High Rise Condominium projects now on Hold
Not even two years ago, it seemed as though you would hear about a new condo project every week in Reno, NV. Now that market has begun to slow, some developers are putting a hold on their construction. However, I don’t think this comes as a surprise to many people. With today’s market and economic climate, fewer buyers are able to find financing, and therefore current inventory seems to just sit on the market. So holding off on construction seems like the sensible move. In combination with new market trends, construction costs are on the rise as well. Just in the last few years, construction costs have risen from around $225 per S.F. to $425 per S.F. for downtown high rise construction.
Although it may sound like terrible news for developers who now must put their projects like the Arterra which is planned for the NW corner of Liberty and Sierra, and the Waterfront Towers on the SE corner of Island and Sierra, it is in fact somewhat of a blessing in disguise. Had they planned on breaking ground earlier, they could have found themselves in an even slower market, with even greater construction cost. “Unlike the development of single-family housing where you can phase construction, vertical development is a zero sum game,” said Fernando Leal, developer of the Montage. “Either you build the whole building or you don’t.” Project that have already started construction in downtown Reno and the surrounding area, have no choice but to continue until it’s finished.
Developers who broke ground early got lucky. Such projects as the Montage, the Belvedere Towers, Riverwalk Towers, and the Palladio are already seeing their buyers moving in, and are well on their way to selling out. Plus they avoided most of the price increase for construction.
However, there is still hope that there is strong enough interest for downtown living, that will give existing structure projects, like the Comstock conversion a good chance of success. Plus, the slow market for condos is still better than that of single family homes. The amount of unsold inventory among condos in Reno and Sparks Nevada is actually decreasing, whereas single family homes are not.
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Well said.