A Strong Condo Market in America?
By Graham Summers
September 12, 2007
"I was a naysayer myself originally."
Ted Kromer chuckles. I can't help laughing a bit myself. One month ago, existing home sales hit a five-year low, the inventory-to-sales ratio hit a 16-year high, and housing prices posted their biggest drop since 1987. Yet, eating breakfast with Ted in the Nashville City Club on the 20th floor of the Sun Trust Building in downtown Nashville, all of this seems a world away.
Ted is the director of development for Giarratana: the downtown residential developer in Nashville. From the 20th floor, most of our view of Nashville's skyline is shaped by former Giarratana projects.
To my right are Cumberland and Bennie Dillon: two residential towers topping out at 24-stories and 12-stories, respectively. Between the two are 119 condos, 256 apartments, street-level retail space, and 404 below-ground parking spaces. Across the street in front of me is Viridian: a 305-unit condo building and the first premium condominium project in Nashville's history. Units sold for between $130,000 and $1.5 million.
All of these projects have significance beyond the mere shaping of Nashville's skyline. Before Giarratana's founder, Tony Giarratana, pushed the city's board to increase its downtown residential real estate market in 1993, downtown Nashville had a measly 10 units – that's units, not buildings – on the market. In 2006, nearly 5,000 condos were sold. Nearly all of the credit for this growth goes to Giarratana.
"I must admit, I was one of the ones who thought Tony was a little crazy," laughs Ted. "But as you can see, I've come around."
Prior to joining Giarratana, Ted himself was one of the premiere commercial real estate developers in the Southeast. Since 1976, Ted has managed the design, development, and operations of more than 14.5 million square feet of properties. A Nashville resident since 1985, his commercial efforts here have garnered national attention: The Hickory Hollow Mall was honored by the American Institute of Architects, while the Mall at Green Hills received the International Council of Shopping Centers award for the most outstanding retail development project of 1983.
One project in particular drew Ted to join Giarratana.
"We were sitting at this very table when Tony pulls out some drawings and blueprints for the Signature Tower. He asked me, 'Are you interested?' I told him, 'Are you kidding me?'"
When completed, the Signature Tower will be the tallest building in the U.S. – outside of Chicago and New York – with a four-star boutique hotel featuring a full spa, an outdoor pool deck, and a chef-driven restaurant. All of these services will also be available to residents of the luxury condos located above the 14th floor, including gourmet room service and in-home spa treatments.
Opening a luxury condo building – let alone the first luxury condo building in the region – while the headlines scream of a real estate meltdown is a pretty gutsy move. Nashville's real estate market has certainly cooled recently: August 2007 closings were 10% below that of August 2006. However, the decrease hasn't touched condos: 524 condos were sold in August 2007, a 12% increase from the 468 units sold in August 2006.
Consider the following: The Signature sales office only started taking orders in the second week of June. They've already sold, not leased, 100 units. And the sales breakdown is evenly distributed among the various price demographics of the building's makeup. As soon as Giarratana has sold 60% of the total units, the project will break ground. At the current sales pace, construction should begin at the end of October.
Nashville has 17 colleges (Vanderbilt is here), 400 music clubs, a brand new symphony hall, NFL and NHL teams, no state income tax, and a lower cost of living than most East Coast cities. It's high on my personal list of places to buy a home in 2008.
Good trading,
Graham
P.S. If you're interested in the Signature Tower or one of Giarratana's other projects, you can contact the company at 615-254-0555.
