Condo conversions revert to rentals

Six communities with 1,571 units - three in Broward and three in Palm Beach County - have made the switch from condo conversion sales back to rentals.
Some are dubbing it "the great conversion reversion of 2006." It's a move to reposition rental communities, which were slated for condominium conversion sales, back to apartment rentals.
A slowing sales market and a high-demand rental market with rising monthly rates are the motivations for the switches, said Jack McCabe, CEO of McCabe Research & Development in Deerfield Beach. He is the author of the Condominium Conversion Report and the Commercial Apartment Market Report, quarterly data services that track South Florida multifamily communities of more than 100 units.
"It's an early-stage trend that will probably accelerate as the market slows even more," he said. "For well-managed communities, the improved cash flow from enhanced rents may help carry them until the conversion sales market comes back into balance."
In other words, converters might try again in a few years.
The three Broward County communities that have switched back to rentals are the 144-unit Crystal Lake in Oakland Park, the 268-unit Fisherman's Landing in Coconut Creek and the 140-unit Summit Chase in Coral Springs.
In Palm Beach County, switchbacks include the 224-unit Enclave at Delray Beach, the 319-unit Gateway Club at Orchid Lakes in Boynton Beach and the 476-unit San Merano at Mirasol in Palm Beach Gardens.
McCabe said the reversion decision has to be made early in the conversion process in order to capture cash flow, market share and minimize expenses.
Resource: southflorida.bizjournals.com