Why Panorama Tower And Solitair Will Affect The Brickell Real Estate Market… And Why They Won’t
It is hard to ignore the fact that Panorama Tower and Solitair Brickell are going to throw a wrench into Brickell’s typically lucrative condo market. Panorama Tower is adorned with a huge banner, boasting its status as the tallest tower in the South and Solitair unapologetically sprung out of nowhere, blocking the north-facing views of all of the unsuspecting buyers at Brickell Heights West. But these qualities actually have very little to do with the reason they will disrupt the rental market, at least for awhile.
Miami’s Fascination With “New”
From a marketing perspective, Panorama Tower and Solitaire Brickell have the upper hand since they’re the newest buildings in town… even if they are only a few weeks newer. The process happens quickly in Miami. We are already receiving significantly fewer information requests for buildings like SLS Brickell and The Bond, even though both buildings are effectively brand-new. In their place are people requesting information on 1010 Brickell, ECHO Brickell and SLS Lux… all of which are still preparing to be Brickell’s new newest new building.
Supply vs Demand
It’s the oldest rule in the investor’s handbook… supply vs demand, and we are about to see it in action. Between Solitair Brickell and Panorama Tower, we are going to see over 1,200 new options come available for the same number of new tenants who move to the area each month. That’s a flood.
Pair the flood of new inventory with Miami’s fascination with new things and you’ll start to see the writing on the wall.
Apartment Buildings Hate Vacancy
It is the #1 enemy of any rental investor… VACANCY. Ack! And could you imagine the pain of having an entire vacant building? To be clear, this is not the time to waltz into the rental buildings offering pennies on the dollar for a lease. The rental buildings price their inventory very carefully and offer attractive move-in incentives in lieu of lower rent.
Why This Is Not Horrible News For Rental Investors
Will there be an inventory glut? Yes. Will it pass? Yes.
The beauty of rental buildings is that they seek a rapid initial lease-up, so their investment is operating to the best of its ability. But once they achieve the sought-after initial lease-up, the buildings integrate into the normal neighborhood market, serving the procrastinating crowd (who needs to move in this week and doesn’t mind paying a little extra on a monthly basis in exchange for lower move-in funds). The condo market goes back to normal.
It is my advice that condo owners whose units are coming available should choose a new tenant before these buildings open, else you will have several months of a dry spell. Next year will be more balanced though.
First Resales At ECHO Brickell Hit The Market
The project is not slated to open until Spring of 2018 (a delay from the previous estimate we were given), but the first resales have begun to sprinkle the market at ECHO Brickell. It is unclear at this point whether the sellers are unwilling/unable to close on their units, or if they had intended to be resales all along. More than likely, they had always intended to be resales as I had heard whispers of similar deals being offered as pocket listings back in 2014… but here we are.
The project is slated to be among the most luxurious addresses in the neighborhood, joining the ranks of the Jade Residences at Brickell Bay, Santa Maria and the Four Seasons, only with the latest security technology including robotic parking and biometric recognition access in the elevators and amenities. There will also be a 50,000 gallon fish tank to greet guests in the lobby (thankfully not the James Bond Villain-esque shark tank initially proposed). Here are the details of the first three available resales…
Lower Penthouse 4902
On level 49, the floor plates have slimmed down considerably with the architectural curve toward the top of the building and there are only two residences per floor. These are also considered lower penthouses. They each have 3 bedrooms plus a den, 3.5 baths and a gorgeous view of South Brickell, the Biscayne Bay and the sunset over Coral Gables. The view is quite spectacular, I wish that my photos had turned out better when I previewed this plan back in January, but the building was still too much of a construction site on this level.
What I find to be very interesting is that LPH 4902 is being offered as a resale for $4.95 million, yet the developer is offering LPH 5002 for $6.5 million. They have the same layout aside from 5002 being slightly smaller and higher. I have reached out to the developer’s office to see what sorts of customizations they have added to 5002 and will report back once they respond.
