Less than three years after the first preconstruction launch party kicked off this latest South Florida high-rise building boom in May 2011, the 50th new condo tower has formally begun construction east of Interstate 95 in the tricounty coastal region of Miami-Dade, Broward and Palm Beach.
Fittingly, South Florida’s most prolific vertical residential developer — Jorge Pérez of the Related Group — held a ceremonial groundbreaking on Jan. 22 for the proposed SLS Hotel & Residences Brickell that is slated to stand 52-stories tall with 453 condos and 132 hotel rooms a block west of Brickell Avenue in Greater Downtown Miami.
With the launch of the planned SLS Hotel & Residences Brickell on a site that originally was to be the Infinity At Brickell II condo tower during the last boom-and-bust cycle, developers are now constructing — or have recently completed — nearly 7,100 units in South Florida, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure purposes, my company runs this website that the Miami Association Of Realtors has designated as the official source of preconstruction condo projects.)
In South Florida, developers are proposing — or constructing — a combined 186 condo towers with at least 25,150 new units from Key Biscayne north to Jupiter as of January 2014.
For comparison, developers created 245 condo towers with nearly 49,000 units during the last South Florida building boom that began in 2003 before crashing in 2007, according to an analysis of Clerk Of The Courts records from Miami-Dade, Broward, and Palm Beach counties.
For its part, the Related Group has proposed at least 29 new condo towers with nearly 7,500 units in coastal South Florida during this latest boom. At least 10 condo towers with nearly 1,950 units are under construction for the Related Group following the groundbreaking for the proposed SLS Hotel & Residences Brickell.
During the last South Florida condo boom-and-bust cycle, the Related Group developed 24 condo towers with more than 9,100 units in the tricounty coastal region.
Besides the Related Group, a number of other veteran South Florida developers are building — or have recently completed — condo towers in this latest construction boom, including Dezer Development, Fortune Development, Key International, Melo Group and longtime veteran builder Martin Z. Margulies.
Overall, veteran developers account for about 70 percent of the new condo units under construction in South Florida. The remaining 30 percent of the units are being built by developers who have never before constructed condo projects in South Florida.
The list of newcomers who are developing new condo towers in South Florida for the first time range from the proposed 321 Ocean Drive project in South Beach to the Faena House in Miami Beach, and the Oceana Bal Harbour in Bal Harbour to the Regalia tower in Sunny Isles Beach.
It is not to say the newcomer developers will have extra challenges building in South Florida but the lack of local experience is worth monitoring, especially as buyers — and not lenders — are solely responsible for fronting the cost of construction.
Unlike the last South Florida condo boom when lenders typically financed 70 percent of the cost of building, this time around many lenders – who lost significantly with the 2007 market crash — are resistant to fund condo construction.
This new reality has forced nearly every developer to collect buyer deposits of 50 percent of the contract purchase price to pay for the construction. This level of financial commitment is dramatically different from the last South Florida condo boom when the norm was 20 percent buyer deposits.
To date, only one condo project — the BrickellHouse in Greater Downtown Miami — in this current boom has publicly faced any significant adversity regarding the developer’s ability to complete the project.
Following a $15.8 million foreclosure suit being filed in Miami-Dade County Circuit Court in October 2013, the developer “cleared a cloud” over the BrickellHouse project by “paying in full a lienholder” some $17 million to dismiss the case, according to the Miami Herald.
The BrickellHouse project has subsequently topped off the 46-story tower as work proceeds to complete the 374-unit project scheduled for later this year.
Going forward, the South Florida condo market is clearly in the midst of building boom that shows no signs of slowing given that cash buyers — not lenders — are spurring the assembly of dozens of construction cranes along the tricounty coast.
Peter Zalewski is a principal with the Miami real estate consultancy Condo Vultures. Zalewski, a licensed Florida real estate professional since 1995 and founder of CVR Realty and Condo Vultures Realty LLC, advises developers, lenders and institutional investors. Zalewski also runs the preconstruction condo project website CraneSpotters.com in conjunction with the Miami Association Of Realtors.