Biscayne Beach Receives TCO But Pushes Back Closings
Image by Jennifer Behar Cervera
It has arrived! Biscayne Beach received its TCO (temporary certificate of occupancy) today, one day after it was expected, according to representatives of the developer. They were expecting the TCO to arrive yesterday, but hey… it arrived on “Miami time” and we are very happy to see this step in the right direction.
Due to disclosure guidelines, the closings are able to begin 10 days after completion. Instead of beginning today, they will now begin May 1. Since the initial TCO is for floors 7-35.
What Happens If A Buyer Cannot Close On Their Preconstruction Condo?
The spring and summer of 2017 are going to be an interesting time for Miami in a real estate sense. We are going to see a flurry of new condo developments opening, bringing thousands of new closings (and probably hundreds of new resale and rental listings).
Brickell Heights 01 and Brickell Heights 02 are set to open within the next month, 1010 Brickell will follow shortly thereafter (or maybe they will open before… the two projects are neck and neck). Up in Edgewater, Biscayne Beach is slated to open its doors any day now, followed by the first tower of the Paraiso District, Paraiso Bay. The four projects together total over 1,800 new condos that are set for completion this summer. The fall and winter will bring another flurry, but for now let’s concentrate on the openings that are closer. These projects are all effectively sold-out. They are a wild success for the developers! But, what happens if one of the buyers is unable to come up with the remaining funds to close?
During the sales cycle of these four towers, the developers were requiring staggered deposit schedules that totaled a 50% down payment prior to closing and the remaining 50% due at closing. Remember that the majority of these condo sold in 2014-2015. A lot of things can happen in 3 years that can change the financial situation of the buyers. There could be an argument between partners in a condo, divorce, death, health issues. There could be political problems, currency exchange rate troubles, economic hardship. A dictator could be elected. We all know that these things are going on around the globe and they are all very sad. But what happens if one of these factors affects a buyer’s ability to close? It isn’t as dire as some may fear. The buyers do have choices.
They can walk from their deposit
Everyone knows this one. If you put a deposit down on a contract and don’t complete the contract, you will lose your deposit. It is very straightforward, and it stings. These condos sold around $500-$600/square foot. If you figure Related Group’s signature 2 bedroom layout that is almost always 1,200 square feet, give or take, the sale amount would be around $700,000. That’s a $350,000 loss, and that is not ideal for anyone… but it’s an option.
They can close with a mortgage
Although condo financing isn’t easy in brand-new developments, there are banks that will finance preconstruction purchases at the time of closing. The challenge is that many of the buyers in these developments are foreign nationals, and those mortgages are more difficult. Some banks refuse to lend to buyers from countries that have political turmoil (looking at you, Venezuela). It’s not a racist thing, the banks are worried about the political climate and their ability to recoup the mortgage. If you have questions about which banks can finance buyers from different countries, let us know. We have a resource that can help.
They can close with a private mortgage
If traditional financing just isn’t a possibility, buyers could visit a private lender. These mortgages typically require very little documentation and are able to close very quickly because the lender is familiar with the local market, the project, and bases the approval on that. The downside of these mortgages is that they are extremely expensive. Expect to pay 3-4 points to the lender at closing as a fee plus astronomical interest rates. I’ve seen interest rates as high as 13-14%. If a buyer was attempting to close the signature 2 bedroom unit that we discussed previously, that would amount to $10,500 – $14,000 just as a closing fee. Then you could expect around $4,000 per month to go just toward interest. Again, not ideal but also better than losing $350,000 right out of the gate.
They could find someone to step in and close on their behalf
This is probably the most ideal situation for someone in a preconstruction condo bind. Developers typically frown upon contract flipping and there’s no guarantee they would approve it, but developers in today’s market are also not eager to hold inventory on a previously sold-out project. They want to take their money and go do something else until another build cycle opportunity presents itself.
We have already had several investors request opportunities to buy in the event that a preconstruction buyer cannot or will not close. If anyone is in a preconstruction condo bind, please contact us and hopefully we can work it out in a mutually beneficial way.
