Miami Condo Developer to Miami Condo Vulture?
Earlier today, the South Florida Business Journal published an article entitled “Related Considering Fund to Buy-up Condos“. It reveals that Miami condo developer, Jorge Perez, is considering to create a fund to buy condos throughout Miami at a discount. The article states that a source disclosed that the funding would come from Latin America.
Much of the The Related Group’s condo inventory is located in Brickell and Downtown Miami. Jorge Perez, CEO of The Related Group, recently stated on NBC6 that his only regret is not buying more land around his first condo development, One Miami. While many condo developers in Miami are now regretting ever getting into the mix, Jorge Perez regrets not buying and developing more land.
As the article points out, I think there will be a [huge] conflict of interest if Jorge Perez’s fund acts to buy defaulted condos that arise at Related developments throughout Brickell and Downtown Miami. I don’t think the banks that loaned the money to The Related Group will find the situation too appealing. I, for one, would feel a bit suckered. Additionally, buyers who do close on condos in Related developments might feel a bit suckered as well if they later hear that the developer himself acted as a principal to buy defaulted condos at much lower prices.
Miami Condo Investments Joins the EWM office in Brickell
I am pleased to officially announce that I have decided to join the EWM office in Brickell. The office is centrally located in the recently developed Mary Brickell Village which has great shops and restaurants and has become the focal point of Brickell. It was a logical choice for me since I conduct most of my business in Brickell.
EWM has been in existence since 1964 and has become one of the top real estate brokerages in South Florida. EWM is owned by HomeServices which is wholey owned by world-renowned Warren Buffett’s Berkshire Hathaway and is also affiliated with Christie’s Great Estates.
EWM is a pro-blogging real estate brokerage. It even has their own widely read real estate blog which has great information pertaining to neighborhoods stretching from the southern tip of Florida to West Palm Beach.
You might be saying to yourself “Congrats Lucas, but how is this move going to benefit me as a reader?”. There’s just one word that comes to mind – statistics. I know that you love statistics, as do I. EWM has the best software that can break down the market like no other can. The software dates back 5 years while the MLS data only goes back 2 years. You can get a taste of the software here at the Facts & Trends link. This is just a taste, however. The full software, which I have access to, allows me to break the data down by city, zip code, development name, single family vs. condo, waterfront vs. non-waterfront, price, square foot and date. I was in heaven when I accessed this software. I’m a big statistical buff, as many of you already know, so having this type of data at my fingertips is sensational! I can now tell someone the average price per square foot that XYZ development was selling for back in 2002. How great is that?!
I’m also now able to provide IDX pages for individual developments. I plan to incorporate all Brickell, Brickell Key, Downtown Miami and the Arts District developments onto my blog. You’ll be able to click on a condo development name to view available units as well as recent sales. This should be implemented within the next month.
You may or may not have noticed that I neglected to publish a December index for Brickell, Brickell Key and South Beach. I have no intentions to do so. The holiday season is upon us. For the rest of December I plan to pretend that the real estate and stock markets are functioning superbly. What a joyous fictitious month it will be!
After the New Year, the Brickell and Brickell Key condo indices will return. The South Beach condo index, however, will not. I plan to focus this blog on condos in Brickell, Brickell Key, Downtown Miami and the Arts District. I know South Beach well but don’t plan to focus my efforts there.
Let’s just say that he’ll take everything east of Biscayne Bay and I’ll take everything west of it. A fare trade in my eyes.
New Construction Condo Deals in the Arts District, Brickell, Downtown Miami, and South Beach
As closing dates for some of South Florida’s newest condo developments quickly approaches, the motivation from contract holders to sell is becoming increasingly apparent. I’ve been receiving a lot of phone calls and emails from contract holders, within the past couple of weeks, who are looking for me to help them find a replacement buyer.
