Downtown St. Pete housing options shift, shrink
ST. PETERSBURG - The popularity of towering luxury condominiums downtown is giving way to a wave of low-rise apartment buildings to be built in the next few years. After a quiet spell for construction, two apartment buildings are going up, and construction on another three is set to begin soon, adding more than 1,200 rental units downtown. Two properties that were supposed to become 30-plus-story condo towers are being developed as low-rise apartments, an indication that decreased land values may increase the affordability of living downtown. With tight inventories of condos and rental properties downtown, more housing should be welcome news for the increasing number of young professionals, families and seniors moving downtown.Maintaining a mix of luxury and affordable housing will be critical to sustaining the growth of downtown retail, development experts say. "Back in the day, at the height of the boom, you needed to be able to afford a $300,000 mortgage or up to be able to live downtown," said Rick Smith, the city's community redevelopment coordinator. "Now, you have a much greater array of multifamily rentals at all different price points, which means people of different incomes can still live downtown." The 29-story Ovation tower, completed in 2009, marked the end of the high-end condo boom that started in the mid-1990s. Offering only two spacious units on most floors, with some selling for more than $1 million, the luxury complex overlooking Beach Drive was the last condo tower built downtown. After several decades with virtually no residential development downtown, the city experienced a boom in condo construction from the mid-'90s into the 2000s, concentrated near the bayfront. The influx of wealthy downtown residents combined with tourists staying at the renovated Vinoy Renaissance Resort spurred the opening of high-end restaurants, bars and boutique shops along Beach Drive, and even a Publix supermarket. By the mid-2000s, even low-rise apartments closer to the University of South Florida St. Petersburg, such as the Madison and the Beacon, were converting to condominiums to take advantage of loose lending requirements for buyers. Commodity costs for building materials were on the rise in those days, and land values were inflating, Smith said. "It made sense to build a lot more units and higher," he said. That left only a small sliver of available rental housing, including a handful of apartment complexes and a scattering of single-room efficiencies. Several high-rise condos, such as 400 Beach and Ovation, opened just after the housing bubble burst, but numerous other planned condo complexes approved by the city in the mid-2000s have stalled. Downtown real estate agents, though, say this does not indicate a lack of demand for high-end condos. In fact, 400 Beach and Ovation are full, and inventory has been slim for a solid year, according to agent Tami Simms of the Simms Team on Beach Drive. Part of the reason is that few people want to sell after seeing their property values drop by 40 percent to 60 percent. The housing crash also pushed from their homes a group of higher-income people who are looking for luxury rentals in neighborhoods such as downtown St. Pete. "There is not a single day that goes by that we don't have an inquiry from someone looking for rentals, particularly downtown," said Simms, the president of the St. Petersburg Downtown Business Association. Most downtown renters are looking to spend about $1,500 a month, but many are willing to pay higher prices, as much as $4,000 or more, Simms said. Condos account for most of downtown's rentals, but the market is expected to change in the next few years. "That's going to shift when we've got these products that are on the table that are going to be built and marketed as rentals," Simms said. The housing projects built in the past couple of years have been smaller and less-expensive. Fusion 1560, a five-story apartment building near Tropicana Field, has nearly filled up since opening in 2011, with studios starting at less than $1,000 and two-bedroom apartments renting for about $1,800. Sites where developers had envisioned towering condominiums before the recession have scrapped their plans, and some properties have gone into foreclosure. Projects moving forward have been scaled back by 20 stories or more. The site of the eight-story Bayway Apartments, which is under construction at 235 Third Ave. N., was supposed to be two 35-story towers with a mix of condos, hotel rooms and retail. A 31-story tower was slated for the site of what is now planned to be the five-story Urban Edge apartments at 300 Fourth Ave. S. Cleveland-based NRP Group plans to build a four-story, 326-unit apartment complex on a 4.3-acre parking lot that had been owned by the Tampa Bay Times near the Urban Edge site on Fourth Street South. Construction on Sol is expected to begin Monday. The property will be aimed at young professionals, older families and seniors, with rents similar to Fusion, about $900 to $1,800, said Kurt Kehoe, NRP's vice president of development. Building a luxury high-rise building would drive rent prices too high for many people in today's market, Kehoe said. "Those rent levels exceed what's currently in the market and what people are really willing to pay," he said. One project that developers hope to be the exception is 330 Third, which is setto be built across from Sol, at Fourth Avenue South and Third Street. Plans call for a 17-story building and more than 350 units. Developers say they are going after the luxury high-rise market, with customers likely to be people who can't get into condos right now. Smith, from the city, said he hopes the influx of more middle-income renters will also attract retailers that offer staple goods such as clothes or hardware, though big-box stores on the city's outskirts may continue to price out those businesses. "I think that would be a hopeful sign. It's not very convenient if living downtown you still have to go out to Tyrone mall or a big-box to get your staples," he said.
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