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Coffee Talk
+ New tax may hit Lee, Collier builders
In Lee and Collier counties, there's talk of a tax on commercial builders to pay for affordable housing.
That's despite the fact that Collier County commissioners voted the idea down recently. The county staff had proposed imposing a one-time tax on new construction of commercial buildings, but commissioners tabled the issue a few months ago. Still, Coffee Talk hears it might resurface.
In Lee County, commissioners recently tripled one-time taxes on new construction, called "impact fees," and the commercial real estate industry largely remained mum. Frank D'Alessandro, a partner in the firm Gates D'Alessandro & Woodyard, says the tax increase happened so fast the building industry had little time to react.
This time D'Alessandro says developers will be more vocal in opposition to another tax. With the price of homes falling in the residential downturn they have a better chance of defeating any proposal.
+ Construction industry to see more cost hikes
Ken Simonson, the chief economist of the Associated General Contractors of America, brought his good-news, bad-news shtick to the lobbying groups' 88th annual convention earlier this month.
The good news is that the cost increases builders and developers were seeing from suppliers slowed considerably in the last half of 2006. The bad news, says Simonson: The decrease is a temporary quirk, adding that "by the end of 2007, materials costs could be rising again at a 6% to 8% rate, with wages rising at a 5% rate."
The construction industry has long been vulnerable to increases in the costs of supplies and materials, Simonson says, partially because the products need to be physically delivered, and fuel surcharges are commonplace. He predicts there will be even more increases in products such as petroleum, concrete and metals in 2007.
The employee wages issue will only exacerbate the problem of increased materials costs, says Simonson. Construction employment nationwide increased by 2 million workers from 1997 to 2007, a 33% increase, and the demand for more workers will grow, as a large segment of the workforce retires. Combine that with extraordinarily low unemployment rates, and the employee has the upper hand in the job market, Simonson says. Hence, higher wages will be the future trend.
So much for the good news.
+ Boosting sales the new old-fashioned way
Back when Florida had more orange trees than houses, there were developers who brought northerners to the Sunshine State on free excursions to look at real estate for sale.
They wined and dined buyers, especially on the Gulf Coast, and offered enticing deals such as $10 down and $10 a month. Waterfront lots, some now worth hundreds of thousands of dollars, were sold for $100 down and $100 monthly.
Now, with the recent slowdown in residential activity, it appears that free or subsidized trips might be making a comeback.
Why not? Some developers are already offering a free Mercedes-Benz with a condo purchase.
Coffee Talk hears that EcoGroup offers $299 two-day packages from New York and Chicago to Tampa for couples interested in buying at New Port Tampa Bay, a 54-acre upscale waterfront community being developed in South Tampa.
"We're facilitating their falling in love with New Port," says Don Gunn, EcoGroup's chief operations officer.
Gunn, who worked for Deltona Corp. three decades ago when it chartered airplanes to bring northerners to the state, says EcoGroup's program is nothing like those deals of old.
Those who buy at New Port Tampa Bay are reimbursed for the cost of their trip, which includes meals and lodging.
EcoGroup is building condos, town houses, a grocery store, offices, shops, restaurants, a resort hotel and marina. Over the next decade, the project is expected to generate about $1.3 billion in revenue for EcoGroup, which has developed projects from Naples to Longboat Key to Pinellas.
New Port Tampa Bay will be the developer's signature project, with pre-construction prices ranging from the $300,000s to over $2 million.
In January, EcoGroup's sales had exceeded $55 million on New Port Tampa Bay's first two condominium towers, Marina Tower I and II, or about 30% of the 218 units.
Skanska USA is building the towers, which should be completed in the first quarter of 2009. EcoGroup is also building two luxury towers, Aqua Pelican Isle Yacht Club, on the Gulf of Mexico in Naples.
The company recently marketed the two yachting communities at the Miami Boat Show through the Bentley Sales Group, a real estate brokerage.
Even with all the promotions companies now offer to woo buyers, it's a safe bet that none will come close to the deals offered decades ago of $100 down and $100 a month.
Still, might it be a good time to buy?
Rapid closings defy market
Did Sarasota-based condo developer Don Bevins figure out the mystery of time travel?
Coffee Talk thought he might have, especially after hearing the developer and his company recently closed on 37 condo contracts in just two months for the Grande Oaks Preserve, a 30-acre gated community with a projected 125 residences being built on DeSoto Road, two blocks south of University Parkway and two miles west of Interstate 75.
