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Condo complex being sold to an apartment developer WHY THE SWITCH?
Cobblestone to be sold to apartment builder
BY EMILY BATTLE
Date published: 3/9/2008
BY EMILY BATTLE
Sluggish sales at the Cobblestone Square condominium complex off Lafayette Boulevard have led the developers of that project to sell what's left to be built to an apartment developer.
The partners involved in Cobblestone, which include K. Hovnanian Homes and Garrett Development Corp., are under contract to sell the rest of the development to JLB Partners, an apartment builder with operations in about a dozen states.
Cobblestone first won zoning approval from Fredericksburg in 2002. At that point, it was pitched as an apartment community, so the switch does not require zoning changes.
In 2004, after seeing condominium developments sell out quickly in localities north of here, the project switched to condos.
Since then, Cobble- stone's units--selling in the $250,000 to $350,000 range--have provided what some condo owners say is an opportunity to own a new home near downtown without paying the much higher prices that single-family homes in that area are fetching.
But now some of those same condo owners are worried about the prospect of being surrounded by rental units, which they fear might hurt their property values.
"The main thing that attracted us was the type of community they were going to build," said Jonathan Franklin, who moved to Cobblestone with his wife in October.
Chris Waller, vice president of Garrett Development, said JLB's apartments will attract high-end renters, and that the change should not hurt the character of the community.
"We have emphasized the importance to this developer that they deliver an apartment project that's going to be a half-step above anything currently available in the city," he said.
Waller said JLB will likely charge about $1,250 a month for a 1,000-square-foot unit.
A letter to current condo owners calls the new concept a "luxury rental community."
Franklin--who lived in a city apartment before buying at Cobblesone--doesn't take much comfort in that description.
"They're just playing semantic games," he said.
The move will add 292 rental units to a city whose housing stock is already two-thirds renter-occupied.
But Waller said switching to apartments will allow the rest of the development and its amenities to be built faster, putting more value on the city's tax rolls more quickly.
Condominium owner Ben Maxwell said he thinks Hovnanian and its partners have made a "hasty decision," and might be better served by waiting out the current slump in the housing market.
When he moved into his unit last June, Maxwell said, "We were under the impression that this was going to be a three- to four-year project. Three to four years from now, it's going to be a completely different real-estate market. You would think that one of the largest home builders in the country would understand this is a cycle."
Like many of the national home builders, Hovnanian has taken quite a hit from the housing downturn.
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Cobblestone's developers said the sputtering housing market drove their decision.
They wrote in a letter to condo owners:
"The regional residential market has deteriorated since its peak in 2005 and, in particular, the market for condominiums in the Fredericksburg area has proven to be not as deep as once thought."
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Date published: 3/9/2008
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