An oceanfront apartment complex in Boca Raton sold last month for 43 percent less than the price two years ago, a sign of how far the condominium conversion market has dropped.
And Jack McCabe, one of South Florida’s most prominent real estate analysts says the crash isn’t over.
“I think we will still see price drops of 15 to 20 percent [for residences] in Southeast Florida over the next two or three years,” said the head of McCabe Research & Consulting in Deerfield Beach.
Laramar Group, a Chicago-based real estate investment and management firm, bought the 160-unit Oceanview Apartments for about $32 million. NRW Development of Miami paid $56.2 million for the complex in 2006.
“This isn’t a bottom by any means,” McCabe said. “For this project, the price is still over $200,000 per unit.” That’s a pretty hefty sum for Palm Beach County these days.
When NRW bought the 40-year-old building in 2006, it planned a condo conversion. But that market quickly tanked.
Still, the property extends from the Atlantic Ocean to the Intracoastal Waterway, an ideal location. “Once they do some renovations, they will probably be able to realize rent of $1.50-$2.00 per square foot,” McCabe said.
Given that Laramar is a long-term apartment project operator rather than a speculator, it should make out ok on its investment, McCabe said.
But he believes that projects in less attractive locations will fare much worse, fetching as little as 25-30 percent of their value at the height of the boom in 2005.