Nearly a century after the first major residential real-estate boom in South Florida, the Tri-County region of Miami-Dade, Broward and Palm Beach still experiences ebbs and flows as it attempts to adjust to the demands of buyers who are interested in owning local properties.
Some five years ago next month, the first pre-construction condo launch of a new tower during this cycle was held at a furniture store in the Village of Merrick Park for the 23 Biscayne Bay project in the Edgewater area of Greater Downtown Miami.
Fast-forward to April 25 of this year, and more than 80 new condo towers with nearly 23,200 units have been announced for the Greater Downtown Miami market, according to the pre-construction condo project website CraneSpotters.com.
(For disclosure, my firm operates the website.)
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The activity in Greater Downtown Miami — the most active market in the region — has spread throughout South Florida to the point that at least 417 new condo towers with nearly 50,800 units are currently in the pipeline during this cycle that began in 2011, according to the data.
To date, developers have completed 63 new condo buildings with more than 4,900 units, representing nearly 10 percent of the total South Florida pipeline announced during this cycle.
More than 130 new condo buildings with nearly 14,700 units — about 29 percent of the total pipeline — are currently under construction.
An additional 221 new condo buildings with 31,200 units — about 61 percent of the total South Florida pipeline — are currently in the planning or pre-sale phase of development.
Fueled early on by foreign buyers with strong currencies combined with relatively cheap real-estate prices for the region, Miami-Dade County is the dominant market with at least 262 buildings and nearly 37,100 units — about 73 percent of the overall South Florida pipeline — announced during this cycle.
As the U.S. dollar has strengthened in recent years, many foreign buyers have adjusted their purchasing strategies to focus more on value rather than luxury units. Domestic buyers have, in turn, stepped up to acquire units that had been previously cost-prohibitive.
The changes in market trends have led to a surge in new developments in Broward and Palm Beach counties, where prices are generally cheaper for land, construction and resales.
Broward County currently has nearly 100 new condo buildings, with more than 9,575 units — about 19 percent of the South Florida pipeline — announced since 2011. Palm Beach County has an additional 57 new condo buildings with nearly 4,150 units — about eight percent of the South Florida pipeline — in the works for this cycle, according to CraneSpotters.com.
As a result, four of the top 10 most active pre-construction condo markets are now outside of Miami-Dade County.
Currently, the Hollywood-Hallandale Beach market in South Broward County ranks second, with more than 4,800 units in the pipeline. The Downtown Fort Lauderdale and Beach market ranks third, with more than 3,350 units announced. The Downtown West Palm Beach market ranks sixth, based on more than 2,400 units in the pipeline. Pompano Beach in northern Broward County ranks 10th, based on more than 1,025 units in the pipeline.
The popularity of new condo units has worked to create a growing supply of resale units on the market east of Interstate 95 in the Tri-County South Florida region.
As of April 25, nearly 17,000 condo units are currently available for purchase east of I-95 in South Florida, according to the Southeast Florida MLXchange.
Based on the nearly 3,600 condo resale transactions in the first quarter of this year, South Florida currently has more than a 14-month supply available for purchase.
A balanced market is considered to have about six months of supply. More months of supply available for purchase suggests a buyer’s advantage, and fewer months of units on the market generally indicates a seller’s advantage.
This combination of factors prompts the question of where the South Florida coastal condo market is headed in the months and years ahead.
Obviously, no one can accurately predict the future, especially in as diverse and dynamic market as South Florida.
That being said, here are five factors that need to be monitored to get a better sense of the future direction of the Tri-County region’s coastal condo market:
▪ South Florida’s role as a global investment safe-haven destination makes the region ever more dependent upon foreign exchange rates;
▪ The increasingly diverse group of builders — who increasingly originate from other parts of this country and the world — are likely to turn South Florida into one of only a few international destinations where global condo trends are started, refined and exported;
▪ Internationally accepted laws that target money launderers who attempt to invest their so-called illicit funds into real estate are likely to play a bigger role in influencing future trends in local real estate;
▪ The reintroduction of the destination of Cuba to the U.S. consumer — who has been for the most part locked out from legally visiting the communist country for more than 50 years — could divert tourist and investment dollars away from South Florida;
▪ And the growing concern that rising sea levels could someday soon impact the market for waterfront condo units in the Tri-County region.
The unanswered question going forward is whether the market will applaud or agonize about the fact that this is my final regularly scheduled column for the Miami Herald after more than five years of providing insight about South Florida’s coastal condo market.
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 pre-construction condo project website CraneSpotters.com in conjunction with the Miami Association of Realtors.
Most active pre-construction condo markets: the top 10
This is a ranking of the 10 most active pre-construction condo markets east of Interstate 95 in Miami-Dade, Broward and Palm Beach counties as of April 25.
Share of South Florida units
Greater Downtown Miami
Fort Lauderdale (Downtown-Beach)
Sunny Isles Beach
West Palm Beach
Bal Harbour-Surfside-Bay Harbor Islands
Total for Top 10 markets