Orlando's condo boom a thing of the past
After a more than five-year frenzy, the condo-building boom in downtown Orlando has ground to a halt.
A new Orlando Sentinel survey of the downtown core finds that more than two-thirds of the 40 new high- and mid-rise condo projects announced in recent years are in limbo, as developers grapple with a slumping housing market, soaring construction costs and lending-industry turmoil.
Many plans have been postponed or altered; some have been scrapped altogether.
Not a single project has broken ground since an identical Sentinel survey six months ago found only 15 of the 40 projects had begun construction or been completed.
Scott Stahley, a senior vice president at Lincoln Property Co., calls the current condo environment "scary."
"It cannot be done," said Stahley, whose company is building the 32-story Dynetech Centre on Washington Street, which will have office and retail space plus 164 apartments -- but no condos.
The projects that have yet to get out of the ground may be the lucky ones. Many developers say the condo market has fallen so precipitously that the true danger now lies with the handful of still-incomplete towers that have already passed the point of no return.
Among them: The Vue at Lake Eola, the Paramount and 55 West, which combined are expected to inject more than 1,100 condos into downtown during the next 13 months.
Representatives of all three projects say they are confident. Each has signed contracts and cashed deposits with buyers on the majority of their units.
Speculators add to unease
But what nobody knows is how many of those buyers are people who intend to move in and how many are speculators who could walk away from their investments rather than close.
That problem has confronted developers of Orlando's newest condo skyscraper, Solaire at the Plaza. Though the condo tower on Church Street opened in March, the developer, Marietta, Ga.-based Wood Partners, says it has sold only two thirds of the more than 300 units. And some of those are sitting empty. Property records show that only a quarter of the Solaire's units -- 75 in all -- are owned by people who list their condo as their mailing address.
"The tale [of the condo slump] is still to be told," said Jeff Arnold, president of Concorde Eastridge, which aborted plans for a 31-story, 187-unit condo tower at Rosalind Avenue and Washington Street in favor of plans for a hotel with only 55 condos.
"I think upon the delivery of some of the units that are getting close to completion, like The Vue and others, we will find out whether the buyers are actually going to close," Arnold said. "There's going to be some leakage. The question is, how much leakage?"
Housing markets in Orlando and the rest of Florida began to fall back to earth last year after an unprecedented boom through the first half of the decade sent land values skyrocketing and construction cranes sprouting.
Demand withered, speculators pulled out, and the price of everything from concrete to gasoline pushed developers' costs higher. More recently, the lending turmoil racking Wall Street has made financing for projects even harder.
The slide displays few signs of slowing. A recent report showed that existing home sales in greater Orlando tumbled almost 43 percent in July from a year ago. Condos have been hit particularly hard; the same report found that condo sales had plunged 64 percent.
Even some of the most optimistic builders in Orlando have been forced to shelve their plans.
Craig Ustler, the veteran downtown developer who helped revitalize Thornton Park, had been hoping to begin construction on his latest downtown venture this summer. Now, however, he says the 13-story, 43-unit East on Park won't begin until January at the earliest. "Anything that's not in the air is on hold," Ustler said.
With the condo market falling, many developers have gone back to the drawing board. For instance, the 86 condos initially planned for the top of a 225-room hotel on Central Boulevard have been stripped out.
JLJ Properties of Lake Mary, which once planned to construct two towers and 510 condos at Church Street and Eola Drive, says it is now considering building apartments or simply selling the property. The developers of Sky Towers at Orange Avenue and Ivanhoe Boulevard have given up on their 381 condos and are looking at retail and office space, according to the minutes of a recent Downtown Development Board meeting.
Rumors are also swirling that changes are in store for the 39-story Tradition Towers on Central Boulevard, which is to have two towers of luxury condos linked by a sky bridge housing the exclusive University Club.
A spokesman for the developer, Broad Street Partners, said the company plans a "public announcement on the project in the next 60 days."
The half of it could be bleak
A number of developers are in a situation some say is the worst-case scenario: halfway built. Five downtown condo towers are in the midst of construction right now, including the 100-unit Star Tower on Jackson Street and the 146-unit 101 Eola. The other three are giants:
Developers are putting the finishing touches on The Vue at Lake Eola, which looms 36 stories over Rosalind Avenue and will have 375 condos. The first residents are expected to begin moving in next month. Hope McCampbell, vice president of marketing for the project's Churchill Development Group, said just 30 units remain to be sold.
The 312 units at the 16-story Paramount on Central Boulevard, which expects to wrap in about 10 months, are about 98 percent sold, said developer Steve Patterson, the president and chief executive of Zom Inc.
The last of the three scheduled to arrive also has the most units -- and the least sold. 55 West, the massive 32-story tower rising on Church Street, isn't likely to be finished until September 2008. The project's 405 condos, which are selling from the $300,000s to more than $3 million, are about 75 percent sold, said Jim Schroder, director of development for developer Euro American Advisors.
But despite the heavy sales, those involved with all three projects acknowledge that they have no way to be sure how many of those buyers will actually close on their condos -- especially if the market doesn't improve.
Walk-aways face losses
"We'll have some fallout, there's no question about it," Patterson said, though he noted that Paramount required 15 percent deposits on condos that range in price from $220,000 to $2 million. "People are going to walk away from a lot of money if they walk away."
Some walk-aways have occurred at the recently completed Solaire, said Jillian McGibbon, a sales and marketing manager for Wood Partners, which still owns about 105 of the building's units. Still, McGibbon said the developer is pleased with the progress of sales, given the condo slump. "To think that we're being slightly affected by it, rather than seriously, we're very happy about it," McGibbon said.
Developers make no secret that they will be anxiously watching to see how the newest projects perform. "I think everybody is in the search mode: How many investors are there?" said Michael Beale, of Raleigh, N.C.-based Highwoods Properties, which has a 125-unit downtown condo project on hold and another in early planning stages.
"We were all hoping it was like 80 percent owner-occupied and 20 percent investors," he said. "But no one knows."
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Jason Garcia can be reached at firstname.lastname@example.org or 407-420-5414.