An early rendering of the intended Preston Lake community center

A variety of documents were filed at the Rockingham County Circuit Court on Wednesday, February 23, 2011 finalizing the Trustee Sale of Preston Lake subdivision. 

In Summary:  A trustee sale took place on February 3, 2011 on the steps of the Rockingham County Circuit Court, whereby Wells Fargo (as the only, and thus highest, bidder) contracted to buy back Preston Lake from its developer.  Now, the deeds have been recorded transferring the bulk of the subdivision to Wells Fargo and the common areas to the Homeowners Association.

The Value of 124+ Acres:  The consideration paid by Wells Fargo for the 124+ acres was $3,500,000, but the trustee's deed also indicates that the appraised value is/was $4,530,000.  Somewhat astonishingly, the two loans (notes) that were being foreclosed on appear to have been for a sum total of $20,500,000.

The New Owner of Preston Lake:  The grantee on the deed is listed as "REDUS VA HOUSING, LLC" -- an LLC registered in Deleware.  The grantee's address, however, is Wells Fargo Bank out of Jacksonville, Florida.

Value of the Common Areas:  Per the deed transferring the common areas to the Homeowners Association, the common areas have an assessed value of $323,700.



What Conveyed To The Homeowners Association:  The map above is based on an early engineering plan for Preston Lake.  I have deciphered (to the best of my ability) the deed, and recorded plats for Preston Lake to mark on the map (letters in circles) the areas that conveyed the the Homeowners Association.  Click on the map for a high resolution PDF, and scroll to the bottom of this post for the source files for the deed and plats.

Management of the Homeowners Association:  The Homeowners Association's mailing address is referenced in the deed as the same Jacksonville, Florida address for Wells Fargo.  Homeowners at Preston Lake have been informed that Wells Fargo will be hiring an association management company in the very near future to handle the business of the association. 

What's Next:  Now that the remaining land comprising Preston Lake is owned by Wells Fargo, my assumption is that:

• Wells Fargo will bring in an association management company to handle the association.
• Wells Fargo will market and attempt to sell the entire subdivision to a new developer.
• If the above is not successful, Wells Fargo may attempt to sell individual lots at Preston Lake.
  

Pertinent Documents:

• Recorded Trustee's Deed - 124+ Acres transferring to Wells Fargo
• Recorded Deed - Land transferring to Homeowners Association
• Partial Satisfaction - Liens against land transferring to HOA
  
• Amended and Restated Declaration for Preston Lake
  
• Recorded Section 1 Plat
  
• Recorded Section 2 Plat
• Recorded Section 3 Plat

Further Preston Lake reading:

• Jul 19, 2010:  Sales Updates at Preston Lake in Harrisonburg, VA
• Jan 19, 2011:  Preston Lake Headed To Foreclosure?
• Feb 3, 2011:  Preston Lake Foreclosure Auction Results In $3.5M Sale To Wells Fargo

 

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New home sales may be improving in and around Harrisonburg -- based totally on anecdotal evidence.  Several of the builders I work with have seen significantly increased activity since the first of the year, and this is after several years of declining new home sales, as shown below.



It somewhat stands to reason -- as I pointed out yesterday, housing supply has been dwindling over the past six months.  There was a 23% drop in listing inventory between July 2010 and January 2011, as compared to only a 5% drop during the same time period a year earlier.

Fewer homes for sale leads to fewer selections for home buyers, leads some buyers to start exploring new construction homes once again.  The trend over the past few years away from new homes was a matter of re-sale homes being more affordable than new homes.  It was nearly impossible to build a new home at the same price that some re-sale homes were selling for in the market.

Now, however, builders who have compelling products to offer, with competitive pricing, stand a chance to see a solid improvement in sales during 2011.
 

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The Preston Lake Trustee Sale took place today (February 3, 2011) at noon, and drew quite a crowd of Preston Lake homeowners, developers, attorneys, Realtors, and neighboring landowners.  Here's an overview of where things stand....

Local History in the Making:  It's not necessarily the good type of history, but this was the first major subdivision --- and hopefully the last --- to be foreclosed on in the Harrisonburg area.  Many other areas across the country have seen multiple large subdivisions be foreclosed on, but until today, Harrisonburg had been unscathed.  The timing of the development of this subdivision is likely what led us to today's events, as the development began just as the housing market began to slow dramatically.

Only One Registered Bidder:  Only one individual registered as a potential bidder at the sale (by showing his deposit check to the Trustee, and providing his name), though he did bid during the auction, likely because of the opening bids from Wells Fargo.