In some cases the contract holders are willing to accept a loss on their contract price in order to retain a portion of the deposit that was made 3-4 years ago. Below you will find some of the better deals that I’ve come across:
Edgewater
- The 1800 Club
- Unit 2×04 – 1 bedroom/1 bath – 842 SF – $235,000
- Unit 3×06 – 1 bedroom/1 bath – 822 SF – $240,000
- Unit 3×03 – 2 bedroom/2 bath with direct bay view – 1,142 SF – $418,000
- Unit 4×03 – 2 bedroom/2 bath with direct bay view – 1,142 SF – $428,000
- Quantum on the Bay
- Unit 15+ floor B (south tower) – 1 bedroom/1 bath – 651 SF – $198,000
- Unit 35+ floor D (south tower) – 1 bedroom/1.5 bath – 780 SF – $212,000
- Unit 40+ floor B (south tower) – 1 bedroom/1 bath – 651 SF – $252,350
- Unit 40+ floor J (south tower) – 2 bedroom/2 bath – 1,239 SF – $399,000
- Unit 40+ floor J (south tower) – 2 bedroom/2 bath – 1,239 Sf – $409,000 obo
- Unit 10+ floor L (north tower) – 2 bedroom + den/2.5 bath – 1,460 SF -$550,000
Brickell
- 1060 Brickell
- LF Loft – 1 bedroom/2 bath – 972 SF – $360,000
- 30th Floor (K floor plan) -866 SF – $290,000
- Unit 3×07 – 2 bedroom/2 bath – 1,103 SF – $467,000
- Axis
- 1x04S (C1 floor plan) – 2 bedroom/2 bath – 1,076 SF – $340,000
- Plaza on Brickell
- Unit 2×09 (901 tower) – 1 bedroom/1 bath – 683 SF – $250,000
- Unit 2×05 (901 tower) – 2 bedroom/2 bath – 1,185 SF – $339,000
Downtown Miami
- Marina Blue
- Unit 4×04 – 2 bedroom/2 bath – 1,208 SF – $470,000
South Beach
- Continuum South Beach North Tower
- Unit ??? – 2 bedroom/2.5 bath NW corner unit – 1,491 SF – $1.86M
- Unit ??? – 2 bedroom/2.5 bath NW corner unit – 1,922SF – $3.35M
- Unit ??? – 3 bedroom/3.5 bath NE corner – 3,497 SF (4 balconies) – $4.2M
If you’re a contract holder and you’re motivated to sell then feel free to email me details of your condo and the price that you are willing to accept. Most developer contracts do not allow you to market your unit outside the sales center, so I will post general information here on the blog to see if a buyer emerges.
I’ll match buyers and sellers together. The sales centers are in some cases charging higher than normal sales commissions and transfer fees which make it virtually impossible for contract holders to get their units into the hands of end-users. I’m hoping that this blog will help contract holders to get some of their money back, end-users to find a great deal and developers to have less defaulted units. The way I see it is a win-win-win situation for everyone involved.
By the way, I’ve added a link to this post on my “Deals” page and will be adding to the list above intermittently.
Some Great Deals at Today’s Real Estate Auction!!!
I wasn’t able to attend this morning’s real estate auction, held at the Miami Beach Convention Center, but did learn the results of several condos that were auctioned. From what I’ve heard, there were more people in attendance at this auction than the Hudson & Marshall auction held on October 21, 2007, which I did attend. However, properties auctioned today sold for much less.
