Mid-Town Residences

[Boston Guy]

I'm new to OKCTalk and to OKC, having just moved from New England. I have read with interest the recent history of the Mid-Town Renaissance and am surprised no one has yet stepped forward on a condo project like the Osler/Heritage. What's the hangup? Ther are a numbe of projects in Bricktown/Deep Deuce, but they all seem overpriced for the market. The Osler seems like a great project and to me a better location. Can it be done for less $/SF than some of the other projects like The Hill, or will Mid-Town support $260/SF?

[Steve]

Patience and welcome Boston Guy. The economy has complicated the Osler a bit, but it's still being tinkered with.

[onthestrip]

I agree with him though. How hasnt some other new construction happened already? Is there no other small apartment building or condo complex being talked about? A building with 6-12 condos would even do. It doesnt have to be something giant like the Osler. Im surprised no one has done something already.

[Steve]

I don't want to sound condescending here, so please forgive me for my bluntness: unless you've approached a bank in the past six months for financing for any spec housing, especially in an embryonic downtown market, you simply don't understand what it's like to get any project started right now.

I've talked to several developers and it's very ugly out there despite ongoing success with existing projects.

[mcgrawsdad]

Steve is absolutely correct...it is nearly impossible to get a new project financed right now. In fact, in a great number of deals, credit lines that were previously extended have been cut or frozen.

[soonerguru]

Steve is dead on.

[blangtang]

steve, please write an article on financing. I would like to know if any local lenders are still giving credit. or arent.

that might give some of us who listen to the national news a local perspective.

for real man...i just read a short book on energy financing. what about construction loans, what about development loans,what about commercial real estate loans? locally. the national news is starting to convince me that all those lending lines listed above are shut off for the meantime.
thx.

[flintysooner]

what about construction loans, what about development loans,what about commercial real estate loans? locally. the national news is starting to convince me that all those lending lines listed above are shut off for the meantime.

Year ago or so we needed 35% LOIs (Letters of Intent) from reasonably "credit worthy" tenants plus owning unencumbered land for a small, retail project. Now we need 60% signed leases from "credit approved" tenants. In other words there are not many tenants that qualify for even 3 year leases anymore much less 5 or 10 year. And the percentage of loan to land value is reduced. Deflation at the beginning.

Larger projects are on hold or canceled because big box retailers have either entirely canceled or delayed openings until 2011 at earliest. Junior boxes don't go without the big boxes plus many have serious financial problems. In line, strip, and pad spaces don't go unless there are the big boxes and junior boxes to help defray the development and construction cost.

Even if that were somehow resolved there is no equity available for projects from traditional sources. The equity players are investing in opportunities provided by the markets disarray as exacerbated by the unintended consequences of government intervention. If 100% or even 1000% returns are available it is hard to justify lowly 8% or worse real estate investments.

This is just the first round.

The second round will be the scores of acres of commercial real estate that will start to come on the market as the financially vulnerable retailers (perhaps 1/4 to 1/2 of all retailers) begin to fail and close.

That in turn will spur additional land deflation.

That will create more toxic assets for banks which will either kill them entirely or cause them to further tighten standards.

Which will make it even harder to actually do a project.

[metro]

steve, please write an article on financing. I would like to know if any local lenders are still giving credit. or arent.

that might give some of us who listen to the national news a local perspective.

for real man...i just read a short book on energy financing. what about construction loans, what about development loans,what about commercial real estate loans? locally. the national news is starting to convince me that all those lending lines listed above are shut off for the meantime.
thx.

Please don't, we don't need any more fear mongering, even if just facts are reported, enough people will buy into the fear and panic. Our local economy is doing quite well compared to the national economy. We don't need to scare everyone locally to hang on to their money or don't go looking for loans when they may be able to qualify.

[Steve]

It's a fine line, Blangtang and Metro. You're both on target, and that's what so frustrating for me as a writer and reporter. My job is report the news. And yet there is a risk that with my words I could be making news by delivering the final death blow to a developer still trying to get something going. This is a quandry we're facing a lot these days. I do believe the constant drumbeat of economic despair delivered by the 24/7 cable news outlets has actually made matters worse.
This job is a lot more fun in the good times.
That said, Blangtang, the Oklahoman's business staff is looking at several angles of this credit crunch and how's it's impacting the local economy, residents and businesses.
I promise I will always do my best within the resources given me to deliver the news you want and need.
-Steve

[Boston Guy]

I understand all the issues brought on by the economic downturn and the inability to finance many of these projects, but let me go back to my original question...

Having just moved from New England, I felt we had found an area of the country that had more reasonable housing prices. If you look in the suburbs, new construction can run $80 to $120/SF, more for high end. Even here in Heritage/Mesta the high end tops out at $160/$180. How can some of these new developers bring product to the market at $260/SF and expect to compete or be succesful? I've heard the two large projects have combined sales you can count on one hand!?

Can a smaller project get done in mid-town and be succesful at $150-$175/SF?

[Steve]

Yes and no. It depends on how important parking is to the buyer. In Boston where you come from (my wife's hometown), some of the best urban housing has no parking whatsoever and that's just fine with folks in Boston. They have the T, they have great public transit and all is well.
But in downtown OKC we have COTPA so parking is deemed critical and it jacks up the price of construction.
Developers are trying to get to the price point you're talking about - Ron Bradshaw is skirting that range now with the Leslie he's planning.
But again, it's a question of financing in this current market. And for the Osler, I just don't know how that's going to end up.

[The Old Downtown Guy]

. . . Can a smaller project get done in mid-town and be succesful at $150-$175/SF?

