Russian oligarch drives up Edgewater land prices

Peter Zalewski
Peter Zalewski

Land prices for new condo development sites in the Edgewater neighborhood of Greater Downtown Miami have surged over the last 45 days.

Russian mining oligarch and developer Oleg Baybakov single-handedly drove up prices for developable land in the Edgewater neighborhood by spending more than $30 million for less than 1.7 acres in a trio of deals that closed between February 21 and March 28, according to Miami-Dade County records.

All told, Baybakov paid a combined 218 percent premium for the properties over the 2013 assessed market value of less than $9.5 million, according to the Miami-Dade Property Appraiser’s Office.

Baybakov’s 700 Edgewater Development LLC completed its third transaction on March 28, paying $6.5 million for a nearly 30,000-square-foot lot on Northeast 26th Terrace that has a 2013 assessed market value of less than $1 million. His newly acquired site was only purchased nine months ago in June 2013 by Gonzalo Chueca-managed Bay Lofts Development LLC at a price of $3.5 million.

Before last week’s land deal, Baybakov paid $2.2 million on March 5 for an 87-year-old house standing on a 5,000-square-foot lot on Northeast 26th Street. The house, which was purchased for $35,000 back in May 1979, has a 2013 assessed market value of less than $184,500, according to government records.

Baybakov’s first investment in the Edgewater area under the 700 Edgewater Development entity occurred on Feb. 21, when he paid $21.5 million for a 32-year-old rental building standing 12-stories tall on a 37,500-square-foot lot on Northeast 26th Terrace that fronts Biscayne Bay. The previous ownership group, which paid $9.9 million for the site in August 2012, was pursuing government approval to develop a 39-story condo tower – dubbed MBay – on the site, according to the city of Miami records.

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The waterfront site of the proposed MBay condo tower has a 2013 assessed market value of less than $8.3 million.

With the three purchases, Baybakov now owns more 60 percent of the entire block that stretches from Biscayne Bay west to Northeast Fifth Avenue and from Northeast 26th Terrace south to Northeast 26th Street. It is unclear if Baybakov is pursuing the remaining properties on the block that his ownership entity does not yet own.

What is clear is developers are flocking to the Edgewater area that roughly stretches from Northeast 17th Terrace north to Northeast 36th Street and from Biscayne Bay west to Biscayne Boulevard. Developers have already proposed, completed or are constructing at least 10 new condo and condo-hotel towers with a combined 2,400 units in a 19-block stretch located just east of the up-and-coming Design District, Midtown Miami and Wynwood neighborhoods.

Overall, the Edgewater area represents 17 percent of the nearly 13,850 condo units proposed for the Greater Downtown Miami market during this latest building boom, according to the preconstruction condo projects website (For disclosure purposes, my firm operates the proposed condo projects website.)

The question going forward is how much higher will land prices rise as developers from around the world compete for sites in one of Greater Downtown Miami’s most popular neighborhoods of this condo boom?

Peter Zalewski is real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.