With the housing market in a nosedive, with the financial system in panic, Durham architect Scott Harmon broke ground last month for a downtown condominium project.
"I'm hyper aware and very grateful," he said this week.
Mangum 506 is a two-building project with 2,600 square feet of retail space and 21 residential units. It's going up on the site of what was, until a few weeks ago, a parking lot across Mangum Street from Public Hardware.
Harmon and partner Andrew Phillips (since joined by Susana L. Dancy) retained Maverick Partners of Durham as sales agent for Mangum 506 in 2005. But it was not until August that their M506 LLC obtained a building permit for $1,377,043 worth of construction.
That same month, they closed a loan with Harrington Bank of the Triangle for up to more than $3 million, according to Durham County records.
These days, that seems both risky and almost miraculous. City economic-development director Alan Delisle said this week that "it remains to be seen" how the economy's troubles affect projects in downtown's pipeline.
"There's a lot of uncertainty," he said.
Harrington Bank did not respond to The News & Observer's request for comment, but Harmon has his own opinion on why the loan came through.
"It really goes back to the reasons I wanted to do this in the first place," he said, "which was that no one was catering to the entry-level market with small, efficient, affordable spaces downtown that you could buy."
Condos at Mangum 506 run from 627 to 1,220 square feet and are priced from $169,900 to $289,900. For comparison's sake, the one unit still available at Greenfire Development's Durham Kress, on Main Street, has 1,646 square feet and is listed at $424,000. Trinity Lofts on Washington Street has 12 of 17 units available, according to its Web site, running 1,144 to 2,150 square feet and $224,900 to $469,000.
Harmon has reasons practical and philosophical for going after the "small, efficient, affordable" niche.
"I don't want to be competing with all of those people," he said; moreover, "when catering to the working-class market, the number of people that can consider your project are much greater."
Across the country, downtown-residential projects have tended to target the "high end," said Harmon, a longtime downtown booster whose Center Studio Architecture firm has worked on a number of downtown renovations, such as the Toast restaurant at Five Points and the Studebaker Building on Duke Street.
"I want Durham's downtown revitalization to have more breadth than that," he said. "I want there to be options for everybody."
While downtown-condominium sales and construction have stalled nationwide since the "credit crunch" began in 2007, many developers have redefined projects as rental apartments -- a niche that has held up relatively well as home buying has become increasingly problematic. Downtown Durham has plenty of apartments coming on the market -- West Village's second phase, the Golden Belt renovation, the Old Bull building at American Tobacco -- and among those tenants Harmon sees potential customers.
"There are a lot of people that land in downtown some of these larger rental projects," he said. "They decide that they want to live here in downtown and this is an easy project for them to go from renting to buying."
For a lot of downtown renters, he said, mortgage payments for one of his condos would be less than their rent anyway -- assuming they can get a mortgage in the "present environment."
To get his construction loan, Harmon had to pre-sell at least 10 of his 21 units. Contracts are signed, but closing the sales won't happen until construction is done and the condos are ready for move-in.
Harmon speaks with optimism. But, he said:
"I'm watching the economy."
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