Market Feels Ritz Effect

It wasn’t just the quick sellout of 50 condominiums atop The Ritz- Carlton, Sarasota, at prices from $695,000 to $4.3 million that changed local real estate. It was the validation that Sarasota was getting a Ritz-Carlton. And it was the anticipation that hotel guests would want to buy second homes here.

The “Ritz effect” has radiated throughout the Sarasota real estate market, pushing up prices along the downtown Sarasota waterfront, Golden Gate Point, in Harbor Acres, on Bird Key.

The hotel opens Friday, and sales of the condominiums have been closing in recent weeks. Many owners won’t move in until their interior designers are done outfitting their apartments, a process that will take weeks.

“The Ritz enhanced an already evolving market. It benefits downtown and Sarasota in general,” said Jay Tallman, principal of U.S. Assets Group, a condominium development firm.

Tallman says his to-be-built, 44-unit Beau Ciel project also benefits because “our buyers want to be close to The Ritz, and it will probably help their real estate values.”

Tallman enjoyed his own quick record sellout at Longboat Key’s En Provence, where 21 condos sold from $1.6 to $4.7 million in March 2000. That was a Sarasota record — $625 per square foot, compared to $540 the Ritz-Carlton’s condos had fetched a few months earlier.

“The Ritz showed the strength of the downtown market. We decided to go straight to selling condominiums,” said Amanda Brinegar, director of real estate for the Wynnton Group. Wynnton had planned to open The Rennaissance of Sarasota as a rental building. Instead, it opened sales as a condominium in January and has sold about 120 of its 244 units at prices mostly between $200,000 and $600,000.

“We provide a less-expensive niche downtown for a mix of people. No doubt, the Ritz helped raise prices downtown,” Brinegar said.

Michael Saunders, whose real estate company sold the 50 condominiums in less than three weeks, argues that the impact is just beginning.

“You’ll see it when the hotel opens and visitors who follow the Ritz discover Sarasota and decide to buy here,” Saunders said. “That’s when you’ll see prices jumping. We’re still very undervalued here.”

Undervalued? That’s how the original Ritz-Carlton prices look in retrospect, although they topped Longboat’s fanciest condos until En Provence. Although the developer tried to prevent speculating, two early buyers were able to resell their contracts at 30 percent more than they would have paid at closings this month. Their profit was even higher because they had only put up a deposit.

Saunders’ Debbie Bahr, who with Joan Dickinson sold the condos above the hotel, said people call every week to see which buyers may offer their units for resale.

“After the closings, several resales will be available,” Bahr said.

The building’s co-developer, Bob Buford, has his penthouse for sale because his family prefers a unit in The Ritz-Carlton Beach Club. The Lido Beach playground, where the Azure Tides Hotel once stood, will offer beach facilities, dining and a beach bar, but no hotel rooms. It’s targeted for completion in late 2002.

As the beach club becomes “the place” to sip drinks and see the sunset, Saunders believes demand will push up prices for St. Armands and Lido homes: “You’ll also see a different mix of shops on the Circle: more upper-end women’s wear and jewelry, not so many T-shirt shops.”

The Ritz-Carlton condos sold out quickly because of “the legendary Ritz services that they deliver in style,” Saunders said. “That was important to people who had lived on top of the New York’s Pierre or Carlyle hotels.”

Saunders uses access to those Ritz-Carlton services to market The Tower Residences at the Ritz-Carlton, Sarasota. The Tower Residences, with 80 units in a 17-story building going up near the hotel entrance, is a WCI project. Condos are still available there for $1.3 to $4.3 million for 2,800 to 5,300 square feet of living area. WCI, a big player on both Florida coasts, developed Tiburon in Naples, where the new Ritz-Carlton Golf Resort, Naples, will open in December.

WCI division president Dwight Thomas reports more than $70 million in sales at the Tower Residences, set for completion in April 2003. Saunders says a number of buyers in the Tower Residences are from Naples. They are responding to the Ritz-Carlton services, the culture and lower prices in Sarasota, and to Naples’ traffic, she said.

