In the latest barrage to sell preconstruction units in a sluggish condo market, the Related Group is offering a slew of incentives at its Paraiso complex in Miami’s Edgewater neighborhood, The Real Deal has learned.
A Fortune International Group agent sent out an email blast on Thursday boasting free maintenance for a year on new contracts signed by March 31 at the four Paraiso towers. Fortune handles sales for the towers — Paraiso Bay, Paraiso Bayviews, One Paraiso and Gran Paraiso — that combined will bring 1,400 new condos to the district between Northeast 30th Terrace and Northeast 32nd Street on the bay.
With units priced from the low $600,000s to as high as $2 million, and maintenance averaging of 70 cents per square foot, the incentive amounts to at least several thousand dollars a year.
The email also offers 30 percent deposits, rather than the usual 50 percent, which has been the standard among new condo developments this cycle. Commissions at Paraiso were already raised to 8 percent to 10 percent, depending on the tower, far above the original 5 percent.
Paraiso’s towers, with 44 stories to 53 stories, are Related’s latest developments to adopt lower deposits. In the fall of 2015, Related slashed deposits on both SLS Lux and Brickell Heights 02 to 30 percent from 50 percent in a move to spur sales on remaining units as the tower approached sell-out.
“It’s so we can dismantle the sales center in the back and finish construction,” Carlos Rosso, president of Related’s condominium division, told TRD at the time. “When the jobs get to the last units, we lower deposits. We already have the loans.”
Related got $117.5 million in financing for One Paraiso from TPG in mid-2015; $95 million in construction financing for the Bayviews tower in December 2015 from Bank of the Ozarks; and 92.7 million in financing for GranParaiso in July 2016, also from Bank of the Ozarks.
Rosso said in a statement on Thursday that sales at all of the Paraiso towers have been strong. “We’ve crossed 85 percent sell-out at GranParaiso and can now be more flexible with last unit deal structures,” he said. “This is part of a carefully balanced sales strategy and by no means a spur of the moment decision.”
Currently a massive construction site, Related’s Paraiso district spans 11 acres and will eventually house the four condo towers designed by Arquitectonica, as well as Paraiso Beach Club. The first tower, Paraiso Bay, is now sold out, and will be completed this summer, along with the beach club, Related recently said. Paraiso Bayviews is 95 percent sold and is set to top off in April; One Paraiso is 99 percent sold and will top off in May; and the fourth tower, GranParaiso, is 85 percent sold, Related said. The property will also have eight homes fronting the park and the bay.
New York-based Meyer Davis is designing the two-story Paraiso Beach Club on the water at Northeast 30th Terrace, which will have a Michael Schwartz-helmed restaurant and bar downstairs with an outdoor patio and marina, and a private residents’ club and pool upstairs.
Greater Downtown Miami, including Edgewater, currently has 21 towers under construction with 7,077 units. An additional 3,666 condos are currently on the market, representing resales, equating to 29 months of supply, according to Peter Zalewski, principal of Cranespotters. The market has slowed in recent months, due to a decline in international buyers amid foreign economic problems and currency fluctuations.
“A developer does not want to cut pricing, so what a developer will do first is raise commissions for brokers; second, eliminate or offer free maintenance; third is provide an incentive or credit for buildout of units; and the final step is reduce prices,” Zalewski said. “So we are about halfway through the process when you have too many units and not enough buyers.