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PO Box 1212 Tampa, FL 33601 Pinellas Updated April 2006
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RETURN TO NEWS INDEX
With Downtown Condos Come Doubts TAMPA - We're not Miami: So why did another developer this week reveal plans to add another shimmering condo tower to downtown's skyline?
Real estate industry experts said Wednesday that Florida's continued growth, a healthy job market and Tampa's relatively underdeveloped high-rise market makes the area attractive to developers such as the ones who this week pitched Museum Tower, a 215-unit high-rise on the Hillsborough River.
But a longtime Florida economic consultant warns that these dreams of condo towers may never come true. Developers, even successful ones, have to fight an increasingly hesitant commercial lending market and a softened real estate market.
"Projects that are announced today will be significantly delayed or will never come to fruition," said Hank Fishkind, president of Orlando's Fishkind & Associates. He has been tracking Florida's economy since 1987.
Fishkind said the state's single-family and condo housing market peaked last summer, meaning new units under construction could stay empty awhile. Also, the number of commercial lenders willing to finance future projects has dwindled to just a few during the past 18 months, he said.
Today, 31 downtown residential projects either are open for residents, in development or under construction, according to the Tampa Downtown Partnership. That doesn't include Museum Tower, whose developers filed initial paperwork with the city on Tuesday.
More than 7,000 units would be available downtown if all the announced projects are completed, partnership data show. However, just 300 units are completed, and 1,730 are at various stages of construction.
Local real estate experts are optimistic there's room for the 5,000 units in the development phase and future projects. Florida's influx of 1,000 new residents a day includes young professionals and baby boomer retirees - key demographics to buy into high-rise city living.
Until recently, downtown wasn't a place for new projects, said Tony Polito, local director for the housing research firm Metrostudy. Projects the past 15 years popped up in places such as Harbour Island, Bayshore Boulevard and the beaches, making up just 5 percent of the area housing market.
"We really haven't been a high-rise condominium market in the past," he said. "Basically, it's been one project at a time."
What will make new residential projects work is a developer's ability to accurately price units for the market, said Byron Moger, a senior Tampa director for Cushman & Wakefield, a real estate brokerage firm. He said more affordable units priced under $300,000 will likely be more popular than towers aimed at affluent buyers.
"It probably makes sense to price in the affordable end and go for velocity and to sell quickly," he said.
Fishkind said Tampa shouldn't experience a real estate bubble bursting as he expects to see in South Florida. There, the condo market is saturated to a point he expects to see projects default on financing.
In fact, Polito said Tampa's condo construction is minute when compared with South Florida's. In 2005, 545 new units were started in Pinellas and Hillsborough counties. Dade, Broward and Palm Beach counties started 59,302 units.
Tampa's smaller market makes it a wild card for developers. Polito said projects launched in the next 12 months and their success will help determine downtown's residential potential.
"The question is the depth of the market," Polito said.
Lending will be the critical question for projects in development and even under construction. Developers of Trump Tower Tampa started construction on the 52-story luxury condominium building last month but have yet to announce who is financing the project.
Also, the Federal Deposit Insurance Corp. this week released a statewide banking analysis that raised concerns about how much money community-based banks were lending to commercial projects.
Moger said the financing question could be a positive. Banks are starting to offer fewer loans to developers, but the projects they do finance will likely be more financially sound, he said.
"Lenders are being more cautious," he said.
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