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HEADLINE: VERTICAL REALITY: BUYERS CLAMOR FOR CONDOS BYLINE: By PAUL OWERS Palm Beach Post Staff Writer
The retired South Bronx schoolteacher badly wanted a condominium at Abacoa Town Center. You can't touch these prices in Jupiter - one-bedroom units for about $125,000 - and Laks, 62, couldn't risk being left out. So she didn't just get in line, she created it. Arriving at the sales center March 25, just ahead of a few other condomaniacs, she camped out for three nights. "I'm lucky enough to live in a country that gives me an opportunity to live where I wish to live," Laks explained. "It's my responsibility to find that place." By the time the 120 units went on the market March 28, about 150 prospective buyers had fallen in behind her, most surrendering their weekends for a shot at living in an upscale neighborhood next to the movies, restaurants and a baseball stadium. Absurd? Maybe. But it's now the norm. Demand for condos is as high as it's ever been, housing experts say. Buoyed by low interest rates and sick of suburban sprawl, buyers are scooping up units as fast as developers can build them. About 7,000 units are planned in Palm Beach County during the next few years, according to Integra Realty Resources, a Miami-based real estate consulting firm. That's an astonishing figure, considering that just more than 3,000 units sold countywide during the past three years combined, according to Reinhold P. Wolff Economic Research Inc. of Pompano Beach. "The marketplace has rediscovered the urban lifestyle," said Michael Y. Cannon, managing director of Integra. "People are sick of sitting in their cars for an hour and a half. "This is what's occurred in most major cities around the country, but it's something we've never experienced here before." To be sure, Palm Beach County has always been a relatively good condo market. But condos traditionally weren't good investments because they didn't appreciate in value the way single-family homes did. That's changed in recent years, as a combination of investors fleeing a volatile stock market for the security of real estate and historically low interest rates have made condos the investment du jour - no matter the price range, it seems. Indeed, few markets are hotter than Palm Beach County. Even prized public landmarks aren't safe from the building boom. The city of Lake Worth wants to sell a small public park just north of the Lake Worth Bridge to a developer planning a luxury development. In tiny Palm Beach Shores, the owner of the Sailfish Marina and Resort had a deal to sell the site to WCI Communities Inc. The deal fell apart last week, but other condo developers could still be interested. More than 3,100 units are scheduled to open in downtown West Palm Beach alone during the next few years, putting residents within walking distance of major entertainment centers such as CityPlace and Clematis Street. Developers are bolstered by the fact that many condo buyers are attracted to the carefree, cosmopolitan lifestyle that includes controlled-access security, concierges, housekeeping services, spas - even putting greens and meditation gardens. "Everyone's lives have gotten so full with work and civic activities, people don't have time to maintain a house," said Barbara Salk, a vice president of The Related Group of Florida, a Miami developer building hundreds of condo units here. Related Group converted The Tower at CityPlace into condos, and the 128 units sold out in three months. Officials thought that was terrific until another Related project, the 304-unit Prado, sold out in five days. "For a long period of time, there was no new product," Salk said. "What you're seeing now is a response to that pent-up demand." 'There's only so much land' The condo craze is just fine with developers, who are running out of cheap, available land for single-family homes. Even as the county's western sprawl continues at a strong pace, some in the local development industry welcome condos as "vertical subdivisions" because hundreds of units can be built in a relatively small space. A Miami Beach developer, Mercogroup International, paid $30 million for just 4 acres on North Flagler Drive in the Northwood section of West Palm. Plans call for as many as 300 luxury condo units ranging in price from $300,000 to the millions of dollars. "We think it's long overdue to have more residential units in the downtown area," said Enrique Dillon, managing partner of The Whitney, a 210-unit complex slated for Evernia Street. "There's only so much available land. Once it's gone, it's gone." In Lantana, thousands of people converged on a former boatyard to be part of the Moorings at Lantana, a waterfront project being built by Related. On the first day the sales center opened along Dixie Highway, buyers waited three to four hours before meeting with one of the 16 sales associates. Related provided food to keep the crowd happy and well-behaved, and police officers were called to direct traffic in and out of the area. Back at Abacoa in Jupiter, Illustrated Properties set up a tent and distributed water, soda and doughnuts while people waited. Even after spending two nights at the sales center, some folks left empty-handed when the units they wanted were sold out, broker Bill Hall said. All 413 apartments-turned-condos at Abacoa are spoken for. At one point, Illustrated raised prices 2 percent to 5 percent and still didn't see demand die down, Hall said. Illustrated's next condo project is in Port St. Lucie, where 205 units at The Belmont will go on sale the first week of June. The price range - $89,000 to $220,000 - should attract plenty of interest because the condo market on the Treasure Coast is starting to pick up, Hall said. "There's a lot of activity everywhere you turn," he said. Threat of market saturation Skeptics argue that the condo market is deceptively strong because of speculators who tie up units at discounted preconstruction prices and then "flip" them to other buyers for a sizable profit. Such a strategy could pose problems in the future, especially if mortgage rates continue to climb, as many expect. Last week, mortgage giant Freddie Mac said rates on 30-year fixed-rate mortgages climbed for the eighth consecutive week, to 6.34 percent. It was their highest level since they averaged 6.44 percent the week of Sept. 5. Speculators could be in trouble if there are too many units and not enough buyers. "What if you can't make a profit?" said Anthoney Casler, owner of Mortgage Cos. Complete in North Palm Beach. "There's a big upside, but there needs to be just a word of caution." But so far, so good, industry observers say. Cannon, the Integra Realty executive, said the only condo failures he's aware of have come from a few inexperienced developers. "It's a crazy time right now," Cannon said. "Are we overbuilt? I don't know. I don't think anybody knows." Some developers are concerned about the rising cost of cement, steel and other supplies, which could increase condo prices substantially. But with more than 1.5 million people expected to move to South Florida during the next quarter century, demand should stay strong, Cannon said. WCI, which built the pricey One Watermark Place along Flagler Drive, is said to be considering more condos in downtown West Palm. Neil Kozokoff, a Palm Beach investor planning condos, townhouses and lofts along North Flagler, said the market will remain vibrant as long as mortgage rates are reasonable and the economy stable. "I know one thing," Kozokoff said. "I wouldn't want to be driving from out west every day to work downtown." |
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