Next week the remaining developer owned condos in the Rhythm at Music Row will foreclose. This foreclosure will mark the end to a rather unconventional chapter for downtown Nashville high-rises and usher in a new, more welcomed chapter that will see market forces driving value.
On Tuesday, September 6th, Cadence Bank and Pinnacle Bank will take possession of 47 unsold condos in the Rhythm. Each bank will take control of their proportionate share of condos (Cadence Bank 39%, Pinnacle Bank 61% roughly) and plan to offer these condos to the public at reduced prices. There is no confirmation on initial pricing, but my estimates place the current value of the unsold condos at $235/ft in aggregate. One hurdle that must be overcome is the fact that the Rhythm will immediately lose FHA approval upon foreclosure. This will hurt the marketability of the condos by reducing the financing options available to new purchasers. But, there seems to be a plan. I have learned that Pinnacle Bank plans on immediately reapplying for FHA approval via HUD once the foreclosure is complete. The result will be a 30-45 day delay in a new purchaser’s ability to use a low down payment, FHA backed loan to purchase. It is my belief that each bank will allow a longer closing time in their contracts to make up for this delay, making it a moot point.
The long story short is that this foreclosure will offer condo buyers a value that has not ever been seen before in the Rhythm. I suspect there is a pent up demand for these condos as many buyers have been lying in wait for just such an opportunity. As a result, I cannot imagine a scenario, if priced correctly, where these remaining 47 condos take more than 9 months to sell.
Which Condos will be Available?
There is a complete mixture of 1-2 bedroom condos with all views on all floors from the 5th floor to the Penthouse. In my personal spreadsheet I show about 82% being 1 bedroom condos. I also show several of the premium view condos being available as well.
Is This Bad for the Rhythm?
Not at all. In fact, it may be the healthiest outcome for the Rhythm. There is no doubt that the remaining developer inventory (47 of 105 condos) has held true market forces at bay. Many buyers did not purchase in the Rhythm assuming there would be a better time to purchase in the future. This killed the momentum of sales and stunted the building’s true value. Once these remaining condos are sold, even at lower prices than market, market forces will be allowed to return. It is an imposed correction that we have seen proven many times in buildings like the Adelicia and Terrazzo.
When Can I Make an Offer?
Now. I would not wait until after the official foreclosure proceedings, you’ll be competing with too many others. If you are looking for the best view or highest floor, you better put eyes on this project asap. Contact me for complete details and to make an appointment to view these luxury high-rise condos in person.
Email: Rhythm@GrantHammond.com
Phone: (615) 945-7123
September 1, 2011, 9:55 pm
I’m not in love with this building. I’ve shown it a number of times, but never had an interested party. The facade and uber-private hallways make me think of a hotel. That being said, I do think these would make lovely second homes or pied-a-terres for musicians and the like on Music Row. Very turnkey and easy to leave on their own for extended periods of time.
I’d like to see you write a post on your stance regarding HOA regulated owner-occupancy rules. I’ve heard that Enclave and Bennie Dillon have instituted new maximums for investor units. I’m assuming they’re hoping to keep their ratios in line for future Fannie/FHA approval. I know Adelicia and Terrazzo regulate their available investor spots, but I don’t think Bristol has addressed it in any of their complexes. Isn’t BWE over 50% now?
September 5, 2011, 6:32 pm
Just a quick update. Of the 47 condos the banks will be taking back next week, there have already been 10 contracts submitted. In other words, should all of these offers be accepted, the Rhythm is down to 37 condos remaining. I believe this to be a strong indication of “right price” economics at work. Clearly, there is a pent up demand for premium Nashville condos at reasonable prices.
November 9, 2011, 11:21 pm
What’s really going on with this building? I haven’t heard of any marketing on the bank owned units but I heard they most have been contracted. What’s the latest on available units?
November 10, 2011, 9:37 am
Qink – it is true that neither Pinnacle nor Cadence Bank has done much advertising at all. It is also true that most of the foreclosed condos are under contract. We represent the 16 foreclosed Cadence Bank units and received multiple unsolicited offers immediately after the foreclosure in September. As a result half of the Cadence Bank condos went under contract within days. Since that point, we have sold an additional 2 condos, leaving us a total of 6 unsold. 3 of those condos are listed in the MLS in the foreclosures section. These are incredible deals in Nashville’s only boutique high-rise!
November 10, 2011, 9:55 am
Get me info…
November 13, 2011, 2:16 pm
There are currently 6 Cadence Bank foreclosures remaining at blow out prices. Shoot me an email for more information: Rhythm@GrantHammond.com
November 18, 2011, 10:41 am
December 30, 2011, 9:07 am
February 15, 2012, 10:06 am
It is now official, there are no more distressed properties left in the Rhythm. The last condo went under contract a little more than a week ago and has moved to pending.