A $3 million condo project is headed for South Lamar Boulevard.
Castle Hill Investments has secured financing to convert 28 apartments on Cinnamon Path near South Lamar and Kinney Avenue into 14 duplexes spanning most of the street.
Some of the duplexes will be available to rent, ranging from $1,100 to $1,300 a month, while condos will start at $199,000.
Units won’t have common walls, which Robert Grunnah, principal of Castle Hill Investments, believes differentiates them from most duplexes. All units will have three bedrooms and two baths or two bedrooms and two baths — “far more desirable unit mixes than the typical covered 1/1 and 2/1 on the market now,” Grunnah says.
The project, called Cinnamon Sola, is the biggest to date for Castle Hill, which did $54 million in sales last year.
“This project had its financials and quality deemed strong enough to attain financing in a market that has turned up its nose at condo conversion and multifamily projects in the current credit crunch,” Grunnah says.
The 20-year-old units will be updated with “a clean modern aesthetic” and designed by architect Rick Black, who designed Starlite restaurant on Colorado Street downtown.
Condo conversions have gained momentum as developers see potential in aging apartment complexes on prime locations near the urban core, which can be turned around quicker and much less expensively than new construction.
“Real estate investors seeking the highest returns should focus on repositioning opportunities in the urban core, providing that they are properly priced,” Grunnah says.
Castle Hill prefers to develop existing properties, he says. Although new construction is potentially more profitable in a boom market, it involves uncertainties related to Austin’s tough development restrictions, fluctuating construction costs and schedules, and a difficult financing environment. Such risks are reduced when converting an existing property, he says.
According to a recent analysis by the Austin Business Journal, more than 3,000 condo units are either in the works for Central Austin or recently came online. The rush to meet demand and the tight credit market has forced developers to scrap plans for more than 700 more condos recently.