Below are the results of some of the condos that were auctioned this morning:
- Courvoisier Courts – Unit 2312 – 3/2.5 – 1,655 SF (Brickell Key) – $540,000
- Isola – Unit 1509 – 1/1 – 735 SF – (Brickell Key) – $185,000
- Jade at Brickell Bay – Unit 502 – 2/2 – 1,460 SF – (Brickell) – $625,000
- Jade at Brickell Bay – BL45 – 2/3 – 1,730 SF (Brickell) – $735,000
- Murano Grande – Unit 805 – 2/2 – 1,400 SF (South Beach) – Withdrawn
- Neo Lofts – Unit 1006 – 2/2 – 1,109 SF (Miami River) – $185,000
- Ocean View – Unit 210 – 1/1.5 – 1,005 SF (Sunny Isles Beach) – $140,000
- Ocean View – Unit 909 – 1/1.5 – 1,005 SF (Sunny Isles Beach) – $160,000
- The Club at Brickell Bay – Unit 2114 – 1/1 – 818 SF (Brickell) – $180,000
- The Club at Brickell Bay – Unit 2603 – 1/1 – 825 SF (Brickell) – $175,000
- The Club at Brickell Bay – Unit 3102 – 3/2 – 1,232 SF (Brickell) – $225,000
- The Club at Brickell Bay – Unit 3202 – 3/2 – 1,232 SF (Brickell) – $270,000
- The Cosmopolitan – Unit 2603 – 2/2 – 1,010 SF (South Beach) – $405,000
- Vue at Brickell – Unit 811 – 1/1.5 – 796 SF (Brickell) – $180,000
- Vue at Brickell – Unit 3606 – 3/2 – 1,551 SF (Brickell) – $290,000
It’s interesting to note that the units at The Club at Brickell Bay and Vue at Brickell sold in the range of $187-$226 per square foot. I think we’ll be seeing much more of this in the months to come. The high bidders of the units in these two buildings at the Hudson & Marshall auction simply overpaid.
The two units at Jade sold for around $425 per square foot. I think the BL45 unit is a terrific buy!
In June of this year, I submitted an offer of $440,000 for a client on unit 2603 at The Cosmopolitan when it was a short-sale. The bank rejected our offer. We were prepared to close within 30 days. It sold today for $405,000. This happens all the time! It really frustrates me which I why I rarely will deal with a short-sale. Banks just don’t get it yet! It’s a better use of my time to wait until the bank takes it back and have my client buy it for much less.
Brickell Condo Index – November 2007
The following data was collected on November 18, 2007. It took me a while to get everything up due to the holiday and work. I made a correction to October’s data. The average price per square foot of closed sales over the previous six months at Vue at Brickell was previously stated at $364.32. The correct figure should have been $469.93. The correction has been made and the overall average for closed sales in Brickell was adjusted to $481.69 instead of $475.16.
The average price per square foot of condos listed has once again dropped this month to $512.14 from last month’s figure of $518.91. The weight-adjusted average also dropped to $509.24 per square foot from last month’s figure of $521.29.
Average price per square foot of units currently listed on the MLS:
Someone recently commented that the average price per square foot of closed sales statistic doesn’t provide much insight due to the lack of activity in the Miami real estate market. This is quite true. List prices need to come down more in order for buyers to be enticed into buying. The condos that have been selling lately are the ones that are aggressively priced. Once each building has at least 5 or more closed sales then the average will begin to show more insight. Below you will see the total number of closings within the past six months in each condo development:
As you can see all of the buildings except One Miami and Neo Vertika have 4 or less closings. The lack of closed sales doesn’t make for an informative average. Nonetheless, I will continue to provide this statistic in hopes that the peak-season months will bring in more closed sales. I have definitely seen more interest within the past couple of weeks. The average price of condos sold over the past six months has gone down to $472.80 from last month’s figure of $481.69. Emerald at Brickell hasn’t had any closed sales within the past six months. The drop would have been less if the average for Emerald at Brickell would have remained the same at $523.78. If that were the case then the average price of condos sold over the past six months in Brickell would have been $475.80.
