Conversion Conundrum

Any market seeks a balance between supply and demand. In New York City, a great example of this is the latest craze that has developers converting old office buildings into luxury residential complexes. These old buildings, full of character from an era past, have been highly sought after to live in. However, there has been a strong influx of young companies looking for swanky space. The office demand has become so strong that developers have begun to take note, and the pendulum is swinging away from residential and back towards office.

Planners and city government are mildly concerned about the shifting balances. They agree, without question, that adequate office space is essential but also recognize that an appropriate amount of housing needs to be available. In the past decade, they had plenty of housing but not much office space. Now the worry is there might be enough office space but not enough housing. The relationship of prices between office and residential will likely keep the supply of each somewhere around the equilibrium, but this rapid shift is taking developers by surprise. To illustrate, consider the private equity firm Savanna. In 2012, they acquired two office buildings with the intent of converting them into upscale residences. They expected to command a rent of approximately $60 per square foot. Recognizing the shifting market however, they ultimately decided to keep the buildings as office space and are able to get upwards of $70 per square foot.

 

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Nick Banks

Nick created Front Street Commercial Real Estate Group in 2002 and spent the first eight years developing and acquiring office and retail projects in South Florida as well as North Central Florida. In 2010 the focus of the firm was shifted to primarily serve third party clients and perform brokerage, property management and mortgage banking functions. Nick has personally developed and acquired nearly 200,000 square feet of office and retail properties in markets throughout Florida. Prior to founding Front Street, Nick was the Director of Finance and Dispositions for Stiles Corporation in Fort Lauderdale where he financed and sold over $500 million in commercial real estate. Before joining Stiles, Nick was an Associate Director at GE Capital Real Estate where he sourced over $200 million in financing throughout Florida. Nick is a graduate of the University of Florida with a degree in Finance and a concentration in Real Estate. He serves as a board member and current vice-chair for the United Way of North Central Florida where he also chairs the Development Committee. Nick is actively involved with the Gainesville Area Chamber of Commerce where he serves as a board member and committee member for the Council for Economic Outreach. He is also a recent graduate of Leadership Gainesville which is a year long leadership program hosted by the Chamber. He is a member of Grace United Methodist Church where he has served as finance chair and as a member of the leadership council. Nick serves as an advisory board member of the University of Florida Bergstrom Center for Real Estate Studies. Nick was recently named chair of the Gainesville committee for the North Florida chapter of Urban Land Institute (ULI). He is a licensed real estate broker in the State of Florida and is a long time member of the International Council of Shopping Centers.

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