Sales Prices in Free Fall at BrickellHouse as Parking Saga Drags On
Back in January, we did a check in at BrickellHouse to see how their parking drama was affecting transactions in the almost-new development. At the time, not much had changed. It appears though that we were at the edge of a cliff.
The Real Deal reported an update of the case on Tuesday, explaining that the debacle is far from finished. Apparently the condo association has sued the developer on behalf of the owners because the system is going to have to be replaced. The only available replacement system is configured differently and cannot hold as many cars as the current, defunct system. That would mean that some owners will have to forego their parking spots and they are not amused.
The developer insists that the entire system does not need to be replaced, only the software. And so the lawsuits go on, bouncing the blame around like a game of Hot Potato.
While the bickering continues, sales prices have been in free fall. In January I reported that sales values from Q4 of 2015 were sitting pretty at $641/foot. That is a healthy increase from the $595/foot that we saw from the developer’s pre-sales. It seems the market had not had time to react to the parking issue, but it certainly responded quickly. In Q1 of 2016, closed sales values fell to $456/foot, then down to $419/foot in Q2 and $402/foot in Q3. Yikes. With 79 active listings today and an absorption rate that could compare to pouring molasses in December, we are in for a ride.
There is no telling how long this will last. Nobody wants to buy into a building with a monstrous problem and banks will not touch the building because of the snowballing litigation. Heck, hard money lenders probably wouldn’t even do a deal there. Cash buyers are not as plentiful as they once were, so it seems the best thing for the owners to do is wait and pray.
On the bright side, the rental market has not been affected. Rental values are holding steady at an average of $3.50/foot. I guess the tenants don’t really care about parking. With our “Uber everywhere” society these days, it looks like what people really don’t want is drama.