First new South-of-Fifth condo project completed at time of slowing resales

The first of at least eight new preconstruction condo projects planned for the ultra-luxury South-of-Fifth neighborhood of South Beach has been completed, at a time when the pace of unit resales is slowing.

The first transaction deed for a condo in the newly completed 321 Ocean project, with a combined 22 units, was recorded on May 20, according to Miami-Dade County records.

In total, a dozen condo units in the 321 Ocean project, developed by 321 Ocean Drive LLC with David Arditi, have been recorded at an average price of more than $1,390 per square foot, for a combined price of $41.4 million as of May 31, according to government records. The development features a pair of buildings — one fronting the famed Ocean Drive, and the other the Atlantic Ocean.

Individual unit sales in the project have transacted at prices ranging from less than $1.4 million to nearly $6 million. On a price-per-square-foot basis, units in the 321 Ocean project have traded from less than $600 to nearly $1,900, according to government records.

Aside from the 321 Ocean project, at least seven more condo projects with nearly 135 units are in the presale phase or already under construction in the South-of-Fifth neighborhood, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)

Overall in Miami Beach, developers have announced plans to build 37 new condo buildings with more than 1,760 units as of May 31, according to the data.

In completing the 321 Ocean Drive project, developers have now constructed 30 new condo buildings with nearly 2,715 units east of I-95 in the tri-county South Florida region of Miami-Dade, Broward and Palm Beach counties since this cycle began in 2011.

An additional 108 new condo buildings with nearly 11,000 units are currently under construction in South Florida, according to the data.

The new condo projects that are under construction or recently completed account for nearly 33 percent of the nearly 42,500 units announced for South Florida during this cycle.

In the South-of-Fifth neighborhood, demand for condo resale units has fallen on a year-over-year basis, as prices have risen.

In the first four months of 2015, buyers acquired about 76 South-of-Fifth condo units on the resale market, at an average price of about $1,038 per square foot, according to data from the Southeast Florida MLXchange.

By comparison, buyers purchased nearly 120 South-of-Fifth condo units between the January through April period of 2014, at an average price of less than $925 per square foot, according to the data.

The slowdown in sales comes as nearly 225 condo units in the South-of-Fifth neighborhood are currently on the resale market, at an average asking price of more than $1,350 per square foot as of May 31, according to the data.

At the current 2015 transaction pace of 19 units monthly, the South-of-Fifth neighborhood has nearly 12 months of condo resale supply available for purchase heading into the traditionally slower summer tourism season.

A balanced market is considered to have about six months of supply available for purchase. Less months of supply generally indicates a seller’s market, and more months of inventory suggests a buyer’s market.

The unanswered question going forward is whether the South-of-Fifth neighborhood will be able to maintain — and increase — the price premiums that developers and unit resellers have come to expect, given the number of new and existing units available for purchase.

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.