Condo developers attempt to push north with pricey new towers

Peter Zalewski tackles reader questions and opinions about the SoFla market

Aug.August 01, 2014 02:15 PM

Peter Zalewski

Peter Zalewski is a real estate market consultant, non-practicing licensed real estate broker and columnist for The Real Deal who now answers reader questions about the South Florida real estate market in a new weekly Friday column. Questions and comments can be sent to [email protected] The TRD editors will choose which submissions will be addressed.

Question: We’re starting to see Miami Beach-like luxury developments expand to the north along Collins Avenue on the barrier island. How far north on Collins Avenue can high-end condo builders realistically go and still expect to find demand?

The ultimate address for South Florida’s preconstruction condo market from a pricing perspective is the South of Fifth neighborhood in the South Beach market, where the minimum presale buy-in amount for a unit starts at more than $1,650 per square foot.

The fact that South Beach is reportedly selling at some of the highest prices per square foot for condos is not a new trend, but what is noteworthy in this current boom is the attempt by developers to achieve South of Fifth prices in areas that are far removed from the southern tip of the barrier island.

Consider that preconstruction condo prices in the South of Fifth neighborhood range from a minimum asking price per square foot of more than $1,690 at the 321 Ocean Drive project to $2,700 at Marea South Beach, according to the latest Developers Pricing Survey produced by the preconstruction condo projects website

(For disclosure purposes, my firm operates the website.)

Moving north on the barrier island along the primary road – Collins Avenue, which is also known as State Road A1A – from South Pointe Drive, presale condo prices generally decrease, but that is not the case this time around.

For example, preconstruction prices at the Residences at the Miami Beach Edition project on 29th Street start at $2,300 per square foot. At the Faena House on 33rd Street in Miami Beach, the last known asking minimum price at the secretive project was more than $1,900 per square foot.

Preconstruction prices in the North Beach submarket of Miami Beach start at more than $575 per square foot at the handful of new condo projects that are currently marketing new units for sale. This minimum price is expected to increase as a number of announced towers are preparing to launch presales as soon as the fourth quarter of this year.

Traveling north up Collins Avenue, preconstruction condo projects in the town of Surfside are starting at $1,800 per square foot at the Surf Club Four Seasons Private Residences on 90th Street and more than $1,500 per square foot at the Fendi Chateau Residences on 93rd Street.

In the village of Bal Harbour, only one project – Oceana Bal Harbour – is going forward at this time. This project has a minimum asking price of $1,350 per square foot.

North of Bal Harbour in Sunny Isles Beach, preconstruction condo prices in this barrier island city are comparable to Miami Beach.

Minimum presale prices for new condos start at less than $500 per square foot at the Parque Towers on the west side of Collins Avenue fronting the Intracoastal Waterway, compared with nearly $1,270 per square foot at the Jade Signature on the east side of Collins Avenue facing the Atlantic Ocean.

It is worth noting, the Mansions At Acqualina has the highest minimum asking price per square foot in Sunny Isles Beach at $1,900.

Preconstruction condo prices north of Sunny Isles Beach drop off noticeably on the barrier island in Broward County.

In Hollywood, minimum presale prices range from $425 per square foot at the Seaside Village on the west side of Collins Avenue to $715 per square foot at the Sage Beach project that faces the Atlantic Ocean.

Preconstruction condo prices for the handful of other projects announced near State Road A1A in South Florida vary widely based on the city in which the towers are to be located.

For example, the minimum asking price per square foot is $400 per square foot at the Pompano City Place project in Pompano Beach, less than $500 per square foot at the 1200 The Ocean project in Hillsboro Beach and nearly $635 per square foot at the Paramount Fort Lauderdale Beach, according to the Southeast Florida MLXchange.

The unanswered question going forward is whether investors will continue to pay rich premiums for preconstruction condo projects in the South of Fifth neighborhood of South Beach when new units are being offered at a fraction of the price just miles up State Road A1A.

Thought Of The Week: Argentina’s Latest Bond Default Raises Concerns In South Florida

Argentina – the South American country producing a steady flow of buyers of South Florida real estate – is facing an uncertain economic future following its latest bond default.

On Thursday, Argentina was declared in “default” by the credit rating agency Standard & Poor’s after failing to make the necessary interest payments to bond holders on some $13 billion in restructured debt, according to Bloomberg.

The missed payments represent the eighth time in Argentina’s history – and the second time since 2001 – that the country has officially “reneged” on its international debt obligations, according to The Economist. Argentina’s previous default some 13 years ago triggered an economic collapse that prompted many of the country’s citizens to emigrate to places like Spain and the U.S., with Miami being one of the most popular destinations.

It is unclear what impact this latest default will have on Argentina’s economy or emigration rate in the months and years ahead.

What is clear is that investors from Argentina, both individual investors and condo developers, have played a key role in South Florida’s recovery from the 2007 real estate crash.

As recently as last month, an Argentine grocery store magnate led a group that paid a record $125 million for a 1.25-acre site on the north bank of the Miami River in Greater Downtown Miami.

Buyers from Argentina represent a notable percentage of the estimated $6.4 billion in international purchases of Florida real estate last year, according to Florida Realtors. For Argentine buyers, the tricounty South Florida region of Miami-Dade, Broward and Palm Beach is the primary location for their real estate purchases in Florida.

In 2013, buyers from Argentina accounted for about 11 percent of the international purchases in the Miami area, 13 percent of the deals in the Fort Lauderdale area, and eight percent of the transactions in Palm Beach County, according to Florida Realtors.

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.

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