Apartment Condo Conversion Deals CoolingHere's an
article on condo conversion deals that have fallen flat, introducing a new buzzword:
Small said people who don't know the Phoenix market are throwing $4 million to $5 million into conversions while "people here in this market are quietly converting back."
Depending where in the process, developers are "repartmenting," a new national buzz word. If not too many condos have sold in a complex, the developer might offer a condo buyer a swap to another condominium project that has been more successful and then repartment back.Although here's an oddball claim:
Other developers are being stuck with homeowner association fees for units not sold. For example, if only 20 condos are sold in a 100-unit complex, at $25 per month, that means the developer is paying $2,000 a month in HOA fees for empty condos.HOA dues of only $25 per month? That seems extraordinarily low.
Spec Development On Wane in AlbuquerqueAs rents have failed to
keep pace with construction costs, developers are looking for more preleasing to reduce the risk of developing speculative projects:
In recent years, Angelo Brunacini has been the most ambitious developer of industrial warehouse buildings in the city, building more than 1 million square feet over a decade through his Brunacini Development LLC. He has a prime property at Meridian Parkway, but has not been able to build his 45,000-square-foot building because the numbers don't equate to profitability.
"I've owned the land for 10 years, but if you look at the fundamentals, it doesn't make sense to build without a tenant," Brunacini says. "If I build it, the total project costs me $70 per square foot and I need $7.50 a square foot in rent. Today's rents are in the high $6 range and are moving up fast because of a lack of space. In six months, I may be able to do the project if construction costs hold and rents go up."
