Out of the Dark

No City Felt The Effects Of The Bank Of The Commonwealth Scandal As Much As Norfolk. But A Few Developers Are Investing In The Buildings Left To Die, Bringing Many Downtown Properties Back To Life



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The former Franklin Condominiums at 220 West Brambleton was another former BoC property that Gadams purchased at auction. “It was an unfinished building that they wanted to turn into 19 high-end condominiums with two retail spaces in it.” Purchased last June and finished at the end of last year, Gadams’ company put the renamed 220 West on the market in February. “I think in the next 12 months we’ll be completely sold out. The condos range from $300,000 to $800,000. Our vision is to have them be the most upscale condos in Hampton Roads.”

The burning question may be: Who is going to live in all of these new apartment spaces? “We have gotten a lot of inquiries,” says Turner of Luna Developments. Fort Tar Lofts isn’t in the application process yet so there isn’t demographic data yet. “I think that there’s a lot more people who want to live near the downtown area. With the tolls going up in the tunnels, if you work in Norfolk you might want to migrate to Norfolk instead of using the tunnels every day. There seems to be a high enough demand in this area to warrant making more apartments available for those who don’t want to buy a home.”

Gadams concurs. “I’m finding 50 percent of the people are from out of town, which is great. We don’t want to just reshuffle the deck, we want new people, and that’s exactly what’s happening. What’s really helped us is the fact that not a lot of people don’t want to own anymore,” he says. “They’d rather rent, at least the folks in their 20s and early 30s, so that’s created a much deeper bench in the market for us, to where we can offer these rentals.”

Some developers, like Gadams, are clearly reaping the benefits from what has been referred to as a fire sale. Southern Bank is not complaining either. “The deal has worked out very well for us,” L. Taylor Harrell says. “We’ve had a significant amount of issues to deal with, but overall the results from the portfolio we acquired have been better than we expected.”

The FDIC estimated that the Bank of the Commonwealth’s shutdown cost the federal government more than $268 million. But people shouldn’t misunderstand how the process works, Harrell says. “Some assume that the taxpayers are footing the bill for this, for the failure. But the FDIC is really an insurance corporation, and they collect premiums from all of the banks and they use those premiums to cover losses when a bank fails. It’s really the healthy banks that are footing the bill for the banks that fail.”

Some say that the real tragedy with the Bank of the Commonwealth is what happened to shareholders and borrowers, and to the properties. “You have a lot of buildings around town that were usable but empty for so long,” Turner says. “All they were doing was becoming damaged. [The former owners] allowed these buildings, many of them historic, to deteriorate. For years, they were just sitting there.”

But while some companies, like Luna and Marathon, are in the process of redeveloping these “lost” spaces, new owners in other parts of town are still waiting for their perfect storm of good.

“We’ve had almost zero movement,” says Michael Myers of S.L. Nusbaum Realty, currently marketing a long-dark space at 717 Granby Street in the city’s new arts district, acquired at auction by the family of the late attorney Pete Decker. “It’s not like we’ve gotten an insulting number we’ve had to respond to, it’s that we’ve had almost no showings and no offers.”

While the realtor is optimistic that it will happen eventually, he says that successful redevelopment of many of the former BoC properties has been slow in the area of Norfolk’s new arts district. “I really can’t blame it on the Bank of the Commonwealth,” he says. “That left a bad taste in a lot of people’s mouths, but I think most people are over it now and moving forward.”

“Right now, though, this is an area that is still in limbo.”



 

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