Average price per square foot of condos sold in the MLS within the past six months:
- Atlantis – 2025 Brickell Ave | 33129 | $283.10
- Brickell on the River – 31 SE 5 St | 33131 | $400.00
- Bristol Tower – 2127 Brickell Ave | 33129 | $425.96
- Emerald at Brickell – 218 SE 14 St | 33131 | N/A
- Four Seasons Residences – 1425 Brickell Ave | 33131 | $680.57
- Imperial at Brickell – 1627 Brickell Ave | 33129 | $331.99
- Jade – 1331 Brickell Bay Dr | 33131 | $723.60
- Neo Vertika – 690 SW 1 Ct | 33130 | $332.27
- One Miami – 325 & 335 S Biscayne Blvd | 33131 | $424.36
- Santa Maria – 1643 Brickell Ave | 33129 | $682.23
- Skyline on Brickell – 2101 Brickell Ave | 33129 | $391.91
- Solaris at Brickell – 186 SE 12 Ter | 33131 | $422.66
- The Club at Brickell Bay – 1200 Brickell Bay Dr | 33131 | $684.44
- The Mark on Brickell – 1155 Brickell Bay Dr | 33131 | $575.90
- The Palace – 1541 Brickell Ave | 33129 | $395.54
- Villa Regina – 1581 Brickell Ave | 33129 | $403.39
- Vue at Brickell – 1250 S Miami Ave | 33131 | $406.92
Below you will find some additional statistics:
As with last month, the first column to the right of each condo development’s name is the difference in the average sales price and list price for this month, expressed as a percentage. The Club at Brickell Bay, The Mark on Brickell and The Palace are the only developments that have a higher average sales price than list price. The former two have questionable closed sales included in the six month average.
The second column is the number of active listings in each development currently in the MLS. The third column shows the percentage that these listings represent over the total number of condo units in each development. The cells highlighted in green reveal those developments that have active listings that represent less than 10 percent of the the overall units in the building. I find this to be a healthy number. The ones highlighted in red reveal those developments that have active listings that represent over 20 percent of the overall units in the building. I would stay away from these condo developments and others that approach the 20 percent mark. The condo developments with active listings less than 10 percent are considered very safe, in my opinion, and anything in the 10-15 percent range is considered normal, even in a healthy market.
The fourth column shows the number of pending sales while the fifth column displays the number of closed sales within the past month. The number of pending sales has dropped this month to 49 from last month’s figure of 51. The number of closed sales within the past month has remained the same at 7, which is still the lowest that I’ve seen in Brickell within one month since I’ve been tracking this statistic.
The sixth column show you the difference in the average list prices from this month’s and last month’s, expressed a percentage. Those highlighted in red reveal those condo developments which had a drop in their average list price while those highlighted in green show those that had an increase. As you can see, listings at Solaris at Brickell had an increase of 7.47 percent within the past month. Much of this increase is attributed to a new listing that is listed at $904 per square foot! What are they thinking? What I find to be particularly funny is that it says “Owner Hardly Motivated” in the broker remarks. Why even list it then? It is a one bedroom with 730 square feet listed for $660,000. I’m going to keep my eye on this one because I wouldn’t be surprised to see it under contract by the wrong type of buyer.
The seventh column reveals the difference in average sales prices from this month’s and last month’s, expressed as a percentage. The 15.49 percent price decrease at Skyline on Brickell is mainly attributed to a closed sale at a high price per square foot that dropped off the average. The large 27.41 percent price increase at Villa Regina is legitimate. There have been two closed sales in the building within the past month and one of them was a 3,060 square foot 3 bedroom/3.5 bath condo with a direct bay view that sold for $1,480,000, or $484 per square foot.
I think next month we’ll see more activity. I did notice that Jade had 2 closed sales on November 20, 2007. Those transactions will appear on next month’s Brickell Condo Index.
