There was an article in the Richmond Times-Dispatch the other day about things looking up on the sales front at Ginter Place Condominiums. For those of you not familiar with the project, it was a historic tax credit conversion - state credits only - of the old Richmond Memorial Hospital into sixty nine (69) luxury condominiums, marketed towards downsizing Baby Boomers who loved the Ginter Park and Bellevue neighborhoods but didn't want the huge house any more.
Well, for reasons that are not the developers' fault at all, the Ginter Place project has been languishing. Only fifteen (15) units have been sold to date. Reasons for that:
1. It hit the market in October 2008. The housing market was in the process of meltdown. It was a scary, scary time. No one was moving anywhere.
2. Meanwhile, credit markets contracted, if not completely froze. AND, in an almost death-blow to larger condominium projects, the FHA changed its financing rules for condominiums and would no longer provide FHA financing unless and until 51% of the units in a project had been sold. So, if you've got 69 units to sell, you have to sell 35 units to buyers with cash or conventional financing (20% down or more) before later purchasers in the project are eligible for the most favorable financing product out there. Well, most folks were conserving all the cash they could, because the general economic situation was so daggone scary. And many folks didn't want to put 20% down for the exact same reason.
[BRIEF ASIDE ON WHY FHA FINANCING IS SO GOOD: First, it has the lowest down payment requirement, only 3.5% of the purchase price of the property. Second, it accepts the lowest credit score, 580-620 scores are eligible. Lastly, it provides close to market rate interest rates for these buyers, almost as good conventional buyers with the best credit scores. On the down side, you do have to pay for private mortgage insurance ("PMI") for five (5) years.]
3. Even if you could find a cash or conventional buyer, a lot of them had a house to sell. And they couldn't sell their house.
4. Lots of people are reluctant to be the earliest adopters in a large-scale condominium project. What happens if the other units don't sell? This concern is magnified in a down market.
5. With respect to Ginter Place, the neighborhood association had extracted a DEED RESTRICTION from the developers, prohibiting the use of the units as apartments. That really tied the developers' hands when the market went south. In the normal world, the developers would have rented out the unsold units to keep the project afloat, then sold the units when the market turned. I find it pretty incredible that they didn't just let the bank take the entire thing back.
So there are the market-based and project-based reasons Ginter Place has suffered in a completely awful real estate market. But IMHO there has always been another issue with this project and several others - Monument Square at Willow Lawn Drive, Rockett's Landing right across the City line in Henrico on the river - that has made the sales even slower going in this market. Here's my theory: Baby Boomers buy condominiums for the "urban" experience. They want to be able to walk places. Or they at least don't want to have to get into a car for everything. They want proximate access to products and services that take care of most, if not all, of their needs.
So I actually have a proposed solution. Maybe folks will think it's goofy as all get out. But this is my proposal for Ginter Place. You aren't quite close enough to shops and restaurants and activities to achieve that walkability that makes the Fan/Museum District/Carytown so desirable. Yes, you could walk to MacArthur and even Bellevue and the few shops and restaurants there, although it's not a short walk. And you can hop across that wacky intersection of Hermitage and Westwood to make it to Kitchen 64. But a walk to the Boulevard corridor isn't easy to do because there aren't any sidewalks, and you have to get past the No Mans Land under the interstate overpass on Boulevard.
So.....how about running a trolley service for your residents? It could run up and down the Boulevard corridor, from Ginter Place south to the Byrd Park tennis courts, with stops all along the Boulevard. It would run north all the way down Lakeside, to the Lewis Ginter Botanical Garden. People could hop off to go to a ball game, or to go to the Virginia Museum, or to walk through Carytown and shop and have dinner. They could go to the Lakeside Farmers Market or have tea at Feathernesters. Start slow, and run it at set times on the weekends. See how it goes. Maybe the City of Richmond could help subsidize it, if it's successful, and it could be opened up to anyone. And you don't even have to rely on the City to make it happen. Just call Buck Ward at Richmond Trolley Company. Maybe two private enterprises could make this a win-win for both sides.
Maybe this is the worst idea in the world. But as I look at the condominium projects over the last several years that have succeeded, and those that have had a difficult time, the idea of flipping the model comes back to me over and over. If you don't have the work and play right there, figure out a way to make it there. In other words, if it won't come to you, bring your people to it. The idea was "if we build it, they will come," even without an additional retail and commercial component. In a booming economy, with the hyperinflated buyers' market, maybe that made sense. But in this world, it has turned out the buyers come if the promised new urbanist ideal - the "work, play" of the "live, work, play" mantra - exists in some form or can be seen coming in the not-too-distant future. Cf. West Broad Village as a good example of that.
So, if you don't have "work, play" as part of your project, and it's not realistically close, make it realistically close. Just a theory. Thoughts and discussion would be greatly appreciated.
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