News
140 West Building Goes Up
CHAPEL HILL - Downtown Chapel Hill’s second biggest condominium project got under way last January after more than a decade of planning.
The $55 million 140 West development will have 140 condominiums, shops, a public plaza and an underground garage at the intersections of Franklin, Church and Rosemary streets. The building will stand four stories tall along Franklin Street; it will “step back” to eight stories tall at the center.
The town is paying the developer, RAM Development Co., $7.245 million using tax-exempt borrowing for underground public parking spaces, $45,000 per parking space, after construction.
Construction on the project will take at least one more year.
The Death of the Fringe Suburb
DRIVE through any number of outer-ring suburbs in America, and you’ll see boarded-up and vacant strip malls, surrounded by vast seas of empty parking spaces. These forlorn monuments to the real estate crash are not going to come back to life, even when the economy recovers. And that’s because the demand for the housing that once supported commercial activity in many exurbs isn’t coming back, either.
By now, nearly five years after the housing crash, most Americans understand that a mortgage meltdown was the catalyst for the Great Recession, facilitated by underregulation of finance and reckless risk-taking. Less understood is the divergence between center cities and inner-ring suburbs on one hand, and the suburban fringe on the other.
It was predominantly the collapse of the car-dependent suburban fringe that caused the mortgage collapse.
In the late 1990s, high-end outer suburbs contained most of the expensive housing in the United States, as measured by price per square foot, according to data I analyzed from the Zillow real estate database. Today, the most expensive housing is in the high-density, pedestrian-friendly neighborhoods of the center city and inner suburbs. Some of the most expensive neighborhoods in their metropolitan areas are Capitol Hill in Seattle; Virginia Highland in Atlanta; German Village in Columbus, Ohio, and Logan Circle in Washington. Considered slums as recently as 30 years ago, they have been transformed by gentrification.
Simply put, there has been a profound structural shift — a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.
The shift is durable and lasting because of a major demographic event: the convergence of the two largest generations in American history, the baby boomers (born between 1946 and 1964) and the millennials (born between 1979 and 1996), which today represent half of the total population.
Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.
The millennials are just now beginning to emerge from the nest — at least those who can afford to live on their own. This coming-of-age cohort also favors urban downtowns and suburban town centers — for lifestyle reasons and the convenience of not having to own cars.
Over all, only 12 percent of future homebuyers want the drivable suburban-fringe houses that are in such oversupply, according to the Realtors survey. This lack of demand all but guarantees continued price declines. Boomers selling their fringe housing will only add to the glut. Nothing the federal government can do will reverse this.
Many drivable-fringe house prices are now below replacement value, meaning the land under the house has no value and the sticks and bricks are worth less than they would cost to replace. This means there is no financial incentive to maintain the house; the next dollar invested will not be recouped upon resale. Many of these houses will be converted to rentals, which are rarely as well maintained as owner-occupied housing. Add the fact that the houses were built with cheap materials and methods to begin with, and you see why many fringe suburbs are turning into slums, with abandoned housing and rising crime.
The good news is that there is great pent-up demand for walkable, centrally located neighborhoods in cities like Portland, Denver, Philadelphia and Chattanooga, Tenn. The transformation of suburbia can be seen in places like Arlington County, Va., Bellevue, Wash., and Pasadena, Calif., where strip malls have been bulldozed and replaced by higher-density mixed-use developments with good transit connections.
Reinvesting in America’s built environment — which makes up a third of the country’s assets — and reviving the construction trades are vital for lifting our economic growth rate. (Disclosure: I am the president of Locus, a coalition of real estate developers and investors and a project of Smart Growth America, which supports walkable neighborhoods and transit-oriented development.)
Some critics will say that investment in the built environment risks repeating the mistake that caused the recession in the first place. That reasoning is as faulty as saying that technology should have been neglected after the dot-com bust, which precipitated the 2001 recession.
The cities and inner-ring suburbs that will be the foundation of the recovery require significant investment at a time of government retrenchment. Bus and light-rail systems, bike lanes and pedestrian improvements — what traffic engineers dismissively call “alternative transportation” — are vital. So is the repair of infrastructure like roads and bridges. Places as diverse as Los Angeles, Phoenix, Salt Lake City, Dallas, Charlotte, Denver and Washington have recently voted to pay for “alternative transportation,” mindful of the dividends to be reaped. As Congress works to reauthorize highway and transit legislation, it must give metropolitan areas greater flexibility for financing transportation, rather than mandating that the vast bulk of the money can be used only for roads.
