BrickellHouse Parking Trouble: How Have Sales Values Been Affected?

Back in early November, residents at Brickell House condominium in the Brickell Financial District were shocked to receive news from the condo association that their “state-of-the-art” robotic parking system would cease to function due to a disagreement between the builder and the operator of the system.

While the news of the service interruption was a surprise, the issue between the building and Boomerang Systems was not. The parking system that was installed in 2014 never worked properly, and the morning ritual of retrieving cars could sometimes take upwards of an hour per resident. The building had done their best to appease the residents, offering free Starbucks coffee during the lengthy wait times, reimbursement for Uber trips and reimbursement for alternative parking arrangements, but the elephant in the room remained. The building had a major problem.

After scrambling to find alternative arrangements for the residents of the 374 apartments, the parking company continued to demand $50,000 per month as a fee for operating the system and $100,000 in back payments. The building resisted the payment as the delays continued to grow as the building continued to fill with residents. According to the South Florida Business Journal, US Bankruptcy Judge Mary F. Walrath settled the dispute on December 21 by cancelling the contracts for purchase, installation and maintenance of the parking system but allowing the building to hire another company to manage the equipment & software that is already on site. In the meantime, the temporary parking solution remains in place.

While the building is busy looking for a new parking service company, many are wondering what will happen to the sales and rental values of the building? 

Now that the market has had a few months to reflect the aftermath of the dramatic news, we are happy to see that not much has changed in the sales values. According to our BrickellHouse Statistics page, the sales figures have steadily risen since the building opened in late 2014.

Over the previous 3 months, the average price per foot has been $641/foot for sold condos, up from $611/foot over the last 6 months and $595/foot at building opening. There are also 4 apartments that have executed contracts that are still in process. The rental market has also steadily grown with 18 new leases in place over the last 3 months, 56 leases in the last 6 months and 143 over the last year.

While we are sure the parking situation is inconvenient for all involved, it is a relief to see that the building is holding its value as planned. Once the parking debacle is resolved, we are confident that the building will be revealed as an even better investment for the long-run.

Related Group Construction Update

The Related Group is looking to start 2016 ahead of schedule. This morning Carlos Rosso, President of Related’s condo division, shared these construction photos of SLS Lux, Brickell Heights, SLS Brickell and the Paraiso mega-development.

Above, you can see Brickell Heights and SLS Lux. Brickell Heights is the two towers under construction in the center of the photo. The tower to the right is Brickell Heights tower 1. This phase is sold out except for a few penthouse opportunities, Brickell Heights 02 is 85% sold out with select residences and penthouses remaining for purchase. This project is scheduled for completion in late 2016.

SLS Lux is the shorter tower to the right of Brickell Heights. The construction began more recently than Brickell Heights and it is scheduled for completion in the fall of 2017. This project is nearly sold out as well with roughly 20 residences remaining and penthouses. Upon completion, SLS Lux will be 57 floors and Brickell Heights will have 49 floors in each tower.

Above, you can see SLS Brickell. This one is topped off just in time for the new year and has been sold out for some time with the exception of a couple of penthouse opportunities. The construction schedule shows SLS Brickell being completed in the spring of 2016.

Below is a great angle to see the impressive size of the Paraiso Bay mega development in Edgewater. This project features 4 towers on 4.6 acres that will begin to be delivered in late 2016. The four towers are Paraiso Bay, Gran Paraiso, One Paraiso and Paraiso Bayviews.

Bravo to Related for pushing the projects & heading toward the finish ahead of schedule! We can’t wait to see the neighborhoods continue to grow. We are happy to help should you be interested in any of the remaining opportunities in the projects.

