Miami condo sales continue to stagnate, new sales figures show.
In a sober tone, ISG principal Craig Studnicky spoke to a crowd of about 500 real estate agents and industry insiders about the state of the preconstruction condo market in South Florida, referencing the challenges agents and developers have faced and the “lack of urgency” among buyers in 2016.
“It’s really, really tough to sell real estate when you can’t find a sense a urgency,” Studnicky said at the Diplomat Gold & Tennis Club in Hallandale Beach during ISG World’s Fall 2016 Miami Report Conference on Wednesday.
The strength of the dollar coupled with increasing supply of preconstruction condos has slowed sales significantly over the past year. Studnicky called out various news reports about the flood of tens of thousands of condos coming to market in Miami, and the claim that buyers are “better off waiting.” “How the hell do you close a condo with that kind of press?” he asked the crowd.
Out of the 19,538 condo units in the pipeline and currently built east of I-95 in Miami-Dade and parts of Broward since mid-2011, 14,877 units or 76 percent have been sold, according to the report.
Compared to ISG’s last Miami report released in July, 516 units, or less than 3 percent of the total inventory, sold during the last four months. Overall sales dropped by 1 percent, though it’s important to note that total inventory increased 5 percent, from 18,623 units in July to the 19,538 units currently that are either newly built or in the pipeline. Projects like the Aston Martin Residences, Emilia Edgewater and Naranza were added, while Faena Mar, which will likely become a hotel instead, was removed.
Regardless, the duo was optimistic about 2017, emphasizing the difference between already completed developments, those under construction and those that have yet to break ground. The high-end condo market has become a buyers’ market. “Every developer that has a project under construction is negotiating,” Studnicky said, adding that while the developers don’t like it, “they don’t have a choice.”
“Preconstruction cannot compete with recently completed projects or projects under construction,” he said.
And while most of those units will come to market, nearly 80 percent are pre-sold, Studnicky said.
When Echo Aventura opened last year, a majority of the building’s Brazilian buyers relisted their units within three months of closing due to the decline in Brazil’s currency from the time they reserved units to closing. “They were willing to sell the units at the price they paid. Given the conversion rate, they were making money,” Studnicky said.
During an hour-and-a-half long presentation, Studnicky and fellow ISG principal Philip Spiegelman countered the slowdown with Miami’s highlights: its growing population (250 people move to Miami-Dade every day), booming commercial real estate sector, new transportation options (All Aboard’s Brightline service), education and overall quality of life.
“I’m trying to create urgency for all of you,” Studnicky said, with Spiegelman later adding, “You don’t see these kinds of people making [commercial] investments unless there’s a market to support it.”
ISG surveys the sales centers/teams for all “preconstruction” projects in the neighborhoods of Brickell, the Biscayne corridor (Edgewater, Wynwood, Midtown, Design District, A&E), downtown Miami, the Beaches (Miami Beach, Surfside, Bal Harbour, Bay Harbor Islands, Sunny Isles Beach, Hallandale Beach, Hollywood Beach), Aventura, North Miami Beach, Coconut Grove and Key Biscayne, according to the report.
Here’s how those numbers break down by market:
- Fort Lauderdale: 59 percent sold
- Hollywood Beach: 72 percent sold
- Aventura: 77 percent sold
- Hallandale Beach: 100 percent sold
- Sunny Isles Beach: 74 percent sold
- Bal Harbour: 82 percent sold
- Bay Harbor Islands: 70 percent sold
- Surfside: 82 percent sold
- North Miami Beach: 86 percent sold
- Miami Beach: 66 percent sold
- Biscayne corridor: 70 percent sold
- Downtown Miami: 50 percent sold
- Brickell: 86 percent sold
- Coconut Grove: 82 percent sold
- Key Biscayne: 100 percent sold