VIDEO: Paramount Miami Worldcenter Construction Update
Paramount Miami Worldcenter from the north side construction entrance April 25, 2017.
Phase one vertical construction is now underway at Paramount Miami Worldcenter, according to the developer. The seven story pedestal has reached its final height at a rate of about one floor per week, now they begin construction on the tower portion of the project. When completed, the residential tower will bring 522 residences to Downtown Miami in a glistening 60 story tower atop a 27 acre high street retail promenade. The tower boasts the most amenities of any residential tower in the world.
The residential condos are currently 62% sold at an average of $650/square foot. Some of the available purchase opportunities that remain are:
a 1,095 square foot 1 bedroom with a den at $626,000 is the least expensive apartment currently available. Considering the typical 1 bedroom in the area is 700-800 square feet, this would probably be considered a 2 bedroom in many competing developments.
Two bedrooms start at $1,287,000 for a 44th floor apartment with 2 bedrooms, 3 baths and a den over 1,753 square feet.
Three bedrooms start at $1,581,300. There is one available on the southwest corner that is 2,230 square feet and has 3 bedrooms, 4 baths and a den.
The entire project is expected to be finished in 2019. Here is a video that Bryan Glazer put together that shows the scope of the project and offers a preview of how much the neighborhood will change with its addition. Last year, the developer also released a movie preview that highlights the projects amenities in dramatic form. I am very excited to see this one start to take shape!
Video overview of Paramount Miami Worldcenter by Bryan Glazer
Market Stat Monday: Quantum on the Bay
After the positive reviews of my Miami Riverfront Market Statistics article last week and similar feedback to previous market stat posts, I’ve decided to try something new and make it a regular thing. Monday is now Market Stat Monday on the Miami Condos Blog. Each week, I’ll take a look at a different neighborhood, area, or a building. If you have a building or area that you would like to see featured, just let me know. I’m happy to do it and enjoy digging in the numbers.
One of our social media followers suggested that I take a look at what’s going on inQuantum on the Bay. I haven’t written about Quantum in awhile, so agree that it a good place to start. For those who don’t know, Quantum on the Bay was developed by Terra back in 2008. It is located across the street from Margaret Pace Park and is situated in a way that most every apartment has at least a partial bay view, but many have a big, open view of the bay. Because of the park, it used to be a very popular place for people with pets, but the condo association stopped allowing pets for tenants. Owners may have pets, but not tenants (unless you have a support animal). The building has 2 towers and 698 residences.
Despite the beautiful views and convenient location, Quantum has not been free from drama. They had to sue the developer in order to be repaid for the repair of some construction defects.They won that lawsuit and threw a party. The party was barely cleaned up before a tenant slapped the association with alawsuit for price gouging on move-in fees. I was really wondering how long it was going to take for that to happen somewhere. Almost all of the buildings do it and the tenants always complain but nobody has gotten mad enough to actually sue over a few hundred dollars.
SALES MARKET
So, let’s see how the building is doing. There are currently 86 active sales listings in Quantum. That’s just over 12% of the building, which isn’t so bad. But with only 7 closed sales this year, that’s 43 months of inventory. On the bright side, the units that did sell received 96% of their asking price, so at least it’s not a bloodbath. There is just a lot of competition for buyers, who are more scarce.
The units that closed did so for an average of $357/square foot. The least expensive was a 1 bedroom on the 36th floor for $250,000. In an interesting turn of events, a 3 bedroom with 1,620 square feet sold for $535,000, less than a two bedroom with a direct bay view. The two bedroom sold for $540,000 on the 27th floor and another for $570,000 on the 39th floor. That’s interesting to see how a direct bay view does affect the price of an apartment more so than an additional bedroom. 1,620 square feet is really an enormous apartment in this area. There are 8 contracts waiting to close.
For the buyers who are still looking, there are studios available with partial bay views starting at $220,000, a one bedroom on the 40th floor with a partial bay view is offered starting at $257,000 and two bedrooms with partial bay views start at $380,000. Three bedrooms start at $524,000 or $350/square foot and there is a 3 bedroom penthouse available for $950,000. These prices are relatively the same as they were two years ago (when I last had an active buyer in the building). I’ll save the trends for a future post.
