Amid growing concerns about the pace of development in downtown Miami – where 12,000 new condo units are proposed — a land flipper wants to take the money and run.
In May, River Tower LLC, managed by a revocable living trust for an unidentified Miami resident, paid $4.6 million for a development site downtown. Less than five months later, River Trust is aiming for a four-fold return on the site; the vacant, 1.6-acre parcel on the north bank of the Miami River has been listed for $20 million, according to public records and marketing literature.
The anonymous owner supposedly spent 18 months obtaining high-rise entitlements for the site while under a purchase contract, according to listing agent George Vail of Ackman-Ziff Real Estate Group.
Before listing the land, the owner envisioned the 449-unit River Tower, totaling more than 405,100 square feet of living space and nearly 5,800 square feet of retail space, according to marketing literature.
But greater downtown Miami is fast becoming a crowded space for developers. As of Sept. 25, at least 40 new condo towers and five new rental towers have been proposed for the somewhat sleepy district, not to mention the approximately 500 condos built during the last boom-and-bust cycle that remain unsold.
Vail told me that the listing has everything to do with the current strength of the market and nothing to do with fears that another bubble is forming.
“They are not afraid to develop it,” Vail said of his clients.
Under current maximum entitlements, a 794-unit residential tower with up to 1.5 million square feet of gross space could be developed on the so-called River Tower site, situated immediately north of the City of Miami Administrative Center on Southwest 3rd Street and east of Interstate 95.
While the owners are hoping for $20 million, the Miami-Dade Property Appraiser has assessed the site at only $2.4 million.
If the owner’s development plans for a 449-unit tower are used to calculate the value of the site, the current $20 million asking price works out to nearly $45,000 per unit; the owner’s original $4.6 million purchase price works out to less than $10,250 per unit; and the 2013 Miami-Dade assessed value of $2.4 million works out to $5,350 per unit.
Whether investors will think the greater downtown Miami residential market is deep enough to justify paying a four-fold premium on a development site when so many other towers are already planned remains to be seen.
Peter Zalewski is a special columnist for The Real Deal and the founder of the real estate consultancy and publishing company Condo Vultures LLC, as well as Condo Vultures Realty LLC and CVR Realty brokerages. His analytics firm Condo Ratings Agency operates CraneSpotters.com in conjunction with the Miami Association of Realtors.