The Real Deal Miami

Real estate consultant sounds condo warning

Condo Vultures' Zalewski fears overbuilding in downtown Miami

June 13, 2013 10:00AM
By Emily Schmall

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Peter Zalewski

Peter Zalewski

Peter Zalewski is one of those rare skeptics about South Florida’s booming real estate market, especially all the condominium projects. And the consultant has listeners, even a developer who has hired him to be that nagging voice of dissent.

Aventura’s Marketing Council crowded a dining room at the Gulfstream racetrack to hear Zalewski, a Chicago native raised in a family who acquired properties around the city to rent, and among the industry’s few internal critics, poke holes in South Florida’s enlarging canvas of proposed condominiums.

Instead, Zalewski began a talk Wednesday, co-sponsored by the mckafka developer group, describing himself as a reformed “vulture.”

“Buyers today are buying out of fear and prosperity,” Zalewski said, adding that demand has sent prices per square foot up, making the rental market a healthy-margin business for investors.

In downtown Miami, only about 600 units remain dormant of the tens of thousands of condo units that went up during the last boom, Zalewski calculates.

Twenty-two towers across South Florida are currently under construction that collectively add 3,400 condo units to the market.

With land costs rising, Zalewski said the condo-development game in South Florida boils down to the cost of maintenance.

Asked to identify winners and losers of the current real estate cycle, the Porsche Tower in Sunny Isles Beach “could be a winner” because of its “ummatched” offerings, Zalewski said, while a condo planned for Palm Beach’s Transit Village may rely too much on the success of the proposed All Florida railway project. It’s not clear to Zalewski how the developers in Miami’s “condo corridor,” his term for a grouping of high-rise condos proposed around the Brickell CityCentre at Coral Way and S. Miami Ave., will inhabit the thousands of units set to go on the market roughly at the same time.

“The beauty of pre-construction is it’s all smoke and mirrors,” Zalewski quipped, adding that the fall-out rate from a market bolstered by 50-percent and higher deposits could be dramatic.

Other projects, like the Crimson, the first effort by a pair of Harvard Business School alums, Stephan Gietl and Fernando Levy Hara, strike the balance for Zalewski between a competitive rental and investment-property market.

Zalewksi’s skepticism garnered him business as an advsier for The Crimson, the 90-unit condominium tower mckafka plan for Miami’s Edgewater neighborhood, which has become a magnet for developers.

“We went through every option, every detail, and Peter would tell us how that didn’t work at so-and-so building, and that’s literally how we designed the Crimson,” Levy Hara, a principal at mckafka, told The Real Deal.

Agents from Condo Vultures Realty, owned by Zalewski’s wife, broker Jenny Huertas, are jointly showing the Crimson’s one- to three-bedroom building with 90 units that features an 8th floor “C Club” with sundeck, swimming pool, hot tub and outdoor-indoor mini-theater.

“The Crimson…is designed with efficient floor plans – limited wasted space – with limited hallways, below average maintenance fees and liberal condo docs that permit rentals three times annually,” Zalewski said.

In addition to paid advice, Zalewski’s company, Condo Vultures, produces free reports, markets and brokers properties and tracks development through sites such as cranespotters.com.

Zalewski – a licensed, non-practicing broker and former journalist – said market conditions are improving as inventory from the previous boom shrinks.

However, he acknowledged that banks and other owners could be holding onto as much as 55 percent of the more than 200,000 units that were foreclosed or repossessed after the 2008 bust, shadow or “warehoused” inventory, with owners said to be controlling the supply to bolster pricing.

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