The land rush in Miami’s Edgewater area is driving up property prices to the point where some notable local developers are questioning the viability of planned condo projects in the bayside neighborhood.
Carlos Rosso, president of the Related Group’s condominium division, cited the recent land buying binge by Russian mining oligarch Oleg Baybakov as a concerning example while participating in a panel discussion during Forbes LATAM’s South Florida Real Estate Forum on Wednesday.
“Compare what we paid for land in Edgewater to what the Russian developer has paid recently and prices have more than doubled,” Rosso told the audience of about 100 real estate professionals and invited guests at the EPIC hotel in downtown Miami. “He will need to sell [units] at $1,000 a square foot to make money.”
Since February, Baybakov has spent nearly $39 million for five properties in Edgewater totaling about two acres. His first deal was for a 37,462 square foot building at $21 million, or $560 a square foot. According to a recent condo survey by the Miami Downtown Development Authority, Edgewater is downtown Miami’s fastest growing market, with 1,900 new units in development.
Barbara Salk, developer of ION East Edgewater on a two-acre site at 2701 Biscayne Boulevard, said property sale prices in Edgewater will continue to get higher, however. The Sakor Development head compared it to the land rush that occurred in Miami Beach’s South of Fifth neighborhood during the early 2000s.
“I see Edgewater as a big bargain right now,” Salk said.
Some developers are turning to nearby neighborhoods which haven’t gotten as much attention as Edgewater, like the Omni area. During the forum, NR Investments principal Ron Gottesmann discussed his company’s decision to develop a 37-story condo tower called Canvas at 1630 Northeast First Avenue, near Braman Motors.
NR Investments acquired the 1.1-acre Canvas property for $7.3 million – or about $152 per square foot – during an October 2013 bankruptcy auction.
To Gottesmann, the neighborhood around the Canvas site has evolved enough to justify new residential construction.
“Five years ago you couldn’t sit outside to have coffee or dinner,” he said. “Today, an influx of young professionals are enjoying a lifestyle that is not available anywhere else.”