ST. PETERSBURG — Fusion 1560, a five-story rental complex whose success helped fuel an apartment-building boom near downtown, has been sold for $57.5 million.
Chicago-based Mesirow Financial Real Estate Value Fund closed earlier this month on the 325-unit complex at 1560 Central Ave. The seller was a company backed by the California State Teachers’ Retirement System.
The purchase price “is a big number but that’s what’s happening in today’s real estate market,” Darron Kattan, managing director of the Tampa commercial brokerage Franklin Street, said Thursday. “The market continues to be strong for high quality property in high quality locations.”
The sale came with a proviso that bars the new owners from converting Fusion to condominiums at a time when demand is great for both condos and apartments in St. Petersburg’s thriving downtown.
Since Fusion was built in 2011, three new condo towers have been proposed while several other apartment complexes have opened or are under construction. Among them is the Hermitage, a $70 million, eight-story project of 348 rental units that recently broke ground on an entire city block at 700 First Ave. S.
Closer to the waterfront, 330 Third, a 17-story apartment tower, is rising on Third Street S next to a busy Publix shopping center.
In March, a memorandum obtained by the Tampa Bay Timesshowed that the developer of that 358-unit project, American Land Ventures, was exploring a sale that could convert it from apartments to condos.
Citing the “tremendous resurgence” of the downtown condo market, the memo said prices for luxury condos had increased by 34 percent over the past year and by 68 percent since August 2012.
The ban against converting Fusion 1560 to condos before 2021 is likely meant to protect against liability should any construction problems emerge, Kattan said.
“The original developer of any condo community is liable for any construction defects,” he said. “Crescent Bayshore (a luxury apartment complex in Tampa) had the same provision in order to avoid liability hanging over their head in case something went wrong. If it’s sold as an apartment complex, it doesn’t matter.”
Fusion, where apartments rent from $1,035 for a studio to $1,900 for a two-bedroom, two-bath unit, was among the pioneers in downtown’s westward expansion toward Tropicana Field as retailers, barkeeps and restaurateurs outgrow the built-out, bustling Beach Drive area.