After Three Years of Condo Chaos, Miami Skyline Sees Reemergence of Construction Cranes

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(MIAMI, FL) - They're back!

Nearly three years after the last condo construction crane was disassembled in Greater Downtown Miami, a South American private equity group has begun vertical development of a new 18-story tower in the epicenter of South Florida's condo crash.

The developer, 23 Plaza Corp with Jose, Carlos, and Martin Ferreira De Melo of Argentina, is working on a construction schedule to complete the nearly 100-unit tower - named 23 Biscayne Bay - for June 2012, according to Florida Secretary of State records and marketing literature.

A construction crane has been assembled on the 28,000-square-foot development site on the north side of 23rd Street between Biscayne Boulevard and Biscayne Bay. The land was acquired from a lender for less than $1.4 million in October 2010, according to Miami-Dade County Property Appraiser's Office.

23 Biscayne Bay's sales manager Linette Guerra of La Playa Properties Group tells World Property Channel that La Playa Properties launched sales in March of 2011, and in less than 5 months they have reached 75% sell out of the building.

According to Condo Vultures, as of June 30, 2011, there were 2,300 developer condos still unsold in the Greater Downtown Miami area that includes the Brickell Avenue Area, Downtown, and the Biscayne Boulevard Corridor.

An additional 1,200 units in Greater Downtown Miami that were previously purchased by bulk buyers are now being actively marketed for resale on an off-market basis.

Another 1,200 condos that were built and sold to individual buyers since 2003 are currently on the resale market in Greater Downtown Miami as of Sept. 1, 2011, according to Florida Realtors association data.

In the first half of the 2011, buyers acquired an average of 200 developer units per month at a blended price of $372 per square foot.

At the current sales pace in the first half of 2011, Greater Downtown Miami's supply of developer condos - nearly 22,250 units constructed in this specific market since 2003 - would be sold out by the third quarter of 2012.

Despite the inventory overhang, the 23 Biscayne Bay project was first announced in May 2011 with a condo launch party in Coral Gables that attracted about 50 people, according to Condo Vultures.

Condo Vultures tell the World Property Channel that at the end of August 2011, more than 70 percent of the proposed 23 Biscayne Bay project is said to be under contract to individual buyers who committed to put down deposits of up to 50 percent of the purchase price, according to marketing materials.

As of Sept. 1, 2011, an additional 11 units in the proposed project are being offered on the market at a median preconstruction asking price of $234 per square foot.

The planned units range in price from less than $200 per square foot to nearly $255 per square foot, according to the analysis based on Florida Realtors association data.

For any condos in the 23 Biscayne Bay project that do not sell at time of completion, the developer plans to lease out the units to tap into the strengthening rental market in Greater Downtown Miami.

Operating as a landlord is something the developer of the 23 Biscayne Bay project has had a lot of experience with in Greater Downtown Miami.

The Melos - with their namesake company the Melo Group -have developed at least four towers with more than 700 units in the Greater Downtown Miami area, including the One Plaza at 1800 SW 1st Ave. in the Brickell Avenue Area and the 1800 Biscayne Plaza condominium at 275 NE 18th St. in the Biscayne Boulevard Corridor.

Preconstruction sales of the proposed 23 Biscayne Bay condominium began in the first quarter of 2011 with an initial focus on South American buyers.

With a majority of the proposed condo project already reportedly presold, the development group has broadened its preconstruction sales and marketing effort to include U.S. buyers.

As part of the preconstruction sales effort, the Melos are requiring as little as 20 percent deposits from domestic buyers - and 50 percent from foreign nationals - and have arranged for financing options, according to marketing materials.

Greater Downtown Miami is a 60-block stretch from the Julia Tuttle Causeway south to the Rickenbacker Causeway, Interstate 95 east to Biscayne Bay, according to the Condo Vultures.

Between 1963 and 2002, developers constructed 11,500 units in the Greater Downtown Miami market. Development during the boom years of 2003 to 2010 nearly tripled the total inventory to more than 34,000 units in Greater Downtown Miami.

It is important to note there are various stages to a residential real estate transaction in South Florida.

A transaction begins when a property is made available for sale and ends when a title is conveyed from one party to another party as a result of the recording of a deed with the local government.

As part of the process, a property typically goes under contract and into a due diligence phase by which a deal can be canceled.

 

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