If condo developers follow through with their announced plans, the total size of South Florida’s coastal market is poised to grow by at least 27 million square feet of sellable living space during this current preconstruction boom that began in 2011.
The bulk of the new livable space slated to be added to the tricounty South Florida condo market east of Interstate 95 is to be concentrated in Miami-Dade County, where at least 20.5 million square feet is currently in the preconstruction pipeline, according to a report by the preconstruction condo projects website CraneSpotters.com.
(For disclosure, my firm operates the website.)
An additional 4.3 million square feet of condo living space is slated to be developed in Broward County while more than 2.3 million square feet has been announced in Palm Beach County, according to the report.
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These square footage estimates are based on an analysis of the eventual amount of sellable living space that would result from the successful completion of all 415 new condo buildings with more than 50,200 units that have been announced east of I-95 in the South Florida region during this cycle.
To date, only 58 new condo buildings with more than 4,300 units — less than 9 percent of the current South Florida pipeline — have been completed in the first five years of this cycle, but an additional 132 new buildings with more than 13,700 units — some 28 percent of the triciounty coastal total — are currently under construction, according to CraneSpotters.com.
It is important to note that these estimates were determined by multiplying the minimum square footage of the smallest residences in each project by the total number of condo units announced in each respective project.
As part of this effort to better understand the depth of the current condo boom, the sizes of the smallest units in more than 165 buildings with nearly 23,500 units — about 47 percent of the South Florida pipeline — were not included in the total projections. For these projects, the developers have publicly announced their intent to build but have not yet filed the applications necessary to obtain local governmental approval to proceed.
The current makeup of the preconstruction condo market makes it inherently challenging to accurately and uniformly determine the exact sellable square footage of the announced projects until the construction is formally completed and Declarations of condominium have been recorded in the respective counties where the properties are to be located.
Even though projects are typically approved for a maximum number of units and square footage by governing entities, changing markets conditions often times prompt developers to adjust their original plans in an attempt to improve their chances for presales success.
For example, developers have been known during this boom and previous cycles to eliminate or combine units in a project in response to buyer demands in the condo market.
As large as the projected livable space projection seems at first glance, the actual amount of square footage developed during this South Florida boom could ultimately end up being more than twice as large at an estimated 59 million square feet if all of the announced projects are completed.
To reach this much higher living space projection, a mean square footage for every project in which information was available was determined by adding the sizes of the smallest units and the largest units in each project and then dividing this blended amount by two. This blended amount of sellable living area space was then multiplied by the number of units announced in each particular project.
While this series of projections may prompt critics to claim the totals are laced with hypotheticals, the goal of the exercise is to bring more transparency to the current preconstruction condo boom that has already spread to nearly 35 coastal areas in the tricounty region.
Historically, it is difficult to project the magnitude of this boom since it is unclear exactly how many millions of square feet of sellable condo living space currently exists east of I-95 in South Florida.
In my more than 20 years of tracking South Florida’s real estate market, I have never seen a report published by a recognized source — or any organization for that matter — that attempts to estimate the total amount of condo square footage that exists east of I-95 in the tricounty region.
What is clear is that nearly 15.8 million square feet of living space transacted in existing South Florida condo projects developed before this current boom and located east of I-95 in the year 2015, according to data collected on March 16 from the Southeast Florida MLXchange.
An additional 17.8 million square feet of existing condo living space in projects developed before 2011 is actively being marketed for sale on the Multiple Listing Service database as of the same date, according to the data.
It worth noting, the condo units that were developed — or slated to be built — since this boom began in 2011 are not included in the existing unit totals.
The unanswered question going forward is whether buyer demand for new South Florida condo units is deep enough to absorb the millions of square feet of livable space that is currently in the pipeline for the tricounty region during this cycle.
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.
Here are some links to some of Zalewski’s past Real Estate/Ahead of the Deal articles in Business Monday:
Millions of square feet of living space in the pipeline
This is an estimate of the amount of living space that would be created east of Interstate 95 in Miami-Dade, Broward and Palm Beach counties since 2011 if the new condo projects in the South Florida pipeline are developed as currently announced.
Minimum square feet of new condo living space*
Mean square feet of new condo living space*
Palm Beach County
*This figure doesn’t include announced projects that have not yet revealed the proposed sizes in square feet of individual unit.