Are downtown Tampa's new apartment towers condominiums in disguise?
By Ashley Gurbal Kritzer
Tampa Bay Business Journal
Published: Oct 8, 2014

With a new apartment tower confirmed for Harbour Island, more than 1,000 apartment units are planned or under construction in downtown Tampa.

There's the 23-story, 320-unit SkyHouse under construction in the Channel district, and the mid-rise project planned on the former Amazon Hose and Rubber site, which will have around 300 units. The Harbour Island deal has 235 units, and an Atlanta developer is in the due diligence phase of a 23-story 375-unit tower on North Franklin Street in the urban core.

Finding residents for those new buildings isn't a concern for most in the multifamily sector, as long as job and population growth continue in the Bay region. Most say there's pent up demand, with existing buildings highly occupied and Downtown Tampa starting to emerge as an up-and-coming neighborhood with restaurants and retail options, and Tampa Bay Lightning owner Jeff Vinik's plans are creating a buzz around the city center, too.

The buzz in the multifamily industry is how soon some of these rental projects - especially luxury high rises - will convert to condominiums.

Building the towers as apartments makes sense from a financing perspective: It's far easier to obtain a construction loan and raise equity for apartments than condos, as apartments have been seen as safer investments. Condos are more complicated, given the ownership structure and typically required presales - not to mention the challenges buyers face in obtaining a mortgage for one of the units. But starting the project as apartments gets it out of the ground, and leaves the door open for conversion down the road, whether it's an exit strategy for the developer or done by someone who buys it after it leases up.

The Harbour Island tower "clearly makes sense as a rental deal,” said Byron Moger, an executive director of the capital markets and multifamily advisory group for Cushman and Wakefield of Florida Inc.

Moger, who isn't involved in the Harbour Island project, said it's impossible to speculate which projects may or may not some day convert to condos, but the conversions could start to happen at a point "not too far down the road.” What determines whether the building has the potential to become a condo is the location and views from the property, Moger said, as well as unit size and the amenity package offered.

"Is the condo market recovering?

Clearly it is,” Moger said. "There's been a pretty steady increase in per square foot prices for condos in downtown and Channelside.”

Ashley Gurbal Kritzer is a reporter for the Tampa Bay Business Journal.