For too long, we over-invested in the wrong places. Those retail centers and subdivisions will never be worth what they cost to build. We have to stop throwing good money after bad. It is time to instead build what the market wants: mixed-income, walkable cities and suburbs that will support the knowledge economy, promote environmental sustainability and create jobs.
140 West Franklin is going to Festifall!
Support 140 West Franklin and Festifall! Coming to Chapel Hill on Sunday, October 2nd!
Sales Heat Up at 140 West Franklin
Could the real estate market be picking up? All signs point to yes as far as 140 West Franklin, the downtown mixed-use development, is concerned.
Seventy-three homes have been sold within the $55 million project, which is now in the early construction stages. Five contracts have been signed in the past month. Several new homeowners have combined two neighboring units to create a larger floor plan. Prices range from the $200,000s to the $600,000s.
As the excavation at 140 West Franklin concludes, the two cranes, one 160 feet and the other 200 feet tall have been installed on site.The next steps are the building of the foundation and the subterranean parking levels. In the fall, the building will begin to rise above the construction fencing. Early next year, the structures will be topped off as the interior customization process ends. John Moriarty & Associates, Inc., the general contractor, expects the project to conclude fourth quarter 2012.
When completed, the buildings will stand four stories tall along the street before stepping back to eight stories tall at the center. There are 140 signature homes above the retail level with open floor plans.
140 West Franklin Passes Halfway Mark
CHAPEL HILL - Construction on 140 West Franklin is still in progress, but developers are well on their way to selling all 140 available residential units.
“In a positive way, we didn’t anticipate the velocity of sales that we’re seeing this summer,” says Shari Meltzer director of marketing at Ram Development.
Meltzer says the company has officially sold more than half of its 140 available units.
“And that has been a very pleasant surprise and I think that’s attributable to the fact that people have been waiting on the sidelines and see that we’re for real, so they are coming in and we anticipate that that will continue.”
140 West Franklin will be home to condominiums, retail space, a public plaza, and an underground parking garage.
Residential units will range in price from $300,000 to $800,000 and there will be 18 condominiums set aside for the Community Home Trust. Those units will be sold to first time home buyers that make less than 80% of the median income.
Community Home Trust executive director Robert Dowling says the sale and marketing of those 18 units isn’t quite on his radar just yet.
“We cannot qualify people to purchase those until we’re within 6 months of closing,” he says. “We’re gathering names to put on a list, we’re not going to be actively marketing 140 West until early in 2012.”
Right now, Meltzer says most of the current buyers have some kind of a connection to UNC and are usually alumni, faculty, or hospital staff.
“The attraction to 140 West Franklin is of course the town of Chapel Hill and the university, so proportionately, most of the people have a heartstring connection to the town.”
Meltzer says she expects to see more potential buyers express interest as the project continues to develop.
“There are people who want the location and are willing to commit now, and then you’ll see a different group of buyers come in when they can touch and feel and get a sense of what they’re view will is going to be and they’ll start coming in probably after the first of next year.”
The finished product is still 18 months away and commercial sales are only just beginning.
140 West Franklin at Sales Midpoint
CHAPEL HILL - The developers of 140 West Franklin have passed the halfway mark on units under contract and have begun negotiating leases for the project’s commercial space.
Ram Realty Services has 75 of its 140 units under contract, Chairman Peter D. Cummings said in an interview Monday. That total includes 18 units priced to meet the town’s affordable housing guidelines, as well as about four buyers who have purchased adjoining units and plan to convert them into a single home, he said.
The seven latest contracts have been signed since two 160-foot and 200-foot cranes arrived this summer to begin building the eight-story project.
“I think that has created more of a sense of urgency,” Cummings said. “It gives you a sense - if cranes are on site and concrete is being poured - that you can go from point A to point B to point C.”
