53-Story Tower Proposed In Omni District

1775 Biscayne Development Site

Miami’s Urban Review Design Board is considering plans for a new 53-story tower in the Omni area near Downtown Miami. The 47,500 square foot lot is located at 1775 Biscayne, just across the street from the Omni Publix location and directly to the west of Opera Tower and Aria on the Bay. The tower is said to feature 444 residential units, 200 hotel rooms, 45,600 square feet of commercial space, 64,500 square feet of office space and 546 parking spots, according to the South Florida Business Journal. It is being called simply, “V.” As of now, it is unclear whether the residential units will be condominiums or rental units, but we do know that the tower is designed by Kobi Karp.

1775 Biscayne Boulevard V

It is also unclear whether the owners actually intend to develop the building, or if they are simply attempting to increase the value of the land by going through the approval process before selling. This is a common tactic for people who do what is called “land banking”. They purchase the land and hold it until the value increases and infrastructure goes up around the lot. At that point, they undergo the approval process so that the ultimate buyer can purchase the land PLUS the approvals (the approvals are notoriously tedious and expensive to obtain).

Another example of this tactic is the current site of the Mexican Consulate in Brickell at 1399 SW 1st Avenue. Back in 2016, plans emerged for redevelopment on the lot just to the west of Infinity at Brickell, but no developer was named (see photo below). Fast forward to August of 2017 and the 44,500 square foot build site was purchased by a developer for $31.75 million despite the fact that the consulate has 5 years remaining on their lease.

Mexican Consulate Lot Brickell

Another likely example of this tactic is the plan for the building dubbed “18” that was released earlier in the year. It is a 78-story mixed use tower that was to go up on the lot at 10 SW 8th Street, just between Brickell Heights and Brickell City Centre.

Related Group has clearly passed on the opportunity to purchase the lot, for now, but they know that something will certainly be built there. The evidence is that the Fabian Burgos mural does not cover the north side of Brickell Heights, I had the opportunity to ask Carlos Rosso, the President of Related Group’s Condo Division, what he thought of the project. He said that he did not see it going up, the renderings are pretty but the lot size would deem the tower structurally impossible. Meanwhile, the tenants in the strip center have reported that their leases include a development kickout clause in case the owner finds a buyer.

What do you think? Will these towers be the first of our next development cycle, or is it all smoke in mirrors?

18 Tower Brickell Miami

Market Stat Monday: 1800 Club

1800_Club1.014

Last week, we had the first official installment of the Market Stat Monday series. We checked in on Quantum on the Bay, which is in the process of overcoming some legal battles. One of our readers suggested that we skip next door this week and look into the less dramatic yet equally beautiful 1800 Club, so here we are.

For those who are new to 1800 Club, it was built in 2007 and has 469 apartments within 42 stories. It is a full-service building, pretty much standard to the area. The amenities include pools, gym, 24 hour doorman, valet, and a party room. The building is quite lovely and is also well-kept. It was actually one of the few buildings in the market to earn FHA approval, so FHA buyers could purchase there with low down payment loans. That approval is notoriously difficult for condo buildings, and sadly it expired for 1800 Club in 2014, but the fact that it was achieved speaks volumes of how the building is run. Today, the FHA certification has not been renewed, but there are conventional mortgage programs that allow up to 95% financing on purchases in the building.

There are currently 32 active listings for sale, so 7% of the total units are available for purchase. The average price per foot ranges more drastically than most buildings. The lowest-priced unit is listed for $295/square foot and the highest price per foot is $511/square foot. If you’re curious why the gap in pricing is so large, it is because the units in this building have a very different mix of layouts and views. Apartments on the east side of the building have direct bay views, apartments on the west side have sunset views and those located on the south side of the building have partial bay views but also look into the nearly-completed Aria on the Bay. Also, all of the one bedroom plans have either the west view or south view. There is one line that has two bedrooms and a west view, but most of the two bedrooms have south or east views. Because the layouts and views are so starkly different, I’ve decided to pull the statistics for each segment of the building.

WEST FACING UNITS

There are currently 7 units on the market that face west. These have beautiful sunset views and the asking price averages $380/square foot. The least expensive is apartment 2902, an 841 square foot 1 bedroom that is offered for $278,900 and includes a $2,000 credit toward new floors (the wood laminate that is now in the apartment is pretty damaged). The least expensive two bedroom is on the 31st floor and is offered for $429,900 with marble floors. The most expensive two bedroom is the same floor plan on the 36th floor for $525,000 that has been completely remodeled.

On the west side, we have seen 3 closed sales since the beginning of the year. These have closed at an average of $323/square foot and the sellers have received an average of 96% of their asking price. The least expensive was unit 1602, which is a 1 bedroom that sold for $260,000. I found the listing photos of this unit to be very misleading. The agent took photos of the bay view from the pool deck but did not specify that they were not taken from the unit itself. An uneducated or underrepresented buyer could easily be led astray with photos like this. Tsk tsk.

