CHARLOTTE, N.C. -- The Vue high-rise in uptown is converting to luxury apartments, ending years of speculation about the fate of a skyscraper filled with condos the developer couldn’t sell.
New York-based Northwood Investors, which bought the tower at auction this month, hopes to attract the same type of customer the original developer had in mind: well-heeled empty nesters, young professionals and people looking for a second, urban home.
And while the new occupants will be renting, not buying, Northwood hopes the change marks a turnaround for a tower that came to symbolize dashed hopes for an uptown condo boom.
“You’re not used to seeing these things outside major metro areas,” said David Ravin, president of Charlotte-based Northwood Ravin, which is acting as property manager and is an affiliate of Northwood Investors. “I think this is going to set a different niche for rental living.”
The units, ranging from 600 square feet to 3,800 square feet, will be priced between $1,250 and $5,000 per month.
The 51-story tower at Fifth and Pine streets has remained mostly empty since construction finished in fall 2010, with buyers closing on fewer than two dozen of the building’s 408 units. Northwood acquired the project’s debt this spring after the Chicago-based developer, Dan McLean of MCL Cos., defaulted on the loan.
Northwood paid $102.75 million June 12 at a foreclosure auction for 389 units and parking and storage space.
In a statement, the company said the existing condominiums will continue as before, but did not elaborate.
Real estate analyst Bill Miley with Metrostudy said it makes sense to rent the unsold units instead of trying to sell them.
“The owner has to do something,” he said. “The condo sales side of things are slow. And there’s pretty high demand for rental units in uptown.”
History of a recession
Two years ago, the Vue was lauded as one of the few proposed uptown high-rises that made it up out of the ground despite a crippling recession and weak housing market.
Since then, the project has become a highly visible sore spot for uptown boosters as it experienced a work stoppage, struggled to close sales and became entangled in lawsuits.
When sales started in the mid-2000s, the project was touted as one of uptown’s most luxurious residences, with its 35,000-square-foot pool deck, fitness center, and tennis and basketball courts.
But the poor housing market flatlined condo sales, especially for luxury units in the center city.
Although the developer said he’d presold half the building, most sales never closed. Still, McLean professed confidence despite the weakening residential market, pledging repeatedly to never lower sales prices or turn the units into rentals. Condos at the Vue started selling from just under $200,000 to more than $2 million.
Miley said Thursday the overall uptown condo market likely won’t be affected by the change to rentals.
If anything, he said, the market may now be better off because the owner isn’t slashing prices, as some investors did in Florida after buying distressed condo properties.
“I think it would be pretty hard on everybody that owns uptown if (the new owner) tried to sell them,” Miley said. “Getting the units occupied and getting monthly cash flow will help (the building) get through until the market improves.”
One existing owner said he heard of the change Thursday when he received an email from Northwood.
The news, he said, wasn’t a surprise, but “I am disappointed that as homeowners there weren’t any options laid out in the letter. Obviously the value of our properties takes an immediate hit as our resale options are extremely limited. Again, not a surprise, but now a reality.”
The owner didn’t want to be named because he has not yet spoken to Northwood.
Charlotte-based Northwood Ravin has experience converting condominium projects to rentals, having assisted developers with conversions on at least seven local properties, including the Catalyst and Quarterside in uptown and Fat City Lofts in NoDa.
The apartment market has been popular among investors and developers both nationally and locally. More Americans are expected to turn to renting as the housing market remains soft.
While the apartment market traditionally has been a cyclical one with large booms and busts, supply in Charlotte has been restricted in recent years while demand has grown, leading rents and occupancy rates to increase.
David Ravin said he’s not worried about the market becoming overheated because the Vue, with its commanding views of the city’s skyline, serves a narrow niche.
“If you want to be in downtown and you want to live in a high-rise and expect the higher end of things, this is that product,” he said.
Ravin said he won’t do anything special to promote the Vue as a rental option for the Democratic National Convention, which is expected to draw 35,000 people to uptown in September.
“We’re certainly aware it’s a high-profile building in Charlotte,” Ravin said. “Like all residents, we want to be good hosts. But we’re probably more focused on residents who will be there for the longer term.”
Eventually, the company would be open to converting the property back to for-sale condos if the market were right, Ravin said.
“On projects like this at the higher end, they are so unique, I think you could go either way successfully,” he said.
Across the street from the Vue, the manager of Versa Salon said she is excited at the prospect of the building being filled with people.
The sleek building, while empty, has been “beautiful to look at,” said Kisha Wright.
“We’re excited about meeting new people and seeing the community growing,” she said.