Condos or apartments? Here's what will determine the future of one Channel district tower
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: May 29, 2015

The sale of more than 200 residences in The Slade will be a bellwether of downtown Tampa's residential real estate market.

HFF LP is marketing 214 of The Slade's 294 units for sale for Miami Beach-based Crescent Heights, which bought the units out of foreclosure nearly four years ago.

The Slade - which is at the intersection of North Meridian Avenue and East Washington Street - is a fractured condominium because the majority of the building's units are operated as apartments, owned by Crescent Heights. The remaining 80 units are owned by individuals.

The units are up for sale at a time when downtown Tampa's rental market is red hot, but its for-sale market is slightly lagging. While brokers are seeing increased demand for condos - and very few available for sale - prices of existing condos are still too low to justify new construction.

"It is a good test of the market when you have existing units you can throw out there and see if you get absorption and activity on it," said Mark Eilers, director of land services with Colliers International Tampa Bay.

Eilers specializes in multifamily real estate.

The per-unit price will dictate the buyer's strategy, Eilers said, and whether the units stay apartments or are sold as condos.

"Both are on the table," he said, "but if the price gets to a certain point, rental is going to be taken off the table."

The upper limit for making the project work as rentals is about $225,000 per unit, Eilers said. And that price point only works if the new owner is able to get rents upward of $2 per square foot, which only a few urban apartment buildings in Tampa have been able to do.

"Once they start getting above $220,000, it doesn't make economic sense to rent it out," he said. "220, 225 is probably the cutoff, and if they did that, they're banking on some pretty big rents."

That price point would be in line with the market: The mid-rise Pierhouse at Channelside sold for $214,000 per unit in early 2014. Crescent Bayshore - a high rise in the more-proven Hyde Park area - commanded more than $300,000 per unit when it sold last fall and set a new high benchmark for Tampa.

If The Slade units sell for more than that, they're more likely to be a condo play. Condo prices in downtown Tampa and the Channel district hover around $300 per square foot, depending on the building.

Crescent Heights' units in The Slade average 935 per square feet. If it were able to command an average of $300 per square foot, that would mean an average sales price of $280,000.

The existing rental base in the Channel district, where apartment buildings are more than 90 percent occupied, makes a good case for condos, Eilers said. Some of those renters may want to transition to homeownership but stay in the neighborhood.

"It's a good time to see what the market will bear," he said. "I think we're ready. We have enough apartments down there."