For developers, [tag]condominium conversions[/tag] offer far fewer risks than new construction. It is possible to convert a 250-unit rental community in less than a year, compared with the three years or longer it takes to prepare the plans, obtain the approvals and complete the sale of a similarly sized new [tag]condominium development[/tag].In hot markets like Southeast Florida and Las Vegas, escalating construction costs have led several well-established highly successful multifamily developers to drop their plans for new developments. Pricing structures created several years ago were simply no longer feasible in today’s high-cost marketplace.

Today, the Florida multifamily marketplace is dominated by end-user buyers who intend to live in their units, either full-time or on a seasonal basis. There is also a small but significant number of investors who purchase and rent out their condominium units for a long-term stream of income. For multifamily developers—both new construction and condo conversions—the loss of the speculator segment means that the marketplace has finally returned to normal. And this is a positive trend for both developers and buyers. In this more stabilized marketplace, demand for condominium units is based on fundamental demographic and economic trends, such as population growth and new job creation, rather than being driven by investors. Prices now will respond to the laws of supply and demand with gradual increases, rather than the volatile jumps that characterize a speculator’s market.

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