In an update to my September 25th, 2009 article about the Encore Condos, I am pleased to tell you that the developers of The Encore have paid off their $63 million construction loan obligation. Led by local developer Tony Giarratana, the Encore has sold remarkably well during what many consider to be recessionary times in the national condo market.
The Encore is the first high-rise to accomplish this benchmark since Ray Hensler did it with his luxury condominium project called The Adelicia 3 years ago in Midtown. Interestingly, and perhaps admirably, Giarratana was also the first developer in Nashville to not only build a high-rise condo project in downtown, but also the first to sell a building out with his Viridian effort in 2005. The Viridian remains the tallest condo project in Nashville standing 31 stories tall and features Tennessee’s highest pool, located on the 31st floor itself.
What are the Encore Condos
Located at 301 Demonbreun Street, The Encore is a 20-story, 333-unit condo tower wrapped with 20,000 square feet of street level retail space. Only 50 developer owned condos remain unsold and incentives are being offered to new buyers. However, don’t expect to ‘steal’ a condo from the developer. Prices have remained very stable over the last 12 months and have sold steadily.
Why the Encore Sells Well
The three magic words in real estate: location, location, location. The Encore is located in the SoBro or south of Broadway area of downtown and sits directly behind the renowned Schermerhorn Symphony hall. It is within walking distance of every single major attraction in downtown including all concert venues, professional sporting events and Nashville’s riverfront. In addition, Tennessee’s largest construction project, the new Music City Convention Center, is underway just 2 blocks West, giving the Encore a bright future.
I highly recommend the Encore to condo buyers who are looking for a solid, bond-like investment who wish to enjoy all of what Nashville has to offer.
April 15, 2010, 7:10 pm
You “Highly recommend” buying in the Encore, as a bond-like investment? A day or so ago, in the article about the Nashville condo market, you said none were an good investment. ??? Should you wait or not?
April 15, 2010, 11:27 pm
Thank you for your comment. In the article above I refer to the Encore as a “solid, bond-like investment”, but I am not calling the Encore an investment property. Rather, for those who are buying a primary residence in downtown Nashville, the Encore represents a very safe investment that is not likely to fluctuate wildly in price as stocks tend to do. Buying a condo in the Encore is a “set it and forget it” type of purchase that won’t keep you up at night wondering if the development is going to be foreclosed upon or slip quietly into receivership. Tony Giarratana and Novare Development have done an excellent job of maintaining ambient pricing around the $265/ft range while still selling enough condos to pay their $63 million construction loan off in its entirety.
On the flip side, there could be other, more distressed developments that might present a bigger upside, but they also inherently have more present risk due to the reasons outlined above. If you are a pure investor who is looking for that upside, I would recommend waiting until a more distressed opportunity presents itself. The best opportunities are typically distressed individuals in stable projects like Encore, Adelicia, Icon, etc or they can be found in a developer or bank bulk sale. I suspect that due to recent events, a bulk sale opportunity may soon present itself in either Rolling Mill Hill or perhaps 5th & Main. Personally, should Wachovia decide to lower the condo prices in 5th & Main to the $150/ft level, I am a buyer.
April 23, 2010, 10:36 am
Unit 817 and more recently, unit 1514, have gone back to banks
through foreclosures. These may offer good buys from motivated sellers.
April 23, 2010, 10:39 am
Indeed they are. In fact, I represented the new buyer of #817 who secured a heck of a deal.
April 23, 2010, 10:55 am
Yes, $228/sf was a steal in that building. With so many units in the Encore and other condos underwater it show that being patient and doing your homework is worthwhile. How long do you think it will be before all those Icon units that sold for $350/sf plus start meeting the same fate?
April 26, 2010, 9:43 am
I suppose the Icon’s fate is directly tied to whether or not the current condo owners in that project can hold on until the developer can sell out their remaining condos. If the Adelicia was any lesson, it was a demonstration of how a building’s price can stabilize once a developer has sold all of their condos. If the Icon continues sales as they have recently, owners may only have to wait another 24 months until the building reaches that point, but I fear a slight slowdown in the market towards the end of this year. I do think that the Icon will sell out of their developer owned condos within 36 months. Can certain owners hold out that long? No likely. There will be blood, at least some.
April 27, 2010, 10:43 am
I more or less agree with your analysis as to the 24-36 mos needed for Icon to sell out. What I'm fuzzy about is how the “blood” of any uptick in foreclosures might muddy those waters. It seems like this would be likely to frustrate the developer's ability to continue holding the line on pricing which, in turn, would seem to increase the number of Icon condos that are underwater. All the experts say that when owners owe more than their units are worth they're more apt to walk away. At some point, I expect that buyers will begin insisting on a much heavier discount when buying into buildings that still face this risk associated with get to stabilization. We'll see though.
April 27, 2010, 3:43 pm
I more or less agree with your analysis as to the 24-36 mos needed for Icon to sell out. What I'm fuzzy about is how the “blood” of any uptick in foreclosures might muddy those waters. It seems like this would be likely to frustrate the developer's ability to continue holding the line on pricing which, in turn, would seem to increase the number of Icon condos that are underwater. All the experts say that when owners owe more than their units are worth they're more apt to walk away. At some point, I expect that buyers will begin insisting on a much heavier discount when buying into buildings that still face this risk associated with get to stabilization. We'll see though.