The new contracts on Franklin Street stand in contrast to an industry survey Monday that found homebuilders remain pessimistic about the depressed housing market. But 140 West Franklin is not a typical project, Cummings said. Some buyers are downsizing; some are purchasing a second home. Last week a professor of geophysics and his wife signed a contract to buy a unit at 140 West Franklin after driving from their home in West Palm Beach, Fla., to Burlington, Vt., checking out possible places to retire.
Cummings said the project’s location in the heart of the college town is the key to sales. He doesn’t even think buyers are basing their purchases on near record-low mortgage rates of just over 4 percent.
“For our customers, mortgages are to some degree a non-issue,” he said. “The majority are cash customers.”
That’s a difference between 140 West Franklin and downtown’s other high-profile mixed-use condominium project, Greenbridge. Developers of that 10-story project have said some buyers backed out when they could not obtain loans. The project now faces foreclosure as the partners seek an investor to take on the debt.
Ram Realty has no debt yet on its project, Cummings said. The company is financing current construction with its own money and does not expect to draw on its Wells Fargo loan until late this year or early next year. About 55 percent of the $55 million project cost will be financed, Cummings said.
Once site excavation ends, workers will begin building the foundation and the underground parking levels. The building will begin to rise above its sidewalk fencing this fall, and the structures will be topped off early next year. General contractor John Moriarty & Associates Inc. expects to wrap up the project in the fourth quarter 2012, according to a news release.
140 West Franklin Sales Heat Up as Cranes Come In
Ram Realty Services is delighted to announce that 140 West Franklin Residences have sold 73 homes with five contracts written in the last month. The installation of two cranes in July have changed the Chapel Hill skyline and triggered intense interest from buyers. Several new homeowners have combined two neighboring units into a larger floor plan designed for their own ideal living requirements.
“As I travel throughout the United States, particularly the Southeast, where Ram’s business is focused, construction cranes are a rare sight these days. We are pleased that 140 West Franklin is one of those rare places and we attribute this to the allure of Chapel Hill and our unique location within the Town,” said Peter D. Cummings, the Chairman of Ram.
As the excavation at 140 West Franklin concludes, the two cranes, one 160’ and the other 200’ tall have been installed on site. In the construction sequence, the next steps are the building of the foundation and the subterranean parking levels. In the fall, the building will begin to rise above the construction fencing. Early next year, the structures will be topped off as the interior customization process ends. John Moriarty & Associates, Inc., the General Contractor, expects the project to conclude fourth quarter 2012.
140 West Franklin, the approximately $55 million project sponsored by Ram with financing from Wells Fargo, is being built as the focal point of the Town of Chapel Hill’s Downtown Economic Development Initiative. The buildings will stand four stories tall along the street before stepping back to eight stories tall at the center. There are 140 signature homes above the retail level with open floor plans. The Town of Chapel Hill has created a dedicated web page for 140 West information at http://www.townofchapelhill.org/140west.
Rooms with Views
The 140 West Franklin condominiums are truly in the heart of Chapel Hill. The view featured in this article is approximately what will be seen from Unit 612, according to Kim Counts, who handles the marketing of 140 West Franklin. Unit 612 will be a three bedroom/two-bath terrace home of 1,918 square feet and will list for $689,900, Count said. For more information, call 919-942-3381 or online at http://www.140westfranklin.com.
Long-time Chapel Hill real estate broker Mark Zimmerman is one of the first to purchase a condo at 140 West Franklin. “140 West combines two very special — and unique — benefits to those who love Chapel Hill,” Zimmerman said. “Our front door is right on the center of Franklin Street, and the view out our window overlooks the whole town.”
Ram Realty breaks ground on 140 West Franklin with company’s own money
CHAPEL HILL - The developer of 140 West Franklin, the luxury condominium and retail project under way downtown, says the project will succeed because of its location, financing and luck.
Ram Realty Services rebid the eight-story project after the recession hit and contractors were hungry for work, chairman Peter Cummings said. That reduced costs from $76 million to $55 million, including the town’s parking structure.
“We’re lucky,” Cummings said in an interview at the project’s Franklin Street sales office. “If the town approval process was 12 months faster we might have started building at the wrong time.”
The possible foreclosure of the Greenbridge project has some asking about 140 West Franklin, which along with the redevelopment of University Square, will transform downtown Chapel Hill. Greenbridge has sold only 36 of its 97 units, and Bank of America has begun foreclosure proceedings to take control of the property.
