Real Estate/Ahead of the Deal: Developers complete only 3,050 new South Florida condos in 2015

Developers delivered nearly 3,050 new condo units in projects located east of Interstate 95 in the South Florida market in 2015.

With last year’s completed units, developers have now built — or substantially upgraded — at least 56 new condo buildings with more than 4,200 units in Miami-Dade, Broward and Palm Beach counties since this current real estate cycle began in 2011, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)

An additional 125 new condo buildings with more than 12,600 units are currently under construction in the tri-county region.

As sizable as the 2015 condo completion total seems, the figure represents less than half of the nearly 6,400 South Florida units that were originally scheduled to be delivered last year, according to a previous column in the Miami Herald.

At least 30 new condo buildings with nearly 2,150 units that were originally scheduled to be completed in 2015 are now working to finish up sometime in the near future.

Given the changing real estate market conditions resulting from heightened competition for buyers, increased construction costs and rising presale prices, the future is unknown for about 1,200 new South Florida condo units that were originally scheduled to be completed last year but were never constructed as marketed.

What is known is that developers are now scheduled to complete nearly 95 new condo buildings with more than 7,800 units in 2016.

This year’s projected total number of completed new units is comprised of the nearly 2,150 unfinished condos carried over from 2015 combined with nearly 5,700 units that were already scheduled to come online in 2016, according to the data.

Going forward, developers are scheduled to deliver an additional 6,900 new condo units in 2017, more than 3,650 new units in 2018 and nearly 800 new units in 2019.

After a two-year pause in the delivery of new condos, an additional 2,400 units are scheduled to be completed in South Florida in 2022, according to the data.

The combination of new units already completed or scheduled to be constructed in the next seven years represents about half of the more than 400 new South Florida condo buildings with 49,100 units that have been announced since this cycle began in 2011.

Completion dates have not yet been publicly revealed for the other half — more than 180 new South Florida condo buildings with nearly 23,400 units — of the pipeline of preconstruction projects announced since 2011, according to the data.

It is unclear if all of the new units will ultimately get built given the changing market conditions for international buyers resulting, in part, from a stronger dollar, weak commodity prices and an overall slowdown in the global economy.

Another factor generating doubts about the number of new condo units that will ultimately be built during this cycle is a growing sentiment by industry watchers that preconstruction sales are slowing.

Developers do not typically publicly release presale percentage totals. Even so, there are other ways to track the strength of the market, including deposit requirements and broker commissions.

In the second half of 2015, an increasing number of developers in Miami-Dade County — which represent 73 percent of all South Florida preconstruction activity — began to relax their original demands of 50 percent deposits.

In all of cases, the developers contended that the deposits were eased in an attempt to sell the remaining presale units — at higher prices with fewer choices — during construction.

Added to this, commissions reached a new high in December when brokers were offered 10 percent for bringing in buyers to a Brickell Avenue area project.

At the onset of this current cycle, preconstruction condo commissions were generally about 5 percent. As the competition intensified, the commissions have increased to 6 percent before reaching 8 percent last summer.

The unanswered question going forward is how many of the new South Florida condo units that have not yet launched construction will actually be built during this current cycle given the increasingly changing market conditions locally, nationally and internationally.

This story was originally published January 10, 2016 at 2:00 PM with the headline "Real Estate/Ahead of the Deal: Developers complete only 3,050 new South Florida condos in 2015."