Condos flourishing

South Florida CEO, Sept, 2004

Baby boomers settling down to an active retirement, empty nesters and young professionals are all fueling rapid residential real estate growth in Fort Lauderdale, according to industry insiders.

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"The baby boomers who spent half their life cutting the grass now want to know their neighbors, grocers, and restaurants," says developer Terry Stiles, CEO and chairman of Fort Lauderdale-based Stiles Corp., which is building the downtown condominium 350 Las Olas Place. "Others are selling their home and looking for a condo they can lock up and not worry about if they want to travel."

After two years of non-stop construction, downtown Fort Lauderdale's first new residential buildings are opening: the Esplanade, and Water Garden, with 454 condominium units between them. Both buildings are sold-out and demand for other condos in the pipeline is going strong.

Still, with 4,500 more units in the planning or development stage downtown, local business owners and area leaders are wondering how many people are snapping up condos for investment purposes and how many actually plan to live in them.

"What we're waiting on now is to see how much of the initial investment was just investment," says Patsy Mennuti, executive director of the Riverwalk Fort Lauderdale Trust, a commercial development agency that focuses on business along the New River in Fort Lauderdale. "It's going to take time for the market to settle."

Mennuti echoes the concerns of some area business owners and residents that many of the condo units are being bought by speculative investors who plan to sell, or flip, the units for a profit--potentially leaving the most sought-after buildings without the full-time residents that area businesses are counting on as customers.

Real estate developer Stiles does see investors buying units in his project, but says it is difficult to say how many. He is quick to add that a large portion plan to live in the units at least part-time and that has an economic benefit of its own to the area.

"They're not just parking their money, but are using the condo units as vacation homes," Stiles says. "Since we have been sold-out for some time, now we have begun a resale program. Only a limited number of current buyers have put their units into the resale program, leading me to believe that many of our buyers intend to live in the building. Several of the units that have been placed in the resale program have been sold again, so somebody is going to be living in these residences."

Like Stiles, other downtown developers are expecting a mix of full-time and part-time residents in their projects. Walter Collins, president of Sea Ranch Properties, which is building the Las Olas Grand condo project, agrees with Stiles.

"Many already have a home here or live on Galt Ocean Mile, but they prefer to move to a modern building," says Collins, who estimates that half the residents in his project come from outside Florida. Those buyers, he adds, are likely to patronize local businesses because the "new downtowner doesn't want 30- to 45-minute commutes to get everywhere. They want restaurants within walking distance. The ocean is a big black hole at night, the downtown area is alive."

With 4,500 residential units in the works and another 13,000 available to be zoned for future development the question of overdevelopment hangs over the city.

Richard Zipes, developer of the Las Olas River House condo, says it has been five years since the last condo was completed in Fort Lauderdale, and that project, L'Hermitage, was the first to be built in 25 years. "So I don't see any big deal over the 5,000 units currently in progress," says Zipes. "Broward County has traditionally been underdeveloped. Demand is under-supplied and values will continue to go up."

While downtown developers have centered their marketing push around a "24/7" lifestyle campaign, those in other areas are marketing the "Venice of America" moniker--given to the city decades ago because of its extensive waterways. For example, on the 17th Street Causeway, the 129-unit Port Condominium and Marina offers a 125-slip "rackominium"--dry boat storage that can accommodate vessels up to 52 feet long and weighing up to 35,000 pounds. A computer-operated crane moves boats in and out of the dock. Chris Rosenberg, a principal at Port Condominium developer Everglades LLC, says boats that large have never been able to use facilities such as his until now. The public can purchase the slips, and so far Rosenberg says the project has sold 116 condo units and 75 slips.

Just west of 1-95, at State Road 84. The Falls at Marina Bay is also catering to a boating lifestyle. The $50 million rental development has 376 units and 10,000 linear feet of dock space. The 150-slip marina has an on-site boat brokerage and boat rentals. "We've got a nice mix of tenants from 30- to 50-years-old, and, surprisingly, retirees," says developer Jack Taplin. He plans to sell the dock space within a year, and is working on a five-year plan to turn the residential rental units into condominiums. "Right now we've got more people approaching us who want to buy rather than rent," he says.