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This article was published on: 02/01/2006 Niche marketing Finding Success in the Condo Craze Experts offer advice for real estate practitioners navigating the expanding condominium market.
No longer just a cheaper alternative to the single-family home or a retirement option for boomers, today's condo market is filled with an ever-expanding array of options. From ultra-luxury high-rise penthouses that rival million-dollar detached homes and hotel condominiums that let owners live like VIPs to city lofts for young professionals and shipboard residences, the growing condo market offers a choice for every buyer. Luxury Wins Out The word condominium actually describes individual ownership in a multiunit structure, not the architecture of a property. For Scot Karp, director for the Ultraluxury Condominium Division of Premier Estate Properties Inc. From inheritance-rich baby boomers to retirees, luxury condo living is in demand across the country. In addition to South Florida, Karp says luxury condos have strong growth in all the major markets, including Las Vegas, Chicago, New York, and Pittsburgh. These opulent dwellings often include a doorman, concierge service, boat dockage, 24-hour monitored security and security staff, maid service, luxury spas, pools, tennis and racquetball courts, state-of-the-art fitness centers, designer appliances, top-of-the-line fixtures and lighting, marble floors, walk-in closets, wireless Internet access in all common spaces (including poolside), owner's lounges, business centers, wine rooms, movie theaters, and valet and underground parking. Karp says monthly assessments in his area for luxury condos can cost $1,000 to $3,000. In the 1970s and '80s, condos were viewed as a housing choice only for first-time buyers and retirees. "I saw a distinct change in the attitude of buyers after 9-11," Karp says.
And a growing number of post-hurricane shoppers are trading single-family vacation-properties for a low-maintenance luxury condo. "It's easier to have the condominium manager wait for the roofing company," Karp explains. Condo Conversions Of course, a condo doesn't have to be new or luxurious to be desirable. Recognizing the need for affordable housing, and increased building costs and land restrictions in many markets over the past 15 years, developers and investors have been turning attached rental stock into for-sale condominium communities -- and the movement to convert has never been stronger than in the past year. Conversions are popular among the traditional condo market -- empty nesters and retirees, says Kevin Krulewitch, managing broker of the Real Estate Alternative LLC in Indianapolis. These buyers are looking for secure gated facilities, less maintenance, and a reduced cost of living. "Instead of tearing something down, why not refurbish and rehabilitate the property?" "If an existing property is already located near schools, jobs, recreation, and other lifestyle choices, the question should really be, why not convert?" Krulewitch and other experts say conversions are popular in Manhattan, Phoenix, Seattle, South Florida, Las Vegas, San Diego, Chicago, and other expensive areas that have limited housing stock for entry-level buyers. Others gut units -- refurbishing with luxury upgrades, such as carpet, window treatments, fixtures, stainless steel appliances, and granite countertops--and redevelop common areas to showcase ornate faades and lush landscapes with waterfalls, pools, and spas. To capture the existing rental market, many developers offer discounts and incentives that can be used toward the purchase price or closing costs. Still, assuaging the "Why would I want someone's old apartment?" mentality can be a challenge when selling conversions, but Krulewitch says stunning makeovers attract entry-level buyers, single professionals, and families looking to trade detached living for shorter commutes and more quality time at home. Condos Within Hotels For buyers looking for more quality time while on the road, the condo-hotel is another option. These permanent residences feature all the furnishings and amenities of a luxury hotel -- such as world-class restaurants, 24-hour concierge, security, valet, housekeeping, and room service. "Today, almost all of the world's largest lodging chains have a condo division," Taylor says. Joel Greene, president of Condo Hotel Center in Miami, says South Florida condo-hotel residences range from $600,000 to $800,000 for a studio to $750, 000 to $1 million for a one-bedroom unit. Greene says a rental option provided by the condo hotel management company allows owners to receive a portion -- often about 50 percent -- of the rental income of their specific unit when away. Taylor says developers favor waterfront, mountainside, and downtown areas with strong demand for upscale lodging. and Las Vegas have fast-growing condo-hotel markets that favor high-end travelers and boomers looking for a high-amenity pied--terre. "Boomers are looking for a vacation lifestyle of spacious accommodations, dining activities, and entertainment," Taylor says. Bon Voyage Living In 2002, former Norwegian Cruise Lines Chairman Knut U Kloster Jr. took that vacation lifestyle to the next level when he introduced the first residential cruise ship. "The World of ResidenSea" features luxury condos priced as high as $15 million, in addition to annual maintenance fees of up to $450,000. In December, Dallas-based Institute for Luxury Home Marketing entered into an agreement with Arizona-based Residential Cruise Line to offer Institute members the option to buy ultra-luxurious condominiums aboard the "Magellan" cruise ship for up to $8 million. In 2002, Miami-based Ocean Development Group teamed up with Four Seasons Hotel & Resorts on a ship-based condo project that will house 100 private residences aboard "The Four Seasons." Annual maintenance fees aboard the liner are based on unit size and range from $100,000 to $500,000, says Leif-Erik Hvide, partner and senior vice president of Ocean Development Group Inc. and a $12,000 annual use-it-or-lose-it credit for spa, beverage, and food services. With ownership based out of the Bahamas, "The Four Seasons" residences have no property tax or sales tax. Catering to 40 to 60-something heirs, self-made millionaires, yacht lovers, or former owners who don't want the expense of an individual vessel, Hvide says these floating condos feature gourmet kitchens, fine china and linens, high-end appliances, maid service, health spas, a casino, restaurants, and shopping. In addition, the ship features a marina, luxury tenders (small boats used to transport passengers to shore), Zodiac boats, and a helicopter pad. Approximately the size of a 1,000-passenger cruise liner, Hvide says "The Four Seasons" will take two years to circumnavigate the globe, stopping at a variety of ports for a minimum of 24 hours and a maximum of 10 days and following good weather and world events, such as Cannes, France, for its international film festival; "You can see the world from the comfort of your own home," Hvide says. "Lofts appeal to those that want condo ownership, but with a twist," Mistretta says. "They want something unique that cannot be found in traditional homes or traditional condos." Mistretta says loft units in her area start at $130,000 for 600 square feet and top $1 million for 2,500 square feet. Popularized in revitalized industrial areas, lofts offer high ceilings, lots of raw space, exposed ductwork, and masonry walls. With the exception of an enclosed bathroom and movable dividers that may be provided to separate areas, true lofts are one open space developed within a building or warehouse. Less traditional lofts have a kitchen and living room on the lower floor and an open second floor for bedrooms. New developments often advertise "soft lofts," which fall in a category between a true loft and a traditional condominium. Soft lofts often have high ceilings -- although usually not as high as in an industrial building -- exposed ductwork, three-quarter walls (with doors), and polished concrete floors, Mistretta says. Mistretta adds Houston, New York, San Francisco,...
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