As the presale condo market surges to a mean price of about $730 per square foot in South Florida, more and more developers are rushing forward to announce new projects in hopes of cashing in on this latest preconstruction boom in South Florida.
After some six years of a challenging residential real estate market, the time is apparently right for local and out-of-town developers alike to come forward now that South Florida is in the early stages of its latest growth spurt as tens of thousands of new condo units, apartments and single-family houses are proposed, planned, under construction or recently completed in Miami-Dade, Broward and Palm Beach counties.
As hot as the market is, no sector is as popular in South Florida as preconstruction condos.
To date in South Florida, developers have proposed a combined 201 new towers with more than 28,100 units — and counting — east of Interstate 95 in Miami-Dade, Broward and Palm Beach counties, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure purposes, my firm operates the proposed condo project database CraneSpotters.com.)
At the end of the first quarter of 2014, developers have completed only five towers with less than 450 units and launched construction on an additional 58 towers with nearly 7,350 condos.
The recently completed units combined with condos under construction represent about 28 percent of the total new units announced for South Florida, according to the data.
An additional 138 towers with nearly 20,350 units are proposed or planned for the South Florida coast, representing more than 70 percent of all units announced to date during this current construction boom, according to the data.
It is worth noting, an estimated 40 percent of the new condo units slated to be built have been proposed by groups that have not previously independently developed on their own in South Florida.
It is not to say developers who are inexperienced in constructing condos in South Florida will have increased challenges compared to veteran local builders in completing their projects but the percentage of newbie builders is worth monitoring, especially as market conditions change in the future, industry watchers said.
As for the new condos being proposed in South Florida, Miami-Dade represents the super majority of the proposed units with more than 21,860 condos slated to be developed. Broward ranks a distant second with nearly 3,600 units proposed. Palm Beach has more than 2,650 units proposed for the No. 3 ranking, according to the data.
On a market-by-market basis, Greater Downtown Miami represents nearly half of all new condo units proposed for the coastal South Florida region with nearly 13,600 units. The Hollywood-Hallandale Beach market in southeast Broward is second with nearly 3,000 units proposed. The West Palm Beach market in Palm Beach County ranks third with more than 2,000 proposed units.
Rounding out the top five most active preconstruction condo markets in South Florida is the Aventura / North Miami market with more than 1,725 units proposed and Sunny Isles Beach with more than 1,650 units proposed, according to the data.
Developers are rushing to announce projects in South Florida as the preconstruction prices east of I-95 are surging upward compared to resale units that have a mean price of less than $325 per square foot as of March 18, according to the Southeast Florida MLXchange.
By comparison, the median minimum presale price for a new condo located east of I-95 in South Florida is $730 per square foot, according to a developer price survey that was completed on March 7 by CraneSpotters.com.
The range of minimum presale prices range from a low of less than $225 at the proposed Bay Colony project in Juno Beach in Palm Beach County to a high price of $2,300 per square foot at the Residences At Miami Beach Edition project in Miami Beach, according to the developer price survey.
The preconstruction condo market is difficult to verify with complete accuracy as price schedules are not required to be recorded with the Clerk of the Court in the respective counties.
As a result, developers — who usually attempt to keep their pricing information confidential for competitive reasons — can easily and often change prices, floor plans and even unit counts with little notice until a project’s construction is ultimately completed, industry watchers said.
Added to this, the presale marketing information for a project can vary greatly depending upon which of the developer’s sales representatives decide to share the pricing information.
Desired commissions requested by real estate agents can also have an impact on pricing, industry watcher said.
Nonetheless, an estimated 61 percent of the South Florida condo units proposed for this cycle are currently under contract or recently sold, according to the developer price survey.
The question going forward in South Florida is whether there will be enough buyers at the current prices to acquire all of the announced new condos given that more than half of proposed units to date have not yet launched their presale marketing campaigns.
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.