Sky-high project stumbles

Developers of the upscale Towers of Channelside file for bankruptcy protection.

By EMILY NIPPS, Times Staff Writer
Published February 2, 2008

The Towers of Channelside in the Channel District near downtown Tampa presold all 257 condominium units, but two-thirds of those buyers didn't follow through with the sale. Now the project developers have filed for bankruptcy protection.
	[Thomas M. Goethe]

TAMPA - Like many of the upscale downtown condominium projects that sprouted over the last two years, Towers of Channelside was hailed as an attractive alternative to suburban tract homes and long commutes.

Developers of the twin 29-story buildings believed the units, starting around $275,000, would sell like crazy. They were right. All 257 condos were presold, requiring 10 percent deposits before construction was completed thisfall.

Problem was, two-thirds of those buyers never followed through with the sale.

That led the Towers of Channelside developers to file for bankruptcy protection, prompting new questions about the viability of recent condo projects in and near downtown Tampa.

Towers of Channelside listed debt between $50-million and $100-million. The project's biggest creditor was its lender, Wachovia Corp., which is owed about $58-million and recently cut off the project's funding. "Had all the presales closed, all creditors would have been paid in full," the company, Towers of Channelside LLC, said in court documents.

Michael McGuinness, a partner in the company, declined to comment, and partner Bradley Hite did not return calls.

To some, the project's financial bust seemed an inevitable fate. Even during the height of the housing boom a few years ago, Tampa real estate agent Ed Gunning thought the newly built or planned condos and lofts in the Channel District were way overpriced for its target market.

"They were banking on that young, hip, urban home buyer," Gunning said. "But what kind of kid gets out of college and has that kind of money? How many hip young people without children are going to pay $300,000 for a home?"

Still, people are moving downtown, said Harry Hedges, a longtime Tampa developer who opened the trendy Fly restaurant downtown. He has a vision for more upscale apartments and homes along Franklin Street and in Tampa Heights, and he pointed to the neighboring Skypoint and Element downtown condo towers as examples of success.

Numbers of sold units at Skypoint and Element were not immediately available, as their developers could not be reached. However, weekly real estate transactions consistently list sales at Skypoint, the one of the two that is complete.

"The difference between downtown vs. Channelside is huge," Hedges said. "Skypoint is affordable starting around $200,000, so it's going to reach out to a lot more people. Channelside is more of a higher-end product that's going to attract a lot of investors looking to flip, or make a quick dollar."

And that's the first type of buyer to pull out of the market, he said - hence Towers of Channelside's predicament.

In court documents, the developers stated that 89 buyers have closed on their units. More could sell after the remaining units are put back on the market.

Those who market downtown Tampa and its outlying areas believe that when the housing bust ends, the dozen or so urban condo developments will be the first to feel it.

"Things happened very, very fast in the Channel District," said Christine Burdick, president of the Tampa Downtown Partnership. "We all know that the economic environment two or three years ago was unrealistic. But just as all booms end, busts end, too."

News of the Towers' inability to pay its $50-million to $100-million debt is no reason to be alarmed, she said, because the market is still in the process of adjusting to a more normal level.

"To me, it feels like a little bit of a breather."

Times researcher John Martin contributed to this report. Emily Nipps can be reached at nipps@sptimes.com or (813) 226-3431.

[Last modified February 1, 2008, 23:28:10]