Thursday, December 04, 2008

Requiem for the go-go '00s

Even in relatively well-off Omaha, the go-go '00s are slowly but surely turning into the hardscrabble Uh-Ohs.

Here's a case in point: The planned 12-story 80Dodge condo project in our neighborhood has just turned into the generic Extended-Stay Hotel and Strip-Center Extension project. The developers ran into the double-whammy of the New Economy -- ain't many people shelling out for luxury condos, and ain't many banks lending money to build them.

UNLESS, OF COURSE, you can pre-sell more units than developers can pre-sell today. So, the developers are doing what they can, as the Omaha World-Herald reports today:

Developers who had planned a high-rise condominium project at 80th Street and West Dodge Road instead plan to build a four-story, extended-stay hotel and two single-story retail buildings.

"It's just too hard in this climate to do a condominium," said Jerry Slusky, attorney for the development team and part owner of the project.

A hotel franchise approached the developers about three months ago, Slusky said. He declined to name the hotel because the parties have not signed a licensing agreement but characterized it as "one of the top two brand names in the country."

The hotel's demographic studies showed a need for an extended-stay hotel in the Dodge Street corridor from 72nd to 102nd Street to accommodate nearby employers and hospitals, Slusky said.

That need, combined with slow condo sales and the changing financial environment, led the developers to conclude that a hotel was a wiser choice, Slusky said.

"First of all, the construction financing for a large high-rise building with a substantial condominium component is very difficult, if not impossible, because you need at least 50 percent with binding contracts."

Only 14 of 56 condos had been reserved. Reservations are not the same as signed sales contracts.

A typical financing arrangement requires the developer to sell a certain percentage of units — measured in revenue — before the bank will release money for construction. Some lenders are requiring a higher percentage of pre-sales.

Slower sales of the condos — which were priced from $260,000 to $3.7 million — delayed construction start dates, leaving developers in a lurch with people who put money down or who considered buying into a new project.

"People want to be assured of a delivery date. You run into a bit of a Catch-22 there," Slusky said.

"There was uncertainty of so many people about their lives and their situation.

"You have to think about the wisdom in these times of developing a condo project in light of people's ability to buy and own them, financing, etc."
THE 80DODGE developers are the savvy -- and lucky -- ones. Just up Dodge lays the fallow vision of one of the unlucky -- and dead -- ones:

Another multiuse project in the area, which included condos, remains in limbo after the death of developer Ed Boesen of Des Moines. Boesen, who had planned the $6 million Piccolo's Pointe at 77th and Dodge Streets, committed suicide, according to official records.

Since Boesen's death July 15, banks, private lenders and other businesses have sued his estate for more than $50 million.
THIS MAY NOT BE the postmodern sequel of the Great Depression. But just like in the original series, our dreams and illusions are sputtering, stalling and then crashing to earth.

What we need is a new dream. A workaround dream . . . a make-lemonade-out-of-lemons dream.

What we need is a "let's pull together, love one another and trust in God" dream. Do you reckon that would be harder to pull off than building a high-rise condo development?

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