Condo boom hits downtown SLC
Even with about 1,000 units coming in the next 15 months, prices are up and sales are brisk
By Lesley Mitchell
The Salt Lake Tribune
Article Last Updated: 02/11/2007 02:06:00 AM MST
Local realtor Babs De Lay in her loft apartment in the Dakota Building (Paul Fraughton/The Salt Lake Tribune )
When Luann Lakis and her family decided to move to downtown Salt Lake City from Orem seven years ago, it wasn't hard to find a good deal on a town home or condominium.
"You almost couldn't give one away," said Lakis. Sellers were so eager to unload units at bargain prices that Lakis and her husband purchased not one but two adjoining units in a downtown loft development. They tore down the wall between the two and created one large condo.
A decade ago - before the opening of The Gateway shopping center would jump-start development on the west side of downtown - condos weren't exactly in high demand.
Now Lakis, a real estate agent who once focused on single-family homes, sells mainly condos, town homes and lofts. She and her broker, Babs De Lay, who also lives in a downtown loft, have carved a niche in working with people willing to shell out from $160,000 to more than $1 million to be near the increasingly diverse mix of entertainment, activities, restaurants and retailers in the downtown area.
Although there are a number of established condo developments in and around downtown, scores of projects are on the way. In all, De Lay estimates that more than 1,000 condominium, loft and town home units will be finished in the next 15 months. Many are spoken for even before developers break ground, with potential buyers putting down $1,000 or more to reserve a unit.
Many of the condos will be within walking distance of The Gateway, which appears to be a strong draw among buyers.
Brian Muir makes an 80-mile round trip commute each workday from downtown Salt Lake City to his job in Provo. He makes the trek because he loves living near The Gateway and EnergySolutions Arena, and being close to extended events such as the Farmers Market at Pioneer Park.
Muir has lived in the downtown area for five years, including in a condo near the Salt Lake City Library. A few months ago, he closed on a unit in Pierpont Lofts, at 350 West and Pierpont Ave. (240 South)
"I like being able to walk across the street to shop, eat or see a movie," he said.
Developers are encouraged by the lack of available units in existing projects and by demand, which has pushed up prices sharply. The average price per square foot at the Dakota Lofts and Pierpont Lofts is up by nearly one-third from 2005 to 2006, according to De Lay. The Warehouse Lofts at 327 W. 200 South is up more than 40 percent.
If the sheer number of units isn't surprising, their price tags can be downright shocking to anyone who views condos as an affordable, entry-level alternative to single-family houses.
Few units are available from $100,000 to $200,000 - and those that are on the market are very small. One development is selling units starting at $150,000 that offer only 400 square feet of space; other units priced at $160,000 are only 650 square feet. Most condos being built now are priced at $300,000 and up.
Take Marmalade, Howa Capital's mixed-use development along 300 West between 500 North and 600 North that will include an 80-unit condo and town-home development.
Prices probably will start in the $300,000s for a condo, with town homes that have two-car garages starting in the high $600,000s, said Dru Damico, director of development for Howa Capital. The condos will have 900 square feet to 2,200 square feet; the town homes are about 2,200 square feet.
Months before construction is set to begin - and more than a year before anyone can even think about moving in - half of the first phase consisting of 50 condos and nine town homes already has been reserved.
Damico said his development's condos and town homes are designed to appeal to people who could afford a house in The Avenues or Federal Heights but who want to live downtown and desire new construction, not something built 100 years ago.
Architect Ken Millo agrees that there is a demand for this market niche. He's developing no fewer than three new condo projects and doesn't plan to stop there.
There's the 108-unit "loft-style" Metro Park West development at 341 S. 400 West. Millo said about half the units at the development - scheduled for completion in about 18 months - are reserved by people paying a $1,000 refundable deposit. Prices are in the high $200,000s to $600,000s.
The 40 units in his "urban flat" (read: single-level condo) development in the old Patrick Dry Goods building at 163 W. 200 South are priced at around $300,000. He said nearly 60 percent have been reserved since he began taking reservations about a month ago. Completion is expected by the end of the summer.
Then there's Broadway Park Lofts at 350 W. Broadway, an 88-unit loft-style development. The project, scheduled for completion in early 2008, is nearly sold out. The project includes 28 400-square-foot, two-story "live-work" units designed to appeal to artists and others who need a small work area with an upstairs living area.
Salt Lake City massage therapist Dennis Record is one of those people. Record, who lives in The Parc at Gateway condominiums, has reserved a 400-square-foot "live-work" unit at Broadway Park Lofts, where he plans to operate his own massage studio.
He plans to move in this fall or spring 2008. He'll live upstairs until late 2008 or early 2009, when Metro Park West is completed and he can move into that development. He said he will keep his office in Broadway Park.
Record said all the new condos being built downtown are going to change the feel of the city. "Salt Lake is not going to be the same city in another eight years. It's going to be a lot cooler."
Another new downtown condominium development is Westgate Lofts, just east of The Gateway at 328 W. 200 South.
The first phase, which includes a cafe and art gallery, has 56 standard units. Only seven units are available, with move-in starting in a week or two. A second phase, set for completion in five months, includes 17 town homes, half of which have been reserved. A third phase is set for completion in 18 months.
One development in which all the units are long spoken for is The Metro Condominiums, 350 S. 200 East. That 117-unit development is scheduled for completion in early 2008.
On another front, several apartment buildings in the downtown area are being converted to condos. They include The Armista, 555 E. 100 South; The Ruby, 435 E. 200 South; and The Parkland, 435 E. 100 South.
Kip Paul, an investment specialist with commercial brokerage Commerce CRG in Salt Lake City, said that in the past six months he has seen a half-dozen such deals and expects to see more.
With all the building activity, The Church of Jesus Christ of Latter-day Saints hasn't decided how many condos it will build in its City Creek Center project. Spokesman Dale Bills said the church might build as few as 300 units and as many as 700, depending on market conditions. Because the residential component of City Creek is still in the design phase, no reservations are being taken and no pricing information has been released.
With all the additional condos coming up in the next several years, there is plenty of speculation about how well sales and prices will hold up.
James Wood, director of the Bureau of Economic and Business Research at the University of Utah, worries about the market's volatile history of long and deep downturns. From the early 1980s to the mid-1990s, condo sales were very sluggish. "It's a market with more risk than single-family homes."
But interest rates are expected to remain attractive, and Utah's economy is expected to continue to do well in coming years.
Add to that strong job growth, continued population growth and the increasing popularity of living downtown, and they all bode well for the market.
"They may not all sell out as fast as the developers want them to," Wood said. "But in general, I think they are going to be successful."
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