Boca Raton, Fla.—Lewis Goodkin believes he can see the future of real estate by looking into the past.

He gestures to the pink stucco high-rise apartments and offices here at Mizner Park. Their windows ring a well-tended plaza filled with fountains, restaurants, and shops. There’s even a movie theater and an art museum.

Finished in 1991, Mizner Park was one of the first large-scale projects to successfully mix apartments, retail, and office space.

The development embodies all of the latest buzzwords in apartment development. It’s exactly the kind of infill, town-center development now making headlines from Asbury Park, N.J., to Oakland, Calif. And 15 years after its completion, the old project is still going strong: The rents at Mizner Park start at $1,360 a month for a one-bedroom apartment with 995 square feet.

“It’s still the top of the market,” Goodkin said in a New Jersey accent softened by decades of living in Florida and California.

Goodkin is the president and founder of Goodkin Consulting, a multifamily research company based in Miami. He did the original market study for the Mizner Park Apartments.

He’s worked in real estate since 1958 and has been a part of most of the biggest trends in the market, from the return to infill development to historical rehabilitation to each of the booms and busts in the condominium market.

Today, Goodkin is helping his clients, including large institutional investors, capitalize on the softening condominium market by buying up unsold units at steep discounts. (See story, Apartment Finance Today September 2006.

Riding the condo crash

Goodkin is in the perfect position to say, “I told you so,” to demoralized condominium investors. For the last two years, he has been a voice in the desert warning speculators that many condominium markets were about to be hit with a flood of new luxury units, all priced too high for the typical consumer to afford.

He also helped his client, Minto Developments, Inc., based in Ottawa, Canada, sell an apartment portfolio to an eager condominium converter for $300 million, or an appallingly low capitalization rate of 1.6 percent. A cap rate represents the net operating income of a property as a percentage of the sales price.

Recently condominium prices have dropped, sales have slowed, and deals have collapsed, especially in Goodkin’s home markets in and around Miami.

But Goodkin is now encouraging his clients to invest in a new, different kind of condo conversion project.

The key is to find a building that can be purchased cheaply enough so that the condominiums can be sold to average homebuyers at prices significantly below the cost of a single-family home and other competing condominium units.

“In many markets, the conversion of rental apartments is the answer for affordable for-sale housing,” Goodkin said.

He is looking for “smaller buildings, older buildings, things rated under Class B,” he said. Goodkin points out that the first successful condominium conversions in the late 1960s and early 1970s were rehabilitations of aging Federal Housing Administration projects.

“In many cases, these buildings are in superior locations,” he said. “The neighborhoods have just gotten old.”

The future is cheaper, denser infill development

In California towns like Canoga Park, and in the Westwood neighborhood of Los Angeles, Goodkin points to modest woodframe and stucco apartment buildings that could be excellent targets for condo conversion. But he also notes that they can provide a strong model for new multifamily development.

Goodkin’s clients built many of these projects here in the 1970s and 1980s. The plainly built mid-rise buildings were dressed up by their landscaping, which consisted mostly of easy-to-maintain street trees and shrubbery.

“If you strip away the landscaping, a lot of the buildings are pretty vanilla,” he said. “Vanilla is still the most popular flavor. You have to bring affordable product to the market.”

These projects use space very efficiently. The apartments, which often rise four and even five stories, sit close to the sidewalk with little setback from the street. There is usually no need for a parking lot; the parking is dug under the buildings. Also, the units are modestly sized, averaging a few hundred square feet less than typical modern luxury rentals.

The buildings also benefit from being clustered together. For example, Goodkin’s clients built enough apartments like these around the Topanga Canyon Shopping Center in Canoga Park to create a critical mass of residents dense enough to support retail spaces that then became an amenity to the tenants.

Goodkin believes that in the future his clients will be forced to construct buildings at higher densities to make their deals work, even if the cost of construction and land level off as condominium developers step away from deals.

If several apartment communities can be developed together as part of a large, planned community, the projects could share other amenities, like common areas, street furniture, and landscaping.

“There’s no reason not to do a really nice gym if you can do a number of large communities to support it,” Goodkin said. “You could create a sense of community rather than just a large complex. … This is revisiting something we’ve done in the past.”