Only One Actual Bidder:  There was only one actual bidder....Wells Fargo.

Surprise Rowhouse Auctions:  In addition to the 120+ acres of land at Preston Lake that were auctioned off today, four rowhouses were also auctioned separately.  This was not specifically advertised -- if it had been, I think we would have seen some actual bidding take place.  Each of these rowhouses are at a different stage of completion, but each at least has the shell completed.  The opening bids from Wells Fargo were as follows, and these are the prices at which they are taking back the properties:

• Lot 9C -- $270,600
• Lot 10B - $39,960
• Lot 11C - $157,760
• Lot 12C - $79,080

A Hefty Price For 120+ Acres:  It wasn't too surprising that there were not any bidders for the 120+ acres of Preston Lake, as Wells Fargo's opening bid was $3,500,000. 

The Common Areas:  The attorney representing Wells Fargo also indicated that the common areas would be deeded to the Property Owners Association.  The Association will still exist, and owners will still make payments to it to support the maintenance of the common areas and other common amenities of the neighborhood.

What Happens Next:  In theory, within 30 days, Wells Fargo will close on their purchase of the four individual rowhouses, and the 120+ acres of Preston Lake.  The attorney representing Wells Fargo commented to me afterward that he thinks there is a 90% chance that the sale will proceed to closing and that Wells Fargo will be the new owner.  After Wells Fargo owns the property, he indicated that they would sell the four rowhouses individually, and seek to sell the remaining 120+ acres to a new developer.  It is unclear what price they will ask for the remainder of the subdivision (likely lower than $3.5M), and it is unclear what price they will eventually take for the remainder of the subdivision (likely lower than $3.5M).  Wells Fargo's attorney also indicated that while they will attempt to sell the entire undeveloped section of Preston Lake as a whole to one developer, it is also possible that they would sell the property as individual lots or sections of lots.  Wells Fargo has done this with other subdivisions around the country that they have foreclosed on, though it is not their goal.

Wells Fargo is interested in money:  This should come as no surprise, but Wells Fargo's goal in being the new owner of the undeveloped areas of Preston Lake are to try to recoup as much as possible of the money that they have invested in the subdivision.  They won't, thus, try to unload the property for development into a mobile home park -- they will be marketing it and working to sell it for its highest and best use.  This does not mean that the development plan won't or can't change -- but they will be trying to recoup as much money as possible, and thus will be trying to sell it to a developer who has the a positive (and profitable) vision for it.

Those Pesky Lawsuits:  The developer of Preston Lake (Richard Hine) had filed a lawsuit against Wachovia (now Wells Fargo) --- and Wachovia had responded with a countersuit.  Per the attorney representing Wells Fargo, both of those lawsuits will go away once the sale closes, and the property is taken back by Wells Fargo.

A Community United:  If anything, the turmoil and uncertainty over the future of Preston Lake seems to have drawn its residents closer together as a community.  Most of the owners were in attendance at the sale, and then went as a group to Cally's afterward to have lunch.  There seems to be solidarity and general optimism (as much as is possible) amongst most (or all) of the owners.  They still seem to thoroughly enjoy their homes, and each other, which is a positive sign for the future of the community.

Have Questions?  If you have questions about Preston Lake or the foreclosure proceedings, I'm happy to try to answer them (540-578-0102, scott@HarrisonburgHousingToday.com), or you can contact Peter Barrett of Kutak Rock, LLP, who is the attorney representing Wells Fargo.  You can reach Mr. Barrett at 804-343-5237 or peter.barrett@kutackrock.com.

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Per a Trustee Sale advertised in today's Daily News Record (view ad), the bulk of the Preston Lake subdivision may be headed to foreclosure.  This doesn't necessarily mean that the foreclosure sale will take place, but this is a significant step in that direction.

Preston Lake is Harrisonburg and Rockingham County's first master planned community, intended to include nearly 500 townhomes and single family homes, a large section of retail stores with a main street appearance, and many amenities such as a community center, soccer fields, swimming pool, and more.


  The vision....


 Main Street renderings


 Amenities at Preston Lake

Now, however, all of those plans may be coming to an end, at least for now.  On February 3rd at 12:00 p.m., 124.693 acres of Preston Lake is scheduled to be auctioned at the Rockingham County Circuit Court.  Please note that an advertised trustee sale (all that has happened thus far) does not necessarily mean that the foreclosure process will take place. 

