Greater Downtown Miami’s preconstruction condo market has surpassed the halfway point, with over half of the more than 10,000 units in the pipeline now completed. And due to the growing inventory of new condos, resale pricing continues to fall in the urban core, according to a new report.
The Downtown Development Authority’s Mid-Year Residential Real Estate Market Study shows 5,180 units have been delivered since 2012 and 5,078 units are under construction – less than previously expected. Some projects didn’t survive the slowdown that deepened last year.
Over the past year, Related Group cancelled Auberge Residences & Spa Miami, and the Verzasca Group converted plans for 2000 Biscayne from condos to rentals. Ugo Colombo is also reportedly planning to develop retail on a site previously planned for condos. Projects like Aston Martin Residences and Missoni Baia are the anomalies: both launched sales during the slowdown and are now breaking ground. Next year, expected completions include Brickell Flatiron, Gran Paraiso and One River Point, which together would add nearly 1,300 units to the market.
About 70 percent of condos under construction have been presold, according to the report authored by Integra Realty Resources.
Resale prices, which rose in 2012, 2013, 2014 and 2015, fell beginning in 2016 and continued dropping through the second quarter of this year. Existing inventory sold for about $400 per square foot mid-year 2017, compared to the peak of $457 per square foot in 2015, according to the report. May was the best month for closed sales in two years as sellers adjusted to the market. More than 140 existing units sold in May and 160 were pending, the report shows.
Growing inventory and declining prices have led rents to drop, as well. As a result of falling rents, condo owners are more likely to sell their units than rent them, according to the report. On average, studio condos, part of the “shadow market,” were asking $2,522 a month in Greater Downtown Miami, down nearly 6 percent from the previous year.
Meanwhile, a slate of new apartment buildings, including the Broadstone at Brickell, Midtown Five and Eve at the District, has pushed rents up in the traditional multifamily market. In June, annual rents were up 3.4 percent to $1,831 a month for a one-bedroom apartment in a multifamily building.