The Condo-Conversion

ORLANDO -- Conversion fever has hit owners of apartment buildings looking to cash in on Orlando's red-hot love affair with downtown condominium living.

True, more than a half-dozen new downtown condo projects have been announced, including 55 West, The Plaza, The Sanctuary, The Vue at Lake Eola, Eola South and The Jackson, a seven-story condo project recently announced by developer Real Estate Inverlad for the northwest corner of Jackson Street and Eola Avenue.

Yet 1,500 new condos in the pipeline may not be enough.

Downtown Orlando's most successful conversion project -- The Metropolitan at Lake Eola -- had more than 1,000 people on its waiting list and sold out in less than a week.

Such conversions may even have an edge on new condo projects. Interest rates are widely expected to begin edging upwards, perhaps as soon as August. An existing property allows buyers the option of nailing down a loan at current record-low rates before Alan Greenspan and the Federal Reserve take action.

"Condo conversions offer buyers a great alternative," says Joe Lopez, the Central Florida regional director of sales for Atlanta-based Coldwell Banker/The Condo Store.

A little late

Orlando has actually come late to the condo party.

The trend hit Atlanta eight years ago and Jacksonville 4 1/2 years ago.

"We've known that condos were coming to Orlando," says Lopez. "There has been a tease for a long time."

Some "As traffic in and around large urban areas worsened, people assessed their quality of life and wanted to live nearer to where they worked," says Betty Harbort, senior vice president of Coldwell Banker/The Condo Store.

As a result, developers have begun to take notice of infill properties in downtown areas, claiming them for urban, high-rise living. Low interest rates

fueled the trend. "Recent interest rates have made it so affordable for young professionals and first-time buyers to purchase condos," says Harbort.

Old for new

Along with the new condo development has come a rash of condo conversions -- renovating old urban apartment buildings and converting them to for-purchase condos.

Developers are attracted to conversion projects because they move faster and are cheaper than constructing new buildings. Because the projects involve existing product, a transaction can be secured in 45 to 60 days, and the units can be turned quickly for a nice profit.

Buyers like conversions because they tend to be more affordable than new construction, especially in downtown areas where housing prices have gone through the roof. "Right now, some people can't afford to live in town, whether they are renting or purchasing," says Lopez.

That's true in downtown Orlando, where the average home price has jumped nearly 81 percent to $249,153 and new condo construction is costing buyers a base price of $200,000.

In contrast, the 128 condos at The Metropolitan at Lake Eola began at $110,000. "There is a demand for in-town living that is priced right," notes Lopez.

On the edge

The success of The Metropolitan has spurred other condo conversion projects just outside downtown Orlando.

Here, prices are even more affordable, and downtown is just a $5 cab ride away.

Take the $5 million conversion at La Costa Brava.

of the credit goes to Interstate 4's notorious traffic jams.

Take the $5 million conversion at La Costa Brava.

Built in 1964, the 194-unit La Costa Brava, located on the shore of Lake Pineloch, once was one of Orlando's most stylish rental addresses. In fact, between 1964 and 1985, it had one of the lowest vacancy rates in the city.

However, as time passed, the elements took their toll on the building, fading the exterior, damaging the roof and causing wood rot.

Local builder and developer Mark Kinchla purchased La Costa Brave earlier this year for $17.5 million.

His plan: Convert the property to a Mediterranean-style condo community.

"The Metropolitan created a huge pent-up demand," says Kinchla. "People are jumping on what they can find to get a spot downtown."

When Richard Zahn, owner and CEO of Longwood-based Hersh Cos., caught wind of Kinchla's purchase, he jumped at the chance to team with him on the conversion. "The problem is many people are afraid of the issues that come with a 30-year-old product," he says. "We're not."

Neither man is a stranger to condo conversions. Hersh Cos. is a national general contractor specializing in condo development and conversion, and has worked on 26 projects in 13 states. Kinchla began doing condo conversions in Boston in the 1980s, and most recently completed the conversion of Lakeside at Delaney.

They are looking to capitalize on Orlando's current condo market conditions with the La Costa Brava project, where they already have sold 30 units ranging in price between the low $90s to the high $100s.

And they are looking for more opportunities. Says Zahn, "There is a lot of product out there on the cusp of great neighborhoods."