This wasn't the first sign of trouble for Preston Lake, as the developer of Preston Lake and its lender (Wachovia) have been in the midst of legal proceedings for almost a year now, as described in the Mar 2, 2010 article from the Daily News Record:


While it was happening quite slowly, residential construction at Preston Lake had been continuing even over the past year.  Since the first closing in 2008, there have been 37 sales at Preston Lake recorded in the HRAR MLS, ranging from $318k to $883k, with a median price of $421k.  Three of these sales took place as recently as the fourth quarter of 2010.

Today, only four properties are being marketed for sale at Preston Lake per the HRAR MLS -- three are resale properties, and one is being sold by the developer.  (view active listings at Preston Lake)

A few notes about the foreclosure sale:

• It appears that most (or all?) of the common areas (such as the Village Green) will not be sold at the foreclosure sale.
• It appears that the property being conveyed will still be bound by the covenants and restrictions already in place.  (view the HOA disclosure package as of October 2008)

What could happen from here?  These are my best guesses:

1. The foreclosure sale will not take place, construction and sales will continue, quite slowly.
2. The foreclosure sale will take place and the subdivision will be purchased by a new developer who will continue with the current vision, or adjust it and move forward with development, construction and sales.
3. The foreclosure sale will take place, but nobody will buy the subdivision, and thus the bank will become the owner.  They will then work to sell Preston Lake to a new developer through more traditional sales and marketing means.
4. Same as #3, but the bank will then try to sell the lots individually, instead of as an entire subdivision.

If you have questions about Preston Lake, feel free to call me at 540-578-0102 or e-mail me at scott@HarrisonburgHousingToday.com.

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 An early rendering of an estate home to be built at Preston Lake.


 An early rendering of the Charleston Rowhouses to be built at Preston Lake.

In the Beginning

The news of Preston Lake first broke in October 2005.  Here's an excerpt from the Oct 26, 2005 article from the Daily News Record:


Sales by the Numbers

Now, nearly five years later, progress is still being made at Preston Lake, but not at the pace that was originally anticipated.  Certainly, the enormous changes in the financial markets and the housing market over the past five years have played a large role in the change of pace at Preston Lake.  Let's take a look at residential sales at Preston Lake per the MLS...



Per the data in the MLS (reflected above) there have only been seven single family home sales, but I believe the count is actually closer to twelve when including custom contract builds that may not have shown up in the MLS .  It would seem that detached homes can be built at Preston Lake for anywhere between $350k and $900k.



Rowhouse sales have certainly slowed down in 2010, but over the past three years have been selling between $300k and $550k.

What's Available Now?

There are currently 14 active (or under contract) listings in the HRAR MLS, priced between $299k and $814k.  Five of these homes are under contract.

The Big Picture

Many developments of this scale (as close as Charlottesville) have failed over the past few years as housing markets faltered across the country.  It is remarkable, and notable, that Preston Lake (slowly) marches onward. 

Construction on the commercial parcels has not yet begun at Preston Lake, partly due to a sluggish retail market across the country, and partly because the layout of the commercial area at Preston Lake still may be in flux as a result of the yet-to-be-fully-funded South East Connector Road.

The developer of Preston Lake and its lender (Wachovia) are in the midst of legal proceedings, as described in the Mar 2, 2010 article from the Daily News Record:


Moving Forward

So, what's next for Preston Lake?  My best guess is that residential development will continue (slowly) and that commercial development will eventually take place.  The retail development, however, will likely not take place until the economy improves such that retail businesses (independent and franchises) are looking to expand once again.

If you have questions about Preston Lake, feel free to call (540-578-0102) or e-mail (scott@HarrisonburgHousingToday.com) me.  My parents live at Preston Lake -- they built a cottage home when they relocated to the Shenandoah Valley -- thus I'm in the neighborhood quite a bit.

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There is a slowly growing area just north of Harrisonburg that you may not have heard of or visited, but there are a variety of factors that may make it a growth area over the next several to many years.



A strategic plan has been created for this North Valley Pike corridor, that suggests turning an existing section of Route 11 into a main street area, with most through traffic diverted to a new road.  For an overview with lots of helpful links, read the post on hburgnews.



A research and technology park has been established amidst this corridor on 365 acres, owned and operated by Rockingham County. 



SRI International has established a 25-acre campus in the above-referenced research and technology park, and opened the Center for Advanced Drug Research, which is a "state-of-the-art research facility for conducting systems biology research in the areas of biodefense and neglected diseases."



An attractive subdivision of single family homes is being developed in this corridor area (I am marketing this subdivision) with prices starting in the low $200,000's. 



A new elementary school was recently built on Smithland Road, not too far from this North Valley Pike corridor.  This has created new traffic flow patterns, bringing greater awareness to the north side of Harrisonburg.

