Advice to Miami Condo Sellers

I mentioned last week in the July Brickell condo index that only 9 closed condo sales occurred from June 19, 2007 to July 18, 2007, in the 18 buildings that comprise the Brickell Condo Index. A question was left for me in the comments section of the post about whether I felt that the lack of sales activity was a reflection of an overpriced condo market in Miami. A great conversation enfolded and I wanted to expand on that conversation with a post that will hopefully find its way to condo sellers throughout Miami.

In a nutshell, yes, prices do need to come in significantly in order for buyers to be enticed to buy. There are a lot of “motivated” condo sellers right now who have their units listed with a Realtor who are having a very difficult time selling their condo. However, sellers need to realize that their situation will become progressively worse as time goes by and more condo units come onto the market throughout the overdeveloped areas of Miami that stretch from Brickell to the Arts District. Your condition can easily turn from “motivated” to “desperate” within a six month time period.

I will let the numbers do the talking. Within the next 7 months there will be five new condo developments that will be completed in Brickell. These five developments are: 500 Brickell (633 units), The Plaza on Brickell (1,000 units), 1060 Brickell (582 units), Brickell on the River South (322 units) and Latitude on the River (455 units). These five condo developments will bring 2,992 new condo units to the Brickell condo market within 7 months. 12 months after that, another four developments will be completed in Brickell. These developments are: Infinity (459 units), Axis (718 units), Icon Brickell (1,816 units) and Epic Miami (966 units). These four developments will add another 3,959 new condo units to the Brickell condo market. That is a total of 6,951 new condo units within 19 months from now.

Over 6,900 new condo units within the next 19 months in Brickell! If this sentence alone doesn’t make a seller see the light then maybe the following sentences will. The Brickell condo index is currently comprised of 18 condo buildings throughout Brickell which consists of a total of 5,348 condo units. This means that within 19 months we’ll see a 130% increase in the number of units that comprise the index. The total number of condo units represented in the Brickell condo index will increase from 5,348 condo units to 12,299 condo units within a 19 month period.

That is just within Brickell. Include the developments below that are within 4 miles north of the southern tip of Brickell and conditions become far worse. These developments should be completed within the same time period. A few of these buildings such as Onyx on the Bay, Platinum Condos, Midtown 2 and Ten Museum Park have already begun closings. The 23 buildings below will add another 9,119 new condo units residing within 4 miles of Brickell within the next 19 months.

• Asia – 123 units
• Ivy at Riverfront – 504 units
• Cima – 471 units
• Mint at Riverfront – 536 units
• Wind – 489 units
• Met 1 – 447 units
• 50 Biscayne – 529 units
• Everglades on the Bay (update: now known as Vizcayne) – 866 units
• Loft 2 – 496 units
• Marina Blue – 516 units
• 900 Biscayne – 516 units
• Ten Museum Park – 200 units
• Marquis – 306 units
• Opera Tower -635 units
• The 1800 Club – 469 units
• Quantum on the Bay – 752 units
• Mondrian – 164 units
• Platinum Condos – 119 units
• Onyx on the Bay – 118 units
• Star Lofts – 48 units
• Cynergi – 100 units
• Midtown 2 – 336 units
• Midtown 4 – 379 units

This means that within the next 19 months there will a total of 16,070 new condo units that will come onto the market in the neighborhoods of Brickell, Brickell Key, Downtown Miami, Park West and the Performing Arts District. The bulk of the problems will be in Brickell, Downtown Miami, Park West and the Performing Arts District since Brickell Key will only add 123 units once Asia is built.

Let’s assume that 30% of the condo units in the five new developments that will be completed in Brickell within the next 7 months were purchased by speculators. That is a very conservative number. I have heard people suggest that this number could be as high as 70%. Let’s use 30% though to illustrate a point in a conservative manner. That means that of the 2,992 new condo units to come onto the market in Brickell, 898 of these will be listed for sale. As I mentioned at the beginning of this post, there were a total of 9 closed condo sales that occurred in Brickell from June 19, 2007 to July 18, 2007. This means that if market conditions remain the same, and this absorption rate continues, then it will take 100 months, or 8.33 years to absorb the new inventory in Brickell. This doesn’t take into account the existing inventory of 1,550 condo units on the market at this time in Brickell. It also only includes those units in Brickell that will be completed within the next 7 months, not the units scheduled for completion 12 months after. Nor does it take into account the negative impact that the units scheduled for completion in Brickell Key, Downtown Miami, Park West and the Performing Arts District will have on the condo inventory in Brickell.

