Over the past quarter century, South Florida’s skyline has been transformed — from distinctive architecture brought to us by world-class starchitects, to Swire Properties’ “city within a city” concepts and Dr. Phillip and Patricia Frost delivering the iconic Frost Museum of Science alongside the Pérez Art Museum Miami.
The Magic City has evolved into one of the most desirable places in the world to live, work and play. In fact, according to the 2018 ISG World Miami Report, close to 900 people move to Florida each day, with 45 percent of them moving to Miami-Dade, Broward and Palm Beach counties.
The Brickell neighborhood has accounted for the biggest increase in population growth. In 2018, the Miami Downtown Development Authority reported that the number of residents living between Brickell and Edgewater has soared nearly 40 percent over the past eight years.
The growing population and desire from international buyers has fueled our real estate market. However, the South Florida condominium market today is significantly different from that of the past decade. Here are the top facts to note:
1. A predominantly end-user market: Ten years ago, the majority of condo buyers were strictly investors, purchasing units not to reside in, but to rent out. In 2018, we saw the opposite, with 80 percent of condo buyers being true users, using their units as a primary or second home, and only 20 percent being investors, providing stability to the market.
2. New construction has slowed: In 2017, 10 condominium projects broke ground in South Florida, down from 23 in 2014. Today, groundbreakings and future condominium startups are virtually at zero, from Coconut Grove to Fort Lauderdale.
South Florida’s developers are concentrating on selling out the remaining inventory of newly built condos from the current cycle. As the senior vice president of residential sales for Swire Properties, I oversee and lead the sales of Reach and Rise, which are move-in ready developments in Brickell located atop the $1.05 billion landmark, Brickell City Centre. Currently, we are focused on the sellout of the two premier residential towers, while our competitors are aiming to sell out their projects, such as Hyde Midtown, Gran Paraiso, Casa Armani and MUSE in Sunny Isles Beach.
3. Winding down of developer inventory: From 2015-2018, South Florida absorbed roughly the same amount of developer units each year, approximately 1,340 condominiums, and that rate of absorption is expected to continue in 2019. With only 2,210 new developer units available for sale from Coconut Grove to Fort Lauderdale, east of I-95, this will result in virtually zero developer inventory 12 to 24 months from now.
Likewise, the Brickell market has absorbed roughly the same amount of developer units each year for the past three years, approximately 296 condominiums annually. We expect to see that absorption rate continue this year, leaving no developer inventory by the end of the year.
4. Outlook on future supply: The concern for the market is not current supply — it’s the future supply. The lack of condominium groundbreakings over the years is daunting compared to what Miami is used to.
The market is running out of new developer condo inventory and there will not be any meaningful new supply of condos for several years. The high U.S. dollar has made it difficult for developers to attract money from South America, which has traditionally been key in driving successful condominium pre-sale campaigns. As a result, major real estate developers have postponed the start of new condo projects until 2020.
Additionally, the time line for the preconstruction and development cycle for a typical high-rise in Miami has increased significantly. For the past three decades, South Florida’s development cycle for new condominium towers was three years. Today, real estate developers are building 50- to 100-story luxury residential towers, which easily doubles the development and construction time line to six years.
Real estate buyers should note that the bargain for 2019 is in condominiums, specifically, remaining developer inventory from this cycle, including Brickell City Centre’s Reach and Rise. This is the year to buy the dream condo in Miami.
Maile Aguila is the senior vice president of residential sales for Swire Properties Inc. and has more than 30 years of experience as a broker in South Florida. 305-371-2888.
▪ This is an opinion piece written, and the views expressed do not necessarily reflect those of the newspaper.
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