Yet Another Auction
I wanted to make everyone aware of another auction that will be held December 15, 2007 at the Miami Beach Convention Center in South Beach. I’ve perused the list of condos to be auctioned and it looks like there are some quality condos on the list. Below you will find some of the condos that will be auctioned:
- Courvoisier Courts – Unit 2312 – 3/2.5 – 1,655 SF (Brickell Key)
- Isola Brickell Key – Unit ??? – ??? – ??? SF (Brickell Key)
- Jade at Brickell – Unit 502 – 2/2 – 1,460 SF (Brickell)
- Jade – Unit ???? – ??? – ???? SF (Brickell)
- Murano Grande – Unit 805 – 2/2 – 1,400 SF (South Beach)
- Neo Lofts – Unit 1006 – 2/2 – 1,109 SF (Miami River)
- Ocean View – Unit 210 – 1/1 – ??? SF (Sunny Isles Beach)
- Ocean View – Unit ??? – ??? – 1,225 SF (Sunny Isles Beach)
- Royal Atlantic – Unit 209 – 1/1 – 654 SF (South Beach)
- The Club at Brickell Bay – Unit 2114 – 1/1 – 818 SF (Brickell)
- The Club at Brickell Bay – Unit 2603 – 1/1 – 825 SF (Brickell)
- The Club at Brickell Bay – Unit 3102 – 3/2 – 1,232 SF (Brickell)
- The Club at Brickell Bay – Unit 3202 – 3/2 – 1,232 SF (Brickell)
- The Cosmopolitan – Unit 2603 – 2/2 – 1,010 SF (South Beach)
- Vue at Brickell – Unit ??? – ??? – ??? SF (Brickell)
- Vue at Brickell – Unit 3606 – 3/2 – 1,551 SF (Brickell)
Contact me if you’d like more information about this auction so I can register you. There’s a 5 percent buyer’s premium and a $5,000 cashier’s check is required the day of the auction. The balance of 5 percent of the total price will be due the day of the auction if you are the highest bidder. Inspections must be conducted prior to bidding.
The Club at Brickell Bay Association Not Paying Its Bills?
Primecast is a cable TV and Internet service company that provides these services to all residents of The Club at Brickell Bay as a part of their association fees. The following letter was delivered last week to all residents living at The Club at Brickell Bay:
IMPORTANT – PLEASE READ
October 31, 2007
Dear Unit Owner,
We appreciate your patronage and want to extend our thanks for being a customer. As you may know, Primecast and The Club at Brickell Bay Master Association have an agreement in which Primecast is to deliver video and Internet service at a discounted price to all members of the Association. Unfortunately, the Association has not performed according to the terms of that agreement, including payment for these services, despite repeated notices from Primecast. As a result, the basic video and Internet services currently being provided to all units under the agreement with the Association will be suspended, effective Tuesday, November 6, 2007.
We apologize for any inconvenience. Please contact your Property Manager with any questions regarding this suspension or call 1-866-xxx-xxxx begin_of_the_skype_highlighting 1-866-xxx-xxxx end_of_the_skype_highlighting to speak with a Primecast customer support staff member.
Sincerely,
Primecast Collections Department
Three words came to mind after I read the letter: “That would suck!”. This not only affects condo owners but also tenants who signed leases under the pretense that they would receive basic cable TV and high-speed Internet services as a part of their monthly rent. You can be certain that rental prices on future leases will readjust themselves downwards within the next couple of months.
It is no secret that The Club at Brickell Bay has a very high number of condos that have gone into foreclosure and are now bank-owned. There are also a significant number of condos that are in preforeclosure that will probably share a similar fate in the months to come. The Association is likely having difficulty meeting its monthly expenditures as a result of the lost revenue from these foreclosed units. How severe is the problem? Is a special assessment or an increase in monthly maintenance fees right around the corner at The Club at Brickell Bay?
Plaza on Brickell – 1 Bedroom/1 Bath – $282,000
The above picture of the progress at Plaza on Brickell was taken this afternoon. The weather was just perfect today, as it has been for the past four days. 80 degrees, no humidity and clear skies! What more can you ask for in November?
Plaza on Brickell is scheduled to begin closings in January of 2008. I’m a fan of this development for two reasons: price and location. Well, actually three. I also like the commercial aspect of the development on the ground floor along Brickell Avenue. I’ve been told that these spaces have already been accounted for and that a few fantastic restaurants and cafes will open there. It will nicely compliment the shops and restaurants at Mary Brickell Village which are only a few short blocks away. City living is finally beginning to transform Miami.
