Drive down Federal Highway or Sunrise Boulevard in Fort Lauderdale or Okeechobee Boulevard in West Palm Beach and the "For Sale" signs seem inescapable. Every lonely strip-mall storefront and empty condominium complex pleads to become someone else's problem.
Consider them the artifacts of a gilded age. During the past decade, South Florida's landscape was transformed by a real estate frenzy, part of the biggest home-price boom in American history. The only thing more stunning than the housing market's steep climb was its precipitous fall. According to the Florida Association of Realtors, median home sale prices in the Fort Lauderdale metro area rose by 85 percent between January 2003 and January 2006, when they hit a high of $370,500. By April of this year, that price had been cut nearly in half. Meanwhile, Palm Beach County is now facing its biggest plunge in taxable property values since the Great Depression.
Home sales, although higher than last year, are still dismally low, and foreclosures have skyrocketed. Owners saddled with giant mortgages face off against buyers who won't fork over a penny so long as prices keep falling. "Nobody wants to lend, nobody wants to spend, no one's got money," says Joseph Altschul, a local lawyer who's helping many condo buyers sue to get their deposits back.
The question on everyone's mind is: When will we hit bottom?
Of the empty homes and storefronts that dot the current landscape, high-rise condos are perhaps the most depressing. During the boom years, an endless parade of concrete towers competed for space on South Florida's skyline, but now only a sprinkling of their windows light up at night.
Miami alone has produced 23,000 new condo units since 2003 and is now experiencing the worst condo meltdown of any city in the country, according to Jack McCabe, a Deerfield Beach real estate analyst. Broward and Palm Beach counties built or permitted more than 18,000 condos. As a region, South Florida is probably the worst-hit, McCabe says.
"I think our population growth is about zero right now, and we're not creating any jobs," says McCabe. "Who is going to live in these things?"
While developers, investors, and real estate agents struggle to answer that question, the bust is taking a visible toll on condo complexes scattered throughout Broward and Palm Beach counties. Some developers appear to be in denial, masking empty units with a façade of glamorous amenities while legions of buyers file lawsuits to avoid closing on their purchases. Other developers survive by lowering their standards and their prices, accepting renters and auctioning off unsold units. Then there are complexes with so many empty units that crime has begun to invade. The resulting fear prompts more owners to flee.
A tour of some once-celebrated condo projects illuminates the misery the housing bust has caused. Welcome to condo living — after the boom.
Anybody home? Tao Sawgrass, Sunrise
The security guard is melting in the midafternoon May heat, standing sentry in the blinding white driveway of the Tao Sawgrass condos in Sunrise. In black pants, black tie, and dark shades, he mops the sweat from his forehead as he questions every car that approaches the twin condo towers. The guard, who says his name is Hugo, has only been on the job a month or so, but already he understands the routine.
Anyone who wants to ascend the winding driveway to the majestic entrance of the 26-story complex must get by Hugo first. Right now, most of the visitors are employees — the security guard at the front desk, the woman who sells the condos — because no one lives there. Not a single resident, in 396 units. "Not that I'm aware of," Hugo says.
Carolyn Van Gorder, marketing director for Hyperion Development, which is selling Tao's units, said she could not confirm or deny the presence of residents. Altschul, the lawyer representing buyers, explains that the "overwhelming" majority of original buyers were out-of-town investors who may have intended to simply flip or rent the condos without ever moving in.
Tao, which broke ground in January 2006, was supposed to attract wealthy new residents to western Broward County and the landlocked Sawgrass Mills outlet mall. The condos presold for $300,000 to $800,000, and buyers, including then-Sunrise Mayor Steven Feren, were wined and dined at the BankAtlantic Center.
"I think it's going to be a very good thing for the community," Sunrise City Commissioner Donald Rosen said optimistically in 2004. "I see this as another innovative project that will enhance the value of Sunrise."
Today the complex is an elaborate monument to the folly of the boom years, when it seemed logical to sell half-a-million-dollar high-rise units on the edge of the Everglades. Tao's twin seashell-white towers with blue-tinted accents sit in eerie silence. A fountain bubbles in the center of the circular entrance drive, surrounded by red flowers that have begun to wilt. The lobby, empty except for another security guard, is rustic-chic, with a mosaic pattern of pebbles embedded in the smooth floor and a coffee table made from a polished tree stump. The whole place seems to be holding its breath, trying not to smear its makeup while it waits for a sugar daddy to arrive.
