Condo comeback: More projects in works
The views, the ease, the retiring Boomers:High-rise lifestyle attracting new buyers
BY KIMBERLY MILLER – PALM BEACH POST STAFF WRITER
The recovery in Palm Beach County’s condominium market has lagged the overall housing rebound, but with inventory near depletion and a revival in urban living, sale prices and new projects are hitting post-boom highs.
A turnaround in condo purchases began in mid-2012 and barreled through last year with the aid of billionaire Jeff Greene’s bulk buy of 166 units at The Strand in downtown West Palm Beach.
But Greene isn’t solely responsible for the condo comeback, which has developers scurrying once again for buildable lots.
“We are actively looking at other parcels,” said Ed Jahn, vice president of Kolter Urban. “We were definitely pleased with the number of sales we made last year.”
Downtown West Palm Beach, where about 15 new condos sprouted during the ill-fated days between 2003 and 2008, has nearly sold out of developer-owned units. Just 54 of 448 units remain available as of earlier this month at Kolter Group’s Two City Plaza. CityPlace South Tower has just 70 units of 428 remaining.
The Related Group’s purchase of 325 unsold units in early 2013 at Boynton Beach’s Casa Costa, formerly known as the Promenade, is paying off. In less than a year, 200 units in the 14-story twin-towers have been snatched up, and the sales team estimates the remaining 100 will be gone by year’s end.
In Boca Raton, Vander Ploeg & Associates, Inc. isn’t waiting for its 192-unit Tower One Fifty Five to even break ground before getting to work on the next project. Plans for a luxury 25-unit condo at 327 E. Royal Palm Road are already on the drawing board.
“South Florida went from too much inventory to sell, to way too little,” said Craig Studnicky, principal of Related ISG International Realty, which bought the Casa Costa units. “Starting in 2008 through most of 2010, the world was at a standstill. That’s not the case today.”
According to the Realtors Association of the Palm Beaches there were 6,554 condominium units for sale on the Multiple Listing Service in February, that’s less than a 6 months’ supply, and down 56 percent from January 2010.
The median sales price recorded for condominiums countywide was $122,500 in February, up 25 percent from the same time in 2013. In fact, last year was the first time the median price on Palm Beach County condominiums breached $100,000 since April 2010.
In 2006, at the tail end of the boom, median prices for county condos reached as high as $220,800.
David Cobb, regional director for the Royal Palm Beach-based firm Metrostudy, said the condo market fell faster and harder than that of single-family homes. Buyers who put deposits down for pre-construction sales walked away in droves before projects were completed, leaving high-profile buildings such as CityPlace South Tower in foreclosure.
“When you saw the condo market fall, it fell steeply and took developers by surprise,” Cobb said. “There was simply too much supply and it was overpriced.”
Cobb said the condo market can also be less reliable. It caters to specific buyers looking for second-homes, to downsize, or to be part of a downtown scene. Monthly condo dues of more than $1,000 in some downtown units may make people think twice before signing a contract.
But Brian Saver, principal broker for McWillams Ballard real estate in West Palm Beach, said he’s seeing a change in the condo demographic with an increase in buyers planning to make their condo a permanent home.
The return of the owner-occupant in the condo market coincides with easier financing, Saver said. During the downturn, banks would rarely make loans for condo purchases. Now, half of Saver’s pending sales are financed, although he noted that buyers may need to put 30 percent down.
“The prices are coming up to the point that investors are no longer interested and now we are dealing with owner-occupants, which is a very healthy sign,” Saver said.
Lena and Seppo Hartikainen are working with Saver to buy a two-bedroom condo at the Montecito, which is a 16-floor condominium tucked between the Tri-Rail station and South Australian Avenue in downtown West Palm Beach.
The couple, who have two adult sons, are downsizing from a four-bedroom, 2,900-square-foot home in Lake Clarke Shores. Condo living will make traveling easier, and the couple likes the thought of walking to restaurants and entertainment. Lena Hartikainen also has an office downtown.
“The move is tough and liberating at the same time,” Lena said. “We love city living.”
Adding to West Palm Beach’s downtown condo inventory will be Kolter Group’s new 213-unit Isis condominium at the corner of Fern Street and South Dixie Highway. The 16-story building with prices beginning in the low $300,000s will market to young professionals and people nearing retirement, Jahn said.
Isis is expected to be completed by early 2017, but Kolter is also busy with the luxury Water Club in North Palm Beach, which has 146 condos and 20 villas with prices starting in the high $700,000s. Jahn said he is also seeing more buyers planning to live in their units, especially older people leaving the country club life when they can no longer play golf or tennis.
“They don’t want the single-family home anymore, they want to go into something where they write a check and everything is taken care of,” Jahn said. “These buyers like the convenience of coming and going and the fact that they have all the services at one location.”
Robert Brandon, vice president of GroundStone, Inc., agrees. He’s targeting active adult baby boomers with his Bay Colony development on the Intracoastal Waterway in Juno Beach. Sales in the 119-unit communitybegan in April 2013. Fifty units are under contract.
“We just think the location and lifestyle here works,” he said.
While condo projects are plentiful in Palm Beach County, it’s nothing like the multitude of new units planned for Miami-Dade County, said Peter Zalewski, a principal with the Miami-based real estate firm Condo Vultures. Zalewski takes potential buyers on tours of pre-construction condo projects in Miami, but hasn’t ventured into Palm Beach County yet.
That’s because Miami-Dade has an estimated 23,000 new units planned at 51 sites. Palm Beach County has an estimated 3,000 new units planned at about 15 sites, he said.
“Everyone is still kind of circling the wagons and trying to figure out where to set up their camp,” Zalewski said. “But Palm Beach County is a market heading in the right direction.”