While most development has taken place just southeast of Harrisonburg in the recent past, the area just north of Harrisonburg will be a key area to watch over the next 3 to 20 years.

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As reported in detail at hburgnews, a new student housing complex is one step closer to being built on South Main Street.  The 60 acre tract is proposed to feature 466 apartments for college students --- but wait, certainly the developer would first be examining the state of the current student housing market --- right??

Let's take a quick look at what has happened over the past several years in Harrisonburg's student housing market:

In Fall 2007, there was a relatively even balance between JMU students living off campus, and housing available for said students.  There were 11,654 students, and approximately the same number of "beds" (bedrooms in apartments, etc) available for those students.

Between Fall 2007 and Fall 2009 the the number of off campus students increased by 382 students.  But.... there were 3,313 new beds for these students!  This huge increase in housing included new complexes (Charleston Townes, North 38, Campus View Condos, 865 East, Copper Beach, Urban Exchange) and additions to current complexes (Sunchase, new JMU residence hall).  This left an off campus vacancy of roughly 20% --- with 12,036 off campus students compared to 14,967 off campus beds for students. 

While growth is still occurring at JMU, it is quite slow because of state budget cuts for higher education.  Thus, the vacancy rate for Fall 2010 will likely only decline to 18.5%, and per my projections, by the time we get to Fall 2013, there will still be an off campus vacancy rate of 15% --- with 13,090 off campus students compared to 15,387 off campus beds for students.

But it seems that a company out of Glen Allen, VA is ready to jump into this exciting student housing market, add help pump that vacancy rate up even higher.  This new community will bring 466 apartments, described as 1, 2 and 4 bedroom apartments, laid out per the site plan below.



Let's assume 1/3 of the apartments are 1 bedroom, 1/3 are 2 bedrooms, and 1/3 have 4 bedrooms.  This equates to roughly 1,087 new beds for students.  They'd like to have them finished for Fall 2011, which means we'll have 12,588 off campus students available to fill 16,286 off campus beds, shooting us up to 23% off campus vacancy.

But the best part yet --- where will this student housing be located?  Next to JMU campus?  In the midst of other student housing? No and No.  This complex is quite a distance from JMU.



Again, read more at hburgnews, as there are a few detailed comments on that site that explain some of the history of the property.

SUMMARY:  Student housing vacancy in Harrisonburg currently hovers around 20%.  A developer is planning to build, likely increasing the vacancy rate to 23%.  If I were the developer, I would not develop it as a student housing complex in this community at this time.

What are your thoughts?  Questions?

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If you are considering the purchase of a new home in Harrisonburg or Rockingham County, you may want to check out HarrisonburgNewHomes.com, where you'll find an overview of many of the new communities being built in our area. 



I represent the builders of each of these communities, and am assisting them with the marketing of the new single family homes, duplexes and townhomes.  For more information about any of these neighborhoods, feel free to contact me or one of the other Realtors also marketing these communities:

• Scott Rogers, 540-578-0102, scott@HarrisonburgHousingToday.com
• Suzanne Trow, 540-383-7173, suzanne@cbfunkhouser.com
• Carey Keyes, 540-476-1988, carey@cbfunkhouser.com
• Jennifer Chapman, 540-746-4774, jennifer@cbfunkhouser.com
  

 

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Less than a year ago (summer 2009) Urban Exchange opened its doors to the very first residents of this impressive new structure in downtown Harrisonburg.  Urban Exchange features 194 apartments in studio, 1 bedroom, 2 bedroom, 3 bedroom and loft configurations -- with over 45 different floor plans. 

The big question that (nearly) everyone asked or wondered was whether there could really be several hundred people who wanted to live in downtown Harrisonburg.  The results are in --- YES, there are a LOT of people who would like to live in downtown Harrisonburg!

A few quick updates, and then enjoy the photos below showing the final product:

• When Urban Exchange opened in summer 2009, nearly 70% of the apartments had already been leased.
• Per signed leases as of today, when Urban Exchange reaches one year of operation (summer 2010), over 95% of the apartments will be leased!
• Approximately 50% of Urban Exchange residents are "young professionals" or downtown employees.
• Approximately 30% of Urban Exchange residents are undergraduate or graduate students.
• Large contingents of Urban Exchange residents are: Rosetta Stone employees, local school teachers, and JMU and EMU faculty and staff.

It certainly is exciting to see the growing enthusiasm that exists for living in downtown Harrisonburg.  Most experts in downtown revitalization would agree that a growing downtown population is an essential part of a vibrant and sustainable downtown district.