Meanwhile, money problems and lawsuits are quietly wreaking havoc on the project. Last November, Tao construction lender Corus Bank took the project back from developer Harry Weitzer and his partners at J.I. Kislak. By then, some of the construction still hadn't been finished, and none of the buyers had closed on their deals. Although the building is now finished, sales have not improved much since the bank took over. By mid-June, just 33 units in the building had sold and closed, according to property records. Meanwhile, Corus, which was a lender on at least 16 South Florida condo projects, is facing serious troubles of its own. Treasury Secretary Timothy Geithner has given the bank a June 18 deadline to raise more capital or face receivership.
George Guatarre, president of the Corus bank subsidiary W/K Sawgrass, which took over the project, responded to a call to his Chicago office this way: "I'm probably not the right person to talk to. We have someone managing the project. I'll have someone call you back." No one did.
Van Gorder, whose company is based in Miami, says Tao recently received Fannie Mae mortgage approval — which should make it easier for buyers to get financing — and "closings are going very well." But she refused to release any information about how many units have closed or been occupied.
Some Tao buyers have filed lawsuits in Broward County to get their deposits back, alleging a breach of contract because their units weren't ready by the February 2008 completion date. Others are still trying to negotiate lower prices.
Oswaldo Mateus and his wife were among the first people to buy at Tao two years ago, putting down a 20 percent deposit on a $300,000 unit. They planned to move to Tao after selling their house in Boca Raton. When their condo wasn't ready by February 2008, their lawyer sent a letter to the developer, Weitzer/Kislak Sawgrass, asking for their $65,000 deposit back. But the company refused the request. Now Mateus and his family have moved to Bogota, Colombia, because it's cheaper to rent an apartment there while they sort things out with Tao. Corus has started offering bargains to entice Mateus to close — the last offer he remembers was $230,000 — but he won't be satisfied until the price reflects what he believes a comparable unit is worth in this rock-bottom market: $125,000.
Along with losing his equity, Mateus is worried that only a few people will be forced to shoulder all the maintenance fees. "Who's gonna be the [homeowners] association? Thirty people?" he says.
Besides, he's not eager to be the lone resident of an empty building. "It's kind of unsafe to move into a place like that," he says.
A Valet's Worst Gig: CityPlace South Tower, West Palm Beach
Don Patterson is hidden in a side room off the main entrance of CityPlace South Tower, sneaking bites from a takeout container of spaghetti. With his blond hair, blue eyes, collared shirt, and khaki shorts, the 25-year-old could pass for a shorter, slimmer cousin of Zack from Saved by the Bell.
As usual, he's having a slow afternoon. There's not much need for his valet services in a condo building that's mostly empty. "It's very boring," Patterson explains. "There's, like, ten people living here."
He's been working here two days a week for four months, earning $10 an hour. He's an amenity, just like the pool, kickboxing studio, spa, and steam rooms. His presence — like the valet services at many newer condo complexes — signals to visitors that the building is vital and full of residents, despite all evidence to the contrary.
Mainly, Patterson's job is to serve the guests, the ones he calls "lookers," the people who drive up to take a tour of the many units for sale or rent.
"Hold on a sec," Patterson says at one point, rushing off to attend to a white-haired gentleman who pulls up in a convertible. A few minutes later, Patterson runs to fetch a BMW for a young couple leaving the building. They were here to meet a realtor, Patterson says.
The residents Patterson has met include doctors, surgeons, and marketing professionals. Occasionally, Patterson helps them unload their groceries. They ask him how sales are going, whether more people are buying or renting units. But he doesn't have much good news to report.
CityPlace South Tower was part of the building frenzy in West Palm Beach — a city that, according to annual census estimates, issued building permits for 9,000 residential units from 2002 to 2007, more than double the number issued in the previous six years. City leaders were trying to revive downtown shops and reap millions of dollars in tax revenue. "The city is on fire," Mayor Lois Frankel said excitedly in 2004. "All of a sudden, it is going to be a boom. There is going to be a huge transformation in the next few years."
Condos at CityPlace South Tower were supposed to sell for $500,000 to $800,000. According to property appraiser records, 37 of the 420 condos have been sold. But there's no way to know how many of those buyers actually live in the building or which units the developer, Related Group, has simply decided to rent out. Just like at Tao, some buyers have filed lawsuits trying to get their deposits back. A local real estate consultant, Christina Morrison Pearce, recently proposed converting the building into a hotel to support its neighbor, the Palm Beach County Convention Center. But Pearce says the mortgage on the building is still too high for her buyers, and county leaders were not eager to embrace the idea.
Leah Weatherspoon, a spokesperson for Related Group, said she would answer only emailed questions for this article. Then she did not respond to the email New Times sent.
