Preconstruction Investor Sells Reach Tower Suite At $350k Loss
A buyer has scooped up an amazing deal on one of the last Tower Suites at Brickell City Centre’s Reach Tower. The original buyer had paid $2,175,000 back in August of 2016, then listed the property on the MLS as a resale shortly thereafter.
The buyer was able to snag the opportunity for $1,950,000, represented by our very own Lucas Lechuga with a quick and seamless closing. After the developer fee on the purchase, the price negotiation and commission on the resale, the seller walked away from over $350,000 in the transaction!
The apartment has 2,740 square feet with 3 bedrooms, 4.5 baths and encompasses the entire east side of the building, offering gorgeous views of the neighborhood and Biscayne Bay. You can find the floor plan here. No word on the reason the investor was willing to take such a drastic loss, but congratulations to the buyer! Here’s a tour of the layout:
Do you think any of the pre-construction investors will be able to turn a profit on their resales now that the buildings are all opening?
Over 30% of Brickell City Centre’s Reach Tower Units Are Already Offered as Rentals
Brickell City Centre’s Reach Tower has been open now for a little over 3 months and over 30% of the apartments are already offered as rentals! According to public records, Swire has been able to close 277 of the contracts on the units already, probably closer to 300 if you count the two-week delay that is common with tax roll searches. Of those closed apartments, 125 have already come back to the market as rental apartments.
What I find to be even more alarming is the fact that of the 125 rental opportunities, only 15 landlords have found a tenant. Fifteen. In 3 months. If we keep up at that pace, landlords will be holding their apartments for 2 years or more. That’s a big pill to swallow if you bought a condo with the expectation of having it produce an income for you.
But what does this mean for Brickell?
Here’s the bottom line. The condos are beautiful. The neighborhood is hot. The condos will rent and tenants will be found… but at what price?
The Downtown Development Authority estimates that 70 new families move to Brickell each month in their 2014 Demographics Report. That doesn’t include people who relocate between buildings in the neighborhood, and there is plenty of that going on. The demand is there and nobody is denying the fact that Brickell City Centre is one of the most anticipated projects of them all. That leaves us at price.
Before the building opened, agents were boasting to our team members that they were representing landlords and planned to offer their 1 bedroom units for $3,500 and 2 bedroom units for $4,500. You see, our team members know their way around the Brickell rental market. Their response was, “You guys have fun with that.”
Fast forward to today. The 15 units that rented were all leased for $2,500-$2,750 for one bedrooms and $3,300-$4,000 for two bedrooms. The one bedrooms offered currently are between $2,500-$3,300 and the two bedrooms offered are between $3,700-$5,700, so some folks are starting to get the memo.
Hopefully the others will realize the true market value, before the Bond on Brickell, SLS Brickell and Rise at Brickell City Centre open, further flooding the market. With this being said, please don’t think it is fire sale time in Brickell. The neighborhood is still very hot, it is just readjusting with the new inventory.
We’ll check back in a few months to see how things are going after the Bond on Brickell and SLS Brickell open.
Brickell City Centre’s R&R Towers Hit $180 in Sales, With Rise Opening This Summer
Plus a Brickell City Centre Fly-Through, Via Drone-Cam
Courtesy Brickell City Centre.
Brickell City Centre’s two residential towers Reach & Rise have done a combined $180 million-plus in condo sales to date, say the megaproject’s public relations wonks, with Reach 90 percent sold out and Rise 45 percent. Reach opened to residents back in April, giving it a head start in sales, while Rise is scheduled to receive its Temporary Certificate of Occupancy (a.k.a. that’s move in day!) sometime this summer. Prices for remaining units have also been bumped up by 10% in response to strong sales despite a slowing market, although even things at City Centre are obviously tamer than they were a year ago.
Stephen Owens, Builder of Brickell Key and Brickell City Centre, is Retiring
Photo courtesy Swire Properties.
Stephen Owens, President of Swire Properties, builder of Brickell City Centre and Brickell Key, as well as JADE at Brickell Bay (through a joint venture), and just a really nice guy, has had more of an impact on the development of Brickell than just about anybody, with the possible exceptions of the Related Group and Mary Brickell herself. Upon completion of City Centre in 2017, Mr. Owens will be retiring from his role as President, while remaining on the board of the company and providing council on U.S. projects. He’s being replaced as President in January of 2017 by one of the Swire bigwigs in Hong Kong named Kieren Bowers who is the General Manager of a Swire megaproject there. If and when Swire decides to build yet another urban megaproject in Miami, it sounds like the new guy will know what he’s doing too.
Closings at Brickell City Centre Reach Tower: How are They Faring and What Percentage are Hitting the Market For Rent?
According to public records, closings for condos in the Reach tower at Brickell City Centre began on April 11, 2016. Since then, as of this past Friday, 82 of its 390 total units (21 percent) have been recorded as closed. The 82 closed units amount to $64M in closed sales, averaging $619 per square foot, and ranging from $532 to $674 per square foot. Of greater significance, to many at least, is not the percentage of units that have closed, but, rather, the percentage of closed units that are being converted to rentals. In other words, what percentage of the units at Brickell City Centre were purchased by investors versus end-users? That’s a question that has crossed my mind a number of times in recent months, so I decided to do some investigative research. According to the MLS, 28 of the 82 recorded closed units (34 percent) have already been listed for rent (25 units available for rent + 3 units pending). If that percentage ends up holding true across both towers at Brickell City Centre (Reach and Rise), that will mean that roughly 265 units will end up hitting the market for rent soon after closing. However, it should be noted that Swire (the developer) appears to be closing lower floor units first. Of the 82 closed units, the majority of them are located below the 20th floor; the highest floor that a closed unit is located is the 30th. The Reach tower at Brickell City Centre is 43 stories high, as is the Rise tower. In my experience, investors tend to snatch up the lower floor units because they tend to bring the highest rate of return from an investment standpoint. As such, if we were to divide the tower in half, I would expect the bottom half to have more units owned by investors than the top half. With that being said, I do not expect the 34 percent rental-to-closing rate to hold true as closings continue. If I were to venture a guess, I would say that the rental-to-closing rate across both towers will end up being closer to 28 percent once everything is said and done. But we shall see, because I plan to report each month an update on closings, not only for Brickell City Reach and Rise, but for all recently completed condo developments. Back in 2007, 2008, and 2009 (during the last condo boom), I reported closings rates a lot. Consider this a reboot.