But Cummings said 140 West Franklin, with underwriting from Wells Fargo, is fundamentally different from Greenbridge.
“We’re very conservatively capitalized,” he said.
Projects like 140 West Franklin historically would get up to 90 percent financing and use customer deposits to build, he said. About a year ago Ram decided not do that, Cummings said.
“The fact is there’s no debt on this property,” he said. “We won’t start to draw on the loan until probably sometime in the first quarter of 2012.
“Everything you’ll see happening - excavation site work, creation of the underground parking, creation of the foundation probably all the way up the superstructure - is going to be done with equity.”
Cummings would not say how much equity Wells Fargo required, and the bank would not discuss the loan. But he did say that, post-crash, banks are now loaning 50 percent to 65 percent of project costs and “that’s the range we’re in.”
Finance experts suggested Ram is spending its own money because it has no choice. And one said the company is taking a big risk.
Bank typically require a percentage of units to be under binding contracts before they loan money, said Steve Cumbie, executive director of the Center for Real Estate Development at UNC.
Ram has contracts on about half its 140 planned condominiums, including all 18 units priced to meet the town’s affordable housing guidelines, Cummings said. It needs a dozen more before it can draw on its loan, he said.
“We’re pretty confident we’re going to get there,” by early 2012, he said.
Building now takes advantage of cheaper construction costs, but also presents a risk if the market for high-end condos doesn’t materialize, said Tony Plath, associate professor of finance at UNC-Charlotte.
“They’ve got a lot of guts,” he said. “You’ve got to have a lot of appetite for risk in this market to do that. They obviously have a lot of confidence in their ability to create a building that people want to buy.”
Cummings didn’t want to discuss Greenbridge in detail. He did say his project, because of its more central location, will be “green” without marketing it as such because people won’t have to drive to go out.
“Greenbridge’s trademark was eco-friendly,” he said. But “80 percent of the die is cast by virtue of where you put it. That trumps a lot of other decisions you make [in building materials, HVAC systems]. Our marketing message is not a green message. What we’re offering, I think, is location.”
The condos in 140 West are now priced from one-bedroom units in the $290s to two-story, 3,000 square-foot terrace homes for $1.3 million. Cummings said he’s not worried that Greenbridge’s troubles will lead to a price war if that project lowers prices to quickly sell more units.
“You don’t want to see a project fail in the middle of town,” he said, then added: “I shouldn’t say fail. You don’t want to see a project in stormy seas. The one thing I’m saying categorically is we have a better location.”
Staff writer Katelyn Ferral contributed to this story.
Big Changes in Chapel Hill
Ground Broken at 140 West
Representatives from the town of Chapel Hill and Ram Realty Services gathered Wednesday morning for a ceremonial groundbreaking to mark the start of construction of the 140 West mixed-use project in the heart of downtown.
The $55 million, eight-story development will include 140 condominiums, 26,000 square feet of retail space and a public open space above two levels of underground parking.
The project, which has been in the works for more than a decade, will go on what is now the town’s Parking Lot 5 at the intersection of West Franklin and Church streets.
Chapel Hill Mayor Mark Kleinschmidt said it will knit together the two ends of the downtown business district by replacing the parking lot with a retail and residential gathering place.
“That surface parking lot reflected a missed opportunity to connect East and West Franklin Street, to generate economic activity 24 hours — or at least 18 hours — a day, to enhance the tax base, and to be place where residents and visitors could come to enjoy downtown,” he said. “It added to the argument that Chapel HIll had missed the mark. It was an emptiness. Now, I’m excited that this project will fill that gap.”
Pre-construction preparation of the site began last month, with the closing of the parking lot and the removal of trees. Construction is expected to take about two years.
When it is finished, one of the underground parking levels will be owned and operated by the town of Chapel Hill, which will pay Ram $7.5 million for it.
The 140 West project was the first of several big downtown developments to be set in motion during the past decade, although one of the others, the two-towered Greenbridge condos a few blocks to the west on Rosemary Street, got built faster and opened last year. Another major project, the renovation of the University Square shopping center directly across Franklin Street from 140 West, is in the planning stages.
