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  #661  
Old Posted Feb 20, 2006, 10:38 AM
Kropotkin Kropotkin is offline
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Quote:
Originally Posted by GoldenBoot
As long as the housing market in Austin (and Texas for that matter) is continuing to heat up - it will be some time (~2008-2010 before one might see a "slow-down"). The entire state of Texas is bucking the National housing trend due to the fact that housing here is so undervalued! Until it approaches and surpasses the “presumed” value, Texas will not see a “housing bust” like the rest of the country is viewing at the moment.
I'd like to believe this, as I want to see tons of new hi-rise buildings downtown.

However, I think later this year will be the end of Austin's downtown condo boom. In other markets, the condo speculation cycle is rapidly collapsing. This is going to bring an end to it nationally, including Austin. So many people are about to be burned that speculation is going to dry-up everywhere, including in Austin. I am just extremely skeptical that real residents, true "end users" are going to show up in sufficient numbers to buy these places under construction and planned at prices that make the developers money. This has been a problem in other markets- speculators are buying and flipping these condos amongst themselves in a game of musical chairs. But who will actually _live_ in these places at these prices? "Real" residents just aren't showing up!

Let's face it- for the price of these smaller condos (~1000 sq ft or less), one can buy a 3000-4000 square foot house just outside Austin. While there's a lot of hype about downtown- which actually started during the late 90s tech boom- it's still very much a catch-22 situation. Downtown Austin is frankly pretty drab and empty, with only ~6000 residents. West Campus is 10x more an urban neighborhood than downtown right now. If however if it can reach a 'critical mass' of 20,000 residents then it may take on a sustainable life of its own that'll create its own demand in the decades ahead.

I am real anxious to see these planned projects turn ground, because they cannot stop at that point.
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  #662  
Old Posted Feb 20, 2006, 1:37 PM
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Just the beginning?

I just stumbled across this ad on Craigslist in the Austin real estate section:

1 bedroom/den 864 sq ft. To be completed/closing July 06. You pay me 18K and keep my deposits at Alamo Title (9k), plus inherit equity at my price of 199K for the unit. This is not a distress sale. Unit 717 see Milagocondos.com for complex.

Not a distress sale? hmmmm.... Sounds like a condo owner who's getting a little nervous.

These types of ads have become all too familiar in the DC market, only there's a huge edge of desperation as investors who have gone in and bought several pre-construction condos with little down and with the dream of flipping them are now facing a tough situation. Condos are nearing completion, no more gullible buyers around willing to pay a 20 to 40% price increase for the sellers' units, and now whopping mortgages plus condo fees are about to take massive bites from the sellers' asses. Oh, and then there's the problem with trying to rent their $450,000 - 650 sq. ft. one bedroom condos at a price that will cover their mortgage when apartment units are available all over town for a fraction of the price.

It's unfortunate that the condo demand in this country has been horribly skewed by greedy flipper investors with no intention on ever living in the units. That has made the demand for condos appear far higher than it really is. But now the condo frenzy that I've seen in DC and other similar markets has shifted quickly because sellers and developers have pushed prices beyond what buyers are willing to accept.

Actually, I agree with Kropotkin. I would like to see completion on all the new buildings going up in downtown Austin. I'd love to see downtown transition into a very liveable environment. But realistically, that's going to be a slow progression and not an overnight transition.

Everyone's eyes should be on the Milago project because it's the first "affordable" high rise condo to be completed in downtown, and almost all have been pre-sold. If you start seeing lots of units on the market in the next few months, then I'd say, "Houston, we have a problem."
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  #663  
Old Posted Feb 20, 2006, 5:32 PM
LookingUp LookingUp is offline
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Condo Owners or Investors?

Quote:
Originally Posted by crewer
Not a distress sale? hmmmm.... Sounds like a condo owner who's getting a little nervous."
It's not a "condo owner" that's getting nervous - it's an investor. The typical development cycle for high-rise condo project is 3-4 years. You can't get "real" buyers until you're within a year of completion, so Developers (or Promoters) allow people to "make believe" they're buyers with "refundable" deposits - that are routinely "flipped" to other investors.

