Been renting for a while? Ready to invest that money in a home of your own? If so, then you might be interested in a new trend on the Mississippi Gulf Coast: converting apartments into condominiums.
John Ellis III, CCIM, of Ellis Realty Group in Pass Christian said that one of the biggest trends in the apartment market currently on the Mississippi Gulf Coast is the conversion of apartments into condominiums.
“What is really going on now is a condo boom,” Ellis said. “I’ve got some contracts now where buyers are paying more than the apartments are worth in order to convert them into condos. We’re getting high prices, and back up contracts are pretty much common today.”
Ellis said the trend means a good capital infusion into the older properties.
The result is also beneficial for the contractors employed to refurbish older apartment complexes into condos.
“Some units are now bringing about $50,000 per unit,” Ellis said. “You can remodel the apartment and sell it as a condominium for $90,000. It is hard to buy housing in that price range. With home mortgage rates continuing to be low, combined with a push for home ownership by President Bush, we are going to continue to see condos as an alternative option, especially for folks starting out.”
Ellis said that occupancy rates for Coast apartments are holding up well in the low- to middle-90s. And there are a number of new properties either under construction or that will be coming under construction soon.
Affordability can be an attractive factor
One of the largest projects announced thus far is the conversion of Fort Bayou Apartments in Ocean Springs to condos. The complex will be renamed Oak Glen Marina Condominium Resort, and eventually all 205 town homes and flats are planned to be converted into condominiums. Complex owner Grant McPhail said that since occupants will ultimately need to move out of their units so the interiors can be completely renovated, current residents are being offered a chance to buy in at reduce pre-construction costs.
“These condos are currently available at pre-construction prices in the low $100s, so they are more affordable than many of the developments currently under construction on the Coast,” said Lisa Crispo, director of sales and marketing for the resort.
Plans call for an additional 72 new condominiums to be built after renovations to the existing 205 units.
The upscale side also a deal
A number of new apartment and condo projects are underway in Biloxi, with the dollar value of each condo much higher than for each apartment. In 2004, building permits were issued for 105 apartment units in Biloxi totaling approximately $8 million in value. Permits were issued for 101 condo units with a total value of approximately $22 million. In 2003, permits were issued for 122 condo units with a value of approximately $23 million.
“Right now, Biloxi has 561 condominiums,” said Biloxi Mayor A.J. Holloway. “When they were built years ago, those condos represented about $11 million in construction. Right now, we have 215 condo units under construction, representing $43.9 million dollars in construction. And developers have proposals to build more than 1,000 more units — investing more than $120 million dollars in new construction.”
Holloway said it is possible not all the proposed condos will move forward, but the units under construction right now will represent a significant boost to their property tax base.
“Consider this: An upscale condo in Destin might go for $800,000,” Holloway said. “You could easily get that upscale condo right here in Biloxi for half that. People considering retiring to Florida are going to start looking here, and they’re going to like the lower prices, along with our overall lower cost of living and better quality of life.”
Next door in nearby D’Iberville, the city recently gave planning approval to five, 10-story condos near downtown D’Iberville that will cost an estimated $371 million. Back Bay, LCC, plans to build five high-rise buildings with a total of 630 units. The cost works out to approximately $300 per square foot.
Strong demand around the state
Jacqueline Liddell, who is executive director of the Mississippi Multifamily Council of the Home Builders Association of Mississippi, said condos are one of the major trends in the multifamily housing market.
“Even with the current supply the index for condominiums is up from this time last year, and survey respondents said they expect even higher production six months from now,” Liddell said.
The number of apartments available for rent in the state has decreased.
“The index tracking the number of rental apartments available for rent continued a downward trend, registering a six-point drop from 63.7 at this time last year to 57.7 in the second quarter 2004,” Liddell said. “But at the same time, the index tracking the volume of calls from prospective renters saw a healthy increase, rising nearly 15 points to 52.9, up from 38.2 in last year’s third quarter.”
Liddell said in the Jackson area five new major apartment complexes were constructed in the last year. Three were by Heritage Properties, and ERC Management and Park Companies both had one.
Al Brock, chairman of the Industrial Foundation of Washington County and chairman of Greenville Housing and Revitalization Association, said over the past six to eight years a couple of nice new apartment complexes have been built in Greenville.
“We’ve got strong, strong demand for apartments here,” Brock said. “These apartment occupancy rates are very high. I know I’m constantly trying to place people into an apartment, maybe prior to building or buying a house.”
Contact MBJ contributing writer Becky Gillette at email@example.com.