If you have questions about Urban Exchange, feel free to call or e-mail Mary Messerley at 877-548-3831 or mary@LiveUE.com.

Of note -- only one of four retail spaces at Urban Exchange has been leased, but several spaces are still available.  If you are interested in details, please contact Mike Hendricksen at 540-908-7528 or mike@cbcfunkhouser.com.


Hardie Plank, corrugated metal, glass, bridges, lavish landscaping, seating areas, and more! 


This glass encased corner includes the mail room, a reading room, the gym, and The Apex.


The west-facing side of Urban Exchange, visible from Main Street near Court Square.


Four floors of apartments joined by a landscaped courtyard over top of double volume retail space.


Western views along Water Street, looking out towards Rosetta Stone.

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One way to take a look at what is being built in and around Harrisonburg is by examining the Harrisonburg / Rockingham MLS to analyze listings circa 2009+.  First, or note, a full 14% of listings currently for sale in Harrisonburg and Rockingham County appear to be new construction.  (113 homes out of 793 homes).

Here's a big picture summary of these new homes for sale in our market:

• 51 are single family homes, and 62 are townhomes
• the townhomes are priced between $119,900 and $499,000
• the single family homes are priced between $76,495 and $738,600
• the median square footage of new single family homes is 1,868 SF
• the median square footage of new townhomes is 1,41F SF
• these new dwellings have been on the market an average of 194 days (six+ months)
  

If you're considering buying a new home in Harrisonburg, feel free to call (540-578-0102) or e-mail (scott@HarrisonburgHousingToday.com) to consult with me.  I work with quite a few builders and have become very familiar with the new construction process.

Also . . . enjoy the first edition of Harrisonburg Real Estate Radio:

Home Inspections via Harrisonburg Real Estate Radio  [08:38]

 

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Have you heard of American Builders Quarterly?  The publication provides a comprehensive look at the nation's entire construction industry by profiling leading companies that consistently perform in all aspects of the building trade.  Take a look at the covers of the last 15 issues (below) and you'll notice one company right here in Harrisonburg, Virginia that was recently highlighted by American Builders Quarterly: Scripture Communities.



This is rather big news, as this publication covers huge developments and developers all over the country --- but they took note (on the cover of the magazine, no less) of this local company that has been building communities in Harrisonburg and Rockingham County for several decades.



The article focused on Scripture Communities' emphasis on building lasting communities focused on market demands.  For years now, Jerry Scripture has been building unique, innovative communities to meet the specific needs and desires of home buyers in many different demographics. 

Communities currently being developed by Scripture Communities include:

• Heritage Estates: 55+ community with stunning French Country architecture, mountain and golf course views, and a community swimming pool.  Single family and paired homes, starting at $339k. www.HeritageEstates.us.
   
  
• The Cottages at Stone Spring:Energy-efficient "green homes" meticulously built to EarthCraft and/orEnergyStar standards.  Single family homes starting at $247k. www.TheCottagesAtStoneSpring.com.
   
  
• The Glen at Cross Keys: Spacious paired homes with high quality interior and exterior features and finishes, with a just released one-level floor plan.  Paired homes starting at $239k.  www.TheGlenAtCrossKeys.com. 
   
  
• Liberty Square: Two and three bedroom townhomes with City convenience, quality interior features many construction options, and several neighborhood amenities.  Townhomes starting at $149k.  www.LibertySquare.biz.
   
  
• Founders Way: One-level upscale condominiums with amenities such as a swimming pool, fitness center and jogging trail.  Construction has begun!  Condos starting at $149k.  www.FoundersWay.com.
  

If you have questions about any of these communities, please let me know (540-578-0102, scott@HarrisonburgHousingToday.com), as I represent Scripture Communities and can either answer your question, or identify someone who can.

ALSO --- STOP THE PRESS!
Don't forget about the Scripture Community Move Up Program, where Scripture Communities will potentially buy your house if you love one of their new communities and want to move up into a new home. 

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If you're building a home, what should you use as a driveway material?  There are a lot of options!

• Pavers, Brick or Stone
• Concrete, Stamped Concrete, or Exposed Aggregate
  
• Asphalt
• Gravel
• Dirt

Each has their own advantages and disadvantages, related to cost, appearance, durability, etc. 

Let's take a look at the most common types of driveways in Harrisonburg and Rockingham County.  The data source for this analysis is the Harrisonburg/Rockingham Association of Realtors MLS, so it's an inexact analysis, but can still provide some helpful insights. 



