Saturday, June 23, 2018
Business

Luxury condos go from recession doom to boom

ST. PETERSBURG

The fire sale of new condos at luxury high-rise Signature Place was a rare glittering spectacle during the darkest days of Tampa Bay's housing collapse.

Hundreds of bargain hunters crowded a downtown ballroom to shout bids over platters of shrimp cocktail. Young women in skirts whisked winners to a closing room gleaming with flutes of champagne.

When 51 condos in the 36-story sail-shaped skyscraper sold at deep discount — some of them at half-price — one auctioneer burst with joy: "Who said Florida's in trouble?"

Now, four years later, some of those buyers happily agree. This year, condos there are selling at a median price of 70 percent higher than in 2010. One condo next door to a $199,000 auctioned unit just sold for $450,000 in cash.

Towers around the bay area once marked for death during the Great Recession have lucratively sprung back to life. In downtown Tampa, for instance, the newer condos are selling for more on average than even in frothy 2006.

Move-up buyers and empty-nesters newly able to sell their homes are boosting demand. After years in the suburbs, many are opting to live in places that are younger, more urban and energized. No yard work in the summers becomes an added delight.

But even after years of overbuilding, supplies of high-quality condos today remain thin. Banks and builders caught by the condo bubble's burst swore off building new condos or opted for more appealing alternatives, such as easily filled apartments.

"Going back five, six years ago, all the construction stopped. And it's not like you can build a condo tower in a month. It takes years in development and planning," said Darron Kattan, a managing director at Tampa real estate firm Franklin Street. That, he added, means condos unveiled during the worst of the crisis are now "a premium product," capable of commanding sky-high sums.

The $170 million Signature Place, St. Petersburg's second-tallest skyscraper, was built with trademark bubble-era excess: $1.5 million lobby columns, a six-story artificial waterfall, a plastic tower model built for $118,000. In 2007, with condos priced up to $7 million, developer Joel Cantor said, "Nothing's been built like this since the pyramids."

But when the ribbon was cut in 2009, Cantor slashed prices 25 percent — and many under-contract buyers still walked away. Other local condo projects folded or were mothballed. The unluckiest towers froze halfway: The Strand, an abandoned 15-story concrete skeleton, still overshadows Clearwater's downtown.

Some shrewd buyers profited heavily off these condos' fall from grace. A sparkling 31st-floor Signature Place unit that sold at auction for $742,000 was resold 30 months later for $1 million, and was briefly listed afterward as a rental for $4,500 a month. At Water's Edge, the 25-story Clearwater skyscraper dubbed "the ghost tower" after its pallid unveiling in 2008, the cheapest condo sold so far this year cost $420,000.

Analysts with commercial brokerage Cushman & Wakefield who looked at a decade of condo sales for 11 newer downtown Tampa towers, including Grand Central at Kennedy, Victory Lofts and the Slade, found that the cost per square foot has climbed more than 50 percent since 2011, to $230.

Even with swelling condo prices, most developers are still opting to build apartments, eager to profit from climbing rents. Apartments are also easier to finance: Lenders have demanded beefy down payments from presale buyers since the bust, when shoppers could reserve opulent condos for less than the cost of a TV.

The few condo developers today cater largely to the upper crust: Bliss, an 18-floor tower proposed for near St. Petersburg's Beach Drive, will offer nothing below $800,000. Some of the new luxury apartments rising around the bay area might also get converted to condos if prices continue to soar.

"It's in the back of the minds of developers building high-rise rentals, for sure," said Byron Moger, executive director of Cushman & Wakefield's multifamily advisory group. "But the prices have to get to the point where they make sense. And we're probably not there yet."

Tony Branch, an Earnest Realty agent in St. Petersburg, represented buyers who sold a third-floor Signature Place condo in March for $535,000, nearly doubling their money. He remembers when they bought it at the 2010 auction.

"Frankly, I thought they were kind of crazy," he said. "I thought the world was coming to an end."

So how high will condo prices climb? Branch doesn't hazard a guess.

"I've learned not to make predictions," he said. "I remember when people said prices could never go down."

Drew Harwell can be reached at [email protected] or (727) 893-8252.

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