When “lite” beers first emerged in the market there were a number of attempts to introduce them to the mainstream. One of the more popular promotions involved celebrities, mainly from the sports world, who argued whether the beer was “less filling” or “tasted great.” The dialogue was always reduced to:
“Less Filling!”
“Tastes great!”
In the end, as you might imagine, both were right.
Such was the debate among Nashvillians when high-rise condos began rising in the urban core/business district. Many felt developers were overbuilding, while others felt a city of this size would absorb the inventory.
Not to deal too much in ancient history, but there had been a moratorium on residential development in the downtown area from the 1960s until the late 1990s. During that period and into the 2000s, there had been a trend nationally of downtown loft living, yet Nashville had none.
In 2003, Tony Giarratana, a charismatic, progressive developer who had the success of the Cumberland under his belt, undertook what no developer had ever attempted in Nashville and announced plans to construct the 29 story, 305 unit Viridian smack in the middle of downtown. And, in a city where price per square foot is everything, offered the units at a price of $298 per square foot.
“Holy Cow! He’s crazy!!! Belle Meade houses don’t bring those prices. What’s he thinking? It’ll never, ever fly!’
Well, it flew. As the project was completed, unit by unit sold and those who had the foresight – OK, luck – to buy early made a killing with many selling for $75,000 to as much as $100,000 over the original offering price. With a modest $5,000 down, many experts felt that the buyers at Viridian would walk away rather than close. However it worked.
Near Vanderbilt, on the site of the venerable Peking Garden, Ray Hensler began to presell a different condominium genus, the Adelicia. Hensler’s initial offering price was $348 per square foot and he proposed to build 186 units. He sold out and they closed on time.
Giarratana and Hensler had different products in markedly unique locations, but were clumped in the high-rise condo package by most. Today, the Adelicia is selling for $390 per square foot, while the most recent Viridian sales price was $280 per square foot. That allows the early buyers in Viridian to profit, while all of the original buyers in the Adelicia should be ahead.
As Belle Meade is seen by many of the naysayers as the most secure real estate in the city, it should be noted that the average price of a home in Belle Meade was $287 per square foot in 2006. It is now $240 per square foot. Therefore, in 2006, a person would have faired better financially having bought a Viridian or an Adelicia than having purchased a Belle Meade property.
Yeah, but what about all the others? When the Icon opened for sales, some may recall, it sold all of the original 237 units in 36 hours. With the $5,000 down, the outsiders felt that these would never close. However, the Bristol development group thought that they would and amended their original plan of selling 237 condo and holding 200 units as rentals. They placed the 200 units previously designated as rentals on the condo market.
Across the street, the Terrazzo began to rise with its 109 units and, on Demonbreun, The Rhythm’s 105 units had its cranes at work. Simultaneously, Giarratana began work on the Encore, a 333 unit development. Not to mention another 200 or 300 units appearing in smaller projects.
A city the size of Nashville devouring 305 Viridians and 186 Adelicias – 491 units – is one thing. But another 1,200? In providing more Belle Meade perspective, there are 1,100 homes in all of Belle Meade. It won’t work. It didn’t. At least, not at first.
While there was overbuilding, there was also a recession and a global financial meltdown. Hardly anything survived in other cities, but here most of the communities pulled through.
Today, the Icon has closed 352 sales, a Nashville record for one development. The Encore has closed 305, tying Giarratana personal record with the Viridian, a record that will fall this month. Terrazzo has sold over 100 units. And Rhythm has 62 sales with seven pending.
Of course, most of these sales are at post-crash prices, but there were no fire sales, as many predicted.
With the units being absorbed as quickly as they are, there will be a shortage before more high-rises can be constructed. Those who have bought are safe.
I love a story with a happy ending.
These were the “tastes greats.” There are some that are “less full.”
Richard Courtney is a real estate broker with Pilkerton Realtors and the author of Come Together: the Business Wisdom of the Beatles and can be reached at [email protected].