DEAL ALERT: Developers Offering Attractive Close-Out Pricing on Existing Condos

While the market is buzzing with attractive pre-construction investment deals, not many people think to inquire about the buildings that are existing and still have a bit of inventory. For some investors, these existing buildings can bring a better investment than the speculative development deals that others are flocking to. The close-out phase of an existing building is actually one of my favorite times to sell in a project for a few reasons:

1. Mitigated Risk
   The investor can see the actual building and apartment they are buying, so much of the risk of the design and construction phase has gone by. Since the apartment exists already, the buyer knows exactly what they will receive, not a photo of a building that they hope comes to fruition the way it is shown in the rendering.
2. Faster Return
   If you buy existing inventory for purposes of a rental investment, you can lease the property immediately. You will be able to see your money work for you straight away while other investors wait to see how their investments will perform after the building is completed.
3. Financing
   Mortgages become far easier after half of the apartments in a development have closed. Since the lender can also see the building, they know what their risk is and are more willing to lend money with lower down payments. This is true for both local and international investors.
4. Flexibility
   Developers are investors too, and when they are in the close-out phase they are almost finished with their project. I don’t care how many people say that there is no emotion in business, that is wrong. There is something emotional about being close to the finish line and that makes developers more eager to sell those last apartments to get to their goal. Many times we see developers offering HOA credits, discounted prices and special leaseback programs to entice buyers into helping them reach their goal. If buyers can reach their goals by helping developer reach their goals, isn’t that a perfect scenario? I think so…

With these points in mind, I have a prime example of a building that is currently in this situation.

City24 is a boutique luxury building in Edgewater with 119 apartments. It was originally built in 2008 and has all of the amenities and finishes that residents of the neighborhood have come to expect. There is a 24 hour doorman, gym, pool & jacuzzi, secured garage parking, the apartments have stainless appliances and quartz countertops with tile or wood floors, washer/dryers in the apartment, pretty views, easy accessibility to restaurants and fun events… the things we look for in the Downtown Miami area.

Out of the 119 original apartments, the developer needs to sell only 6 more in order to be finished. We have toured the remaining 6 and have not seen a reason that these specific apartments remain unsold. The developer is offering the full inventory for $2.5M, which works out to roughly $385/square foot. Naturally, if one investor were to purchase all 6 apartments, a lower price or additional perks would be considered.

At the offered price, the remaining apartments would equate to a pre-tax return of 5% when rented for full market value. The typical investment apartment in the area today brings a 3% return, so the buying investor would start off with an advantage on this package. Additional parking spaces, HOA credits or price negotiations would help the both the buyer and the seller while making good use of the property.

If you would like more information on specific apartment numbers, sizes, prices or packages, don’t hesitate to reach out. We can work together to present a package that meets your investment goals on this or similar projects.

Developers Offering Year-End Incentives to Close Out Projects

In an effort to hold the attention of buyers and sell as many apartments as possible before the end of 2015, developers are coming out with attractive incentives packages to help buyers decide to act now and close out their projects. Here are some of our favorite incentives from buildings that are currently under construction and selling pre-construction residences:

Brickell Heights – Related has lowered the down payment requirement to 30% from the original 50%. Prices of remaining inventory start in the $400,000’s.

SLS Lux – All of the condo/hotel apartments are currently under contract, but the developer is offering upgraded kitchens on the remaining condo residences and 30% down payment. The penthouse collection has recently been released and sales are almost finished. Prices start in the $600,000’s for the remaining units.

Paraiso Bayviews – All four towers of the Paraiso development are currently under construction and Paraiso Bayviews is 95% sold. For select apartments, the developer is offering a finishes package with porcelain flooring throughout. The prices currently start in the mid $500,000’s up to the high $600,000’s and penthouses are priced between $639,900 to $1.75MM. The developer has not officially offered deposit flexibility but has indicated that it is possible on a case-by-case basis.

Hyde Midtown – The construction of Hyde Midtown has only just started in recent months, but close out is fast approaching. Prices on remaining inventory start in the $400,000’s and the sales team has offered some flexibility on the 30% down payment on a case by case basis.

We were very happy to see these flexible down payment options, as it will make new condo purchases more accessible to those who hope to live in the apartments. The incentives also help to allow for the possibility of financing the condo purchases, which many people have inquired about yet been unable to easily attain until now.

Let us know if you or someone you know is interested in more information on these or other developments. We will have team members in Miami during all of the holidays and until the end of the year to help visitors by appointment.