RENTAL MARKET
Just like at the Miami Riverfront, Quantum on the Bay’s rental market is also far healthier than the sales market. There have been 54 rentals this year so far at 98% of the asking price. The average price of a closed rental is $2.37/square foot. The individual prices were:
Studios: As low as $1,500/month.
One bedrooms: Starting at $1,675 for a 35th floor apartment with 663 square feet and a little bit of a water view.
Two bedrooms: There was one rental at $2,250 for a two bedroom, but I have a feeling this one is an outlier. The remarks said that the property had to be taken “as-is”, so I imagine it was either filthy, needed painting or had something else wrong with it. The next least expensive unit was 2711, which rented for $2,300/month with a partial bay view.
Three bedrooms: as low as $3,100/month.
There are 38 available rentals listed, so just under 3 months of inventory for tenants. There are 18 units that have a contract signed and are waiting for move-in day.
All in all, it looks like things are picking up for Quantum. I feel like that once the association straightens up and the lawsuit over their application fees settles, the sales market will pick up also. Litigation makes things very difficult for sellers, since most banks will not finance transactions in buildings with legal drama.
We’ll see you next week with another report! Which building or area should we dig into next week?
Investing In Condos For AirBnb Income Is A Risky Idea
Despite Miami Beach’s crackdown on AirBnb properties, we receive regular calls from hopeful investors who want to buy properties in order to lease them out on the short term rental website. It is important to understand the risks involved in breaking the rules with hopes of high returns.
Miami Beach Crackdown
Because AirBnb rentals do not contribute to the hotel taxes that largely fund Miami Beach and they take away from the bookings at hotels, they are strictly outlawed. The government is in the midst of a strict crackdown of the policy, levying $20,000 fines on investors who break the rules. That’s $20,000 PER OFFENSE. Unless you’re leasing a $25 million waterfront mansion for $8,000/night to Kylie Jenner, the risk is just not worth the reward.
Many condo associations prohibit rentals of less than 30 days, or even less than 6 months. Some older buildings require owners to wait 1 to 2 years before leasing their condos. It is important to be clear about the rental policies of buildings prior to investing, because your bottom line will be affected if the policies don’t line up with your investment goals.
But what happens if you ignore the condo association rules and continue to lease your property on AirBnb? According to our contact at the management office at Infinity at Brickell, where the minimum lease term is 6 months, fines of $100 per infraction are issued to the owners of the apartments that get caught. He said that it is also not uncommon for visitors to be given violations for failure to obey conduct and noise rules in addition to giving themselves up for being nightly renters by treating the front desk like a front desk at a hotel. Eventually, the fines add up to make the investment not profitable enough to continue.
Some other buildings are taking enforcement a step further. Mint at Riverfront requires each applicant to sign an acknowledgment of the rules pertaining to short term rentals. MarinaBlue has posted a sign at the front desk alerting visitors that short term rentals are prohibited and violators will be removed from the premises.
With condo buildings, the issue is about security rather than the hotel tax. Each resident in a condo building must undergo a background check to ensure the safety of all residents. If one condo owner (or tenant) sublets their unit to vacationers, this security measure is compromised.
Renting A Condo To Use As AirBnb Rental Investment
The investors we’ve seen are not only buyers who purchase with the intention to run a short term rental business. We have also seen entrepreneurial tenants inquiring about a strategy of leasing a furnished condo and then subletting it online. This is not only a violation of the City (if the property is in Miami Beach) and condo association policies, but it is a violation of the lease terms. Most Florida leases do not allow subletting, putting the tenant at risk of eviction and penalties.
Landlords who keep yearly tenants have already picked up on this strategy and have begun to screen potential tenants for risk of violation of the subletting section of the lease, but I anticipate more buildings will follow suit with Mint and MarinaBlue over the coming months even if the City of Miami fails to pass their ordinance outlawing short term rentals.
******Update: One Miami East and West have both jumped on the bandwagon with the following stern message to residents, sent today.
