Business Monday

1,200 new condos still unsold from previous South Florida real estate cycle

Even as developers propose more than 260 new condo towers with nearly 36,000 preconstruction condos in coastal South Florida, more than 1,200 units created during the previous boom of 2003 remain unsold as of the end of the second quarter of this year.

Despite the remaining unsold inventory some seven years since the market crashed in 2007, developer condo sales from the previous South Florida boom still generated more than $23.2 billion in sales at an average price of about $397 per square foot in the coastal tricounty region of Miami-Dade, Broward and Palm Beach, according to an analysis of government records.

During the previous South Florida cycle from 2003 to 2010, developers created 246 new condo towers with nearly 49,000 units east of Interstate 95 in the region’s seven largest coastal cities, according to an analysis of government records.

As of June 30, the original developers still own a 1,216 new units, representing about 3 percent of the total new condo projects first envisioned a decade ago.

The largest number of unsold condos from the previous boom is in the South Beach neighborhood of Miami Beach where nearly 525 units have not yet been sold out of pool of nearly 5,550 units created between 2003 and 2010.

The unsold units represent about 9 percent of the total South Beach condos created during the last cycle.

Greater Downtown Miami has the second largest number of unsold units at about 290 units from a pool of more than 22,200 units created during the last boom. The unsold units account for about one percent of the condos developed in Greater Downtown Miami during the previous cycle.

The market of Boca Raton-Deerfield Beach — where more than 250 units remain unsold — is in the No. 3 spot in the rankings of the greatest number of existing developer condos from the last South Florida boom. Some 24 percent of the nearly 1,050 condos created in the Boca Raton-Deerfield Beach market are unsold.

The four other major coastal markets of South Florida have small numbers of developer units unsold.

For instance, the developer condos total about 80 units in Downtown West Palm Beach, 40 units in the Downtown Fort Lauderdale and the Beach market and about 35 units in Sunny Isles Beach.

The Hollywood-Hallandale Beach area in Southeast Broward County is the only South Florida coastal market to have sold out all of its condos — nearly 5,000 units — from the last boom.

Given the success, it is no surprise that the Hollywood-Hallandale Beach area is the second most active market today for preconstruction condos in coastal South Florida with more than 3,200 units announced to date, according to the preconstruction condo projects website CraneSpotters.com. (Disclosure: my firm operates the website.)

Prices have undoubtedly played a significant factor in the sales velocity of coastal developer condos from the last boom in South Florida.

Not surprising, South Beach achieved the highest average price during the last cycle with developer units trading at $600 per square foot. Alternatively, Downtown West Palm Beach realized the lowest average price at $317 per square foot.

The Boca Raton-Deerfield Beach market ranks second in the tricounty region based on an average developer sales price of $491 per square foot. Sunny Isles Beach captured the No. 3 position based on an average developer sales price of about $441 per square foot.

The Downtown Fort Lauderdale and Beach market with an average developer sales price of $367 per square foot and the Hollywood-Hallandale Beach market at $358 per square foot both narrowly beat out Greater Downtown Miami’s $356 per square foot from the last boom, according to the data.

The unanswered question going forward is whether developers with unsold condos from the previous boom will be still able to achieve premium prices for their older new units now that another cycle is underway.

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.

A decade of developer condo sales in coastal South Florida

This is a summary of new condo sales in South Florida’s seven-largest* coastal markets between 2003 and 2014 (January through June).

Year Units sold Gross sales price Average price PSF
2003 1,406 $904,447,345 $385
2004 3,555 $1,619,429,457 $394
2005 8,554 $3,493,360,630 $354
2006 7,878 $3,776,283,063 $385
2007 4,624 $2,557,527,973 $427
2008 6,679 $3,719,256,176 $465
2009 3,893 $1,799,297,926 $362
2010 4,689 $2,081,326,842 $364
2011 3,081 $1,832,258,335 $410
2012 1,835 $884,365,106 $435
2013 990 $444,286,323 $439
2014 328 $164,721,121 $467
Total 47,512 $23,276,560,297 $397

Source: CraneSpotters.com compiled this data from government records

* - Markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood-Hallandale Beach, Downtown Fort Lauderdale And Beach, Boca Raton-Deerfield Beach And Downtown West Palm Beach

Overview of South Florida’s 2003 condo boom

This is a summary of new condo projects created east of I-95 in Miami-Dade, Broward and Palm Beach counties between 2003 and Q2 2014

Submarket Total new towers Total new units Sold new units Unsold new units % of unsold new units Average price per square foot
Greater Downtown Miami 84 22,202 21,914 288 1% $356
South Beach 37 5,530 5,006 524 9% $600
Sunny Isles Beach 27 6,362 6,328 34 1% $441
Downtown Fort Lauderdale and the Beach 49 5,313 5,273 40 1% $367
Hollywood/Hallandale Beach 21 4,948 4,948 0 0% $358
Boca Raton/Deerfield Beach 12 1,035 782 253 24% $491
Downtown West Palm Beach and the Island 16 3,425 3,348 77 2% $317
Total 246 48,815 47,599 1,216 2% $397

Source: CraneSpotters.com compiled this data using government records.

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