The Plaza Condominium at Berkman Plaza on downtown’s Northbank was among the earlier in this round of conversions. The 22-story building was purchased for $46 million by McRae & Stolz Jacksonville and post-conversion is about 75 percent sold, with unit prices ranging from the $200,000s to more than $700,000.
Competition, however, is heating up across the river with numerous projects on Southbank. These include The Strand, a 28-story apartment tower with 295 units that broke ground in mid-2004; The Peninsula, a 36-story condo tower now in the sales process; and the nearby San Marco townhomes overlooking Lake Marco, which also broke ground mid-2004 and will sell for no less than $1 million each.
And the movement continues. In March, Hines and South Shore Group Partners announced plans to develop Riverpointe, a $100 million high-rise new-build project on downtown’s Southbank. At completion, Riverpointe will total up to 300 condominiums and townhomes. Construction is set to begin late this year or early next.
Financing Watch While the market is booming, there’s no doubt that demand for condominiums will decrease when rates inflate, and already, some lenders are stepping back from the condominium sector. “Right now there’s a lot of major lenders out there with concerns that the condo market is so hot. Some are starting to underwrite their loans a little more conservatively and, in some cases, even exiting the market,” says Coykendall.
He cites Bank of Atlantic, which is one of the largest banks in Florida, as an example. “They’ve been active in the condo market for years and likely realized they had just too much exposure, and they exited the market six to nine months ago,” he says.
Those banks that have not exited condo conversion financing are getting more particular. “They see the big gap between high values and lowering cap rates,” Coykendall adds, “and are requiring buyers to offer substantial equity in order to fulfill financing.”
Still, Coykendall says he has yet to see a condo conversion in northeast Florida fail to do well. “Some are weekend sell-outs and some fill slowly, but they do eventually succeed, 99 percent of the time thanks to low rates,” he says. “It will be interesting to see what happens when mortgage rates start moving up, which is inevitable.”
Until this changes, luck is on the side of those that can fulfill the American Dream: homeownership.