Condo Fees

[simms3]

Quote
I have heard of COAs approaching $1,000.

Uh, buy a house for the same amount?

I've looked at 3/2 condos for 70-80k in an area of town with good schools. Find me a house for that.

For me also, I am a single father with two kids and a full time job. It's not easy take care of a yard.

Simms3 was saying he's heard of COA fees hitting $1,000 a month.  That's ON TOP of your mortgage.  You can get somebody to take care of the yard at a house for way less than $1K per month :-)

Before people jump on me for bringing up other cities, I do discuss Jacksonville.  Everything is relevant, but it is necessary to compare other buildings (for which Jax does not have many) by pricing, rentals, etc.  All of this is necessary to understand why high rise condos are priced the way they are and why they rent for what they they do.  Also, pay attention to these numbers, because these are mostly similar buildings to the Peninsula or the Strand or Berkman Plaza.

Current market conditions in a selection of new construction near me (Midtown to Buckhead):

The Atlantic (Atlantic Station, completed Aug 2010) $170K-$1.5M rents 1 BRs from $2,500, 2 BRs from $3,500 COAs @ $0.60/SF

1010 Midtown (completed Dec 2008) $199K-$1.65M rents 2 BRs from $3,200, COAs @ $0.28/SF (COAs are low because the 50,000SF base is rented out to high paying retail and restaurant tenants like Crate and Barrel, and this extra income basically carries that building)

Aqua (completed Sept 2007) $164.5K-$2.0M rents 1 BRs? from $2,950, PHs from $10,000, COAs @ $0.53/SF

Luxe (completed Dec 2008) 2 units left starting at $729.9K, overall range from $250K-$2.5M, no rentals, COAs at $0.31/SF

Sovereign $1.1M-$10.0M (though highest sale was for $5.0M), no rentals, COAs at $0.40/SF (office component of this building just sold for about $350/SF!...over 3x the max for Jax)

Ritz Carlton Residences (completed Jun 2009) $450K-$3.0M (though a PH went for $2.582M), no rentals, COAs at $0.68/SF

Mansion (completed 2008) $2.3M-$12.0M (though I believe PH was lowered to $3.95M) COAs range from $1,304/mo for smallest unit to $4,600/mo + $4,800/yr for the PH

10 Terminus (across from my office building, sold out, complete 2010) $180K-$1.6M (PH originally listed at $3.6M, sold for 55% off), 1 BR renting at $3,900/mo, COAs @ $0.40/SF

Gallery (completed Dec 2007) $300K-$1.4M, COAs @ $0.34/SF

1065 Peachtree (completed 2010) all rentals, 52 units, 1BRs from $2,900, 3 BRs from $5,500, COAs @ $0.30/SF?


The newest building, all rentals, 23 floors, breaking ground next month, has financing from Northwestern Mutual, 714SF 1-BRs start at $1,500/mo ($2.10/SF), and 1,102 SF 2-BRs start at $2,350/mo ($2.13/SF).  Most units are 1-BRs, and there will be 20,000 SF of retail.  Total cost is estimated at $81.75M for 330 units.  It looks to be a roughly $200-225/SF construction cost, so if all units rent out for their given price, discounted to 10%, payback is well over a decade away.

Just to give one an idea, new office construction is about $280-$320/SF, so just to get payback (discounted), rents would have to be north of $30/SF.  Top rents for class A space downtown do not exceed $21.50/SF currently.  (And I just found out the other day that our BOA building has the fastest elevators in FL!)  We have a longggg way to go before we see new residential or office high rise construction.  Our hospitality real estate market is showing even worse performance.

Rental ranges in these buildings above are $1.63-$2.41+++/SF (the necesary range to get construction financing for new multifamily projects), or $1,467-$2,900+++/bedroom.

COAs ranged from $0.31-$0.68/SF, and of course $60K/year for the 9,586 SF PH of Mansion (56th floor...$0.52/SF). 

Your COAs at the Peninsula are about $0.47 or $0.49/SF on average, so for the smallest units you're looking at $611/mo and for the largest units $1,316/mo.

For another comparison, my building is amongst the cheapest in Midtown Atlanta, but the COAs are high (because we have so many ghetto people who don't pay).  My unit is 876 SF I believe, my COAs are $468, so that is roughly $0.53/SF.  Units in my building range from "they say" $90s to $400s, but really you can get foreclosures here or burned out units for under $40K.  The unfinished 40th floor is listed at $1.2M and has not sold yet, even though the building was constructed in 1989 (used to be entirely rentals).  My rent here is $1,600 for 2 bedrooms and 1 bedrooms start at about $1,100.

Atlanta may seem "expensive", but for city living is actually cheap.  This is slightly above the bottom range necessary to sustain high rise multifamily and condos.  South of these numbers is unfeasible for lenders, developers, and equity partners, so there has to be a demand for these numbers.  I can tell you $1,900 for 3 bedrooms on the top floor of the Strand is a money loser for the owner of that complex (unless there is something I don't know).  First generation/new construction needs to be at about $1.70/SF or higher, which would mean rent for that same unit would need to start at $2,586 for the "Residence A" 3-BR and $3,080 for the "Residence S" 3-BR - what I would consider a fair price to pay for borderline luxury living 28 floors up on the river, with amenities at your fingertips to boot.  People who own 3BR houses on the river are certainly paying nearly double that monthly on their mortgage.

For peer city comparisons, Austin prices similarly to Atlanta.  Miami used to price A LOT higher than Atlanta, but is now quite similar considering its glut.  Nashville is between Jax and Atlanta.  Charlotte is slightly above Nashville in pricing, but not much (still a good 20-30% more expensive than Jacksonville).  Birmingham does not have a high rise condo/multifamily market to speak of.  Basically, the densest, most urban southeastern cities have the bare minimum pricing and markets necessary to do urban multifamily projects.

[Springfield Chicken]

We used to live in a moderately priced gated neighborhood in Naples, FL.  When we bought there in '94 the fees were $100 a month.  By the time we left 14 years later they were $300 a month and that didn't include yard work.  Even though I'm a Realtor and I know what the fees cover I decided I was through paying them.  We bought in a neighborhood in Jax with no fees.  I control whether or not I want cable, who my insurance carrier will be, I do my own yard, etc.  If I spend as much money now it's because I choose to.

[Fletcher]

Condos suck. Sorry for the negativity. Just stating the truth. I'd rather rent, and not own, then own a condo.

I totally agree with you buddy and that is why I don't have any condo of my own..!!

[mtraininjax]

Uh, buy a house for the same amount?

Cause Obama and Joe are going to eliminate the housing deduction from your taxes over the next few years to help pay down their spending. So what incentive do people have to own a house? Oh yeah, the picket fence. Nice.

[tufsu1]

their spending?  are you ignoring the large debt run up during Reagan, Bush I, part of Clinton, and Bush II years?

even if we cut spending enough to eliminate current deficits (which is practically impossible), we still owe $15 trillion....how do you sppose we pay for that without significantly increasing revenues?