February 16, 2017
Dear One Miami Residents,
As the Associations have previously notified you, short term rentals are not permitted in One Miami for periods of less than thirty (30) days. Despite such prior notifications, we have received numerous complaints that certain owners and tenants are in fact renting their units for short term stays in direct violation of the Associations’ governing documents, whether through websites like Airbnb or on their own. The Associations’ have sent (and will continue to send) violation letters to such owners and tenants who are committing these short-term rental violations instructing them to cease and desist from such actions immediately. The next step will likely be for the Associations to file lawsuit(s) against such owner(s) or tenant(s) without further notice. The Associations also reserve the right to deny access to any such unauthorized parties who may be renting from owners on a short-term basis.
We again remind all Members that the Associations’ take such issue very seriously. Therefore, if you are engaging in such improper conduct, please cease and desist from the same immediately. Additionally, if you are aware of a short-term rental violation that is occurring in the building, please report the same to management. Thank you for your assistance.
Sincerely,
Board of Directors of:
One Miami East Condominium Association, Inc.
One Miami West Condominium Association, Inc.
One Miami Master Association, Inc.
January 2017 Brickell Real Estate Market Update
This is a very interesting time in Miami’s real estate market and we are going to start doing more regular market updates of the various neighborhoods and even individual buildings. We’ll start with Brickell, but don’t hesitate to reach out and make a request if there is a specific neighborhood or building that you are curious about.
SALES MARKET
January 2017 brought 41 closed sales in Brickell, according to MLS data, down from 66 in January of 2016. These were seller to buyer transactions, not developer to buyer transactions, since developer to buyer transactions are not reported in the MLS. We will do a separate post with developer-buyer transactions for each building as they open and the sales are recorded.
Although the number of transactions fell, the average price rose to $514,000 for those 41 closed sales. 2016’s average price was $500,000. The average price per square foot also rose to $412/square foot, up from $401/square foot last year. The condos that found buyers had an average time on the market of 163 days, last year was 114 days. It seems the longer marketing time and increasing inventory choices for buyers has made the sellers more eager to sell. The buyers who transacted were able to negotiate down to 92% of the asking price this January, down from 97% of the buyers who bought last January.
The most expensive listing that sold this month was Tower Suite 3801 in Reach at Brickell City Centre. It sold for $1.95M and was offered at $2.1M and the buyer was represented by our very own Lucas Lechuga. We did an in-depth look at the numbers from that transaction last week. The least expensive sale of the month was a $168,000 studio at Brickell’s original condo building, the Four Ambassador.
As of today, there are 1,888 active listings in Brickell (300 of which are new listings in January), averaging $725,000 and $508/square foot. If we continue selling at this rate, we have enough inventory for 46 months of business. With this amount of available alternatives for the buyers, the sellers who are eager to move on from their units need to not only price them aggressively but also hire an agent with strong marketing power so that you stand out from the crowd.
RENTAL MARKET There were 306 new leases signed in January of this year, up from 264 in 2016. The average rental price is $2,466/month, basically the same as last year’s $2,440. The 306 landlords who found new tenants beat out the competition of 1,442 alternative active listings, 465 of which were new listings.
Although the number of transactions is up and the prices are holding firm, the marketing time is increased this year to an average of 79 days on the market. Last year it took an average of 65 days to find a new tenant and move them in.
Tenants should not smell blood in the water yet though. The 306 leases that were signed garnered 96% of the asking price, so lowballing isn’t a thing just yet. The landlords who are not into 2+ months of vacancy are pricing their units well and finding a tenant quickly.
The most expensive rental of the month was the Four Seasons Residences Unit 44C. That one rented for $9,750/month. The least expensive was a studio at The Club at Brickell Bay for $1,400. It is important to note that the entry-level apartments in the neighborhood are less likely to negotiate price. Brickell is increasingly a hot neighborhood, so the entry point options are very much in demand.
What trends do you anticipate for Brickell? Weigh in and we’ll follow back up next month!
Miami’s Rental Market Is In Decline, About To Be Flooded. What Does This Mean For You?
The rental market in the Downtown Miami area is in for a jolt, according to an inventory report from the Downtown Development Authority. Many people expected that rental prices would begin to decline in 2017 as the new luxury condo buildings begin to open. As of the third quarter of 2016, the prices were already beginning to decline after buildings such as The Bond at Brickell and SLS Brickell began to open, flooding the market with new options for prospective tenants.