The level of "speculation" in condo projects is what creates the bubbles and crashes. Until they figure out how to shorten the cycle to 18 months or aty leaste less than two years - the high-rise condo industry will always have this "smoke and mirrors" type of financing.

Milago is a Class-B condo project (read Apartment Style, not Luxury) and I have heard contracts have "flipped" 2-3 times. Each time they're flipped - the perceived value of the unit goes up because you have to pay for the "reservation" that get's flipped - this only makes it more expensive for the evenutal or actual buyers.

It isn't just this inefficient and lisleading for of "investor-financed" deals. The design and construction industries are still doing things the same way they did 100 years ago. While other industries have become more efficient the design and construction industries have seen little improvement in efficiency. It used to take a month to "build" a car - now they'reproduced in just hours. Certainly there's room for improvement in the "delivery system" for buildings.

INVESTOR NOTE: Please don't pay more than $250 PSF for Milago - it's low quaility construction (including EFIS) and the finishes rise only to "apartment grade."

Hopefully Austin will become a high-rise City, but the current proposals (Spring, Novare etc.) don't generate much confidence.
     
     
  #664  
Old Posted Feb 20, 2006, 6:43 PM
Kropotkin Kropotkin is offline
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Another basic truth about condos is that, outside of retirement areas (e.g., S Florida), they tend to only be built during the peak of real estate booms. Yet another sign of a condo boom is conversion of apartment buildings into condos-- something that's happening a lot in Austin at the moment.

Condos, at least in low-rise structures, normally are cheaper than single family homes on a per square foot basis. It's a a major red flag that new and old condos in Austin are selling for double that of new SFHs of equivalent age/quality right now per square foot.

Condo prices tend to go up much faster during real estate manias than SFH.. but they also drop much further in real estate crashes, too. By this logic, buying a newly-built condo is almost always a bad deal. You are virtually guaranteed to be "under water" for many years. Condos can be an awesome value (for living in, based on cost) if you buy them when the real estate market is considered "bad." SFHs hold their values better and are subject to less dramatic turns.
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  #665  
Old Posted Feb 21, 2006, 5:49 AM
LookingUp LookingUp is offline
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Condo Investment

Quote:
Originally Posted by Kropotkin
buying a newly-built condo is almost always a bad deal.
Tell that to the developers, buyers and investors in more than 500 new buildings this year. The truth is - people want their time back. They want to live where the action is - downtown. They want the amenities and the convenience.

Unfortuantely, you can't judge "high-rise condo living" by the product completed and promoted in Austin. Dallas is doing better. Houston is embarrassing.

For the first time "condos" are outpacing SFH in price appreciation and buyer interest. There is an incredible interest in moving back to our cities. Some cities will understand this and do well, others will miss the boat - again. In the 80s "suburban malls" challenged downtown retail - most cities lost. If cities can regain residents they can even get new retail - exciting neighborhood retail and recreate dynamic cities.

Austin needs 5,000 new residents downtown. This will change everything. The challenge is who will provide it? Spring appears to be an economic joke - it can't be built for the numbers they suggest. Novare's / Andrew's Urban "360" is an "apartment high-rise" that won't generate sufficient PSF sales prices to actually build it and Tom Stacy has spent a year promising "the tallest building in Austin," yet hasn't even paid for decent renderings. Maybe he can't find risk capital.

I hope it gets more promising. Other cities are having a great time. Check Charlotte, Seattle, Denver and even Cleveland. Austin has little to be proud of when it comes to downtown living. ACL and PlazaLofts are cheap. The new Milago is just an apartment building. 555 (Hilton) is trying to squeeze residential into a hotel floorplate.

Hopefully - things will get better. Keep Looking Up.
     