Saunders also is the sales agent for Beau Ciel and The Renaissance. The oval-shaped Beau Ciel gives each of the 44 units a view in two directions: over the boat basin southward and Sarasota Bay to the northwest. It will be going up between Hyatt Sarasota and 888 Boulevard of the Arts, headed for summer 2003 opening.

“The Ritz very much is a catalyst for everything happening downtown,” said Beau Ciel agent Nancy Betty, who has units priced from the $800,000s for 2,400 square feet to $4.9 million for the grand penthouse, with 8,100 feet.

Bob Skalitzky’s Marina Tower on Gulf Stream Avenue has a dozen residents who have just moved in and 10 residences yet to sell at prices from $730,000 to $3.4 million. A veteran developer since he built the 15-story Royal St. Andrew on Sarasota’s bayfront in the late 1960s, Skalitzky believes that Tangerine Development’s Sarabande condominium really started the resurgence of downtown bayfront construction in 1997-98.

“The Ritz sales spurred the demand for downtown, and the prices,” Skalitzky said. His top sale is a 5,580-square-foot penthouse for $3.4 million. His complaint is that he sold his early units too cheaply in order to get financing. He said four of his buyers have resold units and three more investors are looking for profits. One unit he sold for $585,000 resold for $800,000.

“I sent two prospects to the Ritz who wanted night services,” he said.

Skalitzky sees more impact coming from the beach club. He said prices at the Lido Beach Club, where he lives, have risen $100,000 to $200,000, “and hardly anything is for sale in the older Lido buildings.”

Realtor Steve DuToit of RE/MAX Properties says The Ritz-Carlton is part of the ripple that has sent area prices climbing.

“No doubt, the Ritz has pushed up the values of the older downtown condominiums. We’ve seen a lot of renovations downtown,” said DuToit. “I figure my $75,000 investment (in a one-bedroom unit in the New Orleans, at 615 S. Palm Ave.) has almost doubled in 2 1/2 years. Also pushing up prices are inventories that are down by 30 percent in two years and interest rates at a 35-year low.”

He believes that Golden Gate Point properties have “appreciated greatly” because of The Ritz-Carlton, as has downtown generally, because “people like the way downtown is looking.” He also sees the West-of-the Trail popularity spreading to South Gate and other areas to the east.

“Some of these high prices we’re seeing are because developers are pushing the envelope and holding out for more money,” DuToit said.

Glenn Brown of Century 21 Advantage sees a “trickle down” effect.

He says that for much of the year values have been “going up like crazy. It’s also supply and demand and low interest rates,” he said. “I’ve had clients who have made a profit on their condominium and now want a new home for $250,000 to $300,000.” He’ll find it for them at Misty Creek, The Grove or other areas out east.

Although Brown isn’t looking for any downturn in the market, he said one seller wanted to get his home listed and sold before the first of the year in case the market slows.

“A lot of people concerned about the market are putting their money in real estate,” he said. “I know a couple of people who have bought their retirement homes a couple of years before they’ll need them. I wish I’d bought more rental property.”

Coldwell Banker’s Betsy de Manio said The Ritz-Carlton has raised prices across the board and they should go higher. “Sarasota will be a new destination for people who follow the Ritz hotels. Once they see how beautiful Sarasota is, they’ll buy. We’re already seeing people from Naples, where it has gotten too busy,” she said. “The baby boomers want to enjoy waterfront, which has proven to be the best investment because of its scarcity and desirability.”

She also sees real estate as a good place to invest money and believes The Ritz-Carlton’s clientele will be a whole new market.

Former City Commissioner David Merrill, who builds villas at Villa Rosa and Rivendell, agrees that getting a Ritz-Carlton is “a stamp of approval for Sarasota. It says we have a lifestyle that people who stay at the Ritz would like. It’s amazing what’s going on downtown and the prices today.”