"It's quiet, you know what I mean?" the valet, Patterson, says. "You get to use all the amenities you want."
Saved by the Highest Bidder: Radius, Hollywood
Sara Gordon is convinced she got an amazing deal. The 28-year-old went hunting for her first house three months before the stock market crashed. She paid $300,000 for a two-bedroom condo with views of the Atlantic Ocean and the ArtsPark in downtown Hollywood.
"It's supercool," she says, as she heads out one evening near Young Circle. Along with the rooftop pool, the home theater, and the restaurants in walking distance, she found the ultimate perk: "I have Starbucks in my building."
This kind of enthusiasm is what investors had in mind when 200 people camped out on the street five years ago to buy homes in Radius. The 311-unit pair of curved white towers was to be the first large residential development along Young Circle in three decades. The City of Hollywood, which was trying to ditch its scrappy, working-stiff reputation and attract more Boca-style residents downtown, chipped in $11 million in incentives for the project.
In 2006, then-Mayor Mara Giulianti was a cheerleader for Radius and other high-end condos, which put to shame the faded, Three's Company-era apartments and cheap motels that had stood near Young Circle for years. By contrast, the new developments were heralded as beacons of luxury that would draw hordes of clean-cut yuppies. "Certainly there aren't a zillion people knocking on our doors to stick anything on U.S. 1," she said at the time. "Certainly not with stainless steel and granite tops. I think it brings energy, and I think it brings young people who love this type of living."
The plan worked — sort of. Plenty of young people such as Gordon live near Young Circle, but they are more Publix shoppers than moneyed socialites. Meanwhile, Radius has given up selling glamour in favor of selling anything at all.
"You've got to redefine success," says Andrew Gardner, vice president of condo operations for Lane Co., which partnered with Hollywood developer FIRM Realty to build Radius. "Success right now, for any developer, is to get rid of its inventory at a number that allows it to fight another day."
In fact, Radius was one of the lucky ones. It was approved for occupancy in December 2007, and 190 of the original buyers closed their deals before the real estate market collapsed, Gardner says. After that, his company's strategy was to sacrifice profits in the name of survival. Last November, Lane auctioned off 40 Radius units at prices that began as low as $90,000. This helped the company find out exactly what buyers were willing to pay, which in some cases was half the original price. "Compared to three years ago, no, it's a bloodbath," Gardner admits.
He estimates the building is only about 64 percent occupied — and that includes renters and seasonal residents. But he says 85 percent of the units have been sold and closed, and that makes Radius seem positively miraculous compared to competitors such as Tao and CityPlace South Tower.
Of course, not every detail of life at Radius is worth celebrating. Gordon pays $740 a month in maintenance fees, a price she believes is "compensating for the unsold units." (Gardner says this is simply how much the amenities cost.) The building has even started charging residents for valet parking.
Tom, a 30-year-old renter who declined to give his last name, complains that the building has too many maintenance problems. His bathroom door was installed backward, the dishwasher leaks, and the gym spa was closed for a long time because it had trouble meeting city building-code requirements. "I think they just threw the building up too fast," says Tom, who was walking his dog on Young Circle on a recent evening.
And although Gordon described a building populated by young professionals, families, and older residents, Tom still can't get past the relative emptiness. "It feels like the movie The Shining when you're walking down the hallway," he says.
Gardner concedes that his company is still addressing maintenance issues covered under a one-year warranty. As for the spa, "there were typical construction issues that delayed final completion of one amenity."
Meanwhile, owners have downgraded their expectations. The days of flipping and quick profit are gone. Gordon's attorney told her she'd have to live at Radius for a decade to earn her money back. But she doesn't seem to mind. "It's my first time buying anything," she says. "I got a great deal."
Crime and Punishment: Villa Medici, Fort Lauderdale
On a blazingly sunny afternoon, the arms of the front gate to Villa Medici are raised. The guard's shaded hut is empty, blind to the black Jeep that rolls by, windows down and bass line pounding.
Here on 17th Way in Fort Lauderdale, the rows of three-story townhouses are mostly quiet, their brick walkways shaded by tall palm trees. They are painted hues of orange and cream, accented with Spanish tile roofs. From the outside, they fit the picture of half-million-dollar homes in walking distance of the beach.
Step a little closer, though, and realtors' key lock boxes can be seen on many of the townhouse doors, indicating that they are for sale. It's possible to peek in the ground-floor window of some units and see bare carpet and open closets. One door bears an orange flier announcing that the property is vacant and abandoned; another broadcasts an eviction.
