Local News

Luxury condos become high-rise rentals

Posted October 3, 2008 5:51 p.m. EDT
Updated October 3, 2008 6:16 p.m. EDT

— A slow economy has prevented investors who snapped up condominiums in downtown Raleigh from selling them for a quick profit. Many of the units are now on the market as rentals.

"The world's changed since the time they went into contract a little over a year ago," said Ed Fritsch, chief executive of Highwoods Properties Inc., which owns the RBC Plaza downtown.

About a third of the tower's 139 condominiums are being held by investors, many of whom can't cash out – or flip – the units until the economy improves.

A study by the Downtown Raleigh Alliance shows the price of some condominium developments dropped by as much as $40 per square foot  in the last year.

"I don't think the flipping is occurring as much as it used to because the market changed," Raleigh Planning Director Mitchell Silver said.

Realtors at The Glenwood Agency have seen a 20 percent increase in the supply of downtown rental units, said Ann-Cabell Baum Anderson, president of the real estate agency.

"Any investor who's in and has a property to flip, a rental is a great option at least to have some cash flow during this time," Anderson said. "When things turn around in the spring (and) we're back into an appreciation situation, you turn around and you sell it."