As competition for buyers intensifies in Sunny Isles Beach, where 14 new condo towers are proposed, developer Edgardo Defortuna is reducing the number of units, square footage and parking spaces in his Jade Signature tower under construction in the city.
Citing “recent changes in the marketplace,” the developer – in a letter submitted by attorney Clifford A. Schulman of law firm Weiss Serota Helfman – filed a “major site plan modification” request seeking formal approval for the changes from Sunny Isles Beach commissioners. The application is on the agenda for Thursday’s commission meeting.
The Jade Signature modification request calls for the elimination of 31 condo units and seven parking spaces in the 56-story tower at 16901 Collins Avenue, which is immediately south of a pair of condo towers – Jade Ocean and Jade Beach – that were previously developed by Defortuna.
Jade Signature is selling at a starting price of more than $1,265 per square foot as of May 2, according to the latest monthly Developer Pricing Survey by the preconstruction condo projects website CraneSpotters.com. (For disclosure purposes, my firm operates the website.)
For context, Defortuna’s Jade Ocean is a 48-story condo tower with 254 units that was completed in 2009 at 17121 Collins Avenue. The project sold out in April 2012 for $377.9 million at an average of $713 per square foot, according to an analysis of Miami-Dade County records. Defortuna’s Jade Beach is a 49-story tower with 248 units that was completed in 2008. This tower sold out in September 2012 for $303.9 million at an average of $651 per square foot.
Even though Defortuna has trimmed the number of units to be built in Jade Signature, the veteran Sunny Isles developer minimally changed the amount of square footage that the new condo tower will have upon completion. Under the modification application, the overall floor-area ratio of the Jade Signature is slated to be reduced by less than 2,150 square feet for a revised total density of 645,597 square feet.
Fewer units combined with virtually the same square footage results in lower density and more space per residents at Jade Signature.
Under the original plans, the floor-area ratio represented an average of nearly 2,905 square feet per unit. The revised plans call for a floor-area ratio average of nearly 3,365 square feet per unit. This works out to an average increase in space of about 16 percent.
The decision to lower the density of the planned Jade Signature comes at a time when developers are proposing more than 1,800 units in the Sunny Isles market, which has a population of 21,500 and a land area of 1.02 square miles, according to the U.S. Census Bureau.
During the last South Florida condo boom that began in 2003, developers created 28 new condo towers with more than 6,350 units in Sunny Isles Beach, according to real estate consultancy Condo Vultures LLC. (For disclosure purposes, I am a principal of this firm.) Less than 60 developer units were unsold as of December 2013.
Defortuna acquired the 2.5-acre oceanfront Jade Signature site for $22 million – or about $203 per square foot – in April 2012 from Sunny Isles Property Holdings LLC, which is managed by Carlos Mattos and Richard Toledo, according to Miami-Dade County records.
Jade Signature is being developed by an entity – Sunny Isles Beach Associates LLC – that is ultimately comprised of two partners: Ivory Sparrow LLC, which has 80 percent of the corporate stock and SIBA Manager LLC, which has 20 percent of the stock, according to government records. SIBA Manager LLC is ultimately controlled by Defortuna, Carlos Carballo and Eduardo Imery.
It is unclear who is ultimately behind Ivory Sparrow LLC, as the entity was not a listed as a Florida corporation as of Tuesday.
There are about 480 condo units in oceanfront buildings on the market in Sunny Isles at an average asking price of nearly $810 per square foot, according to the Southeast Florida MLXchange. In the first four months of 2014, buyers acquired more than 130 condo units in oceanfront towers at an average price of less than $630 per square foot.
Based on an average of 33 condo resales in oceanfront towers per month in 2014, the Sunny Isles market has about 14.5 months of inventory. A healthy condo market is said to have six months of inventory available for resale. Less than six months of condo resale inventory suggests a seller’s market, while more than six months suggests a buyer’s market.
The unanswered question going forward is whether there are enough buyers willing to pay today’s prices for all of the proposed and existing condo units currently being marketed in the Sunny Isles area.
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 CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.