Condo Conversions
Thursday, March 20, 2008SUSIE GHARIB: The housing market decline is not only hurting condo buyers, but also condo builders. For builders with projects still in the planning stages, they can build and hope or cancel their projects altogether. But as Jeff Yastine reports, there's a third path emerging -- redesigning condo towers for other uses.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Credit crisis or not, condominium construction continues to fill the Miami skyline. But the builders of one project, a twin tower development called Capital at Brickell, face a dilemma. One of the buildings is already sold out; work on the foundation is underway. But the other condo tower as yet un-built, remains largely unsold. For Capital at Brickell's Vice President of Development Misha Mladenovic, it means changing the building to suit the fast-changing real estate climate.
MIROSLAV MLADENOVIC, VP DEVELOPMENT, CABI DEVELOPERS: We are exploring now together with the hotel component a change in design that would contemplate a six-story assembly component that would essentially be right here on top of this cavity.
YASTINE: Rather than cancel the project, architects are now redesigning the 58-story tower to have fewer condos and more hotel rooms, retail space and offices.
MLADENOVIC: We thought that, in order not to keep a construction site idle -- which is bad for both perception in business and can be interpreted in many ways by many people -- a project that is done and is completed would be a better complement to the many projects that we do.
YASTINE: Architect John Fullerton says firms like his, which design large urban construction projects, are seeing a lot of redesign work from developers in once-hot condominium markets around the country.
JOHN FULLERTON, FOUNDING PARTNER, FULLERTON DIAZ ARCHITECTS: And that has a lot to do with the marketplace, obviously. And so he'll build more hotel rooms if he feels that the condominium market is not there for him. In that case, we've planned the floors so they work interchangeably; we can go from condo to hotel without too much trouble.
YASTINE: But others caution that such projects mean developers potentially take on more risk, since a condo builder may not have the same level of expertise at building retail or hotel spaces. Mike Cannon, executive director at the analysis firm Integra Realty Resources, says the concept, called mixed use, can work if it's done for the right reasons.
MICHAEL CANNON, EXECUTIVE DIRECTOR, INTEGRA REALTY RESOURCES: I would think so, if it's a long-term investment. But if it's a developer that's builds just to build to get out and sell, then the answer may not necessarily be so. There are so many extra requirements that are incorporated in a mixed-use development that may come into play. But the answer is, it should be.
YASTINE: Such efforts won't help developers with buildings already under construction, where large numbers of condo buyers have already walked away from contracts and deposits. But redesigning condo towers still on the drawing board may help other builders survive the slowdown. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.