Eighty Seven Park Surpasses The 50% Sold Mark
In the same month that they plan to formally break ground, Renzo Piano’s Eighty Seven Park has surpassed the 50% sales mark. The 18 story tower will have 70 total residences and famous neighbors such as Michael Huffington, the Conde Nast family and the latest announcement, tennis star Novak Djokovic. He has reportedly purchased a 3 bedroom, 3.5 bathroom residence with a wraparound terrace for between $5.9 million and $8.9 million (the exact sales figure has not been disclosed, but that is the cost of available units with the floor plan he purchased).
Not to digress from the star factor, the residences will be quite nice. We were able to go for a preview last month, and the boutique building is impressive for those who love parks and have money. The tower is secluded between two parks. The 35 acre North Shore Park to the South is set to be redeveloped with money contributed by the developer. This park will be shared with the public, but a more secluded park will also be available only to residents. Each of the 70 apartments will come with a key to the door and a key to the park, much the way New Yorkers covet a key to Gramercy Park. The private key park will be built by the designers of the new New York Governor’s Island.
According to a representative of the developer and against Miami trends, 55% of the buyers are from the United States. I imagine most of them are from New York, since New Yorkers are most comfortable paying $1.7 million for a 1 bedroom, even if it does have over 1,000 square feet. Prices go all the way to $45 million for the penthouse. 30% of the buyers are from Europe and 15% are from other international markets. Buyers from Turkey and Asian countries have been more active in our market over the last few months, while the Latin American market has cooled.
Site work on the build site has already commenced, and we expect groundbreaking this month or early next month.
Despite maintaining that the project is “on hold” and not “cancelled”, Related Group is cancelling the reservations and refunding deposits to the pre-construction buyers in Auberge Miami. Last April, the first of the three planned towers was reported to be 20% in reservation, contracts were to be delivered shortly and groundbreaking was scheduled for early 2017. When the sales screeched to a roaring halt, the project was officially put on hold until at least 2018.
“We are selling, and as soon as we get to our (desired) presales we will start construction. The sales center is open,” Related’s condo division president, Carlos Rosso told us in August as they delayed the project. Now that the reservations are cancelled and the deposits returned, I take that to mean that they are no longer selling. The developer’s website for the project has also gone dark and their social media accounts have been quiet since November.
It is possible that the formal cancellation has taken place so that Related can later sell the apartments at a higher price. The buyers we had in the project were given an amazing price, which is one of the reasons we are so disappointed to hear of the cancellation. When completed, Auberge was supposed to have 1,400 units in 3 towers on a 2.8 acre build site at 14th Street and Biscayne Boulevard. The first tower was the only one to open sales and had units priced between $350,000 to $3.9 million.
This isn’t the only project in the works that is “on hold.” Related’s other mega project, One Brickell is also on hold indefinitely. The website is down and the leases in the existing office building have been renewed without the kickout clauses that are used when a new tower is moving forward. If built, One Brickell will bring three new towers to the corner of 5th Street and Brickell Avenue. The first would be a 75 story hotel and condo tower, then a 57 story residential tower and an 82 story third tower that will likely be residential as well. Prices were reported to begin at $700,000 but sales did not officially start.
Elysee Reveals “Les Grandes Maisons” Collection & New Renderings
Builders typically wait until further into the sales cycle to release the larger, higher and more expensive apartments, but the time is now for Elysee. They have unveiled a collection of the larger, limited edition, full-floor residences on floors 46-56 of the 57 story tower. With the telescoping design, the building is able to offer deeper balconies and 3,891 square foot 5 bedroom plans with a sky-high vantage point. Les Grandes Maisons will bring together the atmosphere and proportions of an estate-like home, penthouse level upgrades and a suite of integrated health and wellness enhancements. The health and wellness enhancements include an aromatherapy infuser integrated into the HVAC system of each residence that continually cleanses the air and dispenses high-quality customizable fragrances; LEED-Certified Wellness Habitat interior paint with antibacterial, anti-mold and odor-eliminating properties; and a pre-installed water filtration system that effectively eliminates impurities.
