INSIGHTREALTY GROUP, Inc.

Big test looms for local condo market

 

The Business Journal of Jacksonville - January 5, 2007

 

Tracking residential home sales in the Jacksonville metro area will be a fascinating spectator sport this year and for some time to come.

Home sales have continued to decline in recent months, but Nassau County has bucked the area trend, and one of the main reasons seems to be lower home prices. Affordability looms as a major issue as big condo projects start flooding an already well-supplied market.

In Downtown Jacksonville, Berkman Plaza converted from apartments to 198 condominiums a couple of years ago, and Berkman Plaza 2, under construction now, will add 222 condos. When the first tower of the Shipyards project is built, it will add 328 residential units.

On the Southbank, three condo towers will be completed this year: The Strand will add 234 condos, The Peninsula 295 and San Marco Place 141.

The developer of The Strand and The Peninsula planned to start building The Vu, with 40 stories and 190 units, by the end of 2006, which was also when Hines expected to start construction on The St. John, a 51-story glass tower with 300 units. Whether these two projects get started this year will be a gauge of the strength of the Jacksonville condo market.

All of these projects would add 1,710 condos just in Downtown, and in a couple of years, the renovated apartment buildings 11 East Forsyth and The Carling, with a total of 225 units, are expected to convert to condos.

Whether there really is a market for pricey condos here is going to become apparent in the near future. But the signs are not positive.

The Florida Association of Realtors reports that sales of existing condos in the Jacksonville area, not including St. Johns County, were down 55 percent in November from the year before.

And we reported last month that investors have been backing out of condo purchase contracts during the past six months to avoid losing thousands of dollars more if they cannot recover the purchase price when they try to resell.

But local builders see hopeful signs in the increasing number of people visiting model homes because they are what the builders call "real buyers," who plan to live in the homes they buy.

And a slowdown in the condo market means renewed interest in apartments. At least one local apartment complex that began a conversion to condos is now reverting to apartments, and out-of-state multifamily investment companies have bought several other area apartment properties recently.

So yet again adversity for some is an opportunity for others.

 

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