With numbers like that, it sounded like Bevins launched himself back into 2005, when half-million dollar condos sold like 10-cent candy bars up and down the Gulf Coast.
No such time-travel trips, says Bevins, managing partner of DeSoto Preserve LLC. Instead, he relied on the tired and true real estate stand-bys of location and amenities. Not to mention persistence and constant communication with potential buyers. "The difference in today's market is in closing," Bevins tells Coffee Talk, "because people are very willing to walk away from a deal."
Bevin's modesty - yes, this is a developer we are talking about - defies the hard numbers he and the sales staff produced: Construction on the first 60 condos began in late 2003, and initially sales and interest were intense. But starting early last year, that interest, as well as contracts that had not yet been signed by potential buyers, began to decrease. Grande Oaks could have been one of dozens of condo projects to succumb to the realities of the market slowdown.
As of last week, though, 60 condos were completed, 11 of which are ready to be occupied, and 49 were sold. And the contracts on 37 of those sold were closed in December 2006 and January 2007. "We've always believed in the high value represented in the residences, location and upscale lifestyle" of the project, Bevins says, and the "sales figures support this belief."
The sold condos are a mix of two-and three-bedrooms, with prices ranging from the mid $500,000s to the high $700,000s. Floor plans, excluding lanais, range from two bedrooms at 1,862 square feet, to three bedrooms at 2,687 square feet; lanais range from 135 to 295 square feet.
Construction on the remaining 65 condos is scheduled for the next two years, with completion of the entire project possible by mid-2009. Pre-construction prices for condos in that phase run from the mid $600,000s to the mid $900,000s.
The entire community is built inside a nature preserve, one of the amenities Bevins boasted about to potential buyers. Other features include eight-foot solid wood doors, graceful crown mouldings and Roman-jetted tubs.
Bevins' other selling point, location, got an unexpected boost recently, when Sarasota County approved initial plans submitted by Sarasota-based Benderson Development to build a mix of retail, hotels and office space on an enormous plot of land off of University Parkway. Parts of the Benderson location, Bevins says, are within walking distance of Grande Oaks Preserve.
UPDATE
Chico's FAS gets another look
Is the worst behind for Chico's FAS?
Some analysts are starting to think the stock of the Fort Myers-based women's retailer could rebound.
In a research note, Friedman Billings Ramsey & Co. analyst Adrienne Tennant upgraded the stock and increased the stock's price target to $25 a share, up from $17. That's nearly 20 times Tennant's 2008 fiscal-year estimate of earnings of $1.30 per share.
Chico's (symbol CHS) recently traded at $24.90 and the stock has traded as low as $16.95 over the past year.
Tennant says Chico's has reduced bloated inventories and cut back on plans to open new stores, a strategy that will let its executives focus on stabilizing the business. Most recently, Chico's reported sales at stores open more than a year declined 4.6% in February versus the same month a year ago.
Still, Tennant cautions that the company's turnaround may not happen quickly because of several factors, including slowing sales at its White House|Black Market division and losses in its Soma division. In addition, Tennant is concerned that the Chico's brand has matured and won't deliver the growth it has in the past.
What's Ahead
April 5 - A bevy of Gulf Coast PR experts will be sharing their secrets in a half-day seminar called "Generate Buzz for your Business: PR and Technology Tactics that Work!" at the University of South Florida Sarasota-Manatee campus April 5. The seminar, sponsored by the Economic Development Corporation of Sarasota County and the Central West Coast chapter of the Florida Public Relations Association, is from 8:15 a.m. to 1 p.m. The USF Sarasota-Manatee campus is at 8350 N. Tamiami Trail in Sarasota. For more information or to register, call the EDC at (941) 309-1200, ext. 203 or go to www.edcsarasotacouty.com
April 5 - The Urban Land Institute's Southwest Florida chapter will host a panel of experts to discuss the Boomer generation and the impact on development. The event will take place at Grey Oaks Country Club in Naples and will last from 8:30 a.m. until 11:30 a.m. Cost is $90 for nonmembers and $75 for members. To register, call 800-321-5011 (event code: 8118-0708).
April 10 - The Real Estate Investment Society will host Robert Ball, the executive director of the Lee County Port Authority, who will discuss expansion of aviation services at Page Field and Southwest Florida International Airport in Fort Myers. The luncheon begins at 11:30 a.m. in the Magnolia Room of the Pelican Preserve Town Center in Fort Myers. Cost is $25 for members and $35 for guests. To reserve, visit www.reis-swfl.org or call Sharon Heston at 239-410-1253.
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