Condo boom gets south push on SoCo

Condo boom gets south push on SoCo

Written by Christi Covington Friday, 13 June 2008

Four urban living projects filled with condos and lofts are coming or expanding on South Congress Avenue, but they are a little less expensive than some of the developments just a few miles north, with prices starting in the low $100,000s. That is because they are all south of Hwy. 71.

“We are offering some alternatives for those who want to be 10 minutes from downtown and see the vision of being on South Congress, south of 71 and they really don’t have a lot of options because they can’t afford downtown,” said Urban Space’s Will Steakley, who handles sales for two of the developments.

Ford Shanley with Pauly + Presley Realty has also seen the opportunity of this area, which is dominated by mostly older retail centers and automotive repair shops.

“Land is cheaper,” he said. “You have other South Congress developments like the SoCo Lofts. They are expensive, super expensive and in a better location, but people still want to be on South Congress.”

The attraction

Cost of property and a South Congress address were not the only attraction for developers, Steakley said. It helped that in 2005 the nearby residents supported a neighborhood plan promoting denser, mixed-use zoning on South Congress. Mark Walters with Austin’s neighborhood planning department remembers the community specifically asked for something eclectic and “funky,” wanting a more modern approach for their area, often considered the edge of town.

Then last year, the city made the neighborhood even more appealing for these types of projects with the Vertical Mixed Use Overlay District, which allows some development concessions in the areas it covers, said Melissa Laursen, a city senior planner,

By definition, a VMU building has a mixture of retail and commercial uses on the ground floors and residences on upper levels to promote a pedestrian environment and encourage transit services. The concept is buses or trains are more likely to go where a large number of people live versus traditional housing. South Congress was one of the highlighted thoroughfares chosen for this designation. Although the overlay has not gone into effect for this area yet, Laursen expects it will before the fall.

“What makes South Congress attractive for mixed-use development is the vacant and underdeveloped land,” Walters said. “It is a primary north-south arterial. There are lots of opportunities for developers.”

What is coming

Both Steakley and Shanley are involved with the projects being built in the area dubbed by the city as the South Congress Combined Neighborhood starting at Hwy. 71 and including everything south to William Cannon Drive.

ZIP code 78745 is now targeted as an entry-level market, Steakley said. He does not expect it to stay that way for long, but for now he has seen a 20 to 40 percent price cut on housing from one side of Ben White Boulevard, or Hwy. 71, to the other.

“The buyers are going to get a direct benefit of the developers buying it at a third or a quarter of what the land costs north of 71.”

Steakley handles sales for both the Village on Congress development and the existing Bel Air Lofts, which is in the process of expansion. For the Village, Steakley said the developer, Richard Coons, purchased the property around two years ago. When it was appraised recently, it was worth two-and-a-half times what he paid for it.

“You are seeing land values are going up,” Steakley said. “What these buyers are getting is a direct benefit of what the developer got.”

The Village, with prices ranging from the low $100,000s to the low $300,000s, is nearing construction with site work already in progress. Once completed, it will have a mixture of retail and urban housing, including modern town homes and condos.

“We didn’t want to gate this community,” Steakley said. “We kind of wanted to create this vibrant mixed-use atmosphere and you can’t gate it off. So this will allow neighborhoods to come here and go to the coffee shop if they wanted to.”

This initial segment is expected to be ready starting in early January 2009. If all goes as expected, Coons plans to build a second phase with more emphasis on retail across the street once part of the portion on the west side is sold. Phase two could be ready by 2010.

Steakley also launched Bel Air’s sales June 5 for the almost completed phase two of the existing loft project. Twenty-six new condos are on the market, ranging from $260,000 to $350,000. Before Steakley, Dale Jacobson, a Coldwell Banker real estate agent who recently worked in Miami’s condo market, handled sales at Bel Air.

Jacobson said Austin developers were comparatively and appropriately more cautious and slow to build. He has seen high interest in the condos with perhaps a little decrease in buying—but not too much.

“My feeling and sense is we saw the worst downturn last year in October and November, and now things will start to slowly move upward. It is kind of the two-steps backward, one step forward,” he said. “Lots of people are looking.”

Like Jacobson, Shanley thinks the condo market is strong and growing. His firm is working with 16 urban living projects, including the SkyBridge development, which is situated just off South Congress on the adjoining North Bluff Road. Any decrease in the real estate market is less seen in this housing category, he thinks.

“Overall, I would say [the slowdown] has filtered the people who are just shopping, those who don’t really have the money to buy,” he said. “We are having the same amount of closings.”

At SkyBridge, site work has begun. Actual construction will not start until 75 percent of the first phase is sold. It has almost reached that point, according to Shanley who took over sales for the project two months ago. He expects phase one will be finished in Spring 2009.

Once the site of the St. Elmo Tel, another project dubbed South Urban Lofts is also planned for South Congress, according to the City of Austin, although developer Mitch Ely was unavailable for comment. It is planned to have 5-story buildings with 162 units and 18,000 sq. ft. of retail and restaurant space.

• Bel Air Lofts
  • 4801 South Congress Ave.
  • Cost: $260,000 - $350,000
  • Size: 1,190 - 1,470 sq. ft.
  • Time line: Construction was recently completed on phase two.
• Village on Congress
  • 6000 South Congress Ave.
  • Cost: $119,900 - $339,900
  • Size: 625 - 1,825 sq. ft.
  • Time line: Site work has begun with the first buildings complete in January 2009.
• SkyBridge
  • 604 North Bluff Road
  • Cost: $139,000 - $309,000
  • Size: 800 - 1,800 sq. ft.
  • Time line: Construction begins as soon as 75 percent of phase one is sold. Expected completion is spring 2009.