The chart above shows that the most common driveway material for single family homes in Harrisonburg and Rockingham County is gravel!  Beyond gravel drives, which are likely found mostly in the County, the most frequently occurring driveway is an asphalt driveway.  Let's take a closer look at driveways of single family homes in the City of Harrisonburg, to exclude the more "rustic" driveways found on homes further out in the County . . .



In the City of Harrisonburg, a full 1 in 5 driveways is still gravel, though asphalt driveways now lead the pack, with a full 10% greater market share than concrete driveways.



The graph above analyzes "expensive" homes --- those sold above $350k in the last year in Harrisonburg and Rockingham County.  Here we find an even more overwhelming share of asphalt driveways, though we also see an increase in the percentage of exposed aggregate driveways.



Perhaps most interesting is that when examining homes sold since Jan 1 2000, we find that most have had concrete driveways.  Is this perhaps the sign of a growing trend in our area, or the nation as a whole?


Notes:  In the last year, 570 single family homes sold in Harrisonburg and Rockingham County (per the HRAR MLS), and the analysis above is based on the 534 sales where driveway data was present and usable.

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Using data provided by the City of Harrisonburg, the information below is what I am finding on vacant land in the City of Harrisonburg.  Bear in mind that there is a bit more vacant land than referenced below, but I chose to exclude land owned by educational institutions, local government, religious organizations, state government. 

Vacant Land In Harrisonburg:

• 918 Residential Parcels (750 acres)
• 135 Multi-Family Parcels (192 acres)
• 216 Industrial Parcels (484 acres)
• 183 Commercial Parcels (320 acres)
• 14 Large Parcels (88 acres)

This is a total of 1,466 large parcels totaling 1,833 acres.

• The 1,466 vacant parcels account for 10% of the 15,075 total city parcels.
• The 1,833 acres account for 19% of the 9,655 total city acres.
  

Here is a visual to show the amount of vacant land remaining in the City of Harrisonburg:

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Almost a year ago I mentioned that a new road connecting Erickson Avenue to Stone Spring Road was moving forward.  Construction is now moving forward, with lots of progress starting on the Erickson Avenue end of the connector.

Below is a map showing where that will be situated (click on the map for a larger version) and this is a web site with more details.

City Portion of Erickson Avenue / Stone Spring Road Connector:



The road shown above lies in the City, but the Connector will continue into the County, all the way to Route 33 East near Boyers Road. 

The map below shows an overlay of the approved map from VDOT over top of both an aerial and road view from Google Maps.  Click on either for a larger view.

Rockingham County Southeast Connector (1 of 2 portions)





As far as I can tell, the County portion will cut through the new campus of Rockingham Memorial Hospital, and then cross through Boyers Road before connecting with Route 33.  From what I have heard, Boyers Road will become a cul-de-sac before reaching Route 33.

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Check out these two stories about Urban Exchange that both hit the news today . . .



Downtown living: Urban Exchange sets a new course for Downtown Harrisonburg  (The New Dominion)






Urban Jungle: Urban Exchange Home To City's First ‘Green' Roof  (Daily News Record)

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The architectural design of Urban Exchange is exciting, provocative and has received a lot of very positive feedback.  Two key features (among many others) that seem to be universally appealing are the expansive landscaped courtyard and the large windows and doors allowing for loads of natural light.  It is the unique "opposed L" design that allows for the natural light and the fantastic courtyard area --- and you might wonder how the developers stumbled upon such a great concept....

Several years ago, at the very start of the design process for Urban Exchange, the architects visited Harrisonburg to examine the site, and as a result, Philippe created the sketch below.



The architect and the developers then spent months creating a multitude of building styles and designs from which to choose --- but throughout the process, they kept returning to the very concept sketched out above. 

This design allowed for more significant massing on the main streets (Mason, Market) --- the brick areas on the now complete building, and it allows for lots and lots of natural light through the multiple exposed faces of the building.  And of course --- the primary colors of the bridges are now shining brightly in the sunlight, despite their position having been adjusted slightly from this original sketch.

As I have spoken with other architects, I have learned that it's not entirely uncommon for this to have happened --- for the very early inspiration to be the eventual reality.  I suppose the accuracy of this early sketch to the final building is so fascinating because of the large size of this project and the long (multi-year) development process that is just now coming to a close.

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Rockingham County, Virginia (not including the City of Harrisonburg) is comprised of (approximately) 46,600 parcels of real estate.  Some of these lots or tracts are very small, in towns such as Grottoes, Dayton or Elkton.  Others are quite expansive and are in the far flung corners of the County.  Below is a visual representation of the distribution of lot sizes of those 46,600 properties --- you might need to click on this link to view the full size document for easier reading.


