The Inner Southeast. The Wedge West of Wells (We3). I don’t know if there is an accepted name for this stretch of Reno turf bordering on the "bungalow distinct", but this ignored patch of ground was set to change downtown Reno as we know it. Forget the Montage, Riverwalk, Belvedere, Arterra, Wingfield Towers and other planned projects. What was going on sort of organically behind the Lake Mill Lodge along the Truckee was going to be the real game changer for downtown and the whole SE, bringing real people, real families into the community. And it still may happen.
Grant’s Landing was going to add several hundred units to the mix.
Thoma Lofts on South Virginia had 33 units in the pipeline.
Ryder had almost a whole city block tied up at Sinclair / Pine / Ryland / River Rock.
Pine Street Partners has an interesting group of parcels assembled along the river, looking for a zoning change to MF-21.
In the world where 8 on Center was "sold out" and making $500,000 downtown lofts look possible, the Townhouses@Holcomb Place boldly went forward while the experienced developers applied the breaks. The developer started assembling the land in late 2004, eventually controlling at least 3/4 of the block (and probably had options on the rest). In September 2007, Affinity Bank green-lighted the 16 unit first phase of the project with a $5,480,000 loan.
The finished project is a bit strange, but the units are really nice. The developer had a lot of code issues to deal with, and Reno was pretty new at dealing with this sort of urban infill development. Still, a couple critical design issues were botched:
– Only one garage space was provided. Even if the neighborhood had improved as anticipated, buyers at the half a million range demand more than one secure parking space. 8 on Center provided 2 (granted, they were so tiny that the City’s definition of parking space was subsequently rewritten!).
– Half of the units back up to each other across a 20 foot wide or so courtyard / yard area. That’s 20 feet bedroom window to your neighbor’s bedroom window. Reno just isn’t ready to be that "urban" yet. The model unit added a translucent film to the windows, which really wasn’t too bad.
Ferrari Lund had the the preconstruction listing with prices around $500,000. It was pretty clear that those prices would not be achievable to everyone. Chase came aboard for a one year listing term about a year ago, when the townhouses were ready for occupancy. I rarely have sympathy for Realtors, but I’ve made an exception in this case. They fronted the cost of the 12 page glossy brochure, all the print media, and all the agent time to babysit the weekly open houses. At the last listing prices of around $240,000, I don’t think they would have recovered their hard costs even if they had sold every unit.
Not one unit sold. Pricing kept dropping, until it hit about $360,000. This was basically short sale territory, since the bank had about $342,500 into each unit. The last list prices centered on $240,000 and still no sales. The agents weren’t allowed to talk to the lender directly, and the developer really didn’t have to care at that point. The developer cut off the water and power to all but the model unit. When the water dries out in a toilet trap, sewer gases are allowed to back up, so you can tell what sort of chance the Realtor had when show the units. With out electricity, those high end alarm systems don’t do much good, but the developer seems to have dodged the bullet on that one – no break -ins occurred to my knowledge.
The construction loan got extended a couple times, finally to 1 October 2009. The NOD was filed on 2 October. Which is when I was asked to take a look at the property by a client who was looking at buying the whole shebang.
My first thought was "what would it take to move these 16 units today?", and I posed the question to the Dude and a couple of RRB readers who follow the neighborhood. We all came up with $160-175,000 (the agent, when finally asked, told the bank $150,000). To profit, my client had to factor in about 10% future transaction costs, holding costs, and at least a 30% profit margin to cover the risk. This put the net value of the units at about $105,000 to an investor, or about $1,700,000 for the entire 16 unit project on a $5.4M loan. We were about to offer $1.5 to the successor bank to Affinity, then Corus went under and put 350 competing units at the Montage in potential competition at fire sale prices. That hasn’t happened yet, but still may. My client walked.
So when you look at Holcomb Place, don’t just look at the ill fated project itself. You need to consider the context of what the neighborhood was slated to become. The bigger players still have all their holdings (though Grant’s is for sale) and will someday move forward with projects in some form. We3 will still be a game changer for downtown Reno. The question is when.
