Real Deals

Developer offers deals on condos

Staff WriterMay 14, 2009 

Ram Development hasn't given up on plans to build 140 condominiums in downtown Chapel Hill. But it has given up the ambitious prices of yesteryear in an effort to forge ahead in a soft housing market.

The Florida developer launched pre-sales last year, hoping to break ground once 25 percent of the units were under contract, and complete the project by 2012. Lenders have since tightened up on such projects, often requiring developers to sell about half the units before construction.

Last week, Ram offered pre-groundbreaking buyer incentives, cutting prices on units at its planned 140 West Franklin project on Franklin Street. The goal was to lure 10 more buyers by offering:

Almost 10 percent off three-bedroom units, bringing the price to $470,000.

Almost 11 percent off two-bedroom units, dropping the sticker to $375,000.

About 8.5 percent off one-bedroom units, bringing the price to $215,000. Less than a year ago, Ram had hoped to fetch about $350,000 for those units.

It wasn't clear Wednesday how many, if any, buyers jumped at the lower prices. Regardless, the discounts show that Ram has faith in the project, albeit at a lower margin and in the face of competition with dozens of condos already being built at nearby projects such as East 54 and Greenbridge.

Only 11 condos were sold in Orange County during the first quarter, according to data from the Triangle Multiple Listing Services. That's down 77 percent from the first-quarter average over the previous four years.

Burt's Bees has taken the plunge.

The maker of natural beauty products, which was headquartered in Keystone Park in Durham County, has moved its front offices to downtown Durham. The company is subleasing 61,040 square feet at the American Tobacco Historic District, a little more than double what it was leasing at Keystone. The space is in the building that was mostly vacated by software company Motricity, which moved to the West Coast last year.

Rich Harris, the Synergy Commercial Advisors broker who represented Motricity in the deal, declined to disclose terms of the deal.

The move was helped by the city's offering of up to $138,750 in incentives.

To receive the full incentive package, the company would need to move 132 workers downtown and create an additional 51 jobs by May 2012.

Plugging the hole takes more space off the shelf in downtown Durham, where the office vacancy rate was about 10.8 percent at the end of the first quarter, down from 16.1 percent a year earlier, Karnes Research data show.

As part of the deal, Motricity, agreed to move its remaining American Tobacco employees to Burt's Keystone space.

Paul Stafford isn't taking the recession lying down. Last month, his company Ideas Architecture filed for bankruptcy protection. The firm joined the long line of credit-crunch casualties with $60,248 in assets but owing creditors $538,140.

In an effort to pay the debts and get back on track, he has started a new firm, called New Ideas.

But the new start comes with some old problems. The tight lending environment is limiting new projects, and making it harder for developers to get off the ground, or in some cases pay for pre-construction services, which in turn makes it hard for companies such as Ideas to pay their own bills.

"We still have work coming in," Stafford says. "But it's tough to collect."

The old Ideas was still owed $35,000 when it filed for Chapter 7 protection. New Ideas already has $65,000 in uncollected invoices, he says.

Oh, it's on.

Last week, I passed on a promise made by Raleigh hotel titan Bob Winston: "I'll eat a copy of The News & Observer if somebody builds a 350-room hotel in West Raleigh with all cash."

Bob Barrett, the unproven hotel developer who recently announced such a plan, has now made this request: "Ask Mr. Winston how he likes his N&O."

I suggested having it baked into lasagna.

Got a better suggestion? Let me know. or 919-829-8917

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