Here's the summary:

• 20,108 parcels less than a half acre
  
• 6,889 parcels of 0.5 - 1 acre
  
• 9,801 parcels of 1 - 5 acres
  
• 5,513 parcels of 5 - 20 acres
  
• 2,355 parcels of 20 - 50 acres
  
• 1,933 parcels of 50+ acres

There is quite a bit more to break down from this data set, but here are a few interesting surface level observations:

• Almost half (43%) of the parcels in Rockingham County are less than a half acre
  
• 79% of the parcels in Rockingham County are less than 5 acres
  
• There are a lot (1,933) of large tracts of land (50+ acres) left in Rockingham County

And the most interesting facts I've gleaned from this data thus far revolve around the largest parcels in Rockingham County:

• The largest parcel in Rockingham County is owned by the (and is the) U.S. National Forest, with a size of 140,001 acres.
• The second largest tract is 37,980 acres, and owned by the U.S.Department of the Interior --- I'm guessing this is also National Park land...
  
• These two largest parcels combined encompass one-third (33%) of the total acreage of Rockingham County.
• The combined value of these two parcels (though I doubt they pay property taxes!?) is roughly $186 million!
  

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Every five years (or so) the Harrisonburg Redevelopment and Housing Authority conducts a detailed analysis of City housing.  In 2005, S. Patz & Associates, Inc conducted the analysis, available here: Citywide Housing Analysis for Harrisonburg, Virginia.

One interesting "housing issue" that is identified as affecting the City of Harrisonburg was identified in the 2000 analysis, and re-confirmed in the 2005 analysis:


I had never considered that this might be occuring --- that most higher price new homes were being built in Rockingham County instead of in the City of Harrisonburg --- but it makes sense, because undeveloped land is generally quite scarce in the City of Harrisonburg.

To confirm (or reject) this conclusion, let's take a look at the homes that have sold each year since 2000, that were built within 3 years of when they were sold (thus, new-ish homes)....

First, here's the break down of where all of these homes sold....

You'll note that the majority of the new-ish homes that were sold (and thus purchased) where in Harrisonburg, as opposed to in Rockingham County with a Harrisonburg address.

Now, let's look at "large" new-ish homes, those with 2500+ square feet....


Here we do indeed find the phenomenon that the report described --- almost all of the large (and thus expensive) homes were built just outside Harrisonburg, and not within the City limits.

Of note --- the City of Harrisonburg identifies this phenomenon as an "issue" because....


For even more reading, read the full housing analysis!

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This past week the Daily News Record published an article about the new housing complexes being built to house JMU students.  I believe the uninformed reader of the article would assume that there is a relatively good balance between students and housing --- but according to my calculations there is a significant oversupply of student housing for JMU students!

Here are the numbers...

• On-Campus Headcount has increased (or is projected to increase) by 1,500 students between Fall 2007 and Fall 2009.
• In this same two year time period new housing developments have accounted for 3,340 new "beds".

Why will this oversupply exist?

• The Daily News Record consistently uses enrollment figures creatively to exaggerate JMU growth, though I won't speculate as to whether it is innocent or intentional.  If you compare the figures in the DNR article with JMU enrollment projections, you'll see that they use a lower enrollment metric (students taking classes at the JMU campus) when referring to past enrollment figures, and they use a higher enrollment metric (students taking classes at the JMU campus, or anywhere else) when referring to current or future enrollment figures.  The result is that JMU growth seems more significant than it actually is.  Take a few minutes to see where on the JMU enrollment projections page they pulled the figures in paragraph 3 and 4 of the DNR article, and you'll start to see the errors in their comparisons.  Their "8 percent increase from last fall" is actually a 5.5 percent increase if you use the same metric for the two data points.  Is this simply an error, or does 8 percent sound better than only 5.5 percent?
• Harrisonburg created an incentive (with good intentions) for student housing developers to build now, now, now.  Much of the land in the City that was annexed several decades ago was zoned R-3, which allowed (until recently) a property owner to build student housing (in the form of three-story apartment buildings) without asking for permission.  Much of this R-3 land was adjacent to single family home neighborhoods, and thus Harrisonburg took this "use by right" out of the R-3 zoning classification.  R-3 property owners were left with a three year window of time in which they could build this higher density housing (student housing) without asking for permission -- and thus the construction began!

Don't Build Anymore!  My concern when I read an article such as the one that ran last week in the DNR is that a local (or out of town) developer will read the article and will decide to build more student housing because of the (exaggerated) enrollment growth and the (fictional) even balance between students and housing.  If you're a student housing developer feel free to contact me (540-578-0102, scott@HarrisonburgHousingToday.com) to discuss this further --- but please don't start building more student housing before completing a thorough market study beyond the figures reported in the Daily News Record.

