Amid Condo-Hotel Boom Comes a Note of Caution If appreciation fails to materialize, massive sell-off could rock the industry, says expert
RISMEDIA, June 24, 2006—(MCT)—There's been an explosion of condo-hotel development around the country, and only time will tell if trouble lies ahead, a hospitality industry expert said Thursday.
Abraham Pizam, professor at the Rosen College of Hospitality at the University of Central Florida, said Florida, California and Nevada have been hotbeds for condo-hotel development.
For developers, investment returns ranging to 30 percent are a strong draw.
For investors in hotel rooms or suites, the lure is the chance to own a piece of a hotel, plus the possible return from rentals and appreciation.
But if appreciation fails to materialize, there's the possibility of a massive sell-off that would rock the industry, Pizam told members of the Central Florida Chapter of the National Association of Industrial and Office Properties.
Addressing office condos, Paul Ellis, principal and North Florida managing director for Trammell Crow Co., said he thinks that market will grow substantially because demand is escalating.
Ellis said office-condo space appeals both to investors and users and that gives the developer a larger pool of prospects for the space over a pure rental property.
Developers also may save on interior space work because buyers take on that responsibility when they purchase space, he noted.
Ellis has office condos to sell. Trammell Crow recently hooked up with developer Cameron Kuhn to handle marketing and management of Kuhn's Premiere Trade Plaza condo-office towers in downtown Orlando and his condo developments in Jacksonville.
Trammell Crow is relocating its offices from the suburbs to Premiere Trade Plaza.
Todd Cohen, Orlando office director for Primary Capital Advisors, a major lender on condo projects, said the residential market has slowed but deals are still getting done.
Cohen said he's not seeing much fallout by buyers, especially in higher-priced condos where significant deposits or down payments have been made.
Downtown Orlando developer Craig Ustler Jr. said the condo market is slowing, but is still pretty good.
However, Ustler said he expects the market cool-down to delay most of the 29 condo towers proposed for downtown Orlando. Those towers would add 7,000 to 8,000 units to the downtown inventory.
The few that get launched in coming months have strong financing and presales, he said.
Copyright © 2006, The Orlando Sentinel, Fla.
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