Trump's big gamble: Who will pay up?
Donald Trump's high-priced condos are drawing a lot of interest and support, but some key answers are yet to come.
By BRADY DENNIS and KRIS HUNDLEY
Published January 14, 2005
TAMPA - In the last four years, just 12 condos sold for more than $1-million in Hillsborough County.
Enter Donald Trump. On Monday, he announced that in a matter of days he had sold more than a hundred condos in a proposed 52-story downtown high-rise with prices ranging from $700,000 to more than $6-million.
What gives?
Credit the magic and moxie of Trump, along with a generous helping of hype.
Trump Tower Tampa, with 190 units at 111 S Ashley Drive, may have generated unprecedented interest from both inside and out of the Tampa Bay area. But so far interested buyers have had to put down only a 10 percent deposit, and that deposit is fully refundable.
A much more telling measure of the Trump Tower's appeal will come when it's time for contracts to be signed, a process that isn't expected to start till mid February.
At that point, serious buyers, who will have to put down a nonrefundable 20 percent deposit, will be separated from the lookie-loos caught up in the excitement of the moment. Many of those buyers may well be speculators, expecting to sell their units for a quick profit as soon as the project is completed in 2007.
With most of Trump's condos costing in the millions, an obvious question is raised: Where is all this money coming from? In a county where the average new home costs $225,000 and the median household income is $44,000 a year, who can afford the rarefied heights of Trump Land?
South Tampa real estate agent Toni Everett, who is involved with the Trump project, said buyers have been both local and from as far away as New York and California.
She sees no end to downtown's potential.
"Downtown Tampa is growing by leaps and bound," she said. "It's going to be a wonderful place to live."
It isn't yet. The neighborhood surrounding the Trump site goes dormant after 5 p.m., and lacks the swanky restaurants and sophisticated retail that would seemingly appeal to residents who have plunked down millions for a condo. There are other questions about the Trump Tower's location. It would sit along the Hillsborough River, not the open bay. And while the project promises spectacular water views south and east, other residents will be looking at the less spectacular sprawl of downtown Tampa and South Tampa.
Warren Weathers, Hillsborough County's deputy property appraiser, fears a bubble of dot-com proportions is about to burst. He has watched real estate trends in Tampa for nearly three decades and says that when people begin to say there's no end in sight, that's exactly when the end is in sight.
"When the store clerks at the convenience store start talking about real estate," he said, "that's your bellwether right there."
For the moment, the believers appear to outnumber the skeptics. Dick Beard, who began developing downtown Tampa 25 years ago, is a Trump believer.
"Harbour Island is done, built out," he said. "If you want to live in the urban core, this is what's left. Downtown becomes a very different city in the next 5 to 10 years. Things we are not even envisioning yet will happen."
Former Tampa Mayor Dick Greco, now executive vice president of Lindell Properties, said Donald Trump's involvement brings a mystique that feeds on itself, generating new retail and interest in the arts downtown.
"This builds enthusiasm for a community," Greco said. "Everywhere you look, you see something happening. You'll see this place soar as long as the economy stays good."
And while many people are gawking at the price tags of Trump's condos, Greco says that's the Tampa of the future.
"Trump's prices are not out of line," he said, pointing to a project he is developing on Harbour Island of two 20-story condo towers with units priced from $750,000 to $2-million. "We're obviously ready for this, or it would not be happening."
Weathers, the deputy property appraiser, estimates that about 5,200 condos are now on the planning boards for construction in and around downtown Tampa. He wonders how many will get out of the ground.
"I think there's lot of hype associated with these developments. It's a status thing," Weathers said. "We're a good working-class, blue-collar town. We're not, at this point, a Trump town. It's like a movie star coming to Arcadia."
Weathers said that during the past five years, no home in Hillsborough has sold for more than $3.75-million. No condominium unit has sold for more than $1.8-million.
"Every market only has so many buyers in it. When you get above half a million (dollars), the air gets very thin up there," Weathers said. Not to mention that as interest rates creep up, he said, "you lose a lot of buyers."
Why would a buyer with millions to spend choose Trump Tower Tampa? In Tampa, $6-million could buy a mansion with much more square footage on the city's most prestigious street, Bayshore Boulevard.
Having breathing room means something to Joe and Liz O'Connell, whose luxurious Avila estate in north Tampa is valued at $6.5-million and could be yours for the right offer. The O'Connells don't see Trump Tower as their next address. Their 21,000-square-foot mansion sits on two acres and includes six guest suites, a 1,000-bottle wine cellar and three laundry rooms.
Liz O'Connell can't imagine giving up Avila's yards and trees, along with the privacy of a gated community, to move to tighter quarters downtown.
"It would be difficult to leave," she said.
But to others, the Trump name is seductive.
"It's going to be state-of the art and trendy," said Cher Hedges, 34, who owns a Woody's Bar-B-Q in Plant City and is anxious to purchase a unit in Trump Tower. "I'm a single guy who owns my own business, so it would be perfect for me. It's pricey but ideal."
His broker told him about the project on Monday and Hedges immediately told him to check it out.
"I want a community where I can meet people on my level," Hodges said.
Marvin Rose, publisher of Rose Residential Reports in Tarpon Springs, observes that very few high-rise projects have yet broken ground in downtown Tampa. And if speculative buyers outnumber those who intend to live in their units, that could mean a flood of condos on the market when the projects are completed.
"There's no question Tampa will be a very different place in five years," he said. "And if these units are built, somebody will live in them. But how much money the current wave of speculation makes remains to be seen."
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