The Story Behind the Magnolia

So Austin Towers has an interesting post about the failure of “The Magnolia”. This is my goto project on why condo projects don’t appear to be just about location. It’s right across from the Alamo Drafthouse, Maudies, and Suzies, right next to Uchi and just down the street from the hike and bike trail, and the new water park. Pretty decent location. But it didn’t get built. While the Sage further down South Lamar is next to a spectacular number of used car lots, and is being built.

Turns out:

– The project on South Lamar had significant issues with topography, grade slope, and tree preservation causing construction estimates to skyrocket. Prices for the units were adjusted accordingly, making the price per square foot uncompetitive for the neighborhood and actually on par with more desirable downtown high rise projects. This factor alone made the project unlikely to succeed.

– The project was also a victim of the national real estate crisis when Fremont Investment & Loan, the project’s construction lender, retracted its loan commitment when the Federal Deposit Insurance Corp. prevented it from funding any new loans.

Keep in mind when they started the units were going to be in the $200s, which is a really good deal for that close in. So obviously some of what is driving the slowdown is trying to lure condo buyers into crummier locations that are easier to build on, rather than a lack of desire for downtown condos. Obviously a lot of the land downtown is going to be hard to build on (since otherwise it probably would have been developed by now).