Investment Opportunity: South Beach 1 Bedroom, Walking Distance to Lincoln Road with Low Monthly Fees

Just in time to wrap up 2015, we are excited to offer this 1 bedroom investment property in South Beach.

The Sherita Condo is a boutique development of only 28 apartments at 1840 James Avenue in South Beach. It was originally built in 1952 and is walking distance to both Lincoln Road and the Miami Beach sand.

Today we listed a 1 bedroom apartment in the complex that is rented until March 31, 2016 for $1,400 per month. The second floor apartment has been updated with laminate wood floors and is offered for $230,000. The HOA fees are $325 per month.

Reach out if you would like additional information on the lease, property or opportunity. We are happy to show the property so long as we can give the tenant 24 hours’ notice of the appointment. Here are some additional photos of the apartment:

Week in Review: Brickell City Centre Reveals Climate Ribbon & Other News…

Week of December 6-12, 2015.

We survived the 13th Art Basel in Miami Beach, drawing record breaking crowds as well as record breaking rain. Despite weather and crowd-related delays and a bit of drama, the yearly art fair drew an estimated 77,000 visitors from around the world and the festival was a success. [NY Times]

Brickell City Centre put a pause on construction to host a beautiful party unveiling their $30 million climate ribbon. The ribbon is designed to filter the tradewinds from the Biscayne Bay into the development, cooling the shoppers and redirecting rain water to the landscaping. [Curbed Miami]

PMG gained approval to build a 1,049 ft tower at 300 Biscayne Boulevard. This would make the new tower even taller than the originally planned 93 story Empire World Towers that was previously proposed for the site. [The Next Miami]  The original plan for Empire World Towers was abandoned after the original developers were sent to prison for tax evasion and fraud. [South Florida Business Journal]

Miami Riverfront land is one step closer to being a more usable & pedestrian friendly shopping/culinary destination. Riverside Wharf would have a fish market, restaurants and a public riverwalk. [Miami Today]

Speaking of the Miami River area, David Beckham finally found a spot for his new soccer stadium. The new & approved location is in Overtown, just bordering the Miami River District and close to highways, public transportation and Downtown Miami. The area has often been overlooked until now, we are excited to see the changes that the stadium will bring! [ESPN]

Moishe Mana has been busy in Downtown Miami. He closed on two more sites this week and now owns over 800,000 square feet of space in the area. We can’t wait to see his plans once he reaches his goal of acquisition in the area near Flagler Street in the historic area of Downtown Miami. [The Next Miami]

Boulevard 57 Bringing Contemporary Design with MiMo Flare to Upper Eastside

Miami’s Upper Eastside neighborhood is preparing to ring in the new year with new neighbors… 107 new neighbors. Unitas Development Group is preparing to launch the sales of their MiMo-inspired midrise development at 5700 Biscayne Boulevard, appropriately named Boulevard 57.

Sieger Suarez was commissioned to design the development, bringing MiMo-inspired design with contemporary finishes and amenities. The project will be 8 stories tall with 107 residential apartments and 40,000 square feet of retail space on the ground level. It has been mentioned that the developers will be seeking a Trader Joe’s/Whole Foods type anchor for the retail space.

Despite previous reports that sales would begin in the summer/fall of 2015, the project will quietly launch in January 2016 with friends and family prices followed by a larger offering in the early spring. Residences will range from 1,100 square feet up to 4,800 square feet and penthouses will include rooftop pools looking out to the Biscayne Bay. Since the development immediately east of Biscayne is single-family residential, the upper floors will have views to the bay.

Boulevard 57 will tie together the historical MiMo District to the north with the booming retail area in the Design District to the south, offering high-end condos with high design, location and finishes. Prices are expected to range from $550,000 for  one bedroom residences up to $3,800,000 for penthouses with rooftop pools.

See below for additional renderings of the design:

Wind by Neo and Latitude on the River Sue Manufacturers for Faulty Fire Sprinkler Systems – What Does This Mean?

