Going Up?

Christopher Homes forms a new division and brand to attract loft buyers around Las Vegas.

Four years ago, only two residential high-rise projects were under construction in Las Vegas. Since then, vertical buildings have mushroomed in Sin City. “Now, there are about 75 [projects] that have been started or are on the boards,” says Erika Geiser, vice president of marketing for Christopher Homes, which is based there.

VERTICAL BRAND: Las Vegas–based Christopher Homes formed a new company, C2 Lofts, to develop and market its mid-rise products. The venture's first project—the 100-unit, two-building C2 Lofts at Summerlin—is scheduled for completion this month.

Credit: Christopher Homes

Christopher Homes, which specializes in luxury single-family detached houses, wanted to get in on this vertical action. But the company's owner, Chris Stuhmer, was reluctant to roll the dice on 20-plus-story towers for resort-minded buyers who covet a residence on The Strip. He saw more promise in mid-rise buildings (at no higher than seven stories) located in “suburban-urban” communities bordering Las Vegas, where prospective buyers “don't want to live on The Strip but still want the ‘lock-and-leave' lifestyle,” says Geiser.

In October 2004, Stuhmer formed a separate business, C2 Lofts, to develop and brand the vertical product. It brought in Newport Beach, Calif.–based Scheurer Architects and a local general contractor, R&O Construction. C2's first project, started in November 2005, is called C2 Lofts at Summerlin. It features 100 residential units in two five-story buildings nestled within the burgeoning Summerlin Centre master planned community, which has its own casino, nine restaurants, and a 1-million-square-foot regional shopping mall under development. Each of C2 Lofts at Summerlin's buildings has modest retail space, too.

The project offers four floor plans for lofts that range from 1,400 to 2,800 square feet (versus condos on The Strip that might be as small as 800 square feet, says Geiser). The fifth floor is a roof deck with a panoramic view of Red Rock Canyon and Las Vegas' lights. It doubles as a communal area, with restrooms, a fire pit, a barbecue grill, and a bar.

The first building was nearly sold out in September, and construction should be completed this month. C2's opening price point in Summerlin was in the upper $500s, but now the lofts sell for between $700,000 and $1.2 million. C2 Lofts has been selling this product from a retail preview center that includes a full-scale mock loft. At first, recalls Geiser, C2 Lofts didn't offer many options. (“We have high-standard features to begin with.”) But it discovered that luxury clients want more choices, so it broadened its selection to include more finishes, such as 15 countertop choices instead of nine, and five or six cabinet options.

Having tasted vertical development, Christopher has acquired two more properties for C2, which is planning a mixed-use project in Summerlin that will have 800 units in five stories that will start in the $700s, and a project in West Las Vegas that will have 700 to 900 units starting in the $400s. Sales for each should begin sometime this year, Geiser says.

The Rottlund Co.'s first vertical redevelopment project encounters unexpected demolition costs and an uncertain market.

The deal should have closed Aug. 31. But after three subsequent delays, officials at The Rottlund Co. wondered whether their company would ever begin its first vertical redevelopment project, on an acre of prime waterfront property the builder agreed to purchase from Ramsey County, Minn., for $3.9 million.

TOUGH TOPOGRAPHY: The Rottlund Co. ultimately dropped out of its plan to convert a former office building and a jail into mid-and high-rise residential structures in St. Paul, Minn., primarily because of unforeseen development costs related to the site's unusual waterfront location.

Credit: The Rottlund Co.

Rottlund was lead developer on a team that included a commercial builder (Ryan Cos.), a commercial brokerage firm (NAI Welsh), and a commercial developer (Metro-Plains Development). The county chose the team to raze two buildings along the Mississippi River in St. Paul and build a tower and mid-rise building that would house 300 condos. Its partners brought Rottlund into the deal for the company's residential expertise, even though the builder previously hadn't worked on a multifamily project with more than 88 units, says Todd Stutz, president of Rottlund Homes Minnesota.

During its due diligence, Rottlund discovered “that this would be a more difficult site to develop, with more ‘hair' on it,” says Tim Whitten, vice president with Rottlund's David Bernard Builders and Developers division, which primarily handles Rottlund's urban projects. The structures to be torn down—a former jail and an office building—are on a bluff below Kellogg Boulevard, which is elevated by a bridge. Stutz says that to raze those buildings and reinforce the bluff with a retaining wall would add $6 million to the cost of the project, which he estimates would have been around $120 million. The city might have chipped in $10 million to $12 million, but the team's pact with the county prohibited Rottlund from receiving financial assistance until after the deal closed.

The development team's original plan called for replacing the office building with a 26-story tower including seven underground parking levels and 200 condos; and replacing the jail with a seven-story building with two parking levels and 100 residential units. (The condos would range from 1,300 to 3,000 square feet and sell for $350 per square foot.) The site itself is considered to be one of the choicest locations in St. Paul, near Xcel Energy Center arena and a new museum. But with pre-construction costs escalating and buyer demand declining, Rottlund went back to the county with a revised plan to reuse the jail, which would have included workforce housing and a museum. Rottlund also suggested that the tower component become a separate development, but the county wouldn't yield. “It wants to sell the jail,” says Stutz.

Even though the county agreed to extend the closing deadline to Oct. 27 to give the developers more time to rethink what they would do, Rottlund finally backed out of the deal because “our gap for potential profit kept getting smaller,” says Whitten. He also says the county was primarily interested in selling a piece of property. “They just didn't have the expertise to see that what we wanted to do was the best solution.” Rottlund, he says, would be willing to reenter the project “if the county changed its tune,” though he's not too optimistic about that happening soon.