Nearly a year after a grand opening celebration, a $2.7 million residential/commercial development on M.L. King Boulevard has only one tenant, records show.
“The market didn’t slow down. It came to a screeching halt,” said real estate agent Sara Moss-Chambers, who is trying to sell condos in Renaissance Square, a two-story, 21,000-square-foot mixed-use building at the corner of M.L. King Boulevard and Houston Street.
Efforts to sell the condos have faltered, even though the 28th Legislative District Community Development Corp., which owns the building, reduced prices and offered bonuses to real estate agents who sell the units and financial incentives for low- to moderate-income buyers through Chattanooga Neighborhood Enterprise.
“We’re targeting everybody,” said Forestine Watson- Haynes, executive director of the 28th District CDC. “But primarily we’re trying to get professional staff and other employees who would be interested in living where they work.”
A sluggish economy has slowed interest in condo developments overall, some Realtors and developers said. Chattanooga area condo sales in the first seven months of 2008 are down 30 percent from a year ago, according to news reports.
Darlene Brown, broker-owner of Real Estate Partners Chattanooga LLC, said the market is tougher than it used to be. Just two years ago, in May 2006, buyers spent $19 million to purchase 75 condos at the Museum Bluffs-Parkview on First Street, even though groundbreaking on the units hadn’t occurred, she said.
That building won’t be ready for occupancy until October, but 15 units have sold since 2006, she said. Had the housing market been better, she said, all 107 units would have sold by now.
“Owning your own home is still the American dream,” Ms. Brown said.
Developer Thomas Johnson, who owns Park Place on M.L. King Boulevard, said he abandoned a sales-only strategy last summer to promote occupancy.
“I’ll rent them, sell them, lease-purchase them. Just move in,” he said.
Half of the 14 condos, priced from $115,000 to $320,000, are either sold, rented or under lease-purchase.
SLOW START
The 28th Legislative District CDC announced two buyers at the grand opening of Renaissance Square in November 2007, but one purchaser, an investor, was unable to complete the deal, Ms. Watson Haynes said.
The development has eight residential condos and 10,000 square feet of commercial space.
A buyer purchased the least-expensive condo at Renaissance Square in January for $114,000, Ms. Haynes said. Prices for the remaining condos once ranged from $160,000 for a 900-square-foot unit to $253,000 for a 1,550-square-foot unit. Those prices have been reduced to $151,000 and $240,000, respectively, officials said.
Ann Jones Pierre, the 28th CDC’s board chairwoman, said organization officials are as concerned about the market as everyone else. Renaissance Square also has a provision for lease agreements, but board members haven’t made a decision to do it, she said.
“We’re analyzing, looking at financing, evaluating where we are,” she said.
Ms. Haynes said the CDC only has to pay the interest on its loans right now, but even that’s a struggle. The organization will have to refinance at the end of the year if sales don’t pick up, she said.
Regions Bank provided $1.2 million in funding for Renaissance Square. However, bank Senior Vice President Dewey Roberson said he’s not alarmed.
“We believe in the organization (the 28th CDC). They have good leadership, and we’re confident that Chattanooga is a good market,” he said.
Other lenders include the Chattanooga Community Development Financial Institute and Seedco Financial Services of New York, each of which loaned $565,000. The development corporation also committed $100,000, officials said.
