Developers sold only 212 units — or less than 1 percent of the pipeline — during the first quarter of this year, as the supply of preconstruction condos slowly gets absorbed, according to a new ISG Miami Report released on Monday.
As of May, 80 percent or 19,326 units were presold of the 23,220 in the pipeline, according to ISG. The company surveys the sales centers and sales teams of each project in the following areas: Brickell, the Biscayne corridor’s Edgewater, Wynwood, Midtown, Design District and Omni; downtown Miami; the Beaches (Miami Beach, Surfside, Bal Harbour, Bay Harbor Islands, Sunny Isles Beach, Hallandale, Hollywood Beach); Aventura, North Miami Beach, Coconut Grove and Key Biscayne launched since mid-2011.
The majority of developments reported slight increases or no new sales by April compared to ISG’s November report. In the Brickell/Miami River submarket, for example, Rise at Brickell City Centre sold about 20 units during the five-month span. Brickell Ten, Echo Brickell and Cassa Brickell reported stagnant sales. And One River Point, which wouldn’t provide a sales figure in the winter, said it is 15 percent presold.
In Miami Beach, Lionheart Capital’s Ritz-Carlton Residences reported the same 60 percent in presales. Sales were also flat at 35 percent of 70 units at Fasano Residences + Hotel Miami Beach, where the Shore Club hotel is still operating.
In response to the slowdown, most developers have held off on launching new projects, bringing the percentage of overall sales up from 76 percent in November to 80 percent in April. Newly launched projects like Naranza in Edgwater and the Aston Martin Residences in downtown Miami both reported some presales.
Prodesa and Fortune International Group launched Naranza in December at a lower price point than most, with units starting at about $445,000. The 137-unit development is about 20 percent presold, according to ISG. The Aston Martin Residences, which will be developed by G and G Development, said it is 10 percent presold of 390 units. Cervera Real Estate was tapped to handle sales and marketing in December.
Here’s the breakdown by submarket:
- Brickell/Miami River: 87 percent sold of 5,908 units
- Biscayne corridor: 83 percent sold of 4,771 units
- Downtown Miami: 55 percent sold of 1,338 units
- The Beaches: 77 percent sold of 4,344 units
- Aventura: 80 percent sold of 549 units
- North Miami Beach, Key Biscayne and Coconut Grove: 87 percent sold of 1,467 units
- Fort Lauderdale: 58 percent sold of 949 units
During a presentation of ISG’s fall report late last year, ISG principal Craig Studnicky attributed the slowdown to the strong dollar and the increased supply of preconstruction condos, adding that both created a lack of urgency among buyers.
While some developers like the Related Group and Plaza Equity Partners are choosing to incentivize brokers and buyers, none appear to have lowered their prices – at least not officially. Studnicky said Monday that luxury condos are being discounted by 5 percent to 10 percent on a case-by-case basis. He expects the market to pick back up by the fourth quarter of this year and early next year.
“When the realization hits in 18 months or so” that inventory is declining, “expect prices to go northward,” Studnicky said.