Vacancy rates to fall, thanks to Chiquita

After seeing relatively little leasing activity for most of 2011, the uptown office vacancy rate is set to fall, thanks to Chiquita International Brands.

The banana purveyor's announcement that it would move its corporate headquarters to the NASCAR Plaza from Cincinnati could shave nearly 1 percent off the rate - pushing it to 12 percent from its current 12.8 percent, according to Karnes Research in Charlotte.

Uptown’s office vacancy rate has hovered above 12 percent since the second quarter of 2010, when it was 12.1 percent. In 2007, at the end of the economic boom, when empty space was scarce, rates were around 2 percent, the lowest in the country.

In calculating the impact of Chiquita’s new lease, Karnes managing partner Andrew Jenkins estimated that Chiquita would occupy roughly 125,000 square feet – or the top three floors - of the office tower adjacent to the NASCAR Hall of Fame.

Last year, uptown had 11,000 more square feet become available than was leased.

“We've just had a shuffle of tenants recently and not a lot of new, good, big deals,” Jenkins said. “We haven't had a lot of really strong, brand new tenants coming in taking a big chunk of space in a while.”

Countywide, there is 8.85 million square feet of office space available for lease. When Chiquita moves in, it will lower the county’s office vacancy rate to 17.75 percent from 18 percent, according to Karnes.

Vue buyers win deposit back in ruling that could affect future condo projects

A federal judge has ruled that a couple who tried to get out of their contract to buy a condo at the Vue should get their $145,485 deposit back.

The ruling against the uptown luxury high-rise could also dampen future condo development - particularly for large projects, some say.

Lawrence and Ke Ding Berkovich sued the developer of the Vue residential high-rise in uptown in December saying they should be let out of their agreement to buy a $1.28 million condo.

The Charlotte couple had entered into a purchase agreement on Dec. 10, 2008 to buy unit 5102 of the 51-story high-rise at Fifth and Pine streets, the filings say.

The couple canceled the contract less than two years later on Oct. 18, 2010, according to court documents. The couple claims there were various paperwork problems, including the developer's failure to include a recordable legal description of the property. They also sued for unfair trade practice and misrepresentation.

Last month, U.S. Chief District Judge Robert Conrad, Jr. ruled that a proper description of the property had not been provided with the sales contract as required by the Interstate Land Sales Full Disclosure Act. The buyers, therefore, were entitled to cancel the agreement within two years and get their earnest money back, the ruling says. The judge did not rule on the unfair trade practice or misrepresentation claims.

"This could affect other buyers," said the plaintiff's attorney, Celie Richardson of the Richardson Law Group. She declined further comment.

Vue developer Dan McLean said in a statement: "The Vue disagrees with the ruling and we plan to appeal the Court’s decision.”

Between the time the luxury condo tower was announced in 2005 and when it was finished in fall 2010, the economy has blossomed and then burst, uptown condo projects have sprouted and then fell out of favor, and buyers have gone scarce - either unable or unwilling to commit money toward a new home purchase. Some buyers say appraisals are coming in below contracted sales prices, making it difficult to get financing.

The Vue has said roughly 60 percent of the 409-unit building was pre-sold. Since the tower opened, fewer than two dozen buyers have closed. Others want to get out of their deals but are afraid of being sued by the developer. The Vue's condos started selling for just under $200,000 to more than $2 million. Buyers paid 10 percent of the contracted sales price as a deposit.

The Vue countersued the Berkoviches, asking the court to compel the buyer to complete the purchase. Conrad also ruled last month that because the contract was legally terminated, the Vue's counterclaim was moot.

The ruling may have broader implications, attorneys say.

In North Carolina, a condominium doesn't legally exist until the developer files a declaration under the N.C. Condominium Act. The act, however, doesn't permit the declaration to be recorded until construction of the building containing the condo has been completed.

Many developers pre-sell units before construction starts, as was the case with the Vue.

The Vue had argued that it did not deserve to be "penalized" for its failure to include a recordable legal description in the parties' contract of sale. The judge agreed it didn't deserve to be penalized, "especially when it appears that North Carolina law makes such a thing impossible," according to the filings.

Developers can sell condos without a recordable legal description, the judge wrote in his ruling.

But the Interstate Land Sales Full Disclosure Act "provided purchasers with a right to revoke the contract for two years to guard against possible fraud," he wrote. "...Plaintiffs are entitled to the prophylactic measure Congress granted purchasers deprived of a recordable legal description."

Attorney Bob Turner with Horack Talley said the ruling, if upheld, could change future condo development. Turner was not involved with the Berkovich case.

Turner said "the clear implication" of the ruling is that "the developer (and the developer's lender) must be confident that the entire project can easily be completed within two years from the date the first contract is signed."

Because lenders often require a significant number of pre-sales before construction can start, he said, this could essentially shorten the time a developer has to finish a new project.

"As it stands now," Turner said, "large condominium projects may become a thing of the past in North Carolina."