|By Steve Brown, The Dallas Morning News|
Knight Ridder/Tribune Business News
July 30, 2004 - When the Victory project added condos to its W hotel tower, developers knew there was a market for the high-rises.
But how many people want to live on a former industrial site next to a sports arena?
A lot, it seems. Construction is just starting, and most of the condos are spoken for. Developer Hillwood is already planning a second tower.
"We have reservations for north of 80 percent of the units," said Jonas Woods, president of Hillwood Capital. "This is way beyond what we anticipated the velocity to be."
That's the kind of buzz that could trigger a high-rise residential building boom in Dallas' Uptown district.
In addition to the W Dallas Victory Hotel and Residences, two more condo towers have been announced for the neighborhood. And two high-rise apartment buildings are already under construction.
"I don't know how deep the market is, but I think we are just cracking the surface," said real estate agent Kyle Crews of Allie Beth Allman & Associates. "People in Dallas now recognize that high-rise condos are a very viable real estate investment.
"That wasn't always the case," he said.
The history of Dallas high-rises has been predictable: Developers would build a project or two, and that would satisfy buyer demand for some time.
But since 1998, a half-dozen residential towers have been built in Uptown and Turtle Creek.
Mr. Crews – who just sold the last two units in the 21-story 1999 McKinney tower – said the base of buyers is growing.
"We are seeing people from Southlake, Flower Mound, Plano and the Park Cities," he said. "They are young professionals, empty-nesters and people from all walks of life.
"They like the security aspect of high-rise living," Mr. Crews said. "And they also don't want to spend their free time tending to lawns and painting the house."
The price tags
That carefree lifestyle doesn't come cheap.
Condos in the planned Residences at the Ritz-Carlton on McKinney Avenue will range from $800,000 to $6 million. Even with those price tags, developer Crescent Real Estate Equities has found buyers for more than 75 percent of the condos since the project was announced three months ago. The 70 residential units will be on top of a 216-room Ritz-Carlton Hotel.
"Our reservations are twice what we thought they would be," said Crescent president Denny Alberts.
Developers have raised prices on the remaining condos at the W, which started at $500,000 to more than $1.5 million. The 33-story tower is under construction across from American Airlines Center.
"Everything we have left is right at about $500 a foot," said Mr. Woods, who sold the rest for an average of $375 per square foot. "We sold much faster than we thought it would or we would have raised prices.
"Our crowd of buyers has been pretty much Uptown or North Dallas residents who currently live in a townhome or high-rise," he said. "And our buyers have been younger – we don't see the empty nester."
The latest tower will take luxury living to an even higher price.
The Cresta Bella tower announced recently near Turtle Creek will have 60 units priced from $1 million to $10 million. While the other projects will have an urban feel, Cresta Bella is wooing buyers with an estate-like private park, spa and huge outdoor pool.
The three new towers – the W, Ritz-Carlton and Cresta Bella – have about 210 condos combined.
Existing high-rises are selling well, too, said broker Judy Pittman.
"The inventory is really shrinking," Ms. Pittman said. "The older buildings have done extremely well – people are doing lots of renovations."
She said about six units are still available in the 21-story Vendome tower that she is marketing at Turtle Creek Boulevard and Lemmon Avenue.
Nationwide, condominium prices are going up faster than single-family homes. In the Dallas area, condo prices are up 7 percent so far this year, and home prices have stayed flat.
"I see units that are selling twice what they were originally purchased for in 1998 and 1999," said Mr. Crews, the Allie Beth Allan agent.
As in any hot market, there's the potential for excess.
"You have a lot of guys trying to get product in the pipeline," said broker Newt Walker. "The land prices are continuing to escalate – almost to the highest we paid in the boom of the '80s."
High-rise buyers are paying a premium for new units, said market analyst Mike Puls. "The sales pace is better than I anticipated. Right now, we have pent-up demand because the confidence in the economy has improved so much."
The owners of high-rise rental projects may take advantage of the market and convert their buildings.
The 20-story Ashton apartment tower on Cedar Springs and the 20-story Mondrian Tower on McKinney Avenue have about 400 units combined.
"We, like most developers, are aware of the condo conversion opportunities that are being pursued in some markets around the country," said Kevin Wisdom, who heads the Dallas office for developer Zoom Inc. "We are, in fact, successfully converting certain properties in Florida.
"However, we have made no decision to do so with the Mondrian," he said.
At least three additional condo towers are in the planning stage for Uptown, brokers say.
"The rumor mill has one building after another coming," said Mr. Woods.
"We are trying to get ahead of the crowd coming behind us."
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