Owners of Les Grandes Maisons also have the option to have their residences designed by Parisian designer Jean-Louis Deniot,one of the world’s preeminent talents in interior design. Prices for Elysee’s Les Grandes Maisons start at $2.8 million. Tres chic!
All residences will include floor-to-ceiling glass windows and sliding doors, private elevators and foyers, 10- to 12-foot ceiling heights, designer finishes and fixtures, premium appliances, top-of-the-line Italian cabinetry, as well as two expansive east/west-facing terraces with wide open sunrise and sunset views.
Building amenities will include two resort style pools, a health club featuring a fitness center, yoga studio and spa with sauna, steam and shower facilities and private massage rooms, a children’s playroom and a blow-dry bar. Residents will also have access to an exclusive Owners Sky Lounge which will encompass the tower’s entire 30th floor and feature a Great Room, Grand Salon entertainment area with a full bar and piano lounge, Grand Dining Room with seating for up to 30 guests, wine room, chef’s kitchen, library, private theater and gaming room. Elysee owners will also have the enviable advantage of Elysee Attaché – a premium concierge service that will be available to residents 24/7 for travel arrangements, dinner reservations, concert and event tickets, gift deliveries, and more. The project is currently 44% sold and expects to break ground shortly.
Paramount Miami Worldcenter Secures $285 Million Construction Loan
Despite the fact that the preconstruction market is cooling off and construction loans are notoriously difficult to obtain, the developers of Paramount Miami Worldcenter have secured a massive $285 million construction loan to fund their luxury project.
“Construction financing is definitely deteriorating,” said Aaron Kurlansky, a principal at FM Capital, a commercial real-estate investment firm told the Wall Street Journal. Mr. Kurlansky said that while at the peak, developers could finance up to 75% of the cost to build a project, now that is down to about 50%.
The construction cost of Paramount Miami Worldcenter is said to cost upwards of half a billion dollars, and the developers have contributed a lot of equity plus raised funds through the popular EB-5 Visa program, which offers an investor visa that transfers to a green card for those foreign investors who contribute $500,000 to a project that creates jobs.
According to the developer’s representatives, the residential tower is 60% sold and is continually selling at a rate of around 10 units per month. While this number is not as impressive as the 20 sales per month that they had become accustomed to during previous years, it is far better than many other developers are faring. In some less-popular projects, we have seen months pass with only a handful of sales. Paramount Miami Worldcenter will have 562 units priced at an average of $750/foot.
This construction loan is the second largest in the last two years, according to The Real Deal. The only loan secured that was larger was The Residences at Armani Casa, which was $305 million.
SLS Lux Reduces Prices On Final Inventory Of Penthouses
I have long said that the best time to buy in a new development is either in the very beginning or at the very end of the sales cycle. That is when the buyer gets the best deal.
In the beginning, the developer offers lower pricing in exchange for being among the first to participate in the project. You don’t receive a tour of the building and many times the sales center isn’t even completed yet. At the end of the project, the developer has a handful of units remaining and is eager to move on to their next project, so are less likely to hold on to top dollar for those last few purchase opportunities.
My personal favorite time to sell an apartment is at the very end of the sales cycle. At that point, the buyer can have a tour of the project, they know that it will actually happen because they can see it, and many times they can still choose their finishes. Some people think that the last few units remaining are the dog apartments of the building, but that is not what my experience has shown. It is typically penthouses because they are so unique.
So, here we are at SLS Lux. After opening sales in the summer of 2014, the partnership between Related Group and The Allen Morris Company is now on the home stretch to Sold Out status. They have five remaining units, all penthouses. In an effort to close out the building as quickly as possible and reflect the new market, they have repriced the last inventory. Here are the new prices:
Penthouse 04
This one has northern exposure, looking over Brickell City Centre to see Downtown Miami and the Biscayne Bay. It has 2,777 square feet and 3 bedrooms, 4 bathrooms and a den. There are three of these remaining.
Lower Penthouse 04 has been reduced to $2,599,900 from $2,999,900.
Middle Penthouse 04 has been reduced to $2,649,900 from $3,149,900.
Upper Penthouse 04 has been reduced to $2,699,900 from $3,199,900.
