Florida condominium conversions buffet retirees
Fort Lauderdale, Fla.
Conversion of rental apartment units into condominiums is having a sharp impact on retirees all over Florida and has resulted in a flood of complaints to legislators. Many retirees assert that they cannot afford to buy their apartment nor can they find a comparable place to which they can move.
The problem is particularly acute in Miami, Fort Lauderdale, and in the Tampa-St. Petersburg area on the state's west coast.
Rik Fulscher, president of the National Apartment Association (NAA), in recent testimony before the housing subcommittee of the Florida House, pointed out that inflation and high interest rates, coupled with restrictive local building codes, zoning, and slow-growth policies, have contributed to rental housing shortages and have generated pressures for rent control.
As a result, investors and developers are reluctant to build new rental apartments.
Mr. Fulscher added that a study prepared in 1978 for the Joint Economic Committee estimated that during the 1980s, the nation would need an additional 9 ,356,000 rental housing units. Current production levels are far short of this figure.
The NAA executive said that for 1980 it was estimated that no more than 300, 000 multifamily rental units would be built, half of them subsidized by the federal government.
It is further projected that at least 145,000 rental housing units will be converted into condominiums.
"By cranking in the normal attrition through abandonment and demolition," added Mr. Fulscher, "we wind up with a net reduction in the rental housing inventory this year, a rather bleak prospect in the light of the lowest vacancy rate in 20 years and the joint economic committee study's estimate of 9.4 million rental-housing-unit demand for this decade."
In Dade County (Miami and Miami Beach), about 10,000 of the County's 200,000 rental units already have been converted to condos. In the first two months of this year Dade developers filed applications to convert 1,928 apartments to condos, almost half the number converted during all of 1979. Another 8,000 are expected to go condo this year.
Earlier this year the village of Kings Creek in South Miami was sold for $33, 585,000, one of the largest transactions of its kind in county history. This rental project is being converted into a 1,067-unit condominium. More than half of the current tenants have signed up to buy their apartments.
In another Miami transaction, Harold L. Miller, a Chicago attorney and investor, bought the Vizcaya Towers for $13.6 million and has begun turning the building into 161 condominiums. Prices will range from $95,000 to $170,000 and, Mr. Miller says, he already is near the sell-out point.
Nonetheless, Mr. Miller predicts that Florida conversions may be headed for a shakeout.
"Because of the heavy concentration of rental units in Dade, Broward, and Palm Beach Counties," he said, "it has attracted too many amateurs to the lucrative conversion field. Amateurs got into the conversion business because they saw it as a way to make money. However, they began to overbid on property. As a result, that forced prices to go up, yet they are still sitting around with units to sell."
Broward County (Fort Lauderdale, Hollywood, and Pompano Beach) presented a more striking picture.
Applications during January and February covered 2,647 apartments, 84 percent of Broward's 65,000 apartments have gone condo in the last three years and few people are willing to predict the final tally for 1980.
In Palm Beach County an estimated 1,300 of some 30,000 apartments already have been converted and it appears that this figure will triple by the end of the year.
In the Tampa-St. Petersburg area the condo-conversion trend also seems to be heating up. In 1978 there were 2,500 conversions from rentals to condos. Last year's figure was closer to 5,000, and for 1980 real-estate people are projecting between 6,000 and 7,000. Sales began picking up in December with prices averaging about $35,000.
The trend in Tampa-St. Petersburg seems to be to waterfront hotels and motels. One broker said that acquisition costs have increased only 10 percent, but markups for units run anywhere from 50 to 100 percent. This area, he added, is attracting converters from Chicago, New York, Atlanta, and Canada.
On a statewide level conversion applications in January and February this year covered 6,817 apartments, or 42 percent of last year's total. Together, Dade and Broward Counties, which have 44 percent of the entire state's rental units, produced a disproportionate share of the potential conversions, or 2 out of 3.
According to the latest figures filled with the Florida Division of Land Sales and Condominiums in Tallahassee, Dade and Broward Counties, two of the largest in the state, have 250,112 rental apartments. Statewide, the total is 567,347.
Looking ahead, Oceanfront Seasons Hotel in Fort Lauderdale will spend about $ 2 million in conversion construction, which will provide 135 condo apartments.
Owner of the Marine Colony rental complex in Pompano Beach is about to spend Intracoastal Waterway. The result will be 79 condo units.
Galt Ocean Terrace, a high-rise rental building on Florida Route A1A, along the beach in Fort Lauderdale, will convert to 136 condominium apartments. A week after the announcement I visited the sales office and was given a number so that I might talk with the next available salesman.
Carlton Towers, close to the beach in Fort Lauderdale, now is in the midst of improvements that will produce 128 condos.
Several municipalities have enacted ordinances so as to put a damper, temporary as it might be, on condo conversions, but officials agree that the final answer will have to come in the courts.
Lauderhill (Broward County) has declared a six-month moratorium on conversions while Lauderdale Lakes has imposed a 90-day moratorium. Nearby Hollywood has given preliminary approval to a 90-day moratorium.
In adjacent Dade County, Miami Beach and Bay Harbor Islands have imposed three-month moratoriums; and North Bay Village, a 30-day moratorium.
Recently, the Miami Beach moratorium was struck down in Circuit Court even as others are being challenged by the developers. One city official remarked: "We're pretty well aware that we can't stop conversions. The moratorium is just a way to give us a little breathing space."
Moon Landrieu, secretary of the Department of Housing and Urban Development, has shown concern about the growing nationwide shortage of rental apartments in all price ranges, noting that moderately priced rental units are simply unavailable in the major cities of the nation.
In testimony before a subcommittee on the US Senate, Mr. Landrieu cited figures which show that private developers built fewer than 130,000 unsubsidized multifamily rental units during all of 1979, the lowest level in a long time.
Low-income families, said the government official, could get help from the federal government to buy condominium- conversion apartments under a plan his agency has just announced.
Is there a solution to the rush to condominium conversions? Not in the foreseeable future, declared an attorney who specialty is real estate.
"High interest rates and federal tax laws have made it uneconomical to build new rental units," he says. "For the developer, it is more profitable to buy apartment buildings for conversion to condos."