Construction Rebounds on Barrier Islands
New home construction on Southwest Florida's barrier islands hardly took a breath during the Great Recession, but the economic recovery has sparked a new burst of activity.
Unlike larger housing developments on the mainland that were shelved during the downturn, some for years, many builders of custom luxury homes continued to find work — though at a much slower pace — on the region's keys.
"We definitely went through a slow time, but not nearly as bad as the tract home builders," said Ricky Perrone, vice president of business development at Sarasota's Perrone Construction.
For Perrone, business began to bounce back about a year ago. The company is currently building six custom homes on Siesta, Lido and Bird keys, valued from $1.7 million to $3 million and ranging from from 4,000 square feet to 8,000 square feet.
"Things really picked up last October," Perrone said. "People were getting off the fence and moving on big properties where they planned homes. Properties started to get snatched up, and people decided the time was right to build."
Lakewood Ranch-based John Cannon Homes is in various stages of construction on 12 custom homes on the barrier islands off Sarasota and Manatee counties.
"The barrier island buyer has been shown to be recession proof," said the company's namesake.
Sarasota's Murray Homes has four custom projects under way on the islands, ranging from $850,000 to $2.5 million and measuring from 3,000 square feet to 7,000 square feet.
"That's based on how comfortable individuals feel with the economy and their own personal situation," said Steve Murray, vice president at the family owned company. "They have recouped losses from the recession, reallocated investments and are now feeling comfortable enough to jump in and buy.
"They are not buying at the bottom. They are buying at an uptick. But that is the nature of the beast. We are never busiest at the bottom, but at the top," Murray said.
Downturn's harsh aftermath
As a result, some custom builders did not survive the real estate downturn and its aftermath, which was especially harsh throughout Southwest Florida.
That's in large part because many upscale and custom buyers chose to linger on the sidelines during the recent economic slump to take advantage of rock-bottom materials and labor prices.
Still, the luxury segment of the region's home building industry has proven, as Cannon notes, to be more resilient to market fluctuations than most, thanks to a client base that can afford to build regardless of the point in any economic cycle.
"For the most part they didn't take as a big a hit as the development type of building during the downturn," said Alan Anderson, executive vice president of the Home Builders Association Manatee-Sarasota. "People who can afford that kind of home can always afford that kind of home."
But finding land on the various barrier islands has become a challenge for buyers and builders alike. There are few vacant lots left on the keys — especially on Siesta near the public beach — so many new homes are going up on land occupied by older, more outdated or modest homes.
"The homes we're building on are lots that our clients have purchased, and we've torn down the existing homes and built or are building their new home," Cannon said.
"There isn't any spare land, other than the odd vacant piece of property," agrees Murray. "People are looking for land, and it's pretty hard."
Perrone said one-fourth of the homes his company is building at any one time now involve demolition of an existing home.
Those "obsolescent" properties remain as opportunities for buyers clamoring to be near the water or on a key.
"There are still lot of properties out there that are right for a teardown," he said.
St. Armands teardown
Few teardowns are as eye-popping as one that began this month on St. Armands.
That was where a 6,100-square-foot house built on a half-acre lot just a dozen years ago is being razed and cleared to make way for a new — and presumably larger — home for Tampa Bay Lightning owner Jeff Vinik and his wife.
The Viniks bought the property on North Washington Drive five months ago for $4.25 million. Neighbors say the couple is planning to construct a three-story home.
Nearby, the biggest home sale on Longboat Key of the past two years involved a newly constructed Cannon home on the beach that the customer never occupied.
A buyer paid $6.8 million for the 6,900-square-foot home that initial owner Jim Abrams decided to sell midway through construction.
Murray explains that because the process of building a custom home — from design to completion — can take 18 months or longer, buyers often try to consider what the market value will be at the time of occupancy.
"They don't want to be in a position where they've put more money into a house than they can get back out after completion," he said.
But as long as land remains available, Perrone said he thinks the upswing in home building on the keys is sustainable.
"A lot of people were just watching things and waiting for the right time," he said. "Some people are motivated by activity. They say 'activity generates activity,' and that has certainly been true this year."