The 01 penthouses have 1,888 square feet with 3 bedrooms, 3 baths and a den. They are on the northwest corner of the building, looking over Brickell City Centre into Downtown Miami. Two of these remain, both priced at $1,599,900. The previous price was $1,999,900.
In addition to the amenities and standard finishes in SLS Lux, the penthouses will have upgraded kitchens, 12 foot ceilings, summer kitchens on the terraces and 2 assigned parking spaces. Completion is expected late this year. Here is a preview of the views from the various penthouses.
Paraiso Construction & Sales Update
The folks over at Plaza Construction have been hard at work over the last few months, making big progress on the Paraiso Complex in Edgewater that is made up of Paraiso Bay, GranParaiso, One Paraiso, Paraiso Bayviews, Paraiso Bayhomes and the Paraiso Beach Club. That’s a lot of Paraisos! Here is how they are coming along, followed by construction photos:
Paraiso Bay is currently sold out. It has topped off and is now being finished out. They are scheduled to start closings in the early Summer 2017.
One Paraiso has reached the 37th floor of the 53 story tower. There are a handful of penthouses remaining, priced between $2 million – $3.5 million.
Paraiso Bayviews has reached the 33rd floor with 10 to go until topoff at 43 stories. This is the least expensive of the towers and Related Group is currently near close-out on the inventory. The last remaining opportunities range from $600k for a 1,460 square foot 2 bedroom/2 bath up to $1.6 million for a 2,522 square foot upper penthouse with 4 bedrooms and 4.5 baths.
GranParaiso is the last of the 4 large towers to be completed. It has reached the 22nd floor and will top off at 53 stories. The last opportunities in this tower range from an $800k 1 bedroom, 2 bath with 1,000 square feet up to $3.2 million for a 3,200 square foot upper penthouse with 4 bedrooms and 4.5 baths.
The Paraiso Bayhomes are a small enclave of townhome-style units along the base of the project. These are 4 stories tall and feel more like a single-family home than a condo. There are only 2 remaining of the 8 that are under construction. They are available at $2 million apiece. One has 3 bedrooms and the other has 4 bedrooms. They have topped out already and are receiving their glass panels.
The Paraiso Beach Club is a shared amenity for the four towers and Bayhomes. It is set to open alongside Paraiso Bay this summer and will feature a restaurant by Michael Schwartz as well as boat slips for the residents to enjoy. Update: The restaurant is called Amara at Paraiso.
Have a look at the photos here:
Paraiso Sales Gallery
Paraiso Beach Club – Paraiso Bay
Paraiso Beach Club
Paraiso Bayviews West Facade
Paraiso Bayviews West
Paraiso Bayviews & Paraiso Bay
Paraiso Bayviews Lower Levels
Paraiso Bayviews Construction Progress
Paraiso Bayviews and OneParaiso
Paraiso Bayviews
Paraiso Bayhomes Construction Progress
Paraiso Bayhomes and Gran Paraiso
Paraiso Bayhomes
Paraiso Bay Condos
Paraiso Bay and Gran Paraiso
Paraiso Bay
One Paraiso Facade
One Paraiso Facade
One Paraiso
One Paraiso
Gran Paraiso
Gran Paraiso
Aria on the Bay Lowers Deposit Requirement To 35% On All Units
Edgewater’s Aria on the Bay is slashing their minimum required down payment to 35%. Prior to the change, buyers were required to deposit at least 50% of their purchase price before closing.
The construction is currently on the 41st floor and will top off this summer at 53 floors. The 35% deposit schedule is: 20% of the purchase price is due within 2 weeks of the contract being signed and the remaining 15% is due at top-off. The final balance is due at closing in late 2017 or early 2018 although it is common for mortgages to be introduced for the final amount.
Aria on the Bay is Melo Group’s first luxury waterfront tower and is already a big success. They have sold 74% of the 647 units with an average price of $540/square foot. Remaining opportunities range from a $420,000 1 bedroom with 880 square feet and a south view up to the $1.6 million 3 bedroom residence with a den, 4 full bathrooms, private elevator and a 600 square foot terrace with north views.
