Hue, the multicolor building that is the largest condo project ever attempted in downtown Raleigh, closed its sales office without ever selling a unit.
Signs posted on the building's doors, as well as a message left on the sales office's answering machine, say Hue will be closed until further notice.
Neither the developer nor Hue's sales manager returned calls seeking comment Thursday.
With its royal blue and mustard exterior, the 208-unit Hue was designed to attract young buyers. The seven-story building across from the city administration building downtown replaced a parking lot and was considered a bold symbol of downtown Raleigh's revitalization. But its splashy entrance on the market last year came at the worst possible time.
Demand for downtown condos has cooled during the recession, and most lenders now shy from issuing mortgages to condo buyers. Just 61 condos inside the Beltline sold in the first four months of this year, down 14 percent from the same period a year ago, according to Triangle Multiple Listing Services data.
Condo projects must have a certain percentage of their units presold to qualify for government-backed mortgage insurance programs offered by Fannie Mae and the Federal Housing Administration. Such approval has become essential in today's market, as most mortgage brokers will not issue loans without it.
No enough presales
Hue wasn't able to get the presales needed for Fannie Mae or FHA approval, something that two of its downtown Raleigh competitors, the RBC Plaza condos and Bloomsbury Estates, have achieved.
Highwoods Properties, the developer of RBC Plaza, has sold 105 of the tower's 139 condos, but just five in the past four months. Bloomsbury has sold four of its 56 units, according to Wake County property records.
Hue's units were priced between $147,000 and $388,000. The entire project, including a parking deck, has a tax value of $33 million.
The project was developed by Trammell Crow Residential along with CityView, a Los Angeles group whose executive chairman is Henry Cisneros, President Bill Clinton's secretary of the housing and urban development.
Cisneros said last year that CityView wasn't interested in converting Hue to rental units, but that option might be back on the table. Hue's Web site says 17 units have sold; but according to property records, no deeds have transferred.
New condo projects have a reservation period in which they accept commitments from buyers before they can actually sell units.
Hue frustrated many prospective buyers because its reservation period dragged on longer than expected. The project began selling units only in January, and it offered a variety of perks to get people in the door.
Instead of buying a unit outright, a resident could sign a contract to lease one and live in it until the building reached the presale requirement that made it eligible for federal loan assistance.
Buyers were offered a free washer, dryer, refrigerator and parking space.
George York, a partner in a local real estate partnership that bought the Hue's ground floor retail space, said Hue's owners told him they will make an announcement about the project's future soon.
York's group, Cameron Street Partners, paid a little over a million dollars for 7,500 square feet of space. He remains optimistic that the residential portion of the project will sort itself out eventually.
"I'm glad we have 7,500 feet instead of 75,000 feet there right now," he said. "But the real estate is still good. It's still a good corner."
The only tenant to lease space from Cameron Street Partners thus far is White Rabbit, a book store that caters to the gay and lesbian community.
Jim Yarbrough, White Rabbit's owner, said the closing of Hue's sales office was disheartening.
"We need bodies in those condos so we can support the store," he said. "Our sales haven't been what we hoped they would be, and I think it's probably because of the lack of traffic."
Yarbrough also publishes Q Notes, a bi-weekly newspaper that covers the gay and lesbian communities in the Carolinas. He said the issue that hits newsstands today includes a half-page advertisement for Hue.
"I don't know what's going on with them," Yarborough said.
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