Amid a market slowdown, the Related Group is likely delaying construction for its Auberge Residences & Spa Miami project until at least end-year 2018, sources told The Real Deal.
Auberge is slated to rise at 1440 Biscayne Boulevard, currently the site of a mid-rise office and retail building in Miami’s Arts & Entertainment District.
According to emails obtained by TRD, Blanca Commercial Real Estate — the brokerage handling leasing for Related’s development site — sent an offer to at least one tenant that would extend its lease until late August 2018, without a previously used development clause that would allow Related to terminate a lease ahead of demolition.
A copy of a lease at the building from 2015, obtained by TRD, had included a provision that Related could cancel the lease with a minimum of six month’s notice.
The Related Group declined to comment, as did Blanca.
However, during TRD’s tour of Auberge’s $2 million sales gallery in April, Related’s Jon Paul Perez said the project would break ground in 2017. Construction would take 30 months for the first tower.
“It’s not terribly surprising,” ISG Principal Craig Studnicky told TRD. “Preconstruction in Miami is not as robust as it was, and it’s due mostly to that high dollar.”
Studnicky, whose firm has a partnership with Related, said he wasn’t aware construction had been delayed for Auberge.
“Related will just keep pushing” until they hit the right sales number, he said.
As of April 2016, Auberge had reserved 20 percent of its 290 units, Perez told TRD. But according to a second-quarter report from ISG, sales for the project now stand at 15 percent.
Auberge, overall, will be a three-tower project developed on 2.8 acres along Biscayne Boulevard. Related’s plans call for about 1,400 units when the project is completely built, with prices for the first tower ranging from $350,000 to $3.9 million.
The project is meant to be 31-year-old Jon Paul Perez’s first foray into leading a development for Related. The vice president, who’s one of founder and CEO Jorge Perez’s four children, is being groomed to eventually take over the company alongside his younger brother Nick.
Auberge’s delay is yet another example of a slowing condo market in Miami. The velocity of preconstruction sales has taken a dive in the past year, which has led to the cancellation of at least two projects: Boulevard 57 in Miami’s Upper East Side, and Krystal Tower on the border of downtown and Overtown (though it’s since been revived by a new developer, according to The Next Miami).
Related, South Florida’s most prolific condo development company, has not been immune. Over the past 10 months, the company has raised agent commissions and slashed preconstruction deposits at two of its projects, Brickell Heights and SLS Brickell.