Residence 3802
In the middle section of the building, there are four residences per floor and the 02 line in this section is actually my favorite layout of all the units in the building. It is a 2 bedroom, 3 bath layout with a large den near the third bedroom that is large enough to serve as a convertible guest room. The plan has 1,802 interior square feet, a great use of space (in my personal opinion) and is on the southeast corner, offering bay and South Brickell skyline views.
This one is being offered for $3.2 million. The developer is no longer carrying any of these floor plans, but this pricing is not far off from where it was when they were.
Residence 1004
The one bedroom plans at ECHO Brickell sold out almost immediately when they came to the market in late 2013/early 2014. On these floors, there are six units per floor and 1004 is located on the southeast corner. From the 10th floor, the view will be overlooking the treetops and buildings of South Brickell, which gives a park-like feel. It will be especially nice in the summertime, when the Royal Poinciana trees are in full bloom, lighting the street up with a canopy of red flowers. It is being offered for $892,000 and has 804 interior square feet.
Remaining Developer Inventory
As I mentioned before, the developer is still carrying a handful of residences, mainly highly customized plans including duplex lofts, panoramic residences that are combinations of several units and penthouses. The remaining developer inventory ranges in price from $1.9 million for a 2 bedroom on a high floor with sunset views, to $42 million for the opulent Carlos Ott Penthouse.
Market Stat Monday: How Is The Rental Market At Brickell Heights?
It has now been almost 3 months since this photo was taken, just as Brickell Heights was preparing to open. The closings have gone down at a harried pace, Equinox is open and buzzing with activity and moving trucks are filling the loading docks daily. The project was a resounding success for The Related Group, and it is too soon to tell how the resale market will fare, but we have had enough time and activity to check the pulse of the rental market.
Brickell Heights East
Between the active/available rental options, the ones whose tenants have already moved in and the ones whose tenants are awaiting association approval, it appears that 99 of the tower’s 358 units are operating as rentals. That amounts to 28% of the building as of today, not bad! I’ve come to expect to see an investor ratio of 60%-75% in most of the Brickell condo towers, after seeing the condo questionnaires that banks use to determine financing availability.
In the last 3 months, 26 landlords have moved their tenants in and have accepted $2.73 per square foot on average. One bedrooms range from $2,000 per month up to $2,750 per month, and two bedrooms are renting for $3,000 per month up to $3,900 per month. Nine units are currently pending, but I expect to see the final pricing stay in line with the previous numbers.
With 64 active/available listings, it looks like we’re operating with right about 2 months of inventory (great news!). The pricing of the available options is also more or less in line with the rented units. One bedrooms are available for between $2,000 per month up to $3,000 per month, two bedrooms range from $2,700 to $3,700 per month and three bedrooms are between $5,500 to $5,950 per month (there are only two of these currently available).
Just as we have seen in past buildings, the landlords are not budging much on their pricing. The ones who already rented their units did so for an average of 97% of their asking price.
Brickell Heights West
Originally slated to be a rental-only tower that turned back into a condo tower when the pre-construction market took off, the West tower is still shaping up to be mainly rentals. There are currently 90 available units for lease, ranging in price from $1,950-$3,000 for one bedrooms, $2,800-$4,500 for two bedrooms and $4,950-$5,250 for three bedrooms.
Aside from those 90 available listings, 16 have rented and 26 more are awaiting association approval. With that many pending leases, I imagine there is quite a bit of backlog in the management office. For the next couple of months, it is probably a good idea to lease here only if you have a flexible move-in date or 3+weeks to wait for approval. Otherwise, you could find yourself in a hotel while you wait for approval.
The 16 units that did rent garnered 96% of their asking price and range from $1,950-$2,200 per month for one bedrooms and $2,700-$3,250/month for two bedrooms. The tenants are paying $2.66/square foot on average.
