The biggest news in the commercial real estate market on the Coast is the boom in construction of high-rise condominiums on the beach in Harrison County.
For many years there was lots of condo talk, but none of the projects came out of the ground. But currently three high-rise condominiums are under construction, and quite a few more are in the planning stages. In Long Beach alone, seven high-rise condominium projects have been announced. A project has also been announced for Pass Christian.
The current trend with condominiums on the Coast is phenomenal, says Dr. Charles P. Cartee, a professor of finance at the University of Southern Mississippi and owner of the commercial appraisal business Cartee Properties Inc. in Gulfport.
“This is a very, very dynamic market right now,” Cartee said. “In some cases, a majority of the units are selling before projects even break ground. The trend started with the Legacy project, which is already topped out. Their first tower is sold out, and a second tower is planned there. I went by Seabreeze the other day, and it appears they have initiated construction. It is the only one on the south side of Highway 90. Their big advertising campaign is that they are the only one located beachside.”
There are also plans for a condo at the site of Broadwater Tower Hotel, located next to President’s Casino. Broadwater Tower was sold to a developer who originally intended to do a conversion from hotel to condos. Currently the plan is to tear it down and build two or three condo towers there.
Another proposal is for the Portofino project just east of Veterans Ave. on Highway 90 in Biloxi.
Why has the high-rise condo market on the Coast finally caught on like fire?
“I think this has been probably one of best-kept secrets in the nation,” Cartee said. “All of a sudden people have finally discovered this place. For years and years, it was Destin, Sandestin and Orange Beach, and now they have finally discovered the Mississippi Gulf Coast.
“I think one of the things that attract developers to this area is that land costs, particularly in Long Beach and Pass Christian, are not yet prohibitive. In Destin, land costs are very high.”
A lot of buyers are baby boomers and empty nesters with discretionary income attracted to the appeal of a second home on the beach. Equally, if not more important, is that a lot of people see condos, particularly beachside condos, as a good investment.
In really hot condo markets, there can be a substantial amount of “flipping” going on. Flipping is the term for frequent changes in ownership. A condo unit can be reserved for a nominal amount down before it is constructed. Some people will go in and tie up several condos at once. Once the condo starts coming out of the ground and the investor has to put down earnest money, often they will sell their interest in the project.
“I don’t know the extent of flipping here, but in Orange Beach and Destin, when these things are announced people will go in and tie up several condos at once,” Cartee said. “Later they have the opportunity to flip it to another investor at a higher price. They have a window of time to flip it between the time the building is started and finished. They buy and reserve a condo with the firm intent of flipping by the time it goes to closing. How much that is going on here, I don’t know. But it is true of most condo markets.”
Condos on the Coast start at $350 per square foot. Cartee said you can “build the best house in Gulfport for $150 per square foot.” So, there must be good reasons for paying a lot more for condos than other residential property in the area.
“There is absolutely a huge condominium market on the Coast,” says Cheryl Boudreaux, director for sales for GCID Partners, the listing company for Seabreeze, 101 units just east of Treasure Bay south of U.S. 90 in Biloxi. “It is the next natural wave after the casinos. There are at least eight projects permitted now, and probably double that to come. We sell to the investment market. We sell to people who either buy it for a second home, or put it into daily or weekly rentals. Most of our buyers are that type of purchaser.
“We’re a year-round market now. We don’t close down after Labor Day. We have people who come in year round from the northern U.S. and Canada because of our climate, gaming and entertainment.”
Boudreaux said people are particularly interested in the Seabreeze project because of the great views and being right on the beach instead of across U.S. 90. At Seabreeze, condo prices start at $425,000 and increase up to $1 million. The project is expected to be completed in 15 months.
The condos haven’t been welcomed with open arms everywhere. In Pass Christian and Long Beach, smaller residential communities on the Coast, there has been some opposition to “Tall Beach” by people who fear the tall condos will block the view of the beach and dramatically change the character of the towns.
Ocean Springs-based freelance journalist Becky Gillette writers regularly for the Mississippi Business Journal. Contact her via e-mail at firstname.lastname@example.org.