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Wednesday, Jul 30, 2014
Business News

Apartment developers target Harbour Island

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TAMPA — Harbour Island is the latest target of apartment developers’ voracious appetites, with developers eyeing land on both sides of The Plaza Harbour Island condominium.

If built, the two towers could bring another few hundred apartments to the downtown area, which already has more than 6,000 apartments and condos either built or under development.

However, some in local real estate say investors are looking more skeptically at Tampa’s apartment boom, because of the number of high-end units planned. Money for new apartment towers probably will be harder to get next year, said Sean Lance, a multifamily broker with NAI Tampa Bay.

An unnamed apartment developer has a contract to purchase a small vacant lot just east of The Plaza condo, said Ryan Sampson, a broker-associate with Eshenbaugh Land Co. who’s handling the deal. He couldn’t reveal who the potential buyer is, but it’s an apartment developer with plans for a 22-story building with about 230 units. At that height, it would be a bit taller than the 20-story Plaza tower next door.

The deal hasn’t closed yet, Sampson said.

On the west side of The Plaza, a Boca Raton-based firm called Crocker Partners is marketing a little more than an acre as an apartment or condo site. The company put the property up for sale lately, and while it’s not under contract yet, Crocker Partners has fielded multiple offers, partner Angelo Bianco said.

Lately, residents of Harbour Island have been abuzz with gossip that two of the last chunks of undeveloped land on the island would make way for apartments or condos. Gail Bernucca, president of The Plaza’s condo association board, is a little worried about traffic one or two new apartment towers would bring.

“I would hope the city would consider that before deciding what to grant them,” she said.

Developers haven’t yet turned in site plans for either parcel of land.

If the projects are built, they almost certainly will begin their lives as apartments and eventually switch to condos some years down the road, multifamily brokers say. Almost no banks or investors are providing money for condos at the moment, so developers have to plan for apartments, said John Stone, managing director of multifamily investments for Colliers International Tampa Bay.

With the high cost of building high-rise towers, developers can only hope to get a small financial return while they rent out their apartment buildings — even at high rents of $2,000 a unit. The real money will come later, if and when the condo market heats up again and they can convert the buildings to condos, Stone said.

“Maybe they hope to get 3 or 4 percent now, but they hope to (eventually) get what will make it a 12 or 15 percent return,” he said.

Until now, there have been few signs the apartment market would slow from its blistering pace. New apartment projects in or around downtown include the 24-story tower The Martin and the 23-story SkyHouse, both in the Channel District, the 36-story Residences at the Riverwalk near the Straz Center and the eight-story Crescent Bayshore on Bayshore Boulevard.

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Twitter: @msasso

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