Florida's new condo laws could open up coastal redevelopment opportunities
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Sep 21, 2022

The condominium laws Florida passed in the wake of the Surfside tragedy could drive redevelopment opportunities throughout the state — and particularly in coastal communities where aging properties occupy valuable waterfront land.

The Building Safety Bill, which became law earlier this year, mandates inspections for buildings three stories or taller once they are 30 years old; buildings within 3 miles of the coast must be inspected at 25 years old. Those inspections can uncover costly repairs; even if they don’t, condo associations will be required to maintain a reserve account for capital expenditures.

The catalyst for the new mandates was the June 2021 collapse of the 12-story Champlain Towers South condominium in Surfside that killed 98 people.

Both the repairs and reserve mandate could cause special assessments for condo owners well into the six-figure range, said Greg Main-Baillie, executive managing director for Florida project management at Colliers.

The repair work can include anything from the roof, foundation, fireproofing and fire protection systems to plumbing, electrical systems, waterproofing and exterior painting, as well as windows and any other deferred maintenance issues.

“The commercial world is built around the capital maintenance of an asset,” Main-Baillie told the Tampa Bay Business Journal, “and the state is trying to bring that same level of benchmark into the multifamily residential game.”

Colliers recently launched a project management arm dedicated to condo associations facing these new mandates — and there’s no shortage of opportunity. Nearly 28,000 associations operate more than 1.5 million condos, Colliers said, citing a legislative analysis conducted earlier this year. Of those, more than 912,000 are over 30 years old.

“This is a natural extension of the work we’re doing on the commercial side,” said Ryan Kratz, the Tampa-based president of Colliers’ Southeast and Mid-Central regions. “The needs of a large condo building — especially the multistory assets — are very akin to what you see in the commercial space, and I think they’re best served by the quality of inspection and work and oversight that our project managers have to offer.”

But aging condos, which are more likely to be owned and occupied by less-affluent residents, could struggle to come up with the special assessment fees necessary to pay for the mandated repairs.

Kolter Urban, one of Tampa Bay’s most prolific luxury condo developers, is eyeing several properties, said Brian Van Slyke, regional president for Florida’s west coast. The most opportunity, he says, is on Florida’s east coast, where condo properties are older.

“We’re watching it,” he said, “and we’ve talked to a few condo buyers.”

One potential hurdle to redevelopment: sellers’ unrealistic pricing expectations. Van Slyke used the example of a 100-unit property in which owners think their units are worth $1 million, but as a redevelopment site, the property is worth $40 million, not $100 million.

“It’s going to be a rude awakening for people,” he said.