FALLING PRICES
YEAR-END MEDIAN SALES OF EXISTING CONDOS IN FLORIDA
MARKET
Ft. Myers-Cape Coral
Ft. Lauderdale
Miami
Orlando
Jacksonville
Sarasota-Bradenton
Tampa-St. Petersburg
STATEWIDE
2006
$256,300
$199,700
$294,400
$163,600
$162,200
$250,000
$183,200
$202,500
2007
$192,200
$171,800
$263,500
$152,300
$152,000
$243,500
$181,700
$187,100
CHANGE
-25%
-14%
-10%
-7%
-6%
-3%
-1%
-8%
Source: Florida Association of Realtors/University of Florida Real Estate Research Center
velopers are also lowering prices and offering concessions to prospective buyers.
“Construction costs are so high that you
can buy brand new real estate for one-third less than replacement value—which is
close to bottom,” says Craig Studnicky,
president and partner of International
Sales Group (ISG) in Aventura. “But, without question, the condos will fill up.”
Nerve racking as the idea of dropping
prices might be, the outlook for condo sales
looks great, according to one legal expert.
“In a perverse way, overbuilding leads
to the population of Downtown because of
these renters,” says Neisen O. Kasdin,
chair of the land use practice group at Akerman Senterfitt in Miami. “There really is
a silver lining. There is a price softening
and some people will be hurt, but prices
will begin to stabilize.”
POSITIVE OUTLOOK IN
TAMPA, ORLANDO
Beyond South Florida, condo experts believe the Tampa Bay area has been experiencing a different set of problems, yet
also shows an upside.
“From a positive standpoint, the market
is not real strong right now but I don’t
think we have a serious oversupply problem based on what’s been built and what’s
under construction,” says Jerry Shaw, senior VP of real estate for Tampa-based
Opus South Corp. There wasn’t too much
overbuilding in Tampa when the market
began to slow, but if the market had held
up for another six months there would be
an even more serious problem right now,
he says.
What happened in the Bay area when
the market began to slow is similar to what
happened in much of the state. “Many
projects were on the drawing boards and,
based on the downturn, they didn’t get
built,” Shaw says.
One solution some developers are looking to in Tampa, as well as statewide, is
changing the use of planned developments. In the Bay area especially, condo-hotel mixes are being reconfigured into a
hotel market, says John Selby, senior VP
with CBRE in Tampa.
“I think the biggest issue is the demand
[for condos] has slowed down,” says Shaw,
adding that he’s not aware of
a large-scale foreclosure
problem with condos in the
Bay area, even though some
are happening.
“Many of the problems
erupted from people who
wanted to live in the condos
and couldn’t sell their existing homes,” he purports. “It’s
not a perceived problem, it’s
a real problem.”
Shaw projects that there
will be more active interest in
the Tampa Bay area this
coming fall and winter, while
others would argue that the
interest is already here.
“In SkyPoint, the only
product we delivered in the
last year, we’ve continued to
write contracts weekly
through all the challenges,”
says Greg Minder, president of Tampa
condo developer Intowngroup. The company originally sold out of contracts for the
380-unit high-rise condo tower in the middle of Downtown Tampa, then gained a
number of units back from investors.
“There are areas of Tampa where units
are turning over in a month. Some in less-desirable areas are on the market for a
year or two,” Minder says. “It goes back to
the fundamentals of residential real estate—
the products have to be where people
want to live.”
While Minder’s condos are doing well,
others within Tampa’s urban core have
suffered from factors such as offering assignable contracts and allowing investors
to purchase multiple units. For example,
the Towers of Channelside, a pair of 29-
story luxury condominiums, filed for
Chapter 11 bankruptcy protection in January after selling only 35% of its 257 total
units. Another nearby condo project, the
469-unit Place at Channelside, also filed
Chapter 11 in early March.
“As the market deteriorated there was
big fallout in contracts, so that property is
suffering,” says Selby.
The bright side is that Tampa condo developers foresee a rebound.
“I think the advantage in a state like
Florida is that any kind of challenge will
make a quicker recovery,” says Minder,
whose company is building a 395-unit
tower called Element adjacent to SkyPoint. “It’s a local
business.”
In Orlando, real estate
professionals share the same
sentiment as those in Tampa
Bay and assume that markets without large supply
problems will be able to
bounce back faster.
Orlando is nowhere near
the scope or magnitude of
South Florida, says Shelton
Granade, VP with CBRE in
Orlando.
“The market is still very
slow, but I would definitely
rather be half full than half
empty,” he says. “I think on
the residential side it’s not
going to get much worse. I
think we’ve hit bottom.”
While there has been fore-
closure on some developments, Granade
says Downtown Orlando projects like the
View and the Paramount, which are nearing completion, have been successful. An-
CONDO UPDATE continued on page 47
“Many of the
problems erupted
from people who
wanted to live in
the condos and
couldn’t sell their
existing homes.”
JERRY SHAW
VP, Opus South Corp.
