McCabe Luxury Project On Hold

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McCabe luxury project on hold

By Laura Layden

Tuesday, April 18, 2006

In a sign of the times, the for-sale sign has come down at Intermezzo, a luxury waterfront community in Naples.

The developer, Phil McCabe, has closed the sales center and temporarily suspended sales at the mid-rise condominium, saying he will wait for the market to improve before opening his arms to buyers again.

"It was just my judgment that the market was too much in turmoil for me to proceed at this time," said McCabe, president and CEO of Gulf Coast Commercial Corp. "Everything is ready to go - the brochures, the other marketing materials for the models. But we'll cover them up with a dust cover and we'll just wait out the market."

Following a national trend, there has been a shift in the Naples market. Home sales have slowed, listings have grown and investor interest in buying real estate has waned. The changing market is partly driven by interest rate hikes and rising home prices.

In February, existing single-family home sales in the Naples metro area dropped 47 percent from the same month a year ago, according to the Florida Association of Realtors.

McCabe still expects Intermezzo to succeed. But, he said, he will wait at least until next winter to resume sales at his latest project, where a three-bedroom, 2,000-square-foot condominium was starting at $1.2 million.

"It's not a factor of the product at all," he said. "It's the market. The market has totally collapsed."

He's returned deposits worth about $40 million. That was for 20 units.

"My goal was to get 50 units under reservation to go full-speed ahead, 100 miles an hour," McCabe said. "We obviously didn't achieve that."

Most of the reservations came in February, when sales started.

In March and April, the Naples market continued to soften, and so did demand, McCabe said.

"I am most concerned about the future," he said. "It's a major real estate correction going on."

Still, he plans to move ahead with the project - just at a slower pace. Site construction will begin this summer. It will lay the foundation for the condominium, including water and sewer.

At completion, Intermezzo would have 146 units in three buildings and include 54 docks. A two-level resort-style club is planned that would include a theater, a fitness center, and a pool and spa.

The project would be built at the southeast corner of Goodlette-Frank Road and Central Avenue.

The fact that the development is near the flight path of Naples Municipal Airport and that it's close to the city's wastewater treatment plant may have hampered sales, said Ross McIntosh, a Naples land broker who provides an annual snapshot of the residential market.

In this market, he said, people are looking for an excuse not to buy, and the location of Intermezzo may be one of them.

McCabe considers the waterfront location superior, however.

"It is not the case that there are buyers not wanting to buy there because of the location," he said. "It's because there are simply no buyers period."

Pat Candito, a Realtor with John R. Wood Realtors in Naples, paints a rosier picture of the Naples real estate market. She said there are still buyers out there.

Her company is getting calls from people looking for homes, just not as many as a year ago.

John R. Wood had a strong first quarter, she said.

"Naples is not in any way in trouble and neither is the real estate market," Candito said. "This is paradise, and people still want to move to paradise. People up North are looking to move to paradise. We talk to them all the time."

While there are thousands of homes and condominiums on the market in Collier County, Candito said most of them aren't in the downtown area where Intermezzo is planned.

From Pine Ridge south down through Old Naples, there are 281 condos and 310 single-family homes on the market, she said.

"It's not a lot of inventory to be in these areas," she said. "You are talking about a prime area."

She does think putting Intermezzo on hold is a good idea. She said more new home developers should consider doing the same to allow time for the overall market to catch up.

"The longer they wait, the more valuable everything becomes," Candito said. "They are not losing anything."

McIntosh said he wouldn't be surprised to see more condominium developers following in McCabe's footsteps in Collier and Lee counties.

He said condominium builders are pulling the plug on projects in other markets, such as Miami and Las Vegas, because of changing conditions in the real estate market nationwide.

High-rise and mid-rise developers have to put up entire buildings at once, making financing trickier - especially when demand isn't that strong, he said.

"In this coming year, we will see further announcements or further evidence of projects not going forward," McIntosh said. "Some people are not going to make a big announcement. They are just going to quietly crawl away with their tail between their legs."

He expects to see projects fail and be taken over by their lenders or investors.

"Heads will roll," McIntosh said.