Tell Your Friends!  Last week I was told of a (usually) well informed local business leader who was convinced that JMU will be growing to 30,000 and then 40,000 students within the next 5 - 10 years.  This type of casual conversation will lead to an even wider sentiment that we need more student housing in Harrisonburg --- and this individual is often in conversation with student housing developers.

I'm stepping down from my soap box now, but I hope that student housing developers, and those that advise them, will carefully study our market before continuing on a rampage of building college student housing!

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Construction is moving along steadily at Urban Exchange in downtown Harrisonburg.  This exciting new mixed-use community will include 194 condos, two levels of structured parking, and approximately 12,000 square feet of retail space.  

Over the past 16 months, we have been excited to see that people crossing nearly every demographic have interest in living at Urban Exchange.  Those having committed to living at Urban Exchange span an age range of 20 to 80, and include retirees, young professionals, university faculty and staff, undergraduate and graduate students, families with children, employees of growing local companies such as Rosetta Stone, SRI, SI, RMH, and more.  

Urban Exchange is comprised of two wings with approximately 100 condos in each, and when we broke ground in February 2008, we did so with the vision of selling the condos in the West Wing, and leasing them in the East Wing.  This past week, however, we made the decision to lease all 194 condos instead of selling half of them --- primarily because of the significant changes in the condominium financing market that have taken place over the past 12 to 18 months.

The West Wing of Urban Exchange is comprised of 98 condos, and Fannie Mae and Freddie Mac guidelines dictate that 51% (soon to be 70%) of such condos must be owner-occupied in order for any purchaser to use a conventional mortgage for purchasing at Urban Exchange.  Furthermore, Fannie Mae and Freddie Mac will not allow loans to close on any condos until 51% of the condos are reserved.

Given these guidelines, we knew that it would be difficult to orchestrate the sale of 70 condos nearly simultaneously, but we were determined to attempt to do so.  Unfortunately, a few timing and logistical factors conspired against us:

1. Construction on the East Wing (for lease) was started two months prior to construction on the West Wing (for sale).
2. Prospective Urban Exchange tenants were willing to sign leases well before their condo was close to being complete.  (In fact, I believe the first leases were signed before we even had a single piece of lumber on the work site!)  As of last week, 75% of the East Tower was leased, and 25% of the West Tower was leased.
3. Prospective Urban Exchange buyers were hesitant to sign even a non-binding reservation agreement until their condo and the building as a whole was nearly complete if not entirely complete.  As of last week, 15% of the West Tower was reserved for purchase.

Last week, when this decision was made, we were at the crossroad we had anticipated for several months.  We were seeing 5 to 6 new leases a week, yet nearly all of the prospective buyers (without reservations) were waiting to commit until construction was nearly complete.  We realized that within the next few weeks we would have to start turning prospective tenants away if were to preserve enough owner-occupied units in the West Tower to achieve the occupancy standards from Fannie Mae and Freddie Mac.  

Given the vast, early demand from tenants to live in Urban Exchange, and the delayed, hesitant demand from buyers --- last week we decided to move forward with leasing all of the condos at Urban Exchange.

We have discussed this change at length with all of the buyers who had reservations at Urban Exchange, but we know that there were quite a few other prospective buyers who had not yet committed to purchase.  If you are one such person, and are still excited about the possibility of buying a condo in downtown Harrisonburg, we'd like to stay in touch with you.  

The developers of Urban Exchange own several other properties in downtown Harrisonburg where they will be developing condos after Urban Exchange is complete.  The next two projects that they will be developing will be considerably smaller than Urban Exchange (15-25 units) and thus will be much more feasible for condo sales.  In approximately six months we will be starting to hold focus groups with any such interested downtown condo buyers, as we begin the design and planning stages of these next projects.  If you would like to know when these focus groups begin, please click here.

Thank you for your continued support of and excitement for Urban Exchange --- while the decision to lease all of the condos marks a slight change in direction, it will still be bringing dynamic change to our downtown district.  In just over a month, the first residents will be moving into Urban Exchange, and as the next few months unfold, we will be building up to over 300 new residents of downtown Harrisonburg in an exciting and diverse community at Urban Exchange

If you have any questions about this change in direction at Urban Exchange, please contact me (Scott Rogers, 540-578-0102, scott@LiveUE.com), and if you have interest in further details on leasing a condo at Urban Exchange please contact Mary Messerly (540-421-9341, mary@LiveUE.com).

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