Icon (Close Menu)

Logout

Arkansas Condo Developers Find Feet in Niche MarketLock Icon

6 min read

Whatever happened to the condo?

Plenty, says Jimmy Moses, the downtown crusader and real estate trailblazer who has ridden Little Rock’s condominium roller coaster from the start.

The city’s condo market was midwifed during a downtown resurgence 15 years ago, traumatized early by the financial crisis, and is just now growing out of a shaky adolescence, the chairman of Newmark Moses Tucker Partners told Arkansas Business.

Moses, whose three decades of downtown developments include the 300 Third Tower and River Market Tower condominiums a block apart along Third Street, believes condos will always be “a little bit different product,” but are now an important anchor in a vibrant downtown offering more dining, shopping and entertainment options.

Condos were thriving until the crisis of 2008 “changed everything,” Moses said. “It made it difficult to get financing, it made people nervous about buying, and it staggered the market for a few years. Really, we’ve been in recovery mode since, I’d say, 2012.”

Moses makes the same pitch today that he did in announcing the 500,000-SF River Market condo project a dozen years ago. He’s not peddling condos; he’s selling a neighborhood.

And it’s a neighborhood he’s been able to fill with some 400 condo owners and families as downtown grew from tourist mecca to lifestyle destination.

Meanwhile, a small but significant condo boom has flared in downtown Fayetteville, where developer and investor Mark Zweig describes a “good market downtown, where you can walk to the [University of Arkansas] campus, walk to Dickson Street to eat, or walk to the square.”


Jimmy Moses

Moses isn’t rushing back into condo construction, but he calls Little Rock’s resale market strong, and reports that most buyers today are using their condominiums as primary residences.

“Over the last three or four years condos have picked back up, and we recently paid off our loan on River Market Tower, where only two units are left for sale,” Moses said in a telephone interview 10 days ago. The total project cost on the 18-floor, 132-unit showcase at Third and Rock Streets was $58 million, and retiring the debt from the original loan of $48 million was “a big event,” he said. (For a market snapshot, note that the two remaining units at River Market, both two-bedrooms at 1,563 SF, list at $369,000 and $379,000.)

“We’ve now sold out about 400 condos since we first started in 2002.” When the 300 Third building soared 220 feet into the skyline at Third and Cumberland in 2005, it joined the 2002 Arkansas Capital Commerce Center as downtown’s first multi-story condo developments in decades. The River Market Tower followed, completed in 2009, according to the website of AMR Architects, where Moses was a founding partner. Two popular restaurants anchor the towers, Copper Grill at 300 Third and Dugan’s Pub at the River Market.

An Urban Neighborhood
“We were focused on building an urban 24/7 neighborhood with a significant residential base,” Moses said. “And we wanted not just a rental base, but one with ownership as well. People weren’t sure that we could create a neighborhood downtown where people could buy and sell properties and live comfortably and safely, but they liked the excitement that had started in the early part of 2002 with Clinton Avenue and the River Market itself and Clinton Library. The things from 15 years ago set the stage.”

The next wave of condo-building could come within 36 months, he predicted. “I don’t know if you’ll see 20-story towers, but it’ll happen, and condos will lead the way.”

Between downtown Little Rock and Argenta across the Arkansas River, more than 1,000 residential units have been built in the past 10 years, Moses calculated. Still, the vast majority of downtown units are apartments, and condos make up only about 5 percent of the for-sale market, Moses said.

“Condo development is a very urban product, and we are not an urban state,” he said. “There’s also always an education process when you’re selling something that’s a little different.”

House-hunters sometimes stumble over concepts like homeowner association fees, but once they run the numbers and “compare the costs of traditional home ownership to what they can eliminate from the budget with condominium living, most people find that they save money,” Moses said. “They see they won’t pay for fixing the roof or cutting the grass or maintaining the pool.”

Loosening the Rules
Townhomes and condominiums under construction in the U.S. have been on the rise since 2009 nationwide, and construction in 2017 was up 7 percent from 2016, according to an analysis of census data by the National Association of Home Builders.

Moses and Zweig agreed that looser restrictions on lending have boosted the condo market.

“Federal regulators have eased requirements for having units presold, which allows more financing; I think that’s the biggest thing,” said Zweig, whose Mark Zweig Inc. is building at least five units in a project called Dickson Square at 218 N. Church St. in Fayetteville.

The Housing Opportunity Through Modernization Act, signed by President Barack Obama in 2016, changed the Federal Housing Administration’s guidelines on condominium lending, lowering required owner-occupancy rates from 50 percent to 35 percent in many cases.

“People couldn’t get financing for condos, but now it’s a different situation,” Zweig said. “Around here I’m known as the guy who bought old houses, spent a boatload of money on them and converted them into single-family expensive houses. But we now think condos are a very good market. If you look at the last few projects built that are near our Dickson Square project, they all sold out completely.”

Ted Belden and son-in-law Randy Werner of Old Buildings LLC in Fayetteville have had success converting vintage properties into condos. Projects include The Dickson at 609 W. Dickson St., the Monterey Condos in an old church on West Lafayette and Willow Condos in the Washington/Willow Historic District.

High Land Costs
Zweig said high land costs have made condo projects attractive. “When land is $400,000 for a quarter-acre, you have to spread that out over a greater number of units,” he said, pointing specifically to the 1.4 acres at 151 Dickson that Mel Collier, owner of Collier Drug Stores, sold for $4.4 million.

Moses said condo building is not on his current schedule. “We’ll probably wait for a while,” he said, ticking off a series of apartment projects that have kept his firm occupied, including MacArthur Commons on Capitol Avenue, The Row at Legion Village on Rock Street and The Clayton on Scott.

“But we’re proud to have contributed to a downtown with four or five buildings offering middle- to upper-end condominium products,” Moses said. “It’s filled a nice niche, and been a good complement to the MacArthur Park and Quapaw Quarter districts that were already here with quite a few homeowners in them.”

Moses said the image of downtown condos as pied-à-terres for wealthy Arkansans or speculative real estate investments is no longer quite true. “There is clearly a niche of people who have second-home condos and might even be as close as west Little Rock for their primary home,” he said. “But what’s evolved is we’ve gone steadily toward more owners in residence.”

Between his two towers along Third and the Capital Commerce and First Security centers, “I’d say at least 75 percent of the owners use them as their primary home, and that’s steadily grown in the 15 years that the product’s been downtown.”

Send this to a friend