Market madness: Prominent 34-story Tampa condo tower to go rental?

Developers of Element, the still-incomplete 34-story downtown Tampa condominium tower, are considering converting much of the building into apartments until the housing market improves.

A shortage of qualified buyers forced the hand of Novare-Intown Tampa Development LLC, whose completion of the neighboring SkyPoint condo tower was among the few success stories in the imploding urban condo market.

Novare is considering renting out units that range from 691 to 3,445 square feet, using the rental income to help cover its debts until the sales climate improves in a couple of years.

Christine Burdick, head of the Tampa Downtown Partnership, said the move makes sense: Better a vibrant apartment building than a half-empty condo tower.

"There are a lot of people not eligible for mortgages and there's a lot more renters," Burdick said. I think having people living downtown and contributing to its vibrancy is one of the objectives.

Work on Element is so far advanced that Novare plans to remove its tower crane this month from the construction site on Franklin Street. Though the building is nearly topped out, the interior work will stretch well into 2009.

Sales prices range from about $220,000 to nearly $1-million.

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Comments

[Tino]

Ouch. There are chumps trying to RESELL their now-rental community units at Element for $400-500 a square foot on the MLS. Meanwhile, there are Harbour Island condos available at $150 a square foot.

Good luck with that!

[Alex]

I have one thing to say to the greedy developers and house flippers who paid way too much initially to buy a condo hoping to make a quick buck by selling only to see the market crash: BWAHAHAHAHAHAHAHAHAH!!!!!!!!

[Dan]

I personally think this is smart. I guarantee you there is significant interest from people thinking they want to live downtown, but not quite willing to jump into a property purchase...

This will offer them a chance to live downtown, keep the building viable, and still contribute a new level of vibrancy for downtown.

"Renters by choice" typically have a great level of disposable income, which should help the pioneering retailers coming to downtown.

I say this is a blessing in disguise....

[Fuzzy Bear]

Good luck with that!

They could also let the government take it over and stick it to the tax payers. I forgot to add this in as hidden inventory, the properties listed as For Sale By the USA Government realestate company.

[Steve Simon]

You can see dozens of examples of high end year round/resort condo's that have upwards of 50% rental occupancy that seems to co-exist fine with their full time "live there year round owners".
Captiva and the Sanibel Island area has thousands of units like this. Longboat Key the same (just to name a couple).
The key is managment; and a similar intensity of use of the premises by both the owner and the renter.

Aside from the fact that it can work well, what the heck else is the guy who owns the place supposed to do if the percentage of units sold and the current absorbtion rates in the market would not provide numbers that would allow for survival?
Just my thoughts :)

[SoldierRenter]

Can't someone find one of them thar economic experts to tell us how this will cause rental rates to go up. I mean up is down and down is up. BTW, the government just put all the taxpayers on the hook for 1-2 TRILLION dollars. Congrats, can I live in a condo rent free? Just kidding, but not about the trillions. Thanks speculators, pigmen, and all the HS grad real estate agents that bought 10 houses. Love ya!

[Tom]

I thought "apartment" meant a type of dwelling and "condo" meant a type of ownership. Therefore, apartments can be either rented or purchased.

[Steve Simon]

Jimmy your readers are posting questions; would you like someone to post answers or would you prefer the comments be directed toward your post?
Don't want to presume :)

[James Thorner]

The "news" of this post is that the builder will rent directly to the public while keeping the condo structure. The builder is cutting out the investor middlemen - they're not buying - and doing the renting himself. But this isn't your typical condo-to-apartment reversion. It' remains a condo in its bylaws.

[Tino]

...and it deals two major disadvantages to individual owners.

1. If the developer owns more than 50%, individual owners have no say in voting for the board, creation of rules or on agenda matters. They are hostage to whatever the developer wants to do (and have to pay for their share).

2. If they want to rent a unit, they are competing with a developer that can set its own rental rules. Plus, they get to subsidize their competitor, as seen in #1.

No sane bank will loan to a buyer/owner in this situation.