The project, known as The District at Victorian Square, was to include 171 condominiums and townhomes zoned for mixed-use to allow for small business owners to operate their business on the first level while living on the second level. The decision to rescind the agreement “reflects the current state of the local real estate market and the difficulty of obtaining project financing given the turmoil in the credit markets,” according to a release by the city.
"It was a combination of high construction costs, declining sales demand, declining prices in the market, and a difficult loan market (for buyers to obtain financing)," Duhon said. "Those are problems that plague the entire country, as well as this market. Victorian Square is not unique in this regard."
"We have been watching the market for several months," said Gary Duhon, area director for Trammell Crow for northern Nevada. "We have been involved in a very cooperative effort to do the right thing for the project and the city of Sparks."
Duhon said there were around 30 presales for The District and that refunds are being processed. Last summer, Trammell Crow representatives reported that 30 percent of the 171 condos needed to be pre-sold to move forward.
Duhon said he did not know where the final pre-sale number was when the agreement was dissolved.
Sparks customer service coordinator Karen Todd said the city is still working on assembling properties and building infrastructure that would allow for such a development in the future. On Monday, the City Council approved the purchase of three Victorian Square properties toward that end. Todd said the city’s vision for the area has not changed and that the hope is that another developer will be found to see that vision through.
“We’re really moving forward so it is easy when we have developer in place and when market conditions are right,” Todd said.
Sparks entered into a development agreement with Trammell Crow for phase one of the project in December 2005. The city and developer were also in negotiations for the development of phase two. Those negotiations ended as a result of this decision.
"It is disappointing to have worked so hard on a project that will not come to fruition," Sparks City Councilman and Redevelopment Agency Chairman Ron Schmitt said in a written statement. "Unfortunately with the current state of the economy and the tough lending market, it has become clear that this project, as designed, was not going to pencil out. We remain committed to moving forward with downtown redevelopment in the weeks and months ahead."
Duhon said Trammel Crow might consider restarting the project in the future, should the housing market improve.
"We wouldn’t rule out anything," Duhon said. "We may take another look at the project when the market conditions improve."
A weak economy and housing market are calling into question projects by many construction and development companies around the country, such as Trammel Crow.
"We’re taking a look at all of our projects," Duhon said. "All aspects of real estate, residential and commercial, to make sure all remain viable."
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