What many people did not see was the influx of new rental buildings that are going to start being delivered in 2017. A few have already come to market, but 2017 promises a whole new array of choices for tenants. Landlords are fervently trying to keep their tenants if leases are coming up for renewal, but many of the options are too good to pass up. In 2016, we saw 3,748 new condo units come to the market and 1,038 additional units in rental-only buildings. 2017 will flip that number, with 2,774 new condo options and 3,575 new units in rental-only buildings.
What to do if you are a tenant?
Don’t be greedy. While the market is in decline, the condos for rent in Miami are not going to rent for fire-sale prices. Yes, you may have more leeway in negotiation than once before with condo units, rental-only buildings typically do not negotiate their prices. Rather, they are pre-set at the beginning of each day based upon an algorithm in their computer software.
A quick move-in is worth a lot. If you can offer to move-in as quickly as possible, you will have more negotiation power than if you are shopping several months in advance. I always say that the sweet spot between the contract date and the move-in date is 3 weeks. That gives everyone enough time to get their paperwork together and applications completed. Building applications commonly take 2 full weeks in condo developments. Rental-only developments are commonly quicker, so are a good option if you get in a pinch and need to move even more quickly.
Have ONE agent to represent you. Make sure that person is someone who is well-informed about the market and what is available. That will prevent you from drowning yourself in options and becoming frustrated. Be open with your agent about what features you like and what features you are disinterested in. Let your agent take you to rental developments as well. Many times, we know ahead of time what the availability and rough price ranges are at the rental developments.
What to do if you are a landlord?
If you currently have a good tenant, entice them to stay and treat them well.
Don’t panic, but understand the monetary value of each month of vacancy. Price your available rental on the market as quickly as possible and with a firm that will give you the most exposure.
When reviewing offers, consider reductions based upon the risk of a full month of vacancy rather than holding onto the idea that your condo will earn as much this year as it did in years past. It won’t. If you have a unit that was previously earning $3,000/month and you receive a quick-move in offer for $2,750/month, it would be a good business decision to accept. Otherwise, you could be stuck accepting far less in contract value on top of the $3,000 expense of having the unit vacant for a month.
Negotiate with people who lowball. Run your numbers and decide what is the lowest price you can accept based upon available options for the tenant and the amount of vacancy that you are already into. Not that you will always have to accept that lowest price, but you know how much room you really have for negotiation.
Remember that just like market storms that we have weathered in the past, this one will blow over. The condos will still be beautiful and in-demand afterward. If you need to sell, then sell. Otherwise just be patient until the inventory is absorbed.
2016 Year In Review: The Downtown Miami Area Condo Market (Brickell to Midtown)
Image courtesy of Wanderson Dos Santos
As the sun sets on 2016, let’s review our year in real estate. There have been a lot of reports about the slowing preconstruction market, but what about the resale and rental markets? Here’s a quick breakdown:
Greater Downtown Miami (Brickell to Midtown/Edgewater) saw 1,485 closed transactions this year.
Those transactions amounted to a total of $720 million.
The average price per square foot of all sales ended up being $389/square foot.
The most expensive sale was Pharrell Williams’ penthouse at Bristol Tower, sold by our Madrina herself, Dora Puig, for $9.25 million.
China didn’t show up the way everyone was hoping back in 2015. Chinese buyers only took 11 condos, according to MLS data. Here are the stats from other countries:
Venezuela: 51
Argentina: 50
Brazil: 41
Colombia: 40
France: 13
Mexico: 10
Italy: 9
India: 7
UK: 7
Spain: 5
Russia: 2
Japan: 2
German: 1
USA: 435!
Undisclosed: 791 (We’re looking at you, 791 lazy Realtors. Please do better with logging your sales data in 2017 so that next year’s year-end post will be better.)
What other stats are you curious about? We would love to improve our content for 2017 and offer more of what you want.
