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Launching Rocketts

With the latest big development on the river, some wonder if the city's condo boom will soon reach its peak. Don't bet on it.



At the Rocketts Landing sales center, large floor plans for each of the buildings are marked with rows of bright-orange sticker dots, each representing a done deal.

Most units in the river-view, luxe-finish Fall Line building have been purchased for between $275,000 and $675,000. About 60 percent of the similarly priced Sky Line building has been sold, including a $1.3 million penthouse. And about three-fourths of the slightly cheaper Cedar Works condos are under contract, going for $150,000 to $575,000.

"That's a nice situation to be in," Sales Director Marti Cooke says.

A "nice situation" not just for Rocketts Landing, but for condo developers across Richmond.

The city's condominium market started off hesitantly and now is roaring, says Tom Tyler, with the local office of Integra Realty Resources Inc., the largest property valuation and counseling firm in the United States.

Integra figures show that in 2002, 120 new and newly converted condos were purchased in Richmond and seven surrounding counties (based on real estate closings). Last year, that number was 507.

Although that's more than a fourfold increase, the total still may seem small compared with the 4,630 new detached single-family homes sold in greater Richmond in 2005. But condos are steadily gaining market share. They accounted for 2 percent of the new-housing market in 2002 and 9 percent last year. The figures include condos constructed from the ground up and those converted from existing buildings.

Has the Richmond condo market reached its zenith? Local real estate watchers say no — it's just getting started.

Condominium construction typically lags far behind demand, University of Virginia professor William Lucy says. Lucy, the Lawrence Lewis Jr. Professor of Architecture and Planning, is co-author of the recent book, "Tomorrow's Cities, Tomorrow's Suburbs."

Building apartments is generally a safer bet for a developer, Lucy explains; rental income quickly pays for the costs of construction, and subsequent years bring in more and more revenue. "So developers have built apartments first," he says. "This is a nationwide condition; there has been an apartment glut nationwide for the past two or three years."

Condominiums, on the other hand, are trickier. "They require fast sales," Lucy explains. "Otherwise, the developers are left with carrying units they have paid to build." Banks often won't finance condo projects unless a developer can demonstrate a prior financial commitment from buyers.

With the breathtaking views of the river on Brown's Island, the Riverside on the James condo project got Richmond buzzing more than a year ago when all 122 condos sold before the project was completed.

Some wondered if the development's success was an anomaly given its proximity to the river or a true sign of things to come. But Rocketts' recent success with swift sales — based only on artists' renderings and floor plans — seems to affirm the potential for similar large-scale condo projects down the road.

"I think there was a lot of pent-up demand, because until recently I think we didn't have much product," Rocketts Landing's Cooke says.

Other companies are beginning to test the waters. Just up the street, by Millie's Diner, Tobacco Row giant Forest City Enterprises is building 12 townhouse condos priced at around $450,000 each. Forest City owns about 36,000 apartments nationwide, Development Manager Kirsten Brinker says, but this is the company's first foray into sale properties on the East Coast.

So where's the demand? Who's willing to pay hundreds of thousands for these homes of modest dimensions and fancy trimmings — exposed brick, granite countertops, river views and so on?

They're 95 percent Richmonders, for one thing, Cooke says, with just a few refugees from Washington, D.C., or other more-expensive metropolises. At Rocketts Landing, the buyers are evenly divided between young professionals looking to upgrade from their apartments and empty nesters who are tired of managing suburban McMansions.

Many boomers are taking more of an interest in convenience, Lucy says, and are looking to ditch the suburban traffic for condos in walkable communities.

"They do want ownership," he says — not apartments. And many are taking advantage of the 1997 change to capital gains laws that allowed people to downgrade their homes and pocket the profits.

Also, Lucy observes, "the distinction between a condo and a single-family house has diminished quite a bit." Whereas condo fees (the average for Rocketts is between $260 and $425 monthly) and rules may be unwelcome burdens to some, more and more new suburban enclaves have similar rules and homeowner's dues, accompanied by restrictions on what colors one may or may not paint the mailbox.

Nor are condos dramatically cheaper than typical new homes. The average new-condo sale price in 2005 was $263,534, according to Integra, while the average for new single-family homes was $346,158.

"We're offering history, convenience, the river," says Rocketts developer William H. Abeloff, standing in the Rocketts Landing sales center, which is tastefully appointed with snaky track lights and a collection of oversized ceramics.

Capt. Christopher Newport sailed up the James here May 24, 1607, Abeloff notes, giving Rocketts Landing 400 years of recorded history. "There aren't many places that can lay claim to that," he says.

"However, that's the history," he adds. "What's it going to be like in the future?"

Abeloff's master plan for the 50 acres along the river includes 1,500 housing units upon completion, but that could change depending on market forces. Will the desire for condos continue or cool?

Tyler and Lucy say they can't yet predict how long the boom will last. "I think this is a new enough phenomenon that people are winging it," Lucy says. S

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