ORLANDO, Fla. – You’ve got to hand it to those aging baby boomers.

If it weren’t for them, the high-rise condo boom in the nation’s cities would be dust in the wind. Or so says Jerry Starkey, president and chief executive officer of WCI Communities in Florida.

Since 1993, WCI has built 88 high-rise condominium buildings both in and out of Florida – 17 million square feet, today worth $15 billion to $20 billion in boom-adjusted numbers, Starkey told a recent session at the International Builders Show here.

“The boomer is the significant driver, both in primary- and second-home markets,” Starkey said. “With 2.5 million to 3 million of the 78 million boomers turning 50 every year, as well as the huge transfer of wealth from their parents to them, the market potential is in the trillions of dollars.”

Of course, other forces also are driving the urban, multifamily-housing market, according to Starkey and session participants Eric Bluestone, a real estate broker in Fresh Meadows, N.Y., and Bob Koch of Fugelberg Koch Architects in Winter Park, Fla.:

Suburban commutes are too long. Boomers are increasingly focused on the quality of life, and the time used in commuting gets in the way.

Traditional families are being formed later in life, so young, single professionals, too, are drawn to condo living.

Government regulation is constraining suburban growth, and any development puts a strain on the infrastructure.

Buildable land is scarce in the suburbs. Yet land costs in the cities are rising, too, as demand for urban living increases, forcing housing to go vertical and from single-family to multifamily development.

Units are getting bigger, thanks to the increasing affluence of the buyers. Starter units are in the 1,500- to 2,000-square-foot range; midlevel peaks at 3,000 square feet, and penthouses average 10,000 to 12,000 square feet.

The typical single-family suburban home now is 2,400 square feet, according to the National Association of Home Builders.

Bluestone said the condo boom and low mortgage rates had caused the rental market, even at the luxury end, to suffer.

“Luxury rentals had a tough time competing even in Manhattan,” said Bluestone. Land prices have risen in the last five years from $25 to $30 a square foot to $100 to $200, making condo development a better bet.

With nothing new being added, the apartment vacancy rate is 1 percent in metropolitan New York, Bluestone said.

“Affordable housing for the work force is suffering the most from rental’s competition from condos,” he said.

Another constraint on affordable rental housing is opposition from neighborhood groups.

NIMBY-ism (“not in my back yard”) is being replaced by “build nothing nowhere near where I live,” he said.

Bluestone’s advice to multifamily rental developers: “Investigate areas outside the core where condos are not as popular, and try to address work-force housing with tax credits and government subsidies, including partnering with not-for-profit developers on land they own or (that) belongs to the municipality.”

The expanding gap between affordable housing and the cost of living has begun “to mobilize legislation aimed at ensuring housing availability” for those who live between eligibility limits and entry-level pricing,” Koch said. Such legislation often mandates “inclusionary housing” on developments and the builders, he said.

Trends in housing, whether condo, rental or single-family, “may often reflect regional, market or geographic distinctions that may not always have relevance to other locations,” Koch said. History shows that some trends are fleeting, and others will become industry standards.

“The market is not static,” he said. “New ideas, better solutions, more demands will always be in the future.”

Today, for example, neotraditional design, expanded emphasis on safety and security, and introduction of mixed-use ingredients are the key trends.

“Trends carry degrees of uncertainty as to how long they last,” Koch said. “Trends without long-term acceptance become dating characteristics that can age a property prematurely, and advance its decline.”


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