Think Tampa Bay’s condo market is booming? You should see Miami’s
MIAMI — Peter Zalewski talks so fast that listeners wonder when he has time to breathe. But his rat-a-tat speech is appropriate for a man who makes his living tracking a condo market growing at breakneck pace.
“Here, the $1.8 billion first phase of Miami Worldcenter, 482 units,” Zalewski says during a sweltering tour of downtown Miami. “Over there, new building, Centro condos, 352 units. Brickell Centre, four condo complexes, 1,400 units.”
And so it goes.
Through his CraneSpotters website, Zalewski catalogs Miami’s spectacular recovery from the 2007 condo bust that nearly brought the city to its knees. Not only has the market absorbed almost all of the condos built in the “last cycle” — as people here refer to the 2003-06 boom period — but it’s now cranking out tens of thousands more.
In the past four years, 221 condo towers have been built, started or announced in Miami-Dade County. Downtown Miami alone boasts seven new towers and an additional 25 under construction, some soaring almost 60 stories high.
All that shimmering glass and steel is enough to make people from elsewhere in Florida feel like they just got off the train from Hooterville. By comparison, downtown St. Petersburg has three condo projects planned with only one under way.
“We are on fire,” Zalewski said. “We should match or surpass what we did last cycle.”
The latest real estate boom comes as Miami — so awash in foreign cash it has been dubbed the “Monaco of America” — is bolstering its claim as one of the world’s great cities, a center of finance and trade and, increasingly, of art and culture.
The Perez Art Museum has moved to a striking new home, soon to be joined by the city’s science museum in a revamped park on Biscayne Bay.
Every winter, thousands of art lovers, dealers and high-end collectors descend on Art Basel Miami Beach, part of the international circuit that includes Hong Kong and the original art fair in Basel, Switzerland.
And Miami draws the celebrity chefs and the “starchitects” designing some of the most eye-popping towers.
“Miami is looked at as one of the most important cities in the entire world,” said Jill Eber, a Miami Realtor who specializes in “uber,” or luxury, properties. “It’s for the foodies, the culture, the weather, the sports. We’re all going to be very happy.”
Invariably, though, there are murmurs that Miami once again is getting ahead of itself.
Condo sales, while still strong, have slowed. With their currencies dropping in value against the dollar, European and Latin American buyers are no longer as plentiful. Domestic buyers from the Northeast and California tend to prefer Fort Lauderdale and Palm Beach.
And in a county with a per capita income of just $23,000, few locals are moving into condos starting in the high six figures.
Says Miami developer Jorge M. Perez, the art museum’s main benefactor: “We have to work on creating high-paying jobs so people can afford to live in this great city we’re building.”
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From the early 1920s, when thousands of Northerners moved to Miami because of its weather, tolerance for gambling and lax enforcement of Prohibition, the city’s history has been one of boom and bust.
Rampant land speculation, skyrocketing construction costs and the Great Miami Hurricane of 1926 ended the first boom. But, after World War II, the city boomed again as many of the military personnel who had been stationed or trained in South Florida returned.
Through subsequent decades, Miami kept growing: with more Northerners fleeing Rust Belt cities. With Cubans fleeing the Castro regime. With Colombians and other Latin Americans fleeing the drug violence or political turmoil in their own countries.
By 2005, with the U.S. economy thriving and home values growing, Miami saw a real estate boom nearly rivaling that of the 1920s. In downtown alone, nearly 22,000 condo units were built.
Then came the financial crisis and the real estate crash. Developers were stuck with thousands of unsold units.
Therein, though, lay the seeds of today’s boom. A New York group snapped up 700 units for $180 a square foot and resold them for $400 a square foot. Other investors scored similar deals.
Four years ago, an Argentine developer, Melo, launched the first post-bust project — an 18-story tower designed as a safe place for rich Argentines to park their money.
For its own safety, Melo took a new approach. “It used to be 20 percent down, but the Melo Group wanted 50 percent down,” said Zalewski. “It spread like wildfire.”
Today, almost all developers require 50 percent down payments, one reason there might be less likelihood of another bust. Indeed, many people pay wholly in cash, especially those from Latin America, who still make up the vast majority of all buyers.
Also, consumers now are more apt to do research on the Internet.
“In this cycle we have information,” Zalewski said. “Buyers went in blindly last cycle.”
With so many towers rising with such similar names — Bay, Brickell and Biscayne are ever popular — a challenge for developers is how to distinguish their project from all of the others.
One answer is branding — partnering with a brand synonymous with wealth and luxury. Hence, the 60-story Porsche Design Tower in Sunny Isles Beach, north of downtown Miami. Three elevators will deliver cars to “sky garages” connected to each unit so the owners can sit and admire their Porsche or Jaguar while enjoying a mojito.
(Bliss, one of St. Petersburg’s new condo towers, will also have car elevators. “Automated parking — what does it mean for maintenance fees, what does it mean when it breaks down?” Zalewski wondered).
In downtown Miami, a major selling point for new projects is easy access to parking, shopping and dining.
Parking, in particular, is an acute problem. One condo tower with more than 450 units has just four parking spaces — and one of those is a handicapped spot.
The city has allowed developers of some projects to skimp on parking, to hold down condo prices (at least in theory) and to encourage people to use the Metromover, a 4.4-mile elevated train through the downtown area. Since the system was built in 1986, the daily ridership, while growing, has never lived up to projections even though the fare was dropped in 2002 and trips are now free.
Given the forest of high-rises, there also is a surprising dearth of stores and restaurants downtown. But that is due to change.
Residents of the twin, 43-story towers at Brickell City Centre will be steps away from a gargantuan mall with two levels of underground parking. The mall will be anchored by Saks Fifth Avenue and include dozens of retailers and eateries, some along the Miami River.
The $1.05 billion City Centre, one of the nation’s biggest private construction projects, is considered such a game-changer for downtown Miami that other developers are riding its coattails.
“Even though we are competition, we market it all day long because it’s such a great amenity,” said Arden Karson of the Related Group, which is building a 58-story tower across the street.
Until City Centre and another huge mixed-used project, Miami Worldcenter, are completed, downtown Miami will have the feel of a ghost town at times. At night, at least half of the existing condo units appear unoccupied — and they might never be.
“We look at condos as commodities,” Zalewski said. “East of (Interstate) 95, it’s not real people, it’s a trading pit, (investors) looking to take a position and hold it three, four, five years. A 6,000-square-foot condo — does that make sense for anyone other than traders and foreign investors?”
Still, Zalewski expects the developers to stay busy.
“In Silicon Valley, they make technology. In South Florida, we make condos.”