The answer is absolutely YES. There are many opportunities for smaller projects in the 5000 Sq. Ft. Range. The project might be a duplex with a garage apartment or a live work three story townhouse with a small rental unit incorporated into the plan. The key ingredient is that it be an owner occupied project. Getting into multiple units. . . say six or eight, investor owned, condo or rental adds an element of risk that most lenders don't have the stomach for right now . . . because as usual, they are way over reacting.

And Midtown is the perfect area for small owner occupied residential projects. Excellent location, low land costs, falling construction costs and way low long term fixed interest rates.

Michael

Pray For World Peace . . . pass it on

[mcgrawsdad]

I understand all the issues brought on by the economic downturn and the inability to finance many of these projects, but let me go back to my original question...

Having just moved from New England, I felt we had found an area of the country that had more reasonable housing prices. If you look in the suburbs, new construction can run $80 to $120/SF, more for high end. Even here in Heritage/Mesta the high end tops out at $160/$180. How can some of these new developers bring product to the market at $260/SF and expect to compete or be succesful? I've heard the two large projects have combined sales you can count on one hand!?

Can a smaller project get done in mid-town and be succesful at $150-$175/SF?

Yes...a project in midtown could be completed and marketed at 150-175 and still be highly profitable.

[mecarr]

The Olser would be great if it turned into a residential complex as it lies really in the heart of midtown. Other than the Seiber apartments, there are no other apartments & condos around there.

[metro]

The Olser would be great if it turned into a residential complex as it lies really in the heart of midtown. Other than the Seiber apartments, there are no other apartments & condos around there.

Um, what about the Harvey Lofts? Also the Garage Lofts aren't too much farther away. Classen Glen, Legacy Arts, Sycamore Square is also about 3-4 blocks away from Plaza Court too.

[mecarr]

Um, what about the Harvey Lofts? Also the Garage Lofts aren't too much farther away. Classen Glen, Legacy Arts, Sycamore Square is also about 3-4 blocks away from Plaza Court too.

Legacy & Sycamore are at Kerr & Walker and are 10 blocks away. Plus you'd have to walk across some sketchier areas. The Garage is at 13th and Broadway, closer, but still not in the heart of midtown in my opinion. We need something within just 3-4 blocks of plaza court.

[BoulderSooner]

Um, what about the Harvey Lofts? Also the Garage Lofts aren't too much farther away. Classen Glen, Legacy Arts, Sycamore Square is also about 3-4 blocks away from Plaza Court too.

i was getting ready to post pretty much the same thing ..

and just an FYI .. the last unit for sale at harvey lofts is priced at 170-185 sqft

[metro]

Legacy & Sycamore are at Kerr & Walker and are 10 blocks away. Plus you'd have to walk across some sketchier areas. The Garage is at 13th and Broadway, closer, but still not in the heart of midtown in my opinion. We need something within just 3-4 blocks of plaza court.

Okay, well you still have Classen Glen and Harvey Lofts within 3-4 blocks.

[The Old Downtown Guy]

Legacy & Sycamore are at Kerr & Walker and are 10 blocks away. Plus you'd have to walk across some sketchier areas. The Garage is at 13th and Broadway, closer, but still not in the heart of midtown in my opinion. We need something within just 3-4 blocks of plaza court.

As the urban neighborhood developes, distances of ten blocks will become less and less a deterant to walking to a downtown destination and the increased numbers of middle income residents will delute the presence of a small population of the less fortuante that leads to the preception of some our urban areas as sketchy.

Michael

Pray For World Peace . . . pass it on

[taylor83]

I recently found out that there is a 4-unit apartment building near the Harvey Lofts. The residents pay around $900/mo for a loft-style townhouse that is about 850 sq ft. The units have a washer/dryer, hardwood floors, granite counter tops, stainless steel appliances, and one reserved covered parking space. If you drive by, it is the smaller brick building with black metal awnings to the west of Harvey Lofts. I found this listing on craigslist and apparently that is the only way you can contact the landlord, at least from what I could tell.

And just FYI, there is one unit at Harvey Lofts that is priced at ~ $135/sq ft.

[johnnyincog]

Legacy & Sycamore are at Kerr & Walker and are 10 blocks away. Plus you'd have to walk across some sketchier areas. The Garage is at 13th and Broadway, closer, but still not in the heart of midtown in my opinion. We need something within just 3-4 blocks of plaza court.

it's 8 blocks from kerr and walker to plaza court at 10th and walker. ive walked/jogged that road often and wouldn't decribe it as sketchy. ive walked home from mcnellies late at night without problem as well. its seems one of the problems we have is our perception of what is "walkable." the main problem seems to be as long as it is easier to get in our car, drive, and park we don't consider something "walkable."

[BoulderSooner]

I recently found out that there is a 4-unit apartment building near the Harvey Lofts. The residents pay around $900/mo for a loft-style townhouse that is about 850 sq ft. The units have a washer/dryer, hardwood floors, granite counter tops, stainless steel appliances, and one reserved covered parking space. If you drive by, it is the smaller brick building with black metal awnings to the west of Harvey Lofts. I found this listing on craigslist and apparently that is the only way you can contact the landlord, at least from what I could tell.

And just FYI, there is one unit at Harvey Lofts that is priced at ~ $135/sq ft.

do you have info or a link to the harvey loft unit that is priced at 135 a sqft??

[taylor83]

Unit 101

It is unit 101 on the first floor and I believe it is owner-occupied right now.

[PLANSIT]

^Yeah, the only bad thing about it is the fact that it is "garden level" and the windows are in the back. Regardless, it's still a great value.