Since the great recession the primary residential real estate story has been the conversion of, well, everything to apartments. Historic buildings, existing commercial, condos, etc. We have not, however, seen any apartments converted to condos over the last 10 years, but that might be getting ready to change.
The Triad Business Journal reported that the Oak Street Lofts apartments in Winston-Salem will be converted to condos as existing leases begin to expire. From the story:
Bloodworth told Triad Business Journal that all current leases would be honored, and the units would be upfitted and sold as the leases expire.
Downtown Winston-Salem is experiencing a boom of new housing, retail, restaurants and entertainment with the growth of the Wake Forest Innovation Quarter, including the Bailey Power Plant, and the office renovation projects at the GMAC tower.
Bloodworth said the one- and two-bedroom condos, each of which has a unique layout, is planned to sell for between $165,000 and $275,000.
“This is irreplaceable real estate and we are excited to offer these updated condos for sale at this price point,” Bloodworth said.
So is this the first indication that we might be seeing a shift in the local multifamily market? There’s no way to tell, but this 2011 article from Multifamily Executive might help explain why it’s worth watching:
But simple economics also points to an emerging cost-of-housing dichotomy that has traditionally been the undoing of the apartment operator: Rents are going up, and condo prices are coming down. If the cyclical nature of multifamily construction proves out, the endgame of that dichotomy means renters will slowly leave apartments to purchase condo units, and builders and investors will chase them down, attempting to convert rental buildings into condos along the way.
Interestingly, the article, which was written just as the apartment industry was entering into its historic growth period, accurately predicted that a trend towards condo conversion wasn’t likely to happen in the near future. Seven years later, with the cost of ownership solidly below the cost of renting, we might finally see the chilling of the apartment market. But, given the fact that the apartment boom has consistently defied historic precedents over the last seven years that’s not a sure thing at all.