Four years ago, when the complex was under construction, developer Shelby Homes was experiencing such a sales boom that it had to raise prices and cut back on ads for some of its projects. Villa Medici was supposed to bring a "new level of luxury" to Fort Lauderdale, with some units boasting private elevators. As recently as March 2008, one townhouse sold for $675,000.
But the complex has since become an uncomfortable example of how crime and a collapsing economy can sabotage a development. Andrea Stern began renting in Villa Medici in May 2008 and witnessed the downfall firsthand. (Disclosure: Stern works in the advertising department at New Times.) First, she was robbed. A burglar broke in through an open garage door while she and her roommate were sleeping and stole her Toyota Scion, two Wiis, her laptop, even her vodka. It was awful, but she acknowledged she and her roommate shared some of the blame for leaving the entrance to the house unlocked.
Then on September 18, her roommate woke her up to report that police had barricaded the neighborhood. The burglaries had become violent.
According to a police report, Richard Shepherd was upstairs in his townhouse watching TV when he heard a doorknob turn. His dog started barking and ran downstairs. Shepherd, 26, told police he figured it was a friend coming to visit, letting himself in because he'd left the door unlocked. Just as he was getting up to investigate, he heard a gunshot, then the pitiful sound of his dog whimpering.
As a panicked Shepherd called police, the man who shot his dog had already found more victims. A few doors down, Viviana Garguilo and 11-year-old Valeria Balcarce had just pulled into their garage and were getting out of the car when a man with a gun tried to push Valeria away from the driver's-side door, according to a police report. Valeria and Garguilo started screaming. Richard Garguilo ran downstairs to find out what was causing all the commotion and opened the door just long enough for his wife and daughter to escape inside. Then he heard a pop. Apparently the burglar, unable to steal the first car, had put a bullet in the windshield of Garguilo's Toyota.
(Neither Shepherd nor the Garguilos could be reached for comment.)
Watching Shepherd's dog be taken away in a body bag, Stern knew she'd had enough of Villa Medici. "After that, a lot of people got scared," she says. She moved out that month.
Since then, Fort Lauderdale police records show there haven't been any more burglaries reported at the complex. Most of the calls to police now are for cars to be towed. But that doesn't mean the fear has disappeared.
On a recent afternoon, a 22-year-old student at the Fort Lauderdale Institute of Art was walking out her front door at Villa Medici with two tiny, feather-duster-sized dogs in tow. She moved in last November, just after the burglaries, and has been frightened by stories of the crimes.
"We are still nervous about it, to have all that stuff happen," said the woman, who declined to give her name. She and her roommates keep their doors locked and the garage shut, and she's grateful for the security guard who watches over the complex on weekends.
She was attracted to Villa Medici because it's close to the beach and the Galleria Mall. But she plans to leave when she graduates and her lease ends this fall.
"It is very quiet," she says. "I guess it would be better if more people lived here. At night, I don't like it."
Another neighbor, who was checking her mailbox near the pool, put it even more succinctly: "We have been burglarized," she said. "It's not a safe area."
Whether Villa Medici's woes can be blamed on the economy, property management, or an unfortunate location is hard to say. Stephen Ulrich, a real estate agent with Condo Vultures Realty, says location woes have cursed many projects that were planned during the boom. Developers counted on their homes benefiting from the revitalization of entire areas. Then the neighborhood face-lift never materialized. "If everything would have continued the way it was going, it would've been a great area," Ulrich says. "But unfortunately everything stopped."
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In the past ten months, there have been at least 15 foreclosure filings in the 118-unit Villa Medici, according to BlockShopper South Florida. In early May, 19 townhouses were listed for sale, including several three-bedroom units listed between $161,000 and $199,000. Many were short sales, illustrating the desperation of both the owners and the banks involved, which must be willing to accept less than the original mortgage price.
No one knows how long developments such as Tao and CityPlace South Tower will be able to avoid this fate, with their prices high and buyers unwilling or unable to close. Even vulture investors, eager to snag deals in this beleaguered market, are waiting for prices to fall before they pounce. Real estate analyst McCabe estimates that it could be five years before large high-rises have more occupied units than vacancies. And it will be at least a year until prices bottom out, he says. Until then, price cuts, lease-to-own deals, and cheap rents abound.
"You can't sell 'em, you can't bulldoze 'em... all you can do is rent 'em," McCabe says.
That's good news for renters, but it means that sellers, developers, and banks will keep taking a hit. The industry that once promised riches to every novice buyer with cash to burn is getting a crash course in humility. Ads across the land read like this one for Villa Medici: "SELLER IS MOTIVATED! EVERYTHING IS NEGOTIABLE! BRING ALL OFFERS!"