South Florida Housing Market Condo Glut Offers Challenges, Potential

As Florida mortgage problems arise, so do defaults on those home loans, and an increased amount of inventory on the real estate market… particularly when it comes to condos.

Gene Gomberg, CEO of The Continental Group, the largest management company in the country, as seen first hand how many of the high-rise condominiums now dot South Florida’s skyline.

Founded in 1990 by Gomberg and Continental’s president Richard Strunin, the Hollywood-based company is a subsidiary of First Service in Toronto.

It manages Florida condos and housing developments across the state under the Continental name and communities from California to New York under other corporate names.

Gomberg spoke to The Miami Herald about the challenges faced by Florida home mortgage holders as well as the opportunities the condo boom brings.

Q: With all the cranes in the sky, there would appear to be a tremendous opportunity for condo management companies but also unique challenges?

A: We are adding 150 employees a month across the state. Continental has in excess of 5,000 employees. The bulk of our hiring is in the South Florida housing market. I can safely say we’re adding 100 new employees a month in South Florida.

This cycle we are in is different because we have experienced something in the last 10 years that Miami has never experienced before. The cranes we see present an opportunity because those buildings - no matter how many people initially occupy them - will need management. And it also gives us challenges because we don’t know how many people will occupy them.

We will be dealing with real estate investors, primary owners, renters and developers who all have units. We really have four clients. The investors used to get out very quickly. Developers used to be able to turn these buildings very quickly. Now these turnovers take longer. It may be harder to get involvement from unit owners.

It makes our services every bit as necessary and maybe even more necessary. The property values will have to be maintained. There is a lot on the line with those buildings.

If those buildings are not occupied by actual homeowners, in many cases they will be occupied by renters and there will be a lot of units on the market. From our perspective, it raises the challenge.

Q: Are condo owners going to get any relief from high maintenance fees?

A: The property insurance issue has been a huge challenge. It has had a negative impact on maintenance fees. We are not seeing rates come down.

But we feel through our own product line we will be able to provide relief to the buildings we are involved in. We are hoping to see a 15-20 percent reduction for our clients shortly. We’ve been working on putting something together ourselves. We’ve been working with Berkshire Hathaway and AON.

We hope to start offering it by December latest or possibly before. The goal is to bring something to market that will bring relief to clients.

Q: What about critics who say you have too big a chunk of the management business? That a homeowner’s association doesn’t have other places to turn?

A: We have earned the business. I have heard the nonsense that we are the only game in town. There are hundreds of companies. They just have not stepped up to the plate like we have. We have given people careers and turned it into a profession. I am proud that I have people who have worked with me over 30 years. It is a challenging business in that contracts must be renewed each year, but 97 percent of our clients renew their contracts year in and year out.