Looking Ahead
It will be interesting to see what happens over the next few months at Brickell Heights with the new competition from Solitaire and Panorama Tower, both of which are slated to open soon. Do you think the prices will dip a bit during the wave of inventory of the first lease-up and then level off at a higher value due to continued demand and less inventory like SLS Brickell, or do you think Panorama Tower and Solitaire’s wave of inventory will hold the prices lower?
Which Miami Condo Developments Are On Highest Ground?
The threat that climate change presents to Miami is as hot of a topic as it is a polarizing one. With increasingly frequent flooding due to storms and the moon/tide cycles, many of the locals have grown familiar with the low-lying hazards in the neighborhood. A summer storm wouldn’t be complete without the dramatic shot of a newscaster standing outside the Publix in Mary Brickell Village with water up to their knees, gawking at drivers who splash by, many of whom end up with water damage to their pricey rides. The intersection of Brickell and 13th Street is another spot that overflows quickly.
After the storm we went through last week that flooded the underground parking garages at Brickell City Centre plus all of Mary Brickell Village, forcing shops to close for a day and a half, I started to wonder which buildings in the area are on higher ground? Some may be surprised to learn that the Downtown area is not flat. There are small, but valuable hills that make certain buildings more secure from the floodwaters. I did a little bit of research and found this very interesting topographical map that is fully interactive and mapped the buildings in our area. The vast majority of the buildings sit between 0-3 feet above sea level, but here are the ones on higher ground…
Simpson Park Area
On the south end of the Brickell Financial District but on the north side of South Brickell is Simpson Park. It is situated on a small hill that crests at the intersection of SW 1st Avenue and I95 at 30 feet above sea level. Le Parc at Brickell is the highest condo development in our service area at 20 feet above sea level. Nearby, Infinity at Brickell also takes advantage of this hill at 10 feet above sea level, but it drops off quickly. SLS Brickell measured 3 feet above sea level.
Because of the contour of the elevation, Vue at Brickell and Axis at Brickell were all showing up as 7 feet above sea level, leaving Millecento and the rest of the surrounding buildings at 3 feet.
North Brickell
All of the other buildings in Brickell are between 0-3 feet except for one small incline at 5th Street that puts 500 Brickell’s East Tower on slightly higher ground (7 feet).
Downtown Miami
The wall of towering skyscrapers along Biscayne Boulevard in Downtown has been affectionately dubbed the “Biscayne Wall” in real estate and architecture groups for some time now, but there could be another reason for it. There is a small increase in altitude along Biscayne Boulevard, leaving Bayfront Park at 3 feet above sea level and all of the condo developments from 50 Biscayne to Marquis Residences at 7 feet above sea level. This includes Vizayne North and South, MarinaBlue, 900 Biscayne Bay, One Thousand Museum, and Ten Museum Park.
Just a bit farther inland, Centro, The Loft Downtown, The Loft 2 Downtown, and Paramount Miami Worldcenter are all also 7 feet above sea level.
Edgewater / Arts & Entertainment District / Midtown
As can likely be expected, none of the buildings in Edgewater are higher than 3 feet above sea level… but the grade increases relatively quickly as you go farther west (by Miami standards anyway). The Arts & Entertainment District’s new project, Canvas, is 7 feet above sea level, and industrial loft or live/work space fans will be pleased to hear that Parc Lofts and Filling Station Lofts are both built 10 feet above sea level.
Midtown fans will also be pleased to know that the entire neighborhood, including Midtown 2, Midtown 4, Midblock and the new Hyde at Midtown are all 10 feet above sea level.
Final Thoughts
If you would like to play with the interactive map on your own, you can do so here. Do the findings make you feel better or worse about our situation?
Market Stat Monday: The Bond On Brickell
This week, we are going to take an in-depth look at another recently-opened development, Rilea Group’s Bond On Brickell. Around the same time last year, we were treated to a sneak peek just days before the project began closings, and it has come a long way since!
