More Downtown Residential Space?

The Statesman reports today on a proposed new development at the corner of Congress and Second. As I’ve written before, I love the idea of more residential building going on downtown. But, I’m afraid I’m going to have to come out against this one. Something about the repeated statements that this would be a luxury project and prices of the condos would be on the upper end of the price range turned me off. We need mixed residential in the downtown area. If you’re going to only put condos starting at $400,000 and going up to a million or so then you’re pushing people out of downtown in the long term. Even the commercial/retail spaces will cater to this demographic and you’d wind up with a downtown full of things the rest of can’t afford.

I call this idea, bad idea jeans. That makes me mad, too. Because I’ve been all over downtown development.

7 Comments so far

  1. CB (unregistered) on January 14th, 2006 @ 2:59 pm

    What else would you expect? This is some of the most expensive dirt in the City. The developer has to put up all the money and take all the risk. Why should he not try to make a profit? Should he lose money, just so there are affordable housing units downtown? Can you think of ANY other urban area where the housing in the city center is not the most expensive?

  2. Charlie (unregistered) on January 14th, 2006 @ 3:16 pm

    I’m a totaly supply/demand guy and a capitalist. I am far from the anti-development environmentalist that dominates these conversations on urban development. I live downtown now, and it was just this last development that has made me think that dang…I’d like to have some affordable places for the young and hot people to live.

  3. M1EK (unregistered) on January 14th, 2006 @ 4:09 pm

    Charlie, if you’re totally a supply/demand guy, then you would understand how foolish it is to oppose putting a bunch of new high-rises on dirt where there’s NOTHING today. This can’t possibly hurt the price for existing residential housing in the area, and in all likelihood will HELP it. Add supply, price goes down (or, more likely, not up as much as it otherwise would have).

    As I’ve said before, I observed this happening with my (moderately priced) Clarksville unit. The more new stuff that got built, the less price pressure there was on older stock like mine.

    It’s NEVER going to be true that brand new high-rise housing will be the cheap stuff. The best you can hope for is that it’ll put brakes on the price increases of the older stuff.

    The only thing opposing housing like this will do is make it MORE, not LESS, expensive to live downtown.

  4. inky (unregistered) on January 14th, 2006 @ 9:45 pm

    I get that it’s got to be expensive, but does it have to be “luxury” expensive? How about some expensive but tiny and not-so-luxurious apartments? Now *that* would help build supply and bring some bodies downtown, and add (a little) diversity.

    Developers get tax breaks and such out the ass from the city — so I’d like to see the city negotiate something like the above.

    p.s. Is anybody else a little freaked out by the shear numbers of extraordinarily well off Austinites?

  5. M1EK (unregistered) on January 15th, 2006 @ 9:12 am

    The cost of developing each one of these units in one of these high-rises is STILL more expensive than developing a McMansion in Round Rock, despite the supposed generous city tax breaks (hint: there aren’t really any for residential development downtown).

    This is how the market works. It’s the worst system in the world for delivering products and services, except for all the other ones.

  6. Julio (unregistered) on January 15th, 2006 @ 1:41 pm

    Inky, the downtown apartments have to be luxury because that market niche has a proven track record. The lenders financing the developers are unlikely to take a gamble on anything else.

    I have a feeling many of the new units will become spec properties. Last year I overheard a conversation (ironically at Tambaleo) between three realtors discussing “flipping” strategies for the the Austin City Lofts. They’ll probably jump on the new units as soon as they hit the market. It’s difficult to envision a real community forming downtown with all these creatively-financed speculators running about. M1EK, your thoughts?

  7. M1EK (unregistered) on January 15th, 2006 @ 3:04 pm

    I don’t know about speculators – I know that the Nokonah seemed to have developed a good set of owner occupants (check Travis CAD for some minor local celebrity names some day). Even if people aren’t living in them, there’s a big gap between “landlord” and “speculator”… for instance, I still own our condo in Clarksville and am not trying to flip it.

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