Due to the “tremendous resurgence” of downtown St. Petersburg’s condo market, the developer of a 358-unit high rise originally planned for rental apartments is exploring a sale that could convert it to a condo project.
American Land Ventures has hired a South Florida real estate brokerage to try to arrange the sale of 330 Third, a 17- story high rise under construction on Third Street S a few blocks from the waterfront.
The project, whose months of relentless pile-driving drove nearby residents to despair, “is well-positioned for condo conversion as it offers dramatic open water views and was designed with condo-quality finishes and amenities,” according to a 46-page offering memorandum obtained by the Tampa Bay Times.
The memorandum says the downtown market has shown a “significant price appreciation,” with prices for luxury condos increasing by 34 percent over the past year and by 68 percent since August 2012.
Among 330 Third’s advantages are its proximity to a central business district with 4-million square feet of office space, more than 25,000 workers and 1,800 businesses and “employment centers” including the University of South Florida St. Petersburg and All Children’s Hospital, the memorandum says.
Downtown St. Petersburg is also part of a vibrant metropolitan area whose beaches, golf courses and pro sports teams “have established Tampa Bay as a premier destination for visitors and provide its permanent residents with year-round activities.”
In all, the memo concludes, 330 Third’s “extremely desirable location” makes it a “unique investment opportunity for a condo converter.”
Darron Kattan, managing director of the Tampa real estate brokerage Franklin Street, said he’s not surprised that 330 Third’s current owner is testing the water on a possible sale and condo conversion.
“Obviously they wouldn’t do it if it didn’t make economic sense,” Kattan said Tuesday. “Really what’s at play here is that to finance a new condo development right now, lenders have to have a hefty pre-sale requirement before giving funding. To finance an apartment building, there’s no pre-sale requirement so it’s a lot easier to get funding.”
Kattan added: “At this stage in the cycle when things are really heating up, you’re going to see a lot (of projects) starting out as apartments and finishing as condos.”
Units in 330 Third, due to be finished in early 2016, will range from studios to three-bedrooms averaging 1,499 square feet. That would make them smaller than those in downtown’s priciest high-rises like Parkshore Plaza and 400 Beach or even in the 74-unit Salvador, soon to start construction near the Dali Museum.
As the economy picks up, several bay area developments are converting from rentals to individual ownership, including the nearby Sage in downtown St. Petersburg and Back Bay at Carillon, a community of 55 luxury townhomes in mid-Pinellas County.
In Tampa, Grand Central at Kennedy, which rented out many of its 392 units when sales slowed during the housing bust, now hopes to have all sold within a year. And Element, a sleek 34-story apartment tower, is due “to begin a retail sales program within the next 12 months,” according to the 330 Third offering memorandum, which cited several existing projects in the bay area.
Executives of Crescent Heights, which paid $98 million for Element two years ago, did not return phone calls.
However, the Miami-based company “traditionally has been a condo player so it would not be a surprise to the market place if they do convert” Element to condos, Kattan said. Despite the demand for condos in prime locations, apartment complexes remain extremely attractive investments, as shown by the just announced sale of the 308-unit Azure Luxury Apartments in the Carillon office park.
California-based Passco Companies paid $54 million for the recently completed complex, which is already 94 percent leased due to pent-up demand.
Many young professionals prefer maintenance-free apartment living while thousands of people who lost their homes to foreclosure during the recession have no choice but to rent.
The future of St. Petersburg’s 330 Third could hinge on that strong demand for rentals.
“I’m sure they’re getting plenty of activity,” Kattan said of the current owners. “Whether they will find someone to go condo is different but as a rental they’ll have plenty of interest.”
Contact Susan Taylor Martin at [email protected] or (727)-893-8642. Follow @susankate