roofs by Traverse City-based Inhabitect. Pricing for the remaining units are $1,300,000 for phase I, $733,500 for phase II and $350,000 to $600,000 for phase III, depending on the size.

Numerous other condo developments offer various sizes, configurations, locations and price points. The HomeStretch Depot Development near the intersection of Eighth Street and Woodmere Avenue will provide townhomes priced at $125,000, with just $3,000 required down, and five market-rate units ranging from $200,000-$220,000. They will all be Zero Energy Ready Homes, built to incur little to no utility costs. Meanwhile, Bob Brick of RE/MAX Bayshore Properties said he has buyers interested in Leelanau Flats at the Moorings on M-72 just west of Tom’s West Bay, but the entire project is currently in litigation and he doesn’t know when they will be on the market.

Six of the 18 units at the Seventh Street Flats near Munson have been sold and are occupied. Construction is ongoing on the remaining units, three of which have sold. Ted Lockwood of RE/MAX, who is representing the development, said construction is ongoing at the condos, which range from 1,200 to 1,500 square feet and from $349,000 to $389,000. He expects they’ll be ready for occupancy this winter.

Is there a bubble?

Where will it end? In other words, is this a bubble that will burst, as the entire industry did in 2007? Prices on condos, and in fact all residential (and commercial) properties, continue to escalate. That’s primarily due to demand outstripping supply, which goes back to the effects of the recession. REO’s Porter said beginning in about 2006, builders stopped construction of spec homes of all sorts, and today they can’t keep up with the demand for housing.

“There are not a lot that are five to ten years old,” she said.

Not only that, but the recession chased many of the skilled laborers out of the state or into another industry, and subsequently there is less capacity to build in the trades than there was a decade ago.

The spurt in home-buying is not a phenomenon limited to this area. Industry analysts across the country are divided as to how long the demand will last. But in Traverse City at least, given the demand for downtown living, it seems likely that if you build it, they will come.