As reported by the Miami Herald, at least two condo towers in the Brickell area have been discovered to have faulty plastic pipes in fire sprinkler systems that protect the high rise towers. Lawyers for the condominium associations at Wind by Neo and Latitude on the River (pictured above) have filed a federal lawsuit against Lubrizol, the Ohio-based sprinkler system company that installed the systems during the development phase of the buildings.

According to the lawsuit, the plastic pipes were made of CPVC and contain a resin that breaks down when combined with other common building materials. This causes leaks, cracks and a loss of pressure. Just a few months ago, residents of the Wind by Neo woke up to water pouring into their apartments, damaging several floors of the 41 story tower. More dangerous still, the subpar materials could cause the fire safety systems to not function properly in the event of a fire. According to the lawsuit, an engineer for Lubrizol warned the company of the issue after seeing damaged pipes from buildings across the country. The company officials decided at that point to not disclose the defects. Officials at Lubrizol have not yet commented on the issue.

So what happens now?

Attorneys for the building are estimating the cost of repair to be in excess of $50 million – $70 million at  each building, and the issue could spread to other developments built around the same time as well. The issue could grow as large (if not larger than) the Chinese drywall issue of recent years. Remediation is lengthy, costly and complicated.

While the attorneys, condominium associations and manufacturers sort the issue out, what happens to the residents of the 943 apartments in the two towers? The Wind (located at 350 South Miami Avenue) has 489 apartments across 41 floors while Latitude on the River (located at 185 SW 7th Street) has 454 apartments across 44 floors. It has not been announced yet whether the residents will be able to remain in their homes during the remediation period, but we imagine that insurance companies would take issue with the risk.

Until the issue is resolved, lenders will not issue mortgages for apartments in the affected buildings, driving the prices down as cash-only purchases will be required. The extent of this adjustment is to be seen, since many of the resales in the area are already cash-only purchases.

At Latitude on the River, over the last 90 days, there have been 5 total closed sales with 1 being financed. The financed purchase was for a 1 bedroom apartment (Unit 1908) at $332/square foot. The average of the 4 cash purchases was $328/foot.

At Wind by Neo, there were 7 total closed sales in the same time period with only 1 being financed. The financed purchase was a 2 bedroom at $375,000 or $349/foot. It was Unit 2803. The average for the 6 other purchases that were cash came in at $341/foot.

Right now, it seems that only a small discount is rewarded to those who are buying without mortgages, but we are curious to see what will come in the future as the remediation gets underway.

Back in 2012, Latitude on the River was faced with a similar class action suit when Chinese drywall was discovered in a handful of the apartments. During that time, the market was on a steady increase after the crisis of 2008 and the building continued to increase in value along with the other properties in the neighborhood, albeit at a lower price than properties with similar layouts, views and amenities. Given that the average price per foot of resale properties over the last 3 months in Brickell is $432/foot, it seems that the trend continues.

We will continue to watch the affected buildings as more details come and will be available for anyone who would like to speak about individual scenarios.

Fully Furnished 3 Bedroom Condo at Trump Palace in Sunny Isles Beach – $2.495M

Your paradise retreat awaits you. Wake up each morning to the sights and sounds of the beautiful Atlantic Ocean. A relaxing stroll down the white sand beaches is just an elevator ride away.

Welcome to Unit 3604 at Trump Palace – an impeccably designed, contemporary masterpiece with nearly $800,000 spent in renovations, furniture, and electronics. This flow-through residence includes 3 bedrooms, 3.5 baths with 2,167 interior square feet plus two spacious balconies and offers direct, breathtaking views of the Atlantic Ocean. Property features include: a private elevator and foyer; 10-foot ceilings with floor-to-ceiling glass windows; Sonos surround sound system; renovated kitchen with custom Italian cabinets and high-end appliances by Sub-Zero, Gaggenau, and Miele; custom half bath with stone tiled walls; and custom master bathroom with a white pedestal tub, glass-enclosed shower with rainfall shower and body jets, and side vanity for makeup and hair.