Sunday, November 14, 2004
Copyright © Las Vegas Review-Journal
Condo building
presents special risks, experts say
By HUBBLE SMITH
REVIEW-JOURNAL
|
Work is continuing on the Manhattan condo project on Las
Vegas Boulevard South. The project's first five
buildings are expected to be finished next year.
Photo by
Gary Thompson.
|
High-rise condominiums are all the rage in
Las Vegas lately, but for most working-class citizens, the hefty
price on these luxury units creates a huge obstacle.
Housing affordability has become a big
issue in Las Vegas as median new home prices approach $300,000.
That makes it tough for locals to pay $400,000 and up for a
small studio or one-bedroom unit.
Alex Edelstein has a solution. The former
technology manager from California founded Gemstone Development
and is building the Manhattan condominiums on Las Vegas
Boulevard South at Serene Avenue.
"This is going to allow that kind of
lifestyle for someone who can only afford $200,000 to $400,000
and they're going to get things Turnberry (Place) didn't offer
like two acres of central park," Edelstein said.
When the project was announced earlier this
year, prices started at $149,900 for the smallest one-bedroom
floor plan, going up to $350,000 for expansive 1,400-square-foot
lofts and three-bedroom residences.
It's comparable to Park Avenue, the midrise
condo complex built by Amland Development just north of
Manhattan at Agate Avenue.
The first five buildings are expected to be
finished and ready for occupancy by the end of next year. Upon
build-out in late 2006, Manhattan will consist of 44 four-story
buildings with 700 residential units.
Edelstein said he's had a diverse range of
11,000 registrants for the condos.
"We've got young professionals, executives
at Strip hotels. They're living in a house because it's the only
choice they've had," he said. "I'm a condo kind of guy. I like
views. If I'd come here five years ago, I wouldn't have had much
to choose from."
While most of the condo projects are still
in the planning stages, Manhattan has broken ground on
construction with financing from Tharaldson Financial.
Edelstein borrowed $105 million this year
for the first five buildings and the 9,000-square-foot clubhouse
with a fitness center, theater, business center and kitchen and
lounge facilities for hosting parties. He'll borrow another $50
million next year for four other buildings.
"Condo financing is tricky and getting
insurance is tricky," Edelstein said. "One of the problems is
construction costs went up this year and lowered profit
margins."
Developers like to say they've "sold" a
certain number of units in order to get construction financing
from the banks.
Edelstein said buyers reserve their units
at Manhattan with a 2.5 percent refundable payment and then
convert to contract with another 2.5 percent payment, which
becomes "hard money," or money that won't be refunded.
Building condos is different than building
single-family residences because it tends to be an
"all-or-nothing proposition," Edelstein said.
"If you have 100 houses, you build and sell
them one at a time. If sales get soft, you can stop. With a
condo tower, that's the other extreme. You've got to build the
whole tower at once," he said.
"It's riskier from the bankers'
perspective. Also, there's the persistent threat of litigation.
If there's a defect with one house, you fix that one house. With
a condo tower, it's all the homeowners. The set of insurers that
are ready and able to insure a condo project is a small pool and
they charge a lot of money. Except for land, I'm spending more
on insurance premiums than any other cost."
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