After digging into the numbers, I’m really starting to see some solid trends among these new buildings. The developer made off flush, closing on all but a handful of the units for an average of $587/square foot, or $183 million as reported by The Real Deal. Nearly 80% (77% to be exact) of the pre-construction buyers are now either trying to sell or lease their properties, and nobody has claimed their homestead exemption.
RESALES
Looking at the resale market, the outlook is pretty grim (but don’t get worked up, the rental market is better, just scroll down if you’re looking for rosy news). There are currently 68 active listings for sale, and only 2 have sold on the resale market so far. The MLS shows 6 total sales, but 4 of them were developer sales. If you figure the months of inventory based upon all closed sales combined, there are 91 months of inventory. If you only consider the true resales, that number jumps to 272 months of inventory! Either way you figure it, that is far more inventory than we’ve seen so far.
Of the apartments that did sell, again we are seeing that the sellers are not budging far in their negotiations. The developer sold their 4 listed apartments at an average discount of 4% and garnered $595/square foot. Open-market resales received 94% of their listing price with an average of $499/square foot. Although both investors garnered far less for their units than the developer, that’s not to say they both lost money.
Apartment 2508
– Originally purchased in September 2016 for $742,900. If you figure a 1.5% developer fee, that nets a $754,000 buy-in.
– The property resold in April 2017 for$620,000. If you figure the seller paid the standard 6% commission, they netted $582,800 in the sale.
– The overall investment lost the investor $171,200 (unless there are hidden factors that we can’t pull from the MLS and tax roll).
Apartment 2101
– Originally purchased in August of 2016 for $527,900, netting $535,800 after assuming the 1.5% developer fee.
– The property sold in May of 2017 for $595,000. Assuming the 6% commission, the net sale was $559,300.
– This transaction left the investor a $23,500 gain, or a little more than 4%.
Final Thoughts
Am I saying that purchasing in The Bond on Brickell is a bad idea? Absolutely not. The building turned out very nicely, with high quality finishes and thoughtfully chosen amenities. Rilea Group was also smart to purchase the air rights over the small office building next door. I see it as SLS Brickell’s not-so-garish cousin. If that is your taste, then it is a great time to get a great deal and a lovely home for years to come, just don’t buy in thinking you can flip the property for a hefty profit, because you will be disappointed.
The current price ranges are:
Studios – $268,000-$389,000
1 Bedroom – $359,000-$680,000
2 Bedroom – $667,000-$850,000
3 Bedroom – $1,050,000-$1,650,000
RENTALS
Now it is time for the good news. The rental market is very stable, with only 20 active listings currently. The building has been leasing up at an average of 18 units per month (142 for the year so far), leaving just over 1 month of inventory for tenants to choose from.
Despite the low inventory today, the average days on market is listed as 64 days. It is common to see new buildings offer a glut of inventory shortly after the investors close on their units. Everyone wants to find a tenant and fast. The lease prices drop for awhile until the majority of that inventory is absorbed and then the prices and days on market stabilize.
This trend is evident in the rental history of The Bond over the last year. Studios have leased for as little as $1,350/month during times of high inventory, but now command between $1,900-$2,350/month. One bedrooms have been as low as $1,800/month, but now are leasing between $2,300-$3,250. Two bedrooms were as low as $2,400/month but now are $3,300-$4,500. Three bedrooms were once $4,200/month, but the only one available today is $6,500.
This is not the time for opportunistic tenants to try and over-negotiate lease prices. There is very little on the market and the landlords are only negotiating to 94% of their asking price… not a huge drop.
So, while the resale market is pretty bleak, the landlords and owner/occupants in The Bond are poised for success!
Resales At 1010 Brickell Hit The Market As Opening Day Approaches
The amenity-rich, Fannie-Mae approved and much anticipated 1010 Brickell is finally preparing to open, bringing 387 new neighbors to Brickell. Although the closing letters have been sent out with anticipated closing dates in August, we have been informed by the developers office that those dates could be delayed into September if the TCO does not arrive this week or next.
