Question: Are we starting to see inexperienced developers coming into the market to try to ride the wave of growth here? That was a big issue last cycle. How can someone new-to-market thrive in South Florida?
Anyone who has ever lived in or visited South Florida quickly realizes that the tri-county region is a proverbial melting pot where everyone – regardless of their background – has a chance to achieve economic success.
To understand how many people from other places call this region home, consider that only 36 percent of Florida’s more than 19 million residents were born in this state as of 2012, according to the Miami New Times.
Of the Florida residences, some 23 percent of the state’s population was born outside of the “continental United States,” according to the article.
Unfortunately, the report does not provide the ratio of foreign and domestic transplants living in tri-county region of Miami-Dade, Broward and Palm Beach.
A quick glance at the U.S. Census Bureau data shows that South Florida – much more than the rest of the state – is a bastion for foreign-born individuals.
The bureau estimates that 38 percent, or 2.2 million individuals, of South Florida’s 5.8 million residents was born in a foreign country.
In Miami-Dade County, foreign-born residences account for 51 percent of its 2.6 million population. In Broward County, foreign-born residences represent 31 percent of the 1.8 million population. In Palm Beach County, foreign-born residents account for 22 percent of the 1.4 million population.
Increasingly, the individuals coming to South Florida looking to make a fortune are focused on real estate, especially condo developments.
By one estimate, more than one-third of the 289 condo towers totaling 38,000 units announced east of I-95 in the tri-county South Florida region of Miami-Dade, Broward and Palm Beach during this cycle have not previously developed in this region, according to the preconstruction condo projects website CraneSpotters.com.
(For disclosure purposes, my firm operates the website.)
It is not to say these out-of-town developers do not know what they are doing, as many of them have built residential communities in other parts of world, stretching from Argentina to Canada, and Malaysia to Israel.
The point is, many of these developers are unfamiliar with the nuances of building condos in South Florida.
To reduce their risk, some of the newly arrived developers are entering into joint venture arrangements with veteran South Florida builders in hopes of learning the market. Others are simply winging it on their own.
To date, none of the condo towers being proposed by newbie developers have experienced any extraordinary troubles that made headlines.
The unanswered question going forward is whether these developers new to South Florida will have a strategic advantage or disadvantage compared to veteran builders as this condo market evolves during the current cycle.
Thought Of The Week: Residences At The Miami Beach Edition Now Completed
A pair of new units at hotelier Ian Schrager’s long-anticipated Residences At The Miami Beach Edition condo tower transacted for a combined $18.4 million on Thursday, marking the completion of the 18-story tower, according to Miami-Dade County records.
The condos – units 1202 and 1501 – traded for an average price of $2,942 per square foot, according to government records.
It’s early in the closing process but the first two transactions came in slightly less than the sales goal of $3,000 per square foot set by Schrager.
The project – officially named the 2901 Collins Condominium – has 25 units with 56,016 square feet of saleable space located on an oceanfront site in Miami Beach, according to the project’s declaration of condominium filed in Miami-Dade County.
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 firstname.lastname@example.org. The TRD editors will choose which submissions will be addressed.