     
  #666  
Old Posted Feb 21, 2006, 4:56 PM
redirector redirector is offline
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The Case For the Milago Purchase

Coming onto a forum with dedicated Architects and construction types may be folly for someone like me, but I thought I would offer what I see in Milago, as I am a buyer both as an investor and as a resident.

The key to value is basic -- Location location location. And sustainable views. And direct access to one of the best downtown fitness/lake trails in the country. I paid the asking price for a west-facing low floor unit, park/lake views, and did so within 24 hours of this units appearance on the market, fending off other interested buyers. I would struggle more to pay asking price for an East-facing unit (ie, facing I35). Looking at the Austin Project Update map posted earlier on this thread, it appears Milago will retain a "closest to Town Lake" profile for some time, and in particular with the Lake immediately South and West of the building, it will always have nice unobstructed views and plenty of sunshine.

I rather like the smallish size of the building... it is very convenient to and from I35 and to downtown, serving a variety of job opportunities. When Leander begins running rail into the COnvention Center, that line will be walking distance to Milago. Very happy to learn of the 2nd street mall and the coming grocer there.

I did not see the value in the 1BR 864sq ft unit, but the basic 2BR/2BTH 1164 sq ft unit will be more value-friendly over time. This unit also has one of the few large walkout-terraces, with secure access to the trail. That will, I believe, be a valuable point of difference over time.

I am glad they did not specify sub-zero appliances to jack up the price. I am content with granite, hardwoods, and the 5 fixture bathroom. It seems to be reasonable quality expectations. Lighting, window coverings -- basically up to the buyer.

Having lived recently in Las Vegas and been a witness to the high-end madness that is going on there, the range of buyers for condos is driven by local economic/entertainment options. Austin's job base will have to pull in both permanent Downtowner residents and high-end entrepreneurs who travel so often to Austin that the schlepping to/from hotels becomes a detriment.

I also believe that the pricing paid for construction materials will continue to drive $/sq ft, so The Shore and other buildings will likely have a higher profitability hurdle rate.

I have worked in downtown Austin while living elsewhere, and bought a small rock duplex in Travis Heights... right at the 1999-2000 peak... got out in 2001 for "even money".

I am not renting the unit out, but will not be there "full time", either.

I would agree that if this were a decision for a single residence vs a SFH, I would struggle to justify it. But as the employment market grows and diversifies, there will be a growing number of mobile buyers with the resources to grab and hold one of these units for some time.

     
     
  #667  
Old Posted Feb 22, 2006, 6:09 AM
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Interesting observation. I guess I just wonder why people don't do any comparison shopping when looking at high-rise condos. They spend more time when comparing new cars before a purchase.

Milago's prices aren't warranted when you compare what you get compared to other offerings. The whole high-rise condo industry (accounting for much of the total commercial construction in the US) lacks any kind of objective analysis.

The single fact that Milago used EIFS on its exterior should be a huge warning sign for buyers - but they have no idea. Google it. It is the number one cause of "defective construction" litigation. It is used by developers because it's very cheap (inexpensive) compared to quality materials.

I hope you enjoy your new home - I agree it's a great location. Somehow I think the location should have warranted using quaility materials.

If you don't know what EIFS looks like - look at the exterior of PlazaLofts some night. It's beginning to warp and peel. Bad news for the owners - they have to maintain it - or sue the developer.

Hopefully Spring and Novare's 360 will use quality materials. Nobody knows because they haven't released any information yet - just floorplans which indicate it's just "apartment" quality - not luxury. We'll see.

The incredible move "back to our cities" shouldn't be compromised by poor design and poor construction. Austin is way behind other cities - maybe this means we're being more prudent. What's already been built doesn't create much confidence.

Looking Up.
     
     
  #668  
Old Posted Feb 22, 2006, 3:21 PM
redirector redirector is offline
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Milago

Thanks for the heads up. A cursory read of some of the issues indicate faulty/defective materials pre-2002, and in particular on wood-frame residential. I will ask Fairfield about their use of EIFS, hopefully they have modified the application process to account for this quite-public potential problem.

