The Condo Market

By: John Akin, senior vice president, Carter

Atlantic In 2005 and 2006, condominiums grabbed real estate headlines across the Southeast with their ever-expanding development. Touting new urbanism design and trends of reverse migration to our cities’ cores, developers scrambled to meet housing demand with newer, bigger and better condominiums.

Unfortunately, the long development timeline, combined with an untimely recession of epic proportion driven by the housing boom led to a bust for most condos started after 2006.

The trends that served as the foundation for would-be condo-dwellers are still alive and well; it’s mainly the market prices that have suffered. This set of circumstances presents an excellent opportunity for investment in distressed projects. Fresh capital is flowing into deals across the country, particularly in the southeast, where development was prevalent with investors buying projects at a fraction of their replacement cost. The new investors are typically using one of two strategies: turning the condos into apartments for the cash flow or, re-pricing the condos and proceeding with a sellout.

With developers resigned to the loss of equity on their projects, new investors setting realistic return requirements, and banks starting to get real about the actual value of their debt in these projects, the market has really accelerated its transaction pace. One example of this new activity in the condo market occurred in August, when The Atlanta Journal-Constitution reported ST Residential would resume sales at The Atlantic in Atlantic Station (pictured here), and The Brookwood in south Buckhead.

Carter is also active in this arena, having acquired City Federal in Birmingham. The iconic building has a vertical stretch of 325 feet making it the tallest residential structure in Alabama. We are pleased to expand our investment in condo turn-around opportunities with the acquisition of this landmark.

John Akin is a founding principal of Carter’s advisory services group where he serves as Senior Vice President. In this role, he provides strategic real estate advisory services to Carter clients across a variety of disciplines. Prior to joining Carter, John was Senior Vice President of Development and Investments at Novare Group for five years. While there, he successfully led the development and acquisition of more than $850 million worth of mixed use projects including 2,000 for sale condominium units, 700,000 square feet of office, 200,000 square feet of urban retail and a boutique hotel.

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