by Michele Newbern Gillis
Staff Writer
A new trend has taken over Jacksonville: condominium conversions from apartments.
Low interest rates and the desire to own rather than rent are driving this new trend. They are happening everywhere – at the Beaches, downtown, Southside, St. Augustine, Riverside area and even in Mandarin. With the redevelopment of downtown, Realtors say people now want to live in and around downtown, where before the suburbs used to be the main attractors.
“Many buyers are attracted to the quality of life in the Historic area (Jacksonville’s Springfield area) and at the Beach, but many can no longer afford the prices of single family homes or they desire the convenience of condos,” said Jon Singleton of Watson Realty.
“Additionally, the rental market has lagged property values to the extent that multi-family structures can’t produce positive cash flow. The best and highest use of the properties for investors is to convert and sell. The property values in the Historic area are appreciating at such a rapid clip because of the increase in jobs downtown, the capital improvements associated with the Better Jacksonville Plan and dissatisfaction with the traffic congestion in Mandarin, Southside and Orange Park.
“Retail and entertainment venues have improved in the urban core, and suddenly everyone wants to be in the hub of the city.”
A few notable projects going on are Ocean Grove, which used to be Arbor Club Apartments and which is being developed by Prospect Capital Group and Perimeter Realty. It will be a gated condominium community with private beach access. Ocean Grove, off A1A next door to Sawgrass, will have one, two and three-bedroom homes in the private community priced from $125,000.
“We saw Ocean Grove as the perfect model of everything we wanted to accomplish with superior construction, large open floor plans, first rate finishes and outstanding amenities. Being able to offer all of this, along with private beach access in the center of Ponte Vedra Beach, all at a very affordable price point presented an exceptional opportunity,” said
Perimeter Realty President Don Fort.
The reality is that since you are only buying the space and not land, condominiums are going to be more affordable for the buyer.
“Ocean Grove represents an outstanding investment value. It is a rarity to find condominiums of this size so close to the beach and priced this well,” said Lance Lundberg, managing partner with Prospect Capital.
Another project is The Reserve at Pointe Meadows Condominiums, which used to be apartments and is being developed by Alliance Corporation and Lifestyles Realtors in Jacksonville’s Southside. It offers one, two and three bedroom condominium homes in a gated community with floor plans ranging from 905 to 1,424 square feet in six different designs and priced from $107,900 to $168,900.
Some of the projects were built as apartments just a few years ago, so minimal upgrade was needed. Though others, like The Preserve, were built many years ago and a major overhaul was needed.
“I have been told by site agents at these conversions that it is easier to get financing for apartments than condos,” said Larry Atwell of Vanguard/GMAC. “Consequently, some builders are probably building apartments with the thought of converting later [giving it a condo look at the outset]. What has happened in part to the real estate market is the mobility of the buying public and lack of desire to maintain a property to the degree a single family home is.
“Another reason is the skyrocketing prices for single family homes has made condos and town homes much more attractive.”
Low interest rates allow buyers who may not be able to afford a single-family home to own something.
“Developers, condominium and apartment owners are looking to make money quickly, and renters are looking to own homes,” said Kelli Gibson, director of marketing at Professional Title & Escrow. “Now, with interest rates as low as they are, there is no purpose for people with an average income to rent when they can afford to own.
“In order for these developers/owners to make money, they needed to jump on the bandwagon of the purchase market. Also, lenders are coming out with more and more programs where people are capable of buying homes of their own, often times with no money down, barely any assets, and even horrendous credit.
“This market is a purchase market right now, and everyone seems to be taking the steps to accommodate that.”
Also, many feel that the lack of affordable housing has led apartments to be converted so that those who can’t afford a single-family home might be able to get into a condominium at a lower price.
“The condo conversion market has been booming because of the lack of affordable housing,” said David Wakefield of CTX Mortgage. “You cannot find a starter home for the price of a condo. This is largely due to the increased land prices, environmental restrictions, permitting costs. Condos are very popular not only because of affordability but also because of low maintenance aspect.”
Our city is growing and many people are moving in from larger cities where condominiums are very popular.
“With regard to the number of conversations, just take a look around,” said Phyllis Staines of Re/Max Coastal Real Estate. “Our city is growing in every capacity and conversions offer an excellent opportunity for the developer,city, and future buyer.
“Most conversions are an efficient and effective way of providing numerous units of affordable housing to a large pool of buyers who may not be able to purchase otherwise. Most conversions start off by improving the building both inside and out, which benefits the community.
“The increased taxes received from the new homeowners benefits the city, and turning a renter into homeowner benefits everyone!”
Low maintenance for busy working young executives or retirees and affordability are all big contributors to the new trend.
Many agree that conversions are new to our area. Sources say that the apartment/condo phenomenon hit our area in 2000 and has no signs of slowing down.
“Also, Jacksonville is on the map,”said Mary Anne Hashem, director of Builder Services for Prudential Network Realty. ”Developers from all parts of the country are flocking to the area. The ‘gold rush’ has hit. The developers flock to the apartments for conversions because they can purchase a building and within a few short months they are open for business. The conversion market is here to stay for a while!
“Here are some reasons I feel this has happened to the market: Low interest rates; investors taking their money out of the stock market and investing in property; first time buyers can purchase for less money than a single family home; buyers have the amenities of country club living including a pool, clubhouse, fitness center, playground without country club prices; its affordable for the second home buyer and its affordable retirement housing.
“It is the alternative to a mobile home with great amenities.”