My advice to condo owners who NEED to sell is to get out now! Today, Barbara Corcoran was on the Today Show and suggested that people who need to sell now should be priced 5% below the currently best priced property in the neighborhood. She was speaking about homes and the national real estate market, but I think that this advice is a great start for condo owners in Miami. To illustrate, last week, two days after our office held an Open House/Wine Tasting at The Imperial at Brickell, a pending contract resulted on one of the three bedroom units that were showcased. It was the best priced three bedroom in the building and was the nicest as well. By the way, for those of you who haven’t heard of Barbara Corcoran before, she is often referred to as “The Queen of Real Estate”. She is a Realtor in New York who has had tremendous success and has been asked to appear on many nationally televised segments for her invaluable insight.

Sellers may not like the idea of discounting the price of their condo to 95% of the best priced unit currently listed in the building. However, they will like the alternative scenario even less if they don’t. Keep in mind that once the new condo units come onto the market, you’ll end up lowering your price to that level anyways. But at that time, you will be priced in the middle of the pack rather than at the front.

If you are a truly motivated seller, who doesn’t have an exclusive listing agreement with another Miami Realtor, and want to sell your condo before the worst begins, then contact me today so we can devise a plan to get you out of this mess before condo inventories in Miami reach nightmare proportions.

Pictorial & Video Review of The Fantastic Four in Miami

Today was a beautiful sunny day in Miami so I decided to revisit my favorite skyline-gazing spot at the southwestern tip of Watson Island, along with my trusty digital camcorder. It is the perfect location to view the progression of what I have dubbed The Fantastic Four, made up of, from left to right, Marina Blue, 900 Biscayne Bay, Ten Museum Park and Marquis. It may appear as though there are five developments but the smallest of the buildings is located further off of Biscayne Boulevard to the west. Wikipedia refers to these four developments as the Biscayne Wall, but to me it is far shy of a wall when you compare it to fully built-out skylines in cities such as New York City and Chicago.

The name The Fantastic Four came to mind though as each of these four developments are fantastic ultra-luxury high-rise buildings revitalizing the Downtown Miami neighborhood now known as Park West. Park West was recently developed to be Miami’s equivalent to Manhattan’s Park Avenue. In years to come it will become known as Miami’s luxury neighborhood. It is located directly west of I-395, also known as the MacArthur Causeway, which leads straight into South Beach.Museum Park, formerly known as Bicentennial Park, which is the green piece of land directly east of the The Fantastic Four, will be redeveloped by the Miami Art Museum and the Miami Museum of Science and Planetarium to be transformed into a world-renowned park. It may not seem like a lot of land from the picture above but it is actually comprised of 30-plus acres. The luxury condo buildings in Park West are walking distance to the American Airlines Arena, the newly constructed Carnival Center for the Performing Arts and Bayside Marketplace.

In future months, as closing dates approach, there will be many opportunities to buy into these four buildings at discounted prices. Condo units in these buildings, as well as the thousands of other units coming to market in Miami over the next 18 months, were heavily purchased by investors. Their plan was to flip each condo unit for a profit prior to closing, but demand dried and prices headed south. Many will end up walking away from 20 percent deposits and instead write it off on their taxes. Closings at Ten Museum Park have already begun and Marina Blue should begin theirs towards the beginning of August.

The following pictorial review will give you a closer look at each of these buildings as they appear today:

Marina Blue

900 Biscayne Bay

Ten Museum Park

Marquis

Note: Watson Island offers the best views of both the Miami and Miami Beach skylines. With the exception of Parrot Jungle and the Miami Children’s Museum, it is a wonder how this land has remained vacant for so long. Flagstone Property Group is supposed to develop a mix-used project known as Island Gardens, with hotel, restaurant and retail space as well as a a “50-slip mega-yacht marina that would accommodate yachts of up 450-feet long”. I haven’t heard of any progress in over twelve months and it doesn’t appear as though anyone has broken ground on the land that I stood on today.