Nashville's Terrazzo lowers prices on 30 condo units

Wednesday, November 25, 2009
Nashville Business Journal - by Eric Snyder Nashville Business Journal

Saturday's auction of Terrazzo condo units was billed as a way for the public to decide what fair market value is for its units.

Leading up to the auction, Crosland Tennessee President Bill Barkley, Terrazzo's developer, didn't offer specifics on how rates set at auction would influence prices going forward. True to billing, however, they appear to have set the condo tower's new fair market value — prices for an additional 30 units inside Terrazzo have been reset to fall neatly in line with those set at auction.

The 30 units represent about 40 percent of the condo's unsold stock, including Saturday's sales figures. The building features a total of 117 units.

Before bidding was halted Saturday, 21 units were sold at rates between $213 per square foot and $269 per square foot (six additional units were sold Saturday using auction rates).

The post-auction pricing rates range from $213 per square foot to $266 per square foot, keeping with the roughly 33 percent average discount from list price established at auction.

One of those who bought a unit at Saturday’s auction was Ray Hensler, president of Market Realty Advisors and developer of The Adelicia condo in Midtown, who said sticking with the pricing set at auction is a smart move for Terrazzo.

“They’re being very realistic about the current plight of the market and capitalizing on the success and momentum of the auction. After this next batch they’ll be approaching 70 percent closed and I think that changes everything for them,” he said.

Keeping the prices at auction rates — as opposed to tacking on a several extra bucks per square footage — is also a smart move, Hensler said.

“Momentum is everything. Right now they have it and nobody else does. Why risk it?” he said.

Hensler said he bought a unit Saturday as an investment.

“They were our main competitor so I know their product and I know their upscale buyer,” Hensler said. “The building is gorgeous ... the only drawback they ever had was pricing. Now they've made that their strongest feature.”

For the revised units, prices now range from $199,000 for an 891-square-foot one-bedroom, one-bath unit to $399,000 for a 1,654-square-foot two-bedroom, two-bath unit.

Though it may be awhile before prices at Terrazzo return to levels over $300 per square foot, Hensler said that day will come.

“Once they push past 70 percent, even more buyers will jump in, especially as other buildings sit at or below 50 percent,” he said. “And although it'll be a few years before they see the original pricing again I think they'll jump back to at least $300 a foot as soon as they sellout ... probably a year from now.”