The Related Group, headed by billionaire Jorge Perez, is having mixed luck with its foray into the West Palm Beach high-rise condominium market.
Its first three buildings sold well. But the Coral Gables company faces a struggle with its fourth, CityPlace South Tower, which recently opened on Okeechobee Boulevard but has not seen the same swift response from the buying public.
All four of the buildings are located downtown. Related completed the first three before the real estate market peaked in 2006 and was able to sell out all of them.
CityPlace South Tower, which has 420 units priced at $500,000 to $800,000, is where the problems lie for Related. Perez acknowledged that last week, saying he expects about 100 of the building’s 367 buyers– 27 percent– to walk out on their contracts. But Neil Merin, chairman of brokerage NAI Merin Hunter Codman in West Palm Beach, says he is hearing that the total could be as high as 70 percent.
The first three projects– Tower Condominiums at CityPlace with 128 units on Okeechobee Blvd. across the street from the latest building; the Slade with 200 units on N. Flagler Drive; and the Prado with 304 units on S. Dixie Highway– all sold well.
A mixture of residents, investors and speculators snapped up the units during the boom.
“They’re now outside the developer,” notes Merin. “The future for these projects relies on the ability of individual property owners to make payments.”
Tower Condominiums, completed in 2001, has five foreclosures; Slade, completed in 2005, has 10 foreclosures; and Prado, completed in 2006, has 23 foreclosures, according to data from Realist research service.
CityPlace South Tower’s favorable downtown location should see it eventually sell out, real estate experts agree. But eventually could be a long time. “It’s probably at least three to five years,” says Rebel Cook, an independent real estate broker.
And Merin points out that Related may have to cut unit prices to spark sales.