His reasoning? Bartenders, police officers, and teachers deserve the same comforts of home as higher-paid professionals who can spring for larger living quarters and more extravagant extras.
Grilli says his company is mimicking the move toward workforce housing that is taking place in Florida, where some multifamily builders have begun targeting working-class buyers as the sales potential for higher-end condos bottoms out.
Nearby, the developers of a new luxury condominium that will become the tallest building in Providence, R.I., have scrapped their plans for a steel skyscraper, saying a concrete structure will allow them to squeeze two more floors—and eight additional units—into the building. The switch could reap developer Blue Chip Properties several million dollars in extra profits, estimates consulting engineer Minhaj Kirmani of Cambridge, Mass.-based Weidlinger Associates, who notes that while the two building materials have similar price tags, steel prices “rise day to day.”
The material switch required the builder to draw up a new design, which delayed construction on the 435-foot One Ten Westminster by four months.
TRIED AND TRUE Developers whose condominium projects came out of the pipeline just as fortunes turned for the overbuilt industry are jump-starting sales by turning to financial incentives, out-right giveaways, and even gimmicks.
About three-fourths of builders who responded to the latest National Association of Home Builders multifamily condo market index say they are using incentives besides price cuts to boost condo sales. Two-thirds of those are throwing in freebies like appliance upgrades and TVs, while a third are paying points for the buyer and two-thirds are picking up closing costs or fees. And half of the developers say they are using agents or brokers to help sell their units. That’s up from about 20 percent a year ago.
That’s not likely to change any time soon. The same report shows that builder confidence in the condominium market was much weaker in the second quarter, as sales continued to suffer.
“Any time is a good time for an incentive,” says sales agent George Schultz of @properties in Chicago. “They are great when you have any kind of opening.” His firm has offered buyers 42-inch plasma TVs, but Schultz says financial incentives like no closing costs or a reduced mortgage are even more popular with buyers.
Developers nationwide are offering everything from free luxury cars to cuts of up to $40,000 on mortgages. Also popular are free assessments for the first year, financing as low as 4.5 percent, paid closing costs, free upgrades on appliances, free washers and dryers, cut-rate deals on parking spaces, and vacations. A Miami developer is forgiving closing costs ranging from $7,000 to $21,000 for buyers who had signed up for competitors’ condos that went bust.
