After a long hiatus, Miami’s Midtown development is launching a sales push at its Midtown 2 tower, headed by Fortune International Realty. Fortune, which led the sales drive that sold out Icon Brickell, has turned its attention now to Midtown, where it is largely courting buyers other than the wave of foreigners who have targeted downtown Miami in the last few years. Fortune CEO Edgardo Defortuna talked to The Real Deal about his strategy in Midtown 2, the impact of dwindling inventory on Miami’s condominium market and his other residential projects.
What kind of activity have you seen at Midtown 2 thus far?
Well, it’s been a great response. We started first with 20 tenants that were living in the units and offered them to the tenants and had pretty good responses. So after two or three weeks of doing that, we offered it to prospective buyers and brokers that were waiting. We really feel that the demand is there. We started with Midtown [where there are] 61 units left. We expect to be done with that in the next 30 days.
What’s your strategy there?
Well, Midtown is very particular, because of all the amenities that are in the building, that are part of the lifestyle, because of the restaurants and retail, and the vibe and activity that Midtown typically generates. The mix in general is more local than foreign, and most of the other buildings we’re marketing are selling all to foreign buyers, some their fourth home. There is a component of foreign buyers [at Midtown], mainly for investment because of good rents, but there are a lot of locals that want to be over there, and were waiting to grab the units because they were not on the market for a very long time.
What is the challenge in selling Midtown’s units?
That they haven’t been marketed for a long time. We have to actually put [the development] back on the market. Especially for the foreign nationals that are not familiar with Midtown per se. But when you take them down there and show them the activity, take them to [restaurant] Sugarcane, they see the vibe and the lifestyle, and they all fall in love with it. It’s really a very up-and-coming neighborhood, with everything that’s going on in the Design District and Wynwood.
What do you see as the biggest impact of Miami’s recent residential inventory reduction?
Well, it’s really impressive. We continue to see absorptions in buildings that are well-priced and well-marketed. We have Axis and Paramount Bay [where Lenny Kravitz is designing] and now Midtown. There’s a great amount of foreign buyers, but they don’t seem to stop, and now because of the lack of inventory, preconstruction sales have picked up. Some of the buildings that are offering pre-construction sales are doing very well, which is the next challenge — when inventory disappears. Now, it’s a different type of buyer. Before, it was 10 percent down and then waiting. Now, the buyer is not just a spectator, putting 20 and 30 percent down to commit to 50 and 70 percent down during the life of the project. So it’s a lot more solid, which will make the market a lot healthier, in my opinion.
How will these new construction projects impact sales efforts at existing ones?
Well it’s too soon to tell. There are two different types of buyers today — the ones that want the new unit, and the ones that are willing to close in 60 days [for an existing unit]. But really the two markets almost don’t compete with each other. There are ones that are willing to wait and put a deposit on a preconstruction unit, and ones that really want the apartment now and like the income from having a tenant. They both exist, and they’re both very strong.
We’ve now seen 26 projects either announced or already underway in Miami. Do you see this wave of development continuing?
Well, I foresee more pre-construction projects coming online, which typically need to be sold at a higher price than existing inventory. Because if the numbers don’t work or add up, it’s really going to create upward pressure on the existing inventory as far as prices are concerned. I see inventory going up in price, because [sellers] are going to see people buying pre-construction for higher, and sometimes significantly higher prices. You see what’s happening in Sunny Isles, where a couple of pre-construction prices launched with $2,000 per square foot sale prices.
What are some of the other projects you’re working on?
We’re engaged in collaboration with the 1100 Millecento Residences, which is a new development project that just started a few months ago. And it’s incredible the amount of brokers that are going [to represent] units. The most difficult part is trying to organize the allocation of units to different units. So it’s really very encouraging. The buyers, and brokers, are all jumping for the units.