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When Richard Corace started building condos in Southwest Florida 25 years ago, the average age of his buyer was 72.
Today, the average age is 54.
That helps explain why Corace's newest project, Kalea Bay, will only be selling condos with a fourth bedroom that can easily be turned into a home office or den. “People can operate a business from anywhere in the world,” says Corace.
Kalea Bay is the biggest new condo development to occur in North Naples, one of the hottest residential real estate markets in the area. According to the Naples Area Board of Realtors, the median price of an existing condo in the North Naples area rose 40% to $275,000 in January compared with January 2014. There's less than four months of supply of condos in that area based on January's sales pace, the data show.
With no new condo construction for the last eight years, Corace is confident buyers will pay $1.75 million on average for one of the new Kalea Bay condos he's proposing to build near Wiggins Pass Road and Vanderbilt Drive in Naples.
It's a big project: Kalea Bay will have 580 condos in five buildings, a project totaling $1.3 billion when it's built out. The sales center just opened and already 22 buyers are serious prospects for the first building, which will start rising this summer once half the building's been sold, and it will be completed in fall 2017.
Corace says a consortium of banks will provide the financing for the project. Although he says the financing has not been finalized, it will likely include Comerica and Wells Fargo, who have backed his previous Naples residential projects, The Dunes and Moraya Bay. So far, Corace and his partners have invested $55 million in Kalea Bay, he says.
As soon as one building is 80% sold, another one will begin. It takes about 18 months to two years to build each building, which comes with its own rooftop pool with a view of the Gulf of Mexico. “This is a 10-year deal,” Corace says.
The buildings sit on Gulf-front land that Corace, the CEO and president of NxTOne Advisors, and Anthony Soave, owner and chairman of Soave Enterprises, acquired 14 years ago from a Chicago family. Permitting alone took eight years, but by then it was 2008 and the country was in recession, Corace says.
Now, a confluence of positive factors will drive buyers to Southwest Florida, Corace says. Among them: technology allows executives to run their business from anywhere, the economy is recovering, people are borrowing against their rising stock portfolios and high-income earners are migrating to low-tax states such as Florida.
At Kalea Bay, the sales center serves as a model home. The floors, windows and even the doors are what buyers can expect when they move in. “People don't want to go through the decorating process,” Corace says.
Unlike Miami, where developers insist on as much as 50% down payment for condo buyers, Kalea Bay only requires 10% at contract signing. Another 10% will be due when construction starts and 10% when the building is topped off. The balance, 70%, will be due at closing.
There is no golf course. Instead, Kalea Bay plans to build 24 guest suites overlooking a $25 million amenities center that will include tennis courts, a restaurant, a children's daycare facility and three pools, including one designed for small children. Membership will cost $5,000 a year, a fraction of what it might cost for a golf membership. “Golf courses have become liabilities,” Corace says.
Corace estimates 80% of the sales will come from outside residential real estate brokers. He doesn't advertise in the local daily newspaper, preferring to pay commissions to brokers and on Internet marketing. “Back in the day we spent thousands on brochures,” he says. “Today it's the Internet.”
Follow Jean Gruss on Twitter @JeanGruss
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