Opportunity Still Knocks, Condo Developers Declare
Opportunity Still Knocks, Condo Developers Declare
January 05, 2006
By Suzann D. Silverman, Editor-in-Chief
The big condominium markets are well developed and players are increasingly questioning the direction of demand, but active condo developers speaking on the opening panel today during CPN's Condominium Summit (co-presented by sister publication Multi-Housing News), don't see an end to opportunities. The event drew more than 375 attendees.
"The great sites are always going to be the great sites," declared panelist Oscar Rodriguez, vice president of development for The Related Group of Florida, pointing to waterfront property as one example.
And don't dismiss the less popular markets, those other than South Florida or New York City or Las Vegas, the panel agreed. Michael Ezgur, managing member of Terrapin Properties L.L.C., for instance, noted that the growth in long-active Chicago has been slow and steady rather than rampant as in other condo markets, and that has proven to be successful. Thus, he suggested, other markets could perform similarly--Arizona, perhaps. Or Tampa, where Judd Bobilin, senior vice president at Novare Group, noted his company is building. "We are not in a lot of major cities," he said. "Typically (we're in) areas that are a little underdeveloped but have great potential."
Having the execution team in place is most important, Ezgur said. "The opportunities are where you can execute the projects," he affirmed.
The opportunities are also financially viable, according to the panel, which was moderated by Manuel de Zarraga, executive managing director at Holliday Fenoglio Fowler L.P. Bobilin said his firm's projects net a 15 percent return on cost and 25 percent gross, while Ezgur looks for a 30 percent cash-on-cash return and a 15 percent internal rate of return on new construction. Eduardo Imery, vice president of finance for Fortune International, meanwhile, has a minimum return goal of 20 percent on revenue. Rodriguez said his company requires a 25 percent profit, and even 16 to 17 percent on market-rate housing.
How do you achieve such numbers in the face of rising construction costs? "We project zero growth on the sales side," Imery said. And he builds in a big contingency for construction of as much as 50 percent.
January 05, 2006
By Suzann D. Silverman, Editor-in-Chief
|
"The great sites are always going to be the great sites," declared panelist Oscar Rodriguez, vice president of development for The Related Group of Florida, pointing to waterfront property as one example.
And don't dismiss the less popular markets, those other than South Florida or New York City or Las Vegas, the panel agreed. Michael Ezgur, managing member of Terrapin Properties L.L.C., for instance, noted that the growth in long-active Chicago has been slow and steady rather than rampant as in other condo markets, and that has proven to be successful. Thus, he suggested, other markets could perform similarly--Arizona, perhaps. Or Tampa, where Judd Bobilin, senior vice president at Novare Group, noted his company is building. "We are not in a lot of major cities," he said. "Typically (we're in) areas that are a little underdeveloped but have great potential."
Having the execution team in place is most important, Ezgur said. "The opportunities are where you can execute the projects," he affirmed.
The opportunities are also financially viable, according to the panel, which was moderated by Manuel de Zarraga, executive managing director at Holliday Fenoglio Fowler L.P. Bobilin said his firm's projects net a 15 percent return on cost and 25 percent gross, while Ezgur looks for a 30 percent cash-on-cash return and a 15 percent internal rate of return on new construction. Eduardo Imery, vice president of finance for Fortune International, meanwhile, has a minimum return goal of 20 percent on revenue. Rodriguez said his company requires a 25 percent profit, and even 16 to 17 percent on market-rate housing.
How do you achieve such numbers in the face of rising construction costs? "We project zero growth on the sales side," Imery said. And he builds in a big contingency for construction of as much as 50 percent.
posted by James Haft at 10:14 AM
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