An article in the Herald Tribune discusses how many developers in Sarasota, Florida as well as the rest of the country are being forced to strategize alternative uses for their condo projects. Some of these alternative uses include converting the condominums to rental or hotel properties or even selling the property outright.
Every time we come across this type of article, which seems to be happening more and more often, 3Dwalkthroughs.com discusses the effect the housing market crisis will have on our industry. There are certainly two schools of thought we have witnessed over the past few months. An increased utilization of tools such as 3D Walkthroughs, 3D Renderings and 3D Floor Plans vs. a slowdown in the willingness of development companies to spend money on marketing materials.
It is certainly our belief that if a project is set to move forward, whether it be a condo, hotel or rental property, superior marketing materials CAN ABSOLUTELY MAKE A DIFFERENCE.
Article published Aug 31, 2007
Sarasota condo developers regroup
Soft market has them backing away from residential projects
By KEVIN MCQUAID
Paradise Development Group hoped to ride the region’s frenzied condo wave to the edge of downtown Sarasota when it bought the offices of the Kirk Pinkerton law firm in August 2005.
In the place of the aging 720 S. Orange Ave. building, Paradise envisioned a $35 million mix of retail space and more than two dozen high-end residences, priced at about $1 million each.
Two years later — and after the collapse of the area’s condominium market — Paradise has pulled the plug and is offering the building for sale for $7 million. New designs from architectural firm DSDG Inc. are pushing alternatives like hotel rooms or up to 150,000 square feet of office space.
Similar scenes are playing out throughout the region and Florida: Developers who had hoped to capitalize on low interest rates and perceived demand are having to reconfigure, stall or abandon projects altogether. In Sarasota alone, roughly a dozen condo developments have either been shelved, revamped or put back on the market.
Projects with names like Washington Lofts on U.S. 301; Premiere at Main Plaza, on a parking lot behind the Hollywood 20 movieplex; CityPointe, on Central Avenue north of downtown; Avalon, site of the former Farm & Garden; The Azure, on Lido Key; and the Grande Sarasotan, at Gulf Stream Avenue and U.S. 41, have all fallen victim to the softened market and are being rethought.
Even mixed-use projects that looked like a lock to be built in 2005 — the revamped Quay known as Sarasota Bayside, Pineapple Square, Michael Saunders’ headquarters on South Orange Avenue, Atrium on Ringling and Benderson Development’s expansion of the 13-story Bank of America building — now appear to be a long way from reaching fruition.
“It’s simple. Our market is in a coma,” said Debra Garrett, an agent with MAM Realty Inc., in Sarasota. “There are too many condos, not enough buyers, and too many speculators. We’re seeing a correction now from overinflated prices, caused because people thought price increases would never stop — and they did stop.”
Florida is not the only state imploding from the overabundance of housing supply, of course.
“It was a knee-jerk reaction around the country,” said John Harshman, president of Harshman & Co. Inc., a leading Sarasota commercial real estate brokerage firm.
Just as reactionary was the total amount of new supply that was being offered by developers, who realized that residential projects provided greater immediate profitability than retail space, offices or hotel rooms.
“Demand was so strong in part because developers saw that residential development pays significantly more than a site, in the same zoning, that would be targeted for office or retail,” Harshman said.
“And the thing was, during the tremendously active period here, from 2002 to 2005, developers looked at practically every site downtown and around it as a residential site,” Harshman added.
Though experts differ on predicting when the region’s residential market will rebound, most believe developers will have to look to product types other than condominiums if they hope to develop new projects within the next five years.
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