January 2005

Residential real estate saw the boom and the gloom in '04

By KEN SALGAT

In 2004, the Tampa Bay area's residential real estate market experienced continued strong performance, while other markets throughout the nation faltered.

Three major hurricanes caused construction material shortages, which in turn slowed delivery of new homes. But the strength of demand by the ever-increasing Bay area population brought another record year in home deliveries.

Much of the success was the prevalence of builders in this market, the demand for varied product types and a wide range of price points.

According to Tony Polito, director of Metrostudy's Tampa division, which tracks residential construction patterns, the Tampa Bay area should be a national top 10 growth market over the next decade.

Tampa recorded 5,271 single-family starts during the third quarter of 2004, an increase of 5.2 percent compared to last year's rate of 5,009 units, said Polito. The annual starts rate increased 19 percent to 19,005 units.

Turning to townhomes
At least one local analyst says townhome construction makes sense for both homebuyers and builders. What typically drives townhome construction is high-priced single-family homes said Marvin Rose, president of Rose Residential Reports Inc. in Tarpon Springs.

This year, a number of homebuilders that traditionally focused only on single-family construction moved to the townhome market.

Westfield Homes began construction of its first townhome community in Hillsborough County with 340 units at FishHawk Ranch.

Bradenton-based Bruce Williams Homes expects to break the $100-million revenue mark partly because it capitalized on townhome construction. At the community of Lexington, near U.S. 301 in Ellenton, the builder built its first townhome community with nearly 100 units completed.

DR Horton Homes, based in Orlando, expanded into three townhome communities in Pinellas and Pasco counties. The company also plans to build townhomes in two Pasco County communities near State Road 54. In Pinellas County, DR Horton built 54 townhomes, priced from $400,000 to $750,000.

Morrison Homes, a Bay area builder for eight years, also entered the townhome marketplace this year. The company built 84 units in Brandon on Falkenburg Road near State Road 60.

Pulte Homes Inc., ranked No. 2 in closings in the Tampa Bay Business Journal's 2004 Book of Lists, built townhomes in two Hillsborough County communities in the Brandon area: 132 units at Vista Cay on Providence Lakes Boulevard and 560 units in Brandon Pointe on Bloomingdale Avenue.

In April, KB Home Tampa announced the grand opening of its Waterford townhome community, with the debut of four models. Waterford, located in Clearwater, represented the builder's first expansion into Pinellas County.

Mixed use in demand too
Another trend that gained significant speed in 2004 was the delivery of mixed-use projects to areas throughout the seven-county Bay area.

The City of Clearwater announced its BeachWalk project. The city committed $15 million to overhaul the waterfront area into a pedestrian-friendly destination speckled with high-end landscaping, upscale shops and restaurants.

City officials had discussed BeachWalk since 2000, however a recent development proposal that promised a national resort moved the issue from discussion to action.

City officials were told that the waterfront improvement project, if committed to, would lure national hotel chain Hyatt to the area to operate a new 250-room, four-star resort, said William B. Horne, Clearwater's city manager.

"We were told that that development hinged on making BeachWalk a reality," said Horne. "If we didn't commit, they didn't commit."

BeachWalk construction is scheduled to start next spring and would finish in 2008.

Just up the beach from BeachWalk, a development team proposed two separate yet connected projects for downtown that would add approximately 200 condominiums and more than 20,000 square feet of commercial and retail to an area in need of an economic spark.

Triangle Development Co. LLC plans to build the projects on a 4-acre parcel, approximately one city block, that would bring waterfront condominium living, street-side retail and commercial to an area that's been the site of dilapidated old homes and unkempt lots for years.

In St. Petersburg, one of the few remaining complete blocks available in downtown was designated for mixed-use by the city. The property includes 30,000 square feet on the northwest corner of First Avenue North and Second Street and about 50,000 square feet on the northeast corner of First Avenue North and Third Street.

The development will provide -- at a minimum -- first floor pedestrian retail, at least 180,000 square feet of new development in addition to the first-floor retail, and a commitment to complete the project within 30 months from the date of city council approval, according to the request.

For the northeast corner, the city wants a facility with first floor retail space, a minimum of 200,000 square feet of mixed-use development in addition to the first floor and parking integrated into the building.

In Tampa's Channel District, numerous mixed-use plans were revealed.

Developer Bill Ware, managing principal in Ventana Tampa LLC, will build Ventana, an 84-unit, 11-story mixed-use project on a little more than one acre at the northwest corner of Kennedy Boulevard and Channelside Drive.

The property had been in Ware's family for four decades, but it wasn't until the last few years that Ware decided the time was right for residential in the Channel District.

Ventana is just one of 12 projects in various stages of development in the Channel District.

Single-family homes topping off?
According to statistics recently compiled by the Pinellas Realtor Organization, residential sales volume and prices increased through the third quarter.

High demand combined with a lean inventory is leading to continued upward pressure on sales prices.

"The first obvious trend that stands out from reviewing these numbers is that residential sales volume is back on track after three months of reduced activity resulting from the numerous hurricanes that hit the state this year," said Paul Wikle, the organization's chairman.
Another trend is the high absorption rate and lean inventory, he said.

"In all of my years practicing real estate, I cannot recall a time when inventory was so low and demand so strong for residential units. The dynamics prove that there is no real estate bubble getting ready to burst."

Biggest Residential real estate stories
The Bay area becomes hurricane alley, churning up residential projects in the process and squeezing the supply lines for building materials and concrete.

Single-family home sales cool off from a rapid boil to a simmer, as interest rates climb slightly.

Tampa's Channelside and St. Pete's BayWalk areas become abundant with new condominium development, forcing some pundits to wonder whether a residential real estate bubble is forming.