More than three years after acquiring, terminating and completely renovating the struggling Paradiso condo conversion in Miami Beach, a development consortium led by the Starwood Capital Group has finally begun to close sales of units in the rebranded 1 Hotel & Homes South Beach project.
Despite a March grand opening celebration, transactions in the 1 Hotel & Homes South Beach project only began to be recorded on April 22 in the 18-story tower with 239 units located in the 2300 block of Collins Avenue in Miami Beach, according to Miami-Dade County records.
To date, the development consortium has recorded transactions for eight condo units in the 1 Hotel & Homes South Beach project at an average price of about $1,677 per square foot for a combined $15 million as of Monday, according to government records.
Individual units in the 1 Hotel & Homes South Beach have transacted between $1 million and $3.4 million each, with the prices per square foot ranging from $1,156 per square foot to more than $2,450 per square foot, according to the records.
Unit sales at the 1 Hotel & Homes South Beach have long been expected.
Back in February 2012, the development consortium “consisting of affiliates of Starwood Capital Group, the LeFrak Organization and Invesco Ltd.” acquired 255 units out of a total of 259 units in the former Paradiso condo conversion for an undisclosed price, according to a joint statement.
At the time, the development consortium planned to “invest more than $100 million in an extensive renovation” of the Paradiso condo conversion project and a neighboring hotel property that once housed the former Gansevoort Hotel Miami, according to the statement.
Units in the former Paradiso condo units were “anticipated” to “be offered for sale” in late 2012 at a time when the supply of available condos for sale was low and the current South Florida real estate cycle was just beginning.
To this end, an original “plan of termination” to break up the Paradiso condo conversion was filed in July 2012, according to government records.
Nearly 30 months later in December 2014, the development consortium filed the paperwork necessary to create the new condo project – officially known as the 2399 Collins Avenue Condominium – that is being marketed as the 1 Hotel & Homes South Beach, according to government records.
The 1 Hotel & Homes South Beach project is the 27th new condo tower – representing a combined 2,550 units – to be developed east of I-95 in the tri-county South Florida region of Miami-Dade, Broward and Palm Beach since this current real estate cycle began in 2011, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)
The 1 Hotel & Homes South Beach project – much like the Ritz-Carlton Residences Miami Beach – is included on the CraneSpotters.com list of new South Florida condo projects as the development is a total refurbishment of an existing structure.
In Miami Beach, developers have announced plans to develop 36 new condo towers with more than 1,760 units as of Monday, according to the data. Overall, developers have announced 346 new condo towers with nearly 44,000 units east of I-95 in South Florida.
Aside from the preconstruction units announced for Miami Beach, nearly 1,250 South Beach condo units are currently for sale at an average asking price of more than $855 per square foot as of Monday, according to the Southeast Florida MLXchange.
In the first quarter of 2015, buyers purchased less than 300 South Beach condo units at an average price of $725 per square foot.
It is worth noting that buyers purchased nearly 350 South Beach condo units at an average price of $575 per square foot during the same January through March period in 2014, according to the data.
Based on the 2015 sales pace of less than 100-unit transactions monthly, the South Beach condo market currently has about a 12.6-month supply of unit listed for resale.
A balanced condo market is considered to have about six months of supply. More months of supply suggests a buyer’s market and less months indicates a seller’s market.
The unanswered question going forward is whether the 1 Hotel & Homes South Beach will enjoy the condo sales success that the development consortium “anticipated” when the project’s original schedule was announced in 2012.
Peter Zalewski is a 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.