Richmond's skyline looks stunning from the future second-floor terrace of Rocketts Landing's Skyline condo project. Reflected in the slow, swirling waters of the James River, the night's lights twinkle prettily.
The city's evening glow, however, owes little to the recent influx of downtown condos. The irony seems lost on a crowd of future residents of the latest riverfront condo development: If the market is so attractive, where are the flickering living-room lights?
Is it bedtime already at these much-touted projects? Or is lights-out a telling market indicator?
"We've seen a lot of quote, investor sales, unquote," says Sam R. Worley, senior vice president and partner at real estate brokerage and management firm Commonwealth Commercial Partners.
Richmond's quick-selling condo projects can be misleading. In many of the projects, the condos were first sold to investors who bought into a hot real estate market pre-construction, and wound up in the cold after the sawdust cleared. Nationally, Worley says, the condo market has "dried up."
"A lot of that was because of the investor coming in on the pre-sale and never intending to move in, and hoping he could flip out," Worley says, expecting that some of the same might be said though to a far lesser extent for certain segments of the Richmond condo market. "If you go down [to Riverside on the James] at night count how many lights you see in those projects."
Are the lights on? It's the best indicator, some in the real estate business say, because if the building's dark that usually means pre-sale investors haven't found buyers.
But the planned 192 unit Rocketts Landing may be a different animal, according to some area real estate experts and judging from the 100 or so attendees at last week's Rocketts Landing homeowners' event.
William Abeloff died in September. The envisioner of the future of Rocketts didn't live to see move-in day. But the care he put into the project's planning may well prove to be the project's salvation in an increasingly dicey real estate market.
Dr. Steve Booth and his wife, Lynn, live on the city's South Side. But they attended the Rocketts event to view the steel and concrete bones of their future home and to scope out their future neighbors. They didn't buy into Rocketts as investors; they wanted a place to call home.
"We just wanted to be back in the city," says Steve Booth, a dentist, attracted here by "the view, the river the whole concept of this being a community."
The pair nearly bought into another riverside condo project, Vistas on the James in Manchester, Lynn Booth says. "But when we went to buy over there, well, there was a lot to buy."
They say they pulled out of their Vistas contract-signing at the 11th hour. There was little substance to buy into, the pair thought, concluding that the project just seemed more focused on the investor and less on the prospective resident.
Rocketts Landing's developers took pains to avoid that impression, says Jason Vickers-Smith, vice president of the WVS Companies, the Northern Virginia firm developing Rocketts Landing.
"As much as legally allowed, we have restricted investors," Vickers-Smith says. That position hasn't hurt sales, he says, with most buyers he's aware of voicing plans to occupy their units. Of the three buildings nearing completion at Rocketts, one is nearing 100 percent sold, another is at 80 percent sold, and the Skyline project, which isn't slated for completion until next September, already is 50 percent sold. Most of those sales have passed the point of allowing refunds for deposits should buyers back out.
Vickers-Smith believes the market will remain strong in Richmond, and though the outlook is less rosy than it was, it's far from flagging, according to market data.
"What I can tell you overall during the year ending June 2006, there were 523 new condo units sold in the Richmond market," says Tom Tyler, an analyst with Integra Realty Resources Richmond. "That is the highest level of activity we've seen since we started tracking in 2002." In the city alone, there were 224 closings.
Third-quarter data ending in September show a cooling off. In the city, there were 171 condo closings, down more than 50 from the previous quarter. But those numbers are still extremely healthy, Tyler says, especially considering they're coming in the wake of a boom that has now probably passed.
And Rocketts has probably "been in the market proposed for so long [that] there may still be adequate demand" for that project, Tyler says.
He points to a healthy job market here as helping to insulate Richmond from the national real estate bubble's apparent burst.
"There is not a bubble in the Richmond market," Tyler says. "We do think that sales are going to go down, but it's not going to be a drastic downturn."
There could, however, be a slowdown in how many new projects are announced.
Some experts estimate that as many as 5,000 condo or townhouse construction starts are planned or in the pipeline locally. The Richmond market typically absorbs only about 1,000 condo and townhouse units each year, meaning the potential for a surplus that could last four to five years.
"But the problem is we have only a temporary oversupply," says developer Robin Miller. "I don't think prices are going to go down. I think the new projects are just not going to come on line until the excess projects are soaked up."
So some builders, it stands to reason, were willing to take the risk and rush into the market knowing their condos eventually would sell, even if they couldn't take advantage of the brisk selling spree of the last two years.
"I don't see where [builders] could have expected it to keep going at the 2005 level," Integra Realty's Tyler says, speculating that many builders may have worn rose-colored glasses during the recent building boom, but few wore blinders. "I would expect that they would have had some contingency there." S