Baltimore condo development still surging
Baltimore is awash in its biggest wave of condo construction ever. In the downtown area alone, 666 condo units were under construction by March. As many as 1,365 were in the pre-construction or planning phase, the Baltimore Sun reported. Outside of downtown, more than 3,000 condos are under construction or planned. New condo developments include the recently announced skyscraper in the Inner Harbor that would be, at 59 stories, by far Baltimore’s tallest building.
To start what the Atlanta Journal-Constitution calls “one of the biggest facelifts in Atlanta history,” a private developer placed a $1 million deposit toward the $27 million purchase of the old Sears Roebuck catalog warehouse on Ponce de Leon Avenue near Midtown. The 2-million-square-foot warehouse, which had been used as Atlanta’s City Hall East, will be incorporated into a $375 million redevelopment project, according to media reports. The new mixed-use development, to be called Ponce Park, will include office space, condos, retail, parking, and rental apartments as well as public parkland. The old Sears warehouse alone will include 1,167 residential units. Construction on Ponce Park is expected to last at least into 2008.
Job growth and ongoing condo conversions are expected to help fuel an increase in apartment rents in Boston this year. Asking rents are forecast to go up 2.5 percent in 2006 to $1,635 per month, according to a report from the Marcus & Millichap brokerage, as the city’s apartment vacancy rate declines to below 5 percent. Around 2,900 rental units are expected to be built in Boston by the end of the year, the report stated, up from 2,200 in 2005.
Hundreds of hotel rooms are being built around the Boston Convention and Exhibition Center off Summer Street. In June, the 793-room Westin Boston Waterfront is expected to open at the convention center, the Boston Globe reported, and the Renaissance Boston Waterfront Hotel, with 471 rooms, is under construction nearby. Also, Madison Properties recently announced plans for a $100 million, 500-room hotel on Congress Street near the convention center, the Globe reported.
More than 10 condo-hotel projects are scheduled to start sales in Chicago in the next few years, raising concerns that the Windy City won’t be able to absorb all the new units. Already, 12,000 condo units are expected to hit the market there between 2006 and 2008, Commercial Property News reported, at the same time as 2,000 condo-hotel units are also in development. Last year, about 8,000 condo apartments were sold in Chicago.
The first condos from the wave of planning that started sweeping Las Vegas three years ago are nearly finished, including the Metropolis and Panorama Towers. Both the 21-story Metropolis, which is near the Las Vegas Convention Center, and Panorama, where two of four planned towers have opened on Dean Martin Drive, are among the few Las Vegas condo projects hatched during the recent boom to have actually made it from planning to construction, the Las Vegas Sun reported.
The price of developable land in Las Vegas is dropping. Land prices were at $367,200 an acre by the end of the fourth quarter of 2005. That represents a 47 percent decline from the third quarter and a 28 percent decline from the fourth quarter of 2004, the Sun reported, leading some to speculate that the decline in land prices should continue through the rest of 2006.
More condos are coming to downtown Los Angeles. The planned 50-story convention center headquarters hotel, scheduled for completion downtown in 2009, will have 250 luxury condos, according to Commercial Property News. The planned $4.5 billion LA Live mixed-use development north and east of the Staples Center will contain 3,000 condos, CPN reported.
The high costs of homes in the Los Angeles area are driving the government and private interests there to come up with ways to help middle-class residents buy homes. The median sales price of a L.A. home was $480,000 by the beginning of March, up 13 percent from the same time last year, the Los Angeles Times reported. A proposed down payment assistance program would provide about $50,000 to $90,000 in low-interest loans to eligible buyers, the Times reported, depending on the purchase price, credit history, and loan package.
Developable land is disappearing from Miami-Dade and Broward counties. Two of the few remaining premium development sites, according to Commercial Property News, recently went on sale — an 11.2-acre site in Hillsboro Beach and 53 acres in Kendall. Because of the scarcity of developable sites, some developers want to push the limits of the Miami-Dade urban development boundary, a line that prevents urban sprawl into the Everglades, a move opposed by environmentalists.
Condo conversions are helping drive Miami-Dade and Broward counties toward the tightest rental market in years. The vacancy rate for rentals in Fort Lauderdale, for instance, was 3.7 percent by the end of 2005 and is forecast to dip to 3.4 percent in 2006, according to a report from Marcus & Millichap. The vacancy rate for Miami was at 4 percent at the end of last year and is expected to drop below that percentage this year, the report stated. Rents, too, are expected to increase in both counties this year; in Miami, asking rents could surge 4.2 percent to an average of $1,064 per month.
Philadelphia’s hospitality industry has fully recovered from the recession at the start of the decade and the effects of September 11, according to a report released last month by the Central Philadelphia Development Corporation. Hotel occupancy rates for downtown Philadelphia’s 10,195 rooms climbed to 73.1 percent in 2005, from 71 percent in 2004. The average daily room rate, the report stated, was $144 by the end of 2005, up from $131 the year before.
The housing boom that hit Center City in the last couple of years has spread to nearby Chinatown and Washington Square, according to the Philadelphia Inquirer. Late winter numbers put the median home-sale price in those areas at $704,859, a 39 percent increase over the same time last year; the median sales price for condos increased 41 percent to $293,330.
A slowing Bay Area housing sales market is driving some developers there back to rental development. The vast majority of new development in the Bay Area over the past three years have been of condos or other for-sale housing, according to the San Francisco Business Journal. But new rental complexes like the 224-unit Avenue 64 planned in Emeryville and the 22-story 100 Grand Avenue tower slated in Oakland could be the start of a wave of rental developments, market observers say.
More than 800,000 square feet of sublease space hitting the market at once is expected to drive the Bay Area’s office vacancy rate upward, according to the San Francisco Business Times. The sublease space comes from the Oracle Corporation, which acquired Siebel and its San Mateo County office space last year. In March, Oracle spilled that office space simultaneously onto the market, which should drive San Mateo’s current 13 percent vacancy rate to 24 percent and affect the overall Bay Area market.
Several office developments are popping up in the Washington suburbs of Reston and Herndon, Va., along the Dulles Toll Roadécorridor, the Washington Post reported, sparked by a flood of jobs to Northern Virginia. These fresh developments include 185,000 square feet of office space at Reston Parkway and Sunrise Valley Drive in Reston; the 1.5-million-square-foot Dulles Station project; and the Dulles Corner development at the intersection of Sunrise Valley Drive and Coppermine Road, which will add a pair of office buildings with 222,500 square feet to the market.
Rents and vacancy rates in the Washington rental apartment market are expected to increase through the end of 2006. Already near $1,200 a month at the start of the year, according to Marcus & Millichap, the average asking rent is expected to rise above that amount in 2006. The city’s vacancy rate, however, is expected to continue an upward trajectory that started in 2005, and could go as high as 5 percent.