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Is Tampa apartment and condo tower boom the start of a bubble?

 
A view of downtown Tampa shows a number of residential towers near the Channelside district. Can the city's downtown handle nine more apartment towers? CHERIE DIEZ  | Times
A view of downtown Tampa shows a number of residential towers near the Channelside district. Can the city's downtown handle nine more apartment towers? CHERIE DIEZ | Times
Published Nov. 14, 2014

Not to pooh-pooh the growing celebration of more and more apartment and condo towers proposed or already under construction in downtown Tampa. But — please — let's not become so euphoric that we end up in a real estate bubble in the core of this emerging city.

The good news is that after far too many fits and starts downtown Tampa is showing renewed signs of life and, more to the point, the promise of more to come. Witness the early sketches of the massive Jeff Vinik overhaul of Channelside (with a Bill Gates good housekeeping seal of approval in financing part of it), the possibility of USF's medical school relocating downtown and the burst of boutique hotels. People are noticing the completion of Riverwalk and, of course, the jolt of lofty apartment and condo towers suddenly slated to rise in an arc across the city's downtown.

It's the tower craze that begs caution. More than nine major residential towers are going up or preparing to do so with enough combined housing to add at least 10,000 new people to the downtown area. That number is practically the size of the city's downtown residential population just a few years ago. Nor do those numbers include lesser-sized residential buildings in the works as well as those rising along Bayshore Boulevard or in the massive Encore project just outside the downtown core.

Many of downtown Tampa's established apartment towers are mostly occupied. So plans for additional housing are a strong indicator that real estate developers see the momentum in downtown Tampa and want to catch the swelling population.

The question is how many towers — the vast bulk of them expecting to charge monthly rents ranging from $1,200 to more than $3,000 based on apartment size, amenities and view — can be introduced into a modest market all at once.

If we were in downtown Miami, city leaders would ridicule such concerns. Miami goes through real estate booms and busts like the Bucs go through quarterbacks. The glaring difference between Miami and Tampa is that Miami is the lucky recipient of a firehose of Latin American flight capital, money that gets plowed into its giant condo towers (even those still on the drawing boards) as safe investment havens beyond the reach of grabby Latin governments.

Tampa gets very little of that action. Miami might wince at only nine new towers going up in its downtown, where 1.25 acres of mostly vacant land along Biscayne Bay sold this summer for $125 million and where nine of 10 buyers are typically from abroad.

Tampa lacks those dynamics and may want to be a bit wary of a sudden surge of housing supply outstripping demand.

Tampa Mayor Bob Buckhorn surely would disagree with such concerns. "This is our time," the state's most gregarious politician likes to crow.

U.S. census data show that from 2000 to 2012, Tampa's city center had the second-fastest rate of population growth of large city downtowns in Florida at 14.5 percent. (Orlando is No. 1.) But Tampa's fast pace is deceptive, reflecting in part the low base of population the city downtown started with 14 years ago.

Experts in urban apartment real estate suggest the lack of new towers built during the recession and the demographic interest by both young adults and downsizing boomers to move to walkable downtowns should propel growth in many cities.

To Tampa's credit, some of the latest residential towers are committed to rise on downtown blocks that have been shuttered and little more than urban blight for decades.

One big breakthrough was this month's announcement that a team of Tampa and Atlanta developers want to erect a 22-story hotel and apartment tower on the downtown block that's home to the historic 1929 S.H. Kress & Co. building at 811 N Franklin St.

If there's a depressed downtown block (and there are still too many) that best symbolized Tampa's lack of success at urban renewal, the Kress block was it. Fourteen years ago, that block was rezoned to accommodate 401 apartments and a total of 560,000 square feet of development only to have the project die from — you guessed it —a real estate bubble.

This time around, the economy in Tampa and Florida is less speculative and stronger.

But nine towers? And 10,000 residents? Real estate developers are infamous for lemming-like behavior in following each other to excess. Is Tampa's downtown entering a housing renaissance, as hoped, after years of arrested development? Or is this the first chapter of "Bubble 2016" already being written?

Contact Robert Trigaux at rtrigaux@tampabay.com or (727) 893-8405. Follow @venturetampabay.