Thursday, May 24, 2018
Business

New waterfront condos disappearing from market in Tampa Bay

Time is running out for people seeking new luxury condos in waterfront towers as the last of the units built during the go-go days fill up in Tampa Bay.

Water's Edge, overlooking Clearwater Harbor, is the latest tower headed toward selling out after new owners slashed prices nearly 40 percent. The project — once destined for doom after the developer filed bankruptcy in 2009 — is expected to fill up in the coming months as only 30 units remain.

The same story has played out in the last year in downtown St. Petersburg and downtown Tampa. Luxury towers have sold quickly after developers, owners and banks cut prices. Another key factor is that developers didn't overbuild this region as they have in other waterfront cities.

"This opportunity, combined with a very limited inventory, has created great buyer opportunities," said Dave Traynor, who is handling Water's Edge sales for Smith & Associates Real Estate. "There aren't many more new ones out there."

With rising construction costs and banks tightening lending standards, it could be years before a new luxury tower rises.

Joel Cantor, who developed Signature Place in downtown St. Petersburg, doesn't expect any new towers until after 2020 because banks lost millions on the projects when the housing market tanked. Currently, the selling prices would trigger losses for developers, he added.

"The prices are too low to warrant new construction," Cantor said. "The banks will not finance the projects."

Larry Richey, senior managing director of Cushman & Wakefield in Tampa, said it will be three to five years before luxury condo towers rise again in the area.

Before that occurs, several luxury towers that developers converted to rentals after the bust will likely be converted back to condos, he said. The region has 400 to 500 units, including many in downtown Tampa.

In fact, developers broke ground Monday on a $55 million apartment complex in the Channel District. Within 18 months, the complex is expected to open with 356 apartments and 4,800 square feet of stores in four buildings.

Richey predicted that St. Petersburg will be the first to get a new tower.

"Downtown St. Pete is the best example of where there is a demand for luxury condos," Richey said. "It's a little slower in downtown Tampa."

Deep price cuts have been the key to selling everything from suburban homes to waterfront condos across the bay area. The Towers of Channelside in Tampa and Signature Place and 400 Beach, luxury towers on Beach Drive NE in St. Petersburg, whacked prices in order to sell the remaining units.

The nearby Ovation complex has only a few of its 45 units left. The developer did not slash prices as deeply as other buildings and attributed that to wealthier buyers not being impacted as much by the economy.

But it's not just luxury condos selling.

As existing home sales have risen in recent months and the supply dwindles, the overall inventory of condos for sale in Tampa Bay has sunk to levels not seen for years. The lower the supply, the stronger the market.

Pinellas and Hillsborough counties have less than an eight-month supply of unsold condos, meaning it would take about eight months to sell the condos currently on the market.

Pinellas County sales jumped from 4,956 in 2010 to 5,893 in 2011, nearly a 19 percent increase. But median prices fell from $114,000 to $90,000.

Hillsborough County sales jumped from 4,175 in 2010 to 4,940 in 2011, an 18 percent rise. But median prices fell from $75,000 to $65,000.

Water's Edge had the misfortune of opening at a tough time for Tampa Bay condo towers.

With only 10 units sold, the 25-story tower sat nearly vacant after developer Opus South declared bankruptcy. Concierge Asset Management bought the remaining 143 units in June 2010 for $30 million. The firm immediately slashed prices.

"It gets back to a realistic marketplace," said Grant Wood, asset manager for Water's Edge.

Two and three-bedroom units range from 1,331 to 3,400 square feet, with prices between $205,000 to $1.575 million. Two of the 12 penthouses remain. The average condo was once priced at $750,000.

Perched atop a 40-foot limestone bluff next to City Hall, the building has drawn empty-nesters as well as second-home buyers from other states. Every unit in downtown Clearwater's tallest building has a water view. That's one of its prime selling points. Four units went under contract last week.

"This has some of the best views on the west coast of Florida," Traynor said.

Unlike many condos in the region, the units are eligible for government-backed mortgages. An additional selling point is that foreclosures have not occurred on any individual units, and no homeowner dues are delinquent. Concierge Asset Management also funded the association's reserves so residents wouldn't be saddled with extra costs.

"We are about as stable as you can get," Wood said.

Steve McAuliffe, a partner in McAuliffe & McCormick Inc., a real estate sales and marketing collaborative, lead the effort to sell the Towers at Channelside once lenders seized the buildings. He also thinks it will take three years before a tower rises in the area.

He points to the booming residential surge in downtown Tampa.

"They're trying to revitalize Tampa," McAuliffe said. "Developers are paying a lot of attention."

Mark Puente can be reached at [email protected] or (727) 893-8459. Follow him at Twitter at twitter.com/markpuente.

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