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Condo sales are going slowly at Cobblestone Square near downtown Fredericksburg, leading to sale of the complex. |
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-
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.
Its stock traded above $73 a share near the peak of the housing boom in July 2005. It dropped to as low as $4.25 a share in January before recovering slightly to recently trade around $8.75--still a nearly 90 percent drop from its highs in 2005.
So far at Cobblestone, two of the 10 proposed buildings have been built. Sales have slowed to one or two units per month, and an attachment to the letter to condo owners says that if the project remained on its current course, it would be built out at a rate of one building a year.
Waller said the apartment builder will act much more quickly.
"Two years from today you'll have a completed project there," he said.
Hovnanian's letter says the two buildings that are complete will remain a condominium, governed by its own homeowners association.
Lee Murray, another Cobblestone condo owner, said he does see merit in one of the benefits Hovnanian mentions in its letter to condo owners.
He said he thinks having fewer condominium units in that location, near downtown and the Virginia Railway Express, could give him less competition when he decides to sell his unit.
But he also admits that having eight buildings of rental units around him could hurt his property value.
"It will probably be more bad than good, but I don't think it's as bad as some people are making it out to be," he said.
The developers have scheduled a meeting for March 13 at 7 p.m. at The Loft restaurant at 1005 Princess Anne St. to discuss the changes. Waller said representatives from JLB Partners will be on hand to talk about what they plan to build.
Staff writer Bill Freehling contributed to this report.
Emily Battle: 540/374-5413
Email: ebattle@freelancestar.com
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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." |
