Trumpeted Towers Trumped?

Yesterday’s article in the St. Pete Times updates the continuing saga of the as yet undeveloped Trump site in the “Channelside” area of Tampa. The announcement that the project will be scaled back comes as no surprise in the wake of numerous, previous holds and setbacks but especially in the context of a “market on hold”. The real question is not what specific number of units should be developed or even at what price range and in what configuration. The more compelling concern is who will buy the units if they were there and why?

The surprisingly downplayed aspect of the recent market run-up of nearly five years, especially in condominiums, was fueled more by available cheap money and “investor buyers” than potential resident users. In truth there is no way of knowing this until the units are completed and people either move in, walk away or sell. Until that time occurs we are reliant upon the marketing team and no indication from the public records, government or other reliable source to know what the breakdown between buyers and investors actually is.

In my on-line presentation found on my website entitled “how we got here” I discuss the obvious parallel between the “Day Traders” of the 1990’s and the “flippers” of the new millennium. In the case of the “Flippers” the intent is to purchase and resell without ever in some cases closing (understandably in condos) and finding the next “flipper”. This makes actual absorption and demand much more difficult to predict especially when the market was driven not by demand for housing but rather demand for money and big profits by becoming a “certified” real estate investor.

To that end the project by aligning itself with the willingly given endorsement and name of Mr. Trump the original developers apparently hoped that the assumed market perception of “luxury” and quality would make a difference in marketing and price expectations. Trump’s role was brilliant strategy to in essence license the cachet he believes is associated with the name. He is as we know more directly involved in a still under construction project on Wacker Drive in Chicago.

In 30 plus years of observing and analyzing real estate markets in Tampa-St. Pete, the west coast and all of Florida I have found that nothing is worse than a over-hyped project that falters in terms of rebuilding investor and buyer credibility. In addition now that the dust has at least begun to clear it is apparent that “smart” investor money has already moved on to other equity opportunities, evidence the stock market now in a decidedly bullish mood.