Just Listed – Spacious 1 Bedroom Condo at Two Tequesta Point on Brickell Key – Asking $435,000
I am pleased to announce our newest listing – a beautiful 1 bedroom, 1.5 bathroom condo at the luxurious Two Tequesta Point. The 22nd-floor residence has a spacious floor plan with 907 interior square feet; deep balcony to accommodate outdoor dining; large, open kitchen with tons of cabinet space; walk-in closet in the bedroom; porcelain tiled floors; and lovely view of the intracoastal, bay, and cruise ships. With an asking price of $435,000, unit 2207 is priced to sell! Just last month, unit 2007 (two floors lower) at Two Tequesta Point sold for $432,000.
Two Tequesta Point is an upscale condo development with 285 residential units. The 38-story tower is located on the east side of the exclusive, gated island known as Brickell Key. Amenities at Two Tequesta Point include: bayfront pool, tennis courts, racquetball courts, 2-story fitness center, BBQ area, children’s playrooms, 24-hour security and concierge, billiard room, valet parking, and more.
For showing requests or any questions that you may have, I can be reached on my cell phone at 786-247-6332 or via email at [email protected].
Two Tequesta Point #2207 – Asking $435,000
IconBrickell Pool Closure Begins December 5
Over a year after we first reported the pool closure at IconBrickell, they have finally given the dates for the work to begin. In a letter to residents this week, the condo association has announced that starting December 5, the pool will be inaccessible for approximately 12 months. Surprisingly, the condo association did not make arrangements for an alternative pool for the residents.
Anticipation of the repair and special assessment have sent sale and rental prices in a tailspin. Sales prices in the last 90 days are averaging $426/square foot. Just a year ago, apartments in the project were closing at $584/square foot.
Rental prices have also been in free-fall. Unit 4103 in Tower 2 rented in 2015 for $5,300. This year, it rented for $3,800 after 5 months on the market. In Tower 1, unit 4104 rented this month for $2,000, down from the $2,600 that the landlord received last year. It doesn’t help matters that there are currently 180 available rentals on the market. Since 24 apartments rented in the last 30 days, it will take over 7 months to absorb all of this inventory.
On the bright side, this is a fantastic opportunity for investors who are looking for a long-term hold or for those who are looking for a great price on a vacation home. While the values are depressed now, I fully expect them to rebound when the amenity deck reopens. There are still plenty of sellers who need to move on from the properties for personal reasons, or investors who are not able to wait out the storm. How much lower do you anticipate the prices will fall? We are happy to help if this situation is an opportunity for your investment goals.
Tenant Sues Condo Association For Price Gouging On Application Fees
Quantum on the Bay
A tenant at Quantum on the Bay in the Omni district finally did something about the high application fees that are being charged to prospective tenants, according to the Miami Herald. He is suing them because their application fees are in excess of the $100 cap that the Florida statute issues.
This has been an ongoing problem for tenants in many of the Downtown area buildings for several years. Some condo associations use these elevated fees in order to avoid having to make a special assessment on the unit owners for repairs or upgrades. The association at Quantum once had a $400 application fee, but it was later reduced to $150 after so many potential tenants complained. In order to continue bringing the income that they once received from the application fees, they split it into the application fee plus the administrative fees. Some other buildings have ‘impact fees’ of $500, but Quantum is one of the highest priced buildings in the area for a tenant to apply for.
Even though it is not lawful for a building to charge these exorbitant fees to tenants, many still do. The tenants really have no choice but to accept the fees. Protesting only causes delay and added expenses. If they miss their move-in date, they would need to stay at a hotel until the issue is resolved and there is still no guarantee that it would be resolved in their favor without a lawsuit. The Government Affairs department of our Miami Association of Realtors has been lobbying in Tallahassee for some time already, trying to convince them to enforce the laws.
Now, most buildings also charge a security deposit for the common areas and for pets, but that is different. Security deposits are returned. We typically see a security deposit that is held through the duration of the lease in order to guarantee there will not be damage to the common areas, a smaller security deposit for the actual move to guarantee that the elevators and hallways are not damaged by the movers and/or a pet deposit to the building.
You can read more about the Florida Condominium Act here, so that you know your rights. While it seems that Quantum is being singled out, this is a large problem throughout the marketplace and something that we are striving to change. On a day to day basis, the best we can do is see that our clients get settled as peacefully and efficiently as possible. On a larger scale, we are very much a part of the efforts from the Miami Association of Realtors to bring change to this practice.