I had a leaky roof in of all places Las Vegas (annual rainfall less than 10 inches!), on a "well-built", premium grade condo by Christopher Homes, a lux-home manufacturer. It was faulty installation of ventilation/flashing, and the HOA sued the manufacturer, they covered it and there was no assessment, or cost to the homeowner.

Needless to say, my eyes are open concerning potential construction issues, and I am glad to be made aware of this particular one.

I wonder what the specs called for prior to Fairfield (ie, the old Raney St plan). There were price-point problems on the prior development, and two things have happened in Austin over the intervening time -- the tech boom hit Austin relatively hard, and construction material costs have soared during the recovery.

It's a balancing act. Perhaps I am one of the greater fools. We shall see. Thanks for the post.
     
     
  #669  
Old Posted Feb 22, 2006, 11:49 PM
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I believe Redirector made a good decision. The EIFS issue, of course, should be explored but my hunch is that the Milago builder is using EIFS in a reasonable way. We'll see.

My experience is that condos are especially risky when the they're located in not-so-desirable areas. I bought one in North Austin in 1986 and saw its market value plummet by 50% in three years during the real-estate crash of the late 80's. I rented the unit out after I bought a house and in 7-8 years the market value eventually rose to once again equal the purchase price.

I view my big mistake as having never really liked the condo in the first place. When I moved to Austin in '85, it seemed like everyone was telling me to buy something as quickly as I possibly could -- because the prices are going to go up faster than your income. So, I went ahead and bought something that I could afford but was never crazy about.

Of course, condo prices will fluctuate. I think the more the condo has going for it in terms of location, view, size, etc., the less steep will be the decline in value. During the 80's crash, I heard that the homes in Central Austin retained a higher percentage of their value than the ones father out.

All in all, if the condo is your home and you enjoy living in it, then you can never lose (as long as you can make the payments). With the Milago's location and your unit's view, I think you'll have a great time living there.
     
     
  #670  
Old Posted Feb 22, 2006, 11:56 PM
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Wow, you know what? We're getting a hefty number of people on here from Austin. Sweet! Welcome to forum guys.
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  #671  
Old Posted Feb 24, 2006, 4:46 PM
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La Vista on Lavaca is supposed to break ground on 3/8, that is if they get two last minute items from the city. All they need are some legal papers finished and then they are off.
     
     
  #672  
Old Posted Feb 24, 2006, 7:29 PM
Kropotkin Kropotkin is offline
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Quote:
Originally Posted by 420MM
La Vista on Lavaca is supposed to break ground on 3/8, that is if they get two last minute items from the city. All they need are some legal papers finished and then they are off.
About time.. that projects has taken forever.
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  #673  
Old Posted Feb 25, 2006, 12:08 AM
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Quote:
Originally Posted by 420MM
La Vista on Lavaca is supposed to break ground on 3/8, that is if they get two last minute items from the city. All they need are some legal papers finished and then they are off.
Awesome, I'll have to get down there and nag them for the height and other statistical goodies.
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  #674  
Old Posted Feb 25, 2006, 4:36 AM
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Quote:
Originally Posted by 420MM
La Vista on Lavaca is supposed to break ground on 3/8, that is if they get two last minute items from the city. All they need are some legal papers finished and then they are off.
This project has been in the works for several years. They think they can get $600 PSF, while Austin is around $350 PSF. They have NO pre-sales, no marketing effort, no financing - and apparently "no idea" about development.

Austin needs some good developers. We should be constructing several buildings and hundreds of units - the interest is there.

Let's hope it gets better.

Looking up. (*)(*)
     
     
  #675  
Old Posted Feb 27, 2006, 11:53 AM
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Just a heads up, I did a photo thread here of pics from the One American Center I took last October.
http://forum.skyscraperpage.com/showthread.php?t=99517
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  #676  
Old Posted Mar 1, 2006, 2:08 PM
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Some good news here.