140 West Franklin: What Will it Mean for Downtown?
Parking Lot No. 5 is closed and construction on 140 West has finally, officially, begun. So what does that mean for the future of downtown Chapel Hill?
The speakers at Wednesday’s groundbreaking ceremony came not to bury 140 West, but to praise it; and everyone at the event had only the best things to say about the massive development project and the impact it’s expected to have on the town.
Ram Realty chairman Peter Cummings believes 140 West represents a major improvement to the existing space. “It will help to stitch together East and West, by removing a surface parking lot and replacing it with residences, shops, and a public space,” he said.
But of course, the loss of the parking lot is exactly what critics have been identifying as one of the worst features of the project; and it’s still yet to be seen whether there’s enough demand to sustain another large mixed-use development in the midst of an economic slowdown.
Those and other concerns have made 140 West a controversial project from the beginning. On Wednesday, though, Mayor Mark Kleinschmidt called 140 West an “inspiration” that has already brought excitement—and new investment—to the downtown.
“Folks around the country talk about Chapel Hill as a very special place,” he said, “but it takes constant work and energy to make sure it stays that way.”
As for parking, the Town has taken steps to offset the loss of Lot No. 5—and when it’s done, the project itself will include 337 new parking spaces, far more than Lot 5 ever offered.
“It’s been a number-one concern,” says Ram Realty project manager, Jon Keener, “and I think the Town’s done a fantastic job…and once the project is built, those gains in parking are just going to make the town better.”
And in a year that saw the town’s commitment to the downtown called publicly into question, there’s no denying that 140 West has the potential to get people interested in Franklin Street again—even before the first brick has been laid.
Future 140 West resident Bill Spiegel says he’s excited already. “I live in the country,” he says, “and I have not focused on downtown for many years. So I’m happy to be contemplating a move into the city, where I can…go back to my college years, of being downtown all the time.”
That’s exactly the response developers and town officials are looking for. Whether that will translate to the community as a whole remains to be seen, but the outlook is good for the long-term impact of 140 West—and it’s certainly an honorable effort.
via 1360 WCHL
Ground Breaks on Chapel Hill Project
January 6, 2011
CHAPEL HILL — With the ceremonial strokes of six shovels, ground was broken Wednesday at 140 West to set the stage for construction of a long-awaited $55 million mixed-use project downtown.
Peter D. Cummings, chairman of Florida-based Ram, said 140 West will connect east and west Franklin Streets and breathe new life into a once vibrant business center.
“First, it will simply bring more people and life and energy to the street,” Cummings said. “And secondly, it will help to stitch together east and west by removing a surface parking lot and replacing it with residences, shops and a public space containing an extraordinary sculpture that has been designed by Mikyoung Kim.”
Mikyoung Kim, a world renowned public artist and landscape architect, has been hired to design the public plaza and its centerpiece sculpture.
When completed in about two years, 140 West, set back from the corner of Franklin and Church streets, will stand four stories tall along Franklin Street before stepping back to eight stories tall at the center.
In addition to 26,000 square feet of ground-level retail space, there will be a two-level, 337-space underground parking deck with a dedicated public parking level owned and operated by the Town of Chapel Hill.
The residential portion of the project will include 140 signature homes built above the retail level to bring new residents into the downtown community, including 18 that are earmarked for affordable housing.
Mayor Mark Kleinschmidt said the decades-old discussion about 140 West has inspired similar development throughout the Franklin Street corridor and beyond.
Kleinschmidt cited the Greenbridge mixed-use development, the 300 East Main Street project in Carrboro and the University Square redevelopment across Franklin Street from 140 West as examples of projects inspired by conversations about 140 West.
“We all need to reflect on the fact that this project here on this lot is more than just creating a mixed-use space on this property,” Kleinschmidt said. “It has served as an inspiration for additional private investment all through the corridor, and it didn’t just stop at the Chapel Hill line either.”
Town Manager Roger Stancil said the fact that the groundbreaking for 140 West is happening in such a tough economic environment is a testament to the town’s financial strength and the vitality of its partner, Ram.
“There aren’t many places these days having this kind of groundbreaking happen in their downtown,” Stancil said. “And between this project and the University Square project across the street, they will only both contribute to strengthening and enhancing the Chapel Hill mojo that we still have and making it even stronger and brighter.”
via The Herald-Sun