Someone contacted me a few weeks ago who has a 1 bedroom/1 bath condo under contract at Plaza on Brickell. He went to contract on the unit the first day that sales began. The condo has 838 square feet of interior space and a 130 square foot balcony. The unit is located on the northwest corner of the 851 tower, which is the taller of the two towers, and is situated above the 20th floor. The floor plan of the available condo is below:
The contract holder of this condo at Plaza on Brickell is looking to sell it for $282,000, or $337 per square foot. Units at Plaza on Brickell come move-in ready. Contact me with any questions or if you have an interest in acquiring this condo.
Will History Repeat Itself in Miami?
Earlier this week, I showed a few condos at Villa Regina to a lady who has owned a unit in the building since 1983. She and her husband purchased their condo in November of that year. She told me that for the first year and a half to two years only 25 condos were owned of the 208 total units. The bust had happened and nobody wanted to buy. The developer, Nicholas Morley, eventually went under and the building was later taken over by the FDIC. Nicholas Morley, was a big-time developer back then who was the equivalent of today’s Jorge Perez or Ugo Columbo.
She said that nobody would touch Villa Regina with a ten-foot pole for the first two years after she purchased because the building was either in receivership, meaning that it was undergoing foreclosure proceedings, or it had already been foreclosed upon. As a result, the common areas were under-maintained. The building didn’t have any security, air conditioning in the hallways, a concierge in the lobby nor valet service.
Before the building went into receivership, she, her husband and the condo owners who represented the other 24 units met each month to resolve the problems. They wanted answers. No, in fact, they wanted action. Each month, the condo board sent requests to the developer stating that they themselves would pay to have the building maintained 100 percent. The developer never answered their pleas.
After Villa Regina was foreclosed upon, there were rumors that Nicholas Morley wished to acquire the building from the FDIC for 10 cents on the dollar. The condo board sent letters to the FDIC to prevent this from happening. Nicholas Morley had made them suffer long enough and they didn’t wish to take any chances.
An investment group stepped up to the plate and purchased the remaining units at Villa Regina from the FDIC, a few years after she and her husband had purchased their condo. She stated that “almost overnight, there was interest in buying condos at Villa Regina”. I asked her for how much the investment group purchased the remaining units. She didn’t know but guessed that it was around 50 cents on the dollar. The level of maintenance that was initially promised had finally been restored. People wanted in because the dark cloud that hung over Villa Regina had been lifted. The investment group was then able to sell the remaining units for a profit.
It was especially interesting to hear, from the above source, that the building fell into the hands of the FDIC. This indicates to me that the bank which loaned the money to the developer also went under as well. I don’t expect buildings in Miami on the horizon, however, to fall into the hands of the FDIC for too long, if at all. The world is too widely connected nowadays. Information exchanges hands at such a rapid pace. Investment groups will act much faster in today’s era than that of the 1980s. If a bank yells, “Help!”, several investment groups will be there to say, “Help has arrived, but how bad do you need it?”.
There’s been talk that the current boom and bust in Miami is worse than had existed in the early 1980s. I’ve advised my readers time and again to watch out for the new digs. If you feel like buying, then look for those buildings that were built prior to 2000. They have much more stability because most units in those buildings are owner-occupied. Investors/speculators flocked to the new buildings and those that were yet to be built. The possibility of the above occurring in a new condo development in Miami is likely within the next couple of years. That’s why I’ve been keeping a close eye on each new development’s ability to close units. If you are interested in buying in a new development then you must be aware of the default rate that is occurring there. Those with a default rate higher than 30 percent, in my opinion, will be ones to stay away from until much of this excess supply is purchased.
The oversupply problem in Miami does indeed currently exist and is worse than that which existed in the early 1980s. However, the level of demand that currently exists far outpaces that of which was evident in that decade. Miami is now on the map. Miami now has world-wide attention. The strength of foreign currencies relative to the U.S. Dollar has made it more alluring for foreigners to buy here. It has also become a mecca for second-home buyers, retirees and those who wish to live in tropical climes throughout the year.
The opening lines of the movie Armageddon says, “It happened before. It will happen again. It’s just a question of when”. It will be interesting to see if history repeats itself in Miami and, if so, then to what extent.
