Martha Shelley and Chris Nelson hear the question all the time: With all the condominium development on the books in downtown Reno, isn't the market about to be swamped with supply?
But Shelley and Nelson, whose Capstone Partners LLC plans to bring 185 units to the market, say the raw numbers are only a small piece of the story something like looking at the total number of residential lots approved in suburban subdivisions.
Far more important, they say, is the timing of the delivery of completed housing units.
Their 16-story project at Liberty and Sierra streets, Arterra, is scheduled for completion in mid-2009, about two years after construction begins next spring. Krump Construction of Sparks will be general contractor on the $90 million building.
By the calculations of Capstone Partners, a developer based at Portland, Ore., about 979 downtown condominium units are firmly on track for completion. The status of another 1,080 downtown condo units both conversions of hotel buildings and new construction is up in the air as half a dozen projects appear to be delayed or uncertain.
Taking the calculations a step farther, Nelson and Shelley figure that the other projects all are scheduled for completion in this year as well as 2007 and 2008.
That leaves Arterra as the only currently announced downtown project with units for delivery in 2009.
During the planning and construction of Arterra, Capstone will be marketing the condominiums to potential buyers that include move-down buyers who want less hassles with home ownership, second-home buyers who want a location in Reno and active young purchasers who want to be part of the downtown arts scene.
"People crave social interaction," says Nelson. "It's one of things that urban neighborhoods provide."
Units will be priced from the low $300,000 to more than $1 million for penthouses.
Since Capstone took control of the property about 18 months ago, Nelson and Shelley looked at a variety of potential uses including an office tower before settling on residential condominiums.
Shelley notes that residential projects are more complex than office construction, partly because the interior design is more complicated.
And she says, "All ground-up development is difficult in the current market. There is no such thing as a slam-dunk development deal."
One of the challenges faced by Capstone has been getting the attention of potential investors and bankers for its projects in northern Nevada.
Because many work only in major metropolitan markets, Nelson says, they're not willing to look at northern Nevada development deals.
While that limits the potential pool of funding sources for Capstone's projects in Reno, it also means that the company faces less competition from national developers who view the market as too small for their projects.
Two years ago, Capstone partnered with NBS Real Estate Capital of Portland to buy the Museum Tower office building at 100 W. Liberty. That's directly across Liberty Street from the Arterra project.
Capstone also is developing the 218-unit Village at Idlewild Park, a condominium project on nine acres next to Idlewild Park in downtown Reno.
Along with the condominiums, Arterra is planned to include ground-floor retail.