From the Austin Business Journal
http://austin.bizjournals.com/austin/stories/2006/02/27/daily14.html

Cap Metro approves loan for rail cars

Banc of America Leasing and Capital LLC was selected to provide a $38.6 million loan for the Capital Metropolitan Transportation Authority to buy six rail cars for a planned commuter rail line.

The board of the Austin authority voted Monday to pick a lender for the rail cars, which will be provided by Stadler Bussnang AG. In September, Cap Metro entered a $32 million contract with the Swiss rail car manufacturer to provide six diesel-powered rail cars for the planned urban commuter rail service.

Chief Financial Officer Cynthia Hernandez says Cap Metro will use up to $34 million to pay Stadler for the rail cars, $3 million for spare parts, $917,000 for increases due to currency exchange fluctuations between the euro and the dollar, and $625,000 for borrowing costs.

The money will go into a fund set up by Cap Metro. As Stadler presents invoices, Cap Metro's board will vote on spending the money.

The 10-year loan carries a 3.8 percent interest rate.

Banc of America's was one of six proposals Cap Metro received. Hernandez says Banc of America offered the most favorable rates and terms.

Cap Metro is set to launch the commuter rail line in 2008, with service going from the suburb of Leander to downtown Austin. The first commuter rail car is scheduled to arrive in the fall of 2007.
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  #677  
Old Posted Mar 1, 2006, 2:21 PM
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And, I found this which is pretty cool.

From the Austin American-Statesman
http://www.statesman.com/business/content/business/stories/technology/03/1wimax.html

Wow, nice view...from roof of Dobie Center!

Ralph Barrera
AMERICAN-STATESMAN
AirBand Communications of Dallas plans to use transmitters such as these atop the 27-story Dobie Center near the University of Texas campus to deliver high-speed Internet access to businesses in and around downtown.


Ralph Barrera
AMERICAN-STATESMAN
AirBand's transmitter on top of Dobie Center already is up and running, and another one planned for Northwest Austin is expected to be in operation sometime next month.

WiMax raining from Austin's sky

Dallas company AirBand will offer broadband wirelessly to Austin businesses.


By Kirk Ladendorf
AMERICAN-STATESMAN STAFF
Wednesday, March 01, 2006

Over the next few months, some Austin businesses will get an early glimpse of a much-touted, next-generation wireless-networking technology called WiMax.

It's a sort of stronger and faster cousin to today's Wi-Fi "hot spots" that offer fast Internet access to patrons at some coffee shops, hotels, fast-food restaurants and airports.

AirBand Communications Inc. of Dallas is launching what it calls "pre-WiMax" service to business customers in town that want high-speed data communications links and other services, including Internet telephony. There's no industrywide standard for WiMax yet.

But it has gained widespread industry attention because it is fast and cheap and because numerous companies, including chip giant Intel Corp., strongly support it.

WiMax can send out far more information than other wireless technologies — well over 45 megabits per second — on its radio waves. In contrast, cable modem customers for Time Warner Cable's Road Runner service receive up to 5 megabits per second.

And it can send it much farther than other technologies. Wi-Fi signals fade after about 300 feet, but a WiMax antenna can send a broadband signal to a customer up to 5 miles away.

AirBand Communications says it will spend about $100,000 on the basic networking infrastructure that can tie together several hundred business customers in Austin.

As its customer base grows, the company will be able to expand its network for a relatively modest expense, management says.

Two Austin locations

In Austin, the first target markets are businesses in or near downtown and in the northwest part of the city near the intersection of U.S. 183 and MoPac Boulevard.

AirBand serves other cities, but Austin is its first new market to use the more advanced "pre-WiMax" technology. It is one of a handful of companies racing to build broadband communications networks in promising markets. Tech-savvy Austin seemed like a natural place to begin the new service, the company says.

"We have great technology, and we will have an unmatched product feature set," says Lisa Kolczun, the company's vice president of marketing. "It will come down to executing."

The company aims to target midsize business customers with between 25 and 500 workers, but it can deliver a 2-megabit-per-second broadband data connection for $450 a month for a three-year service contract and add Internet-based digital phone service for five employees for $100 more a month.