There are not any sales listings that currently have pending contracts. I have a feeling we will see some price reductions from those who need to sell.

SOUTH FACING UNITS

The south side of the building is interesting because Aria on the Bay is being constructed next door, so many of the sellers purchased their units when the view was very much different. The view is still pretty, just the water view is not as expansive as it once was. There are currently 8 available sales at an average price per foot of $343. The only closed sale this year in this section of the building was unit 2212, which is a 1,374 square foot 2 bedroom layout that sold for $435,000 ($316/square foot).

Just a few floors up, unit 2712 is currently awaiting closing and was listed for $324/square foot. Since buyers are settling for 96% of the asking price, it looks like we’re due for some price reductions before things start to move.

EAST FACING UNITS

The east view at 1800 Club is really a money-maker. All of the plans on the east side are 2 bedroom layouts and 11 are currently available at an average price of $488/square foot. The actual listing prices are $489,000 up to $620,000.

Something interesting that I found is that the only closed sale on this side of the building was unit 1807, which closed for $545,000 ($445/square foot). The lowest price of the available units is unit 1403, a 2 bedroom with 1,142 square feet for $489,000 ($428/square foot). DEAL ALERT!!!

There are two 3 bedroom units available, but I really don’t have anything to compare them to. One is a furnished 01 line that is on the 8th floor (below the pool deck). The other is a 3,082 square foot duplex loft on the pool level. They are listed for $975,000 and $1.29 million, respectively.

Overall, the building is looking at 27 months of inventory based upon closed sales rates. While that’s not a great number, it is far healthier than some of the other buildings we’ve dug into over recent weeks. There have been a total of 6 closed sales in the overall building with an average price of $328/square foot. With 3 closings on the west side, one on the east side, one on the north side and one that was an outlier (it was on level 3 with a very different floor plan), the less expensive west side is the busier side currently. Since there is nothing pending over there at this point, it will be interesting to see what the summer brings us.

WHAT ABOUT RENTALS?

Just like the buildings we’ve seen over recent weeks, the rental market is still healthy at 1800 Club. There is just under 4 months of inventory on the market (20 active listings and 24 have rented since the beginning of the year). The listings are fetching 99% of their asking price and the listings are staying active for just under 60 days on average.

Now as an investor, you’re probably thinking that 60 days is a long marketing period but also consider that many of the listings are activated 30 days before the previous tenant vacates. The paperwork process of moving a new tenant into the building typically takes 3 weeks, so the 60 days on the market statistic isn’t really so bad.

One bedrooms are fetching $1,750/month and up right now, two bedrooms with west views are bringing $2,450/month. The only north facing unit that is available is an enormous 1,810 square foot 2 bedroom that is available for $3,500/month. East views are available for $2,800/month.

From an investment standpoint, I’m giving 1800 Club a gold star. Mortgages are available in the building, layouts are attractive to tenants (and owner/occupants), the building is well-run, the finishes are nice, the location is top notch and the views are beautiful. Pretending that we purchased that $260,000 one bedroom (the least expensive recent sale) and leased it for $1,750/month (the least expensive 1 bedroom recent rental), it would work out to a 4-5% return rate after expenses. Those are really great numbers for the area!

Which building should we look into next week???

Blighted Lots West Of Adrienne Arscht Center To Become Park Space

Image from The New Tropic

The vacant lots around North Miami Avenue and 13th Street in Downtown Miami have been a blighted eyesore for years now, but that is changing as we speak. Brad Knoefler, the owner of Bar 1306 nearby, has made it his business to redevelop these lots into something more usable and enjoyable. With help of the Omni CRA, the area will become a 4 block park space until construction of the 395 flyover bridge begins.

Knoefler isn’t a stranger to redevelopment of park space, he is the man behind the Grand Central temporary park that was located on the site that was once the Miami Arena and near his previous bar/nightclub, Grand Central. For Grand Central Park, he invested $80,000 of his own money and used $200,000 of CRA funds to transform the lot into a skate park, according to The New Tropic. For Omni Park, he vows to up the ante by investing differently. Rather than purchasing landscaping and permanent structures that will ultimately be removed when the park closes, he is investing in structures that can be relocated at the end of the park’s term.

For shelter, they are designing cafes and restaurant spaces from shipping containers and portable chikee huts for shade outside of the trees that already exist in the space. He is working with a $300,000 budget from the Omni CRA that was earmarked for redeveloping blighted spaces.

The project was approved in mid-December and broke ground on January 16. It should open by the end of the month with an opening celebration set for early March. The park will eventually move to another space when it comes time to begin the construction of the new I395 flyover that has been in the works.