Maturation of Baltimore's residential real estate market likely to

When HarborView Properties Development Co. built the Pierside apartments on the southern edge of the Inner Harbor five years ago, the company did so with an eye toward significant change.

We built the building with the thought in mind that market conditions may ripen for condominiums, said Frank Wise, a vice president of HarborView.

And so they did. Earlier this year, HarborView converted the rental apartments into for-sale condos.

We were selling a lot of units, he said of the condominiums his company developed in the HarborView tower in south Baltimore. Others around town were selling a lot of [condominium] units. We also saw a strong demand coming from the Washington market where the prices have gotten too high.

As Baltimore's housing market continues to mature, and long-term interest rates remain relatively low, the pace of apartment-to- condominium conversions will likely speed up, said Bob Aydukovic, director of residential and economic development for the Downtown Partnership of Baltimore.

The for-sale market is always the last one to enter into a city, Aydukovic said. It shows a maturing market.

Rent prices are an indication of downtown's growing market strength. And with Class-A rates hovering near $2,000 per month, according to a third-quarter 2005 report by Delta Associates, for- sale units are comparatively more affordable.

Purchasing a condominium allows buyers to build equity while renting does not. Condominiums also tend to be more profitable for developers, Aydukovic said. Selling a whole apartment building is usually less lucrative than selling off the individual pieces within that building, he said.

The condo craze is becoming more and more of an accepted exit strategy for an apartment building, Aydukovic said. They're maximizing value.

In Washington, investors have caught on. The Washington Post reported earlier this month that at least 24 apartment complexes in the Washington region have been purchased during the last year for conversion to condominiums.

Washington developers realized that there was a high demand for ownership, but an ever-smaller number of affordable properties. The median home price in Washington was $419,000 in September, up 30 percent since last September, when the median home price stood at $321,500, according to statistics from Metropolitan Regional Information Systems.

Some condo developments in the Greater Washington area offer prices starting in the $100,000s and $200,000s.

Baltimore developers are also capitalizing on the market of Washington commuters, among others, who want the amenities of living in a city or near the water without having to pay astronomical prices.

All but 28 of the 168 Pierside condominiums have sold since February, many for prices between $200,000 and $300,000, Wise said.

We were able to produce a lower-priced product for sale, which filled a void in the market place, Wise said.

Others may soon begin filling that void, Aydukovic said, although he could not point to any potential conversions.

Baltimore's condominium market is growing in general, with about 843 existing condominiums downtown, he said. Condominiums in the HarborView tower, Harbor Court, Spinnaker Bay and the Belvedere Hotel are all reportedly selling well.

There are about 227 condominiums units under construction and 600 set to break ground in the next few years, Aydukovic said.

Midtown Baltimore LLC will soon begin construction on 180 condominiums along the Inner Harbor in South Baltimore, with units selling for more than $5 million each.

Conversions are the next frontier, Aydukovic said.

I imagine you'll start seeing it all over the place, he said.

Copyright 2005 Dolan Media Newswires
Provided by ProQuest Information and Learning Company. All rights Reserved.