PS: I finally got to write this post up because I got Dyson to Rancho San Rafael dog park for the first time today and wore him out. BB, this one’s for you, you old softie!
Grand Wazoo
Well done Mike, as always.
One thing I’d like to draw attention to – the “sold out” moniker on 8 on Center. As Mike mentioned some time back in another post, 8 on Center never “sold out”. Although certain downtown development blogs trumpeted the sold out status on the eight $495K condos in the project, the developers only ever sold four of them, kept four for themselves, and somehow lost one to foreclosure on a deal I don’t understand. That “sell out” at the time was made to be a big deal by some Kool Aid drinkers, demand would exceed supply for this type of project in urban Reno after all went the proclamations, when in fact it never ever happened. It was all bullsh!t 24×7.
NorthwetRenoMe
Hi Mike,
Talk about coincidence. I received this e-mail today from a realtor who was selling these units.
—————-
Hello Perry,
Just thought I’d give you the latest update on the Townhouses on State Street, as you may recall the bank took them from the builder and appointed a Receiver to manage the sale and they are now back on the market priced at $159,900. Please let me know if your interested in purchasing a unit I would be happy to assist you with that process. Have a wonderful holiday season.
Tom
Mike, you commented on density … “that’s 20 feet bedroom window to your neighbor’s bedroom window. Reno just isn’t ready to be that “urban” yet.”
When we toured developments by a prominent national builder of semi-custom home communities, including 4,000+ S.F. tract homes southwest of the noisy shotgun club, and up in Arrowcreek, as well as in SS, they all seem to be packed in like that, maybe 12 – 15 feet from the house to the side lot line. I concluded then that much of the newer housing in Reno already reflected dense urban living.
Downtownmakeoverdude
Grand Wazoo if you are referring to myself touting 8 on Center being sold out, I mentioned it ‘once’ on my own blog, when the developer first told me, so your comments about ‘trumpeting’ are as dramatically skewed as the past predictions on this blog that homeless bums would constantly be urinating all over the doorsteps of 8 on Center and breaking/vandalizing the glass doors because of the neighborhood it is in. Whether 4 sold or 8 sold, I really don’t care, it’s nicer to look at than the closed run down graffitied falling apart pizza parlor that formerly occupied that lot.
Good post, Mike. Living so close to this area, I was pretty bummed when the plans for this area fell apart.
Re: Townhomes, I was surprised when the developer told me he was moving forward…my first question was ‘how did you get financing?’ Mike M and I have had several lengthy discussions about Townhomes and what price point it would take to sell them, and I’ve always guessed from the beginning those would never sell above $150,000-$160,000…but if NorthwetRenoMe received a letter with that price point already, then perhaps $90,000 to $120,000-ish might sell one or two. Maybe. A couple of things you neglected to mention about the neighborhood is the section-8 housing project just to the west, and right across the street between State and Mill, the run down multi-unit low-income Victorian nestled between Birtha’s and the nicer Victorian Office Building, and the quite-frightening backyards of the homes on Pine Street that all of the south-facing Holcomb Place units overlook. Pricing aside, those ‘might’ have a factor in why no units have sold. Maybe if all 3 projects had been built out, the overall package would be more appealling.
I believe the Grant’s Landing land was rezoned to commercial, and is currently for sale at $20 PSF. I was hoping Ryder Homes would get at least far enough in their project to demolish that hideous old industrial brick building on the corner of Mill and Holcomb…alas not to be.
SkrapGuy
With all due respect, Mike, this isn’t really very hard to figure out.
Nothing warms my heart more than to see all these places having gone down in flames. $500K for these places? Well, sure, on stated income, no-doc, neg-am, liar loans to 20 year old college student waitresses?
All these places were nothing more than the bubbled up greedy dreams of the developers, builders, and realtors associated with them. They all regarded themsleves as frickin’ geniuses while standing in the middle of the biggest bubble in history.
I hope these greedsters and the bubble they rode into town on NEVER again breathe a breath of life. EVER.
I shall celebrate when these places sell for $75,000.
Joey canolli
It’s clearly a transitional area that i personally still find highly desirable. I have great hope for this particular area of downtown!