As was to be expected after what we have seen in other buildings that opened over recent months, resale listings have already started to appear on the market. There are currently 10 active listings, priced between $571,000 for a 932 square foot 1 bedroom on the 31st floor, up to $1.8 million for the 3 bedroom penthouse. Almost half of the available resales are in the 01 line, the big northeast corner plan with 3 bedrooms, a den, 3 baths and over 2,100 square feet. They are listed for between $1,479,000-$1,639,000. You can compare all of the floor plans here.
Another thing that grabbed my attention is the pricing of these listings compared with the price list that we happened to save when the building opened sales in 2013. Many of these sellers are offering their units far less than they were offered from the developer, which leads me to wonder whether they REALLY need to sell, or whether the developer gave them a REALLY great deal.
We will be watching the closings very closely and scheduling a tour as quickly as possible so that we can figure out which it is! In the meantime, check out this amenity list! Wow!
1010 Brickell Brochure by Sarah Elles Boggs on Scribd
ECHO Brickell Gets Its Sign
Construction is moving right along at PMG’s super-luxury tower, ECHO Brickell this week, and the sign has now been installed. The logo is reminiscent of the building’s signature shape, filled with black glass tile and surrounded by slate. The awnings and lighting features are also being installed.
Construction began on the Carlos Ott designed tower at the end of 2014, and is expected to be completed at the end of this year. Earlier this year, we were lucky to receive a hard hat tour of the progress & the views, including the $42 million Carlos Ott Penthouse. Prices of available residences range from $1.9 million to $19.7 million including a handful of one-of-a-kind custom designed floor plans.
Market Stat Monday: Brickell Sales Statistics By Country Of Buyer’s Origin
Since this is such a patriotic week and it is no secret that our friends from abroad play a big role in the Brickell real estate market, I thought it would be interesting to see which countries are producing the most buyers of condos. The Miami MLS has a new-ish feature that reports the country of origin for the buyers after they close on a listed condo. We still have to rely upon the word of developers in order to report buyer origins of new condos, but resales can now be statistically found.
Out of the 414 total sales that have happened in Brickell since the beginning of the year, about half of the agents have reported the country of origin of their buyers. This represents just under $100 million of Brickell inventory sold out of the $198 million that was sold in total.
Here are our findings:
If you look at the total sales volume of all of the sale transactions in the neighborhood during 2017 so far, you can see that the United States is responsible for the overwhelming majority, followed by Brazil, Venezuela, Colombia, and Argentina.
Despite reports of their sales activity in the area, China and Mexico did not spend nearly as much as other countries, and Russia was not even on the list.
The number of transactions was skewed even farther in the United States’ favor, with Venezuela, Argentina, Colombia and Brazil following behind.
For those who prefer a chart rather than a graph, here are the actual figures for each country.
Are you surprised by the findings?
The 8th Street Metromover Station Is Officially Renamed “Brickell City Centre Station”
Photo via Jami Reyes Facebook
The Miami Metromover’s 8th Street Station was formally renamed the “Brickell City Centre Station” this morning in a ribbon cutting celebration with Mayor Gimenez.
During the construction phase of the $1.05 billion mega project, Swire also upgraded the city-owned transit stop and integrated it directly into the third level of the shopping mall, allowing shoppers and residents the ability to come and go from the development without being exposed to the summer showers that Miami is famous for.
For those who are new to the area, the Miami Metromover is a 4.4 mile electrically powered train system that shuttles people around the Greater Downtown area for free. It is automated and air-conditioned, and can drop people in the Brickell Financial District, Miami-Dade College, Bayfront Park, The Frost Museum and PAMM, Omni Mall and now Brickell City Centre.
There are also transfer stations in Downtown and Brickell that allows people to transfer to the Metrorail, accessing the University of Miami, the Jackson Medical Center hospital district, the Miami International Airport and more. “The Mover,” as it is commonly called, is extremely convenient to people in the Downtown area, and even more now that we can access Brickell City Centre directly.
Bravo, Swire!