AirBand says it is offering a faster service for about the same rate that phone companies charge for T-1 service, which runs at 1.5 megabits per second over a traditional wireline network. The company also offers other services, such as virtual private networks, a highly secure way of communicating over public networks.

Its plan in Austin is to put up two transmitting stations, one on top of the 27-story Dobie Center tower near the University of Texas campus and one on a building in Northwest Austin. Each will be able to reach customers within 5 miles who are in a line of sight of the transmitter. The company says it also can reach customers who are outside its transmitters' line of sight by using signal repeater equipment. The company has to negotiate "roof rights" to set up receiving antennas on the buildings where its customers' offices are located.

Dobie antenna ready

The Dobie Center transmitter already is up and running, and the Northwest Austin antenna is expected to be in operation sometime in March. The company has begun talking to potential customers, but it hasn't signed any yet.

"The technology is there, it works and there is no reason it can't be deployed," says analyst Keith Nissen with market research firm In-Stat. "There is a lot of growth potential, and it doesn't take a lot of investment to set up a business service."

Going after midsize business customers makes sense, analysts say, because providers such as AirBand can offer discount prices for communications services and still make money because of the low investment required.

"Carriers like AirBand are targeting the higher-margin business markets. They are using the technology where it has an advantage," Nissen said.

In-Stat projects that about 3 percent of broadband subscribers, or about 8.5 million customers worldwide, will be connected via WiMax technology by 2009.

WiMax won't transform telecommunications by itself, the analyst said, but it will give business customers another lower-cost service alternative.

Mark Spagnolo, the CEO of AirBand, says his company recently raised $8 million from venture capital investors.

"We think the competitive situation is right now for someone like us," said Spagnolo, former CEO of Broadwing Communications in Austin, which operates a nationwide fiber-optic communications network. "We intend to use the funding to significantly broaden our offerings, expand our footprint and deliver truly integrated services over our wireless network."

Some experts expect WiMax eventually to become a mobile communications technology, transmitting data and other high-bandwidth content to users of cell phones or laptop computers. But Nissen and others say that is at least a few more years away.
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  #678  
Old Posted Mar 4, 2006, 6:14 AM
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High-rise Living?

Found an interesting site on the "future of high-rise living." Some group in Austin. Looks interesting, but hard to believe. 40% savings in cost and half the time. Sent an email, but haven't heard back yet.

www.NewCenturyLiving.com

Last edited by LookingUp; Mar 4, 2006 at 1:14 PM.
     
     
  #679  
Old Posted Mar 4, 2006, 1:32 PM
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Quote:
Originally Posted by LookingUp
Found an interesting site on the "future of high-rise living." Some group in Austin. Looks interesting, but hard to believe. 40% savings in cost and half the time. Sent an email, but haven't heard back yet.

www.NewCenturyLiving.com
Thanks for sharing that. Very interesting clip. I do agree that it's hard to believe.

It's interesting how they compare New Century Living to Novare by emphasizing how Novare offers small units with apartment style amenities.

He then goes on to compare New Century Living condos to others in terms of construction quality. He says "many buildings use styrofoam and an epoxy coating for the exteriors". As this is explained, pictures of the Milago and Plaza Lofts in Austin are shown as examples of poor quality exteriors which you discussed in this thread awhile ago. (Hey, LookingUp... do you work for New Century Living? LOL)

It's also interesting to hear about how they can keep costs down by shortening the construction process and making it more efficient. Sounds great in the clip. Not being in construction or design, I can't challenge their approach, but it sounds too good to be true. It's also hard to believe that any developer is going to pass those savings onto the buyer when they could be raking in the profits. Any comments on it?
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  #680  
Old Posted Mar 4, 2006, 11:02 PM
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Fast-track construction might save the developer a few bucks, but it's a pain in the ass for architects and contractors. It is a process which carries a great deal of liability and many architects often lose money on such jobs.
     
     
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