South Florida’s new condo pipeline moves closer to supply levels of last cycle
What was the total number of buildings and units built during the last boom cycle compared to this cycle for Miami-Dade, Broward and Palm Beach counties?
Unlike many of the nation’s largest metropolitan areas, the history of the biggest cities of the tri-county South Florida region can be traced back only to the final years of the 19th Century.
For instance, West Palm Beach was incorporated into a city in 1894, Miami in 1896 and Fort Lauderdale in 1911.
Given the relative newness and increasing populations of South Florida’s biggest cities, it seems reasonable to consider the tri-county region of Miami-Dade, Broward and Palm Beach counties as a work in progress, especially from a residential developmental perspective.
As a result, the likelihood of future South Florida real estate booms and busts, especially in the high-rise condo market east of I-95, still seem plausible given the level of investor interest even at today’s high deposit requirements and the amount of vacant land available in the downtown areas of Miami, Fort Lauderdale and West Palm Beach.
During this current real estate cycle that began in 2011, developers have already announced plans to build at least 335 new condo towers with nearly 43,000 units east of I-95 in the tri-county region as of Friday, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)
In the South Florida preconstruction market, more than 120 new condo towers with nearly 13,200 units — about 31 percent of the tri-county regional total — are currently under construction or completed during this cycle.
An additional 212 new condo towers with more than 29,800 units — some 69 percent of the tri-county total — have been announced for South Florida but may never get built depending upon market conditions.
On a county-by-county basis, developers have announced nearly 215 new condo towers in Miami-Dade County with more than 31,050 units, representing about 72 percent of the total number of units in the pipeline for South Florida.
In Broward County, developers have announced an additional 75 condo towers with nearly 8,500 units, representing nearly 20 percent of the South Florida preconstruction supply.
Nearly 50 condo towers with more than 3,400 units — some eight percent of the South Florida total — have been announced for Palm Beach County.
Comparing the current South Florida preconstruction condo cycle to the previous one that stretched from 2003 to 2010 is somewhat possible given the research that is currently on hand.
To do so, it is important to understand the limitations of condo statistics that are readily available.
For this current cycle, our statistics track only those projects located east of I-95 that are being newly constructed, or created within existing structures that are being dramatically improved, such as the Ritz-Carlton Residences Miami Beach or the 1 Hotel & Homes projects. The statistics do not include typical condo conversions of existing buildings that receive basic upgrades such as fresh paint jobs, remodeled common areas and new names.
Contrast this current research approach with the last cycle when our firm tracked the number of new condo towers and units that were created — by way of new construction or the conversion of existing apartments — only in South Florida’s seven largest coastal markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood/Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton/Deerfield Beach and Downtown West Palm Beach.
To provide an accurate historical comparison in the future, our firm intends to expand upon the original research from the last cycle to include all of the condo projects located east of I-95 in the tri-county region that were created between 2003 and 2010 but are not currently in our database.
Based on our statistics from the last cycle, developers created nearly 250 new condo towers with more than 49,000 units, according to an analysis of government records.
It is worth noting that an unknown number of additional towers were announced during the last cycle but were never ultimately built in South Florida.
For the projects that were delivered during the last cycle, developers in Miami-Dade County created 148 new condo towers with more than 34,100 units, representing about 70 percent of all South Florida units.
Developers in Broward County created an additional 70 condo buildings with nearly 10,500 units, accounting for about 21 percent of the tricounty total.
In Palm Beach County, developers created 28 new condo towers with nearly 4,500 units, representing about nine percent of the regional total.
The unanswered question going forward is whether South Florida’s development industry is experienced enough after nearly a century of cycles to steer the market away from another bust at a time when preconstruction condo inventory levels are rising rapidly.
Thought of the week: Miami real estate market suffers celebratory hangover?
Less than a week after the Greater Miami Chamber of Commerce hosted a number of real estate heavyweights to celebrate the accomplishments to date of the local market, a trio of announcements have raised questions about the outlook of the Greater Downtown Miami condo market in the near term.
First, the developer of the Brickell City Centre mixed-use project that is under construction at South Miami Avenue and Eighth Street reduced its presale deposits from the industry norm of 50 percent down to 35 percent in hopes of attracting more buyers, according to the Daily Business Review.
Second, the developer of the planned 36-story Ion East Edgewater condo tower with 328 units confirmed a longstanding industry rumor that the original plan for the project was being ditched and replaced by a mixed-use development with a residential component, The Real Deal reported.
Third, Oklahoma City All-Star basketball player Kevin Durant, the reigning MVP of the NBA, listed for resale his three-bedroom condo located in the 900 Biscayne Bay in Greater Downtown Miami at a time when 72 new towers with nearly 20,000 units are in the pipeline for that market, according to Realtor.com.
Time will tell if the chamber event on March 27 ultimately ends up marking the symbolic peak of the current real estate cycle for Greater Downtown Miami.
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.