Demand for trophy properties and record-setting sales are driving developers to bet on boutique, luxury condominiums in the narrow inlet south of Fifth, which some developers refer to as Miami Beach’s Babylon.
“In 2010, nobody wanted land down here. People thought Miami Beach was never coming back,” Tim Gordon, one of three principals of Aria Development Group, which is selling pre-construction units at its 321 Ocean residential complex in SoFi, told The Real Deal.
321 Ocean is among four condo developments with a collected 107 units on the market competing on extravagance for the world’s ultra-rich. Related Group is developing two projects, Marea and One Ocean, and Terra Development is selling pre-construction on its expensive, minimalist Glass tower.
Recent sales in SoFi’s existing luxe condo market may justify the optimism.
A penthouse at Ocean House, a 28-unit condo tower at 121 Ocean Drive, which was built on the ashes of developer Michael Samuels’ failed South of Fifth condo tower project, was sold for $15 million, or $3,592 per square foot, in an all-cash deal completed late last month. Recent sales at Apogee and the Continuum South Tower valued property in SoFi at more than $2,000 a foot.
Sellers are going for even more. Eight resale units in the South of Fifth enclave are asking over $3,000 per square foot, with two units at the Continuum asking $4,000 a square foot, according to research compiled by One Sotheby’s, the exclusive sales and marketing agent for Glass.
Aria bought the oceanfront site – where the priciest penthouse in the two-tower development designed by Mexican architect Enrique Norten is on the market for $25 million – for $9.8 million in cash in 2010 from a developer whose project went belly-up.
“We’re getting much more than we expected,” Gordon said. “This deal would have worked at 40 percent less.”
Terra Group’s expensive glass-paneled, 18-story tower, designed by Miami architect Rene Gonzalez, offers each buyer a private floor, or, for the buyer of the triplex penthouse, three, and a 360-degree view of the Atlantic, Biscayne Bay and the neon-lit Art Deco buildings of South Beach.
“Developers in Miami suffered a lot two years ago but it’s such a special place. It’s sort of like very limited special properties always have a market,” said David Martin, the co-founder and principal, along with his father, attorney Pedro Martin, of Terra Group.
The permit for what will become Glass was issued in 1993, shortly before new zoning restrictions with height constraints took effect. Martin said buyers are attracted to the building because it can’t be duplicated.
Some observers are skeptical that all the reservations in SoFi will translate to sales.
Though all four of these buildings claim to be 100 percent or close sold, Condo Vultures consultant Peter Zalewski doubts that the towers and tenants will all materialize, especially for projects not located on the waterfront.
“South of Fifth is trying to push some tremendous prices,” Zalewski said. “I just don’t see how they all can be successful.”