Downtown Miami Has 700 Condos Sales in Q1; 'Closed Condo Sales Ratio' Over 70%

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According to a new Condo Vultures report, buyers purchased more than 700 new condo units in Greater Downtown Miami in the first quarter of this year, pushing the overall closed sales ratio for the epicenter of Florida's condo crash to more than 70 percent.

A year ago, buyers purchased units at half that pace, acquiring only 370 new condos between January and March of 2009. At that time, only 59 percent of the more than 22,200 new condo units constructed in Greater Downtown Miami since 2003 had been sold, according to Condo Vultures.

The strong buying activity in a market with virtually no financing means that 35 projects out of a total of 82 are now completely sold out. An additional 24 projects have successfully sold at least half of their respective units for sale. Only six projects have not sold a single unit.

"The condo sales in Greater Downtown Miami are a function of price," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based Condo Vultures, LLC. "A year ago, developers and lenders were still asking $300 per square foot for a new condo. The asking prices dipped shortly after that to the $200 per square foot range, triggering a buying frenzy that reduced the overall inventory by 11 percent.

"As the inventory of new condo product dips below 6,600 units, some developers are attempting to boost prices back up to the $300 per square foot range. Time will tell if the new pricing sticks."

Greater Downtown Miami is a 60-block stretch from the Rickenbacker Causeway north to the Julia Tuttle Causeway, Interstate 95 east to Biscayne Bay. Greater Downtown Miami is comprised of the Brickell Avenue Area, the Downtown Area, and the Biscayne Boulevard Corridor.

Between 1963 and 2002, developers constructed 11,500 units in the Greater Downtown Miami market. The boom years of 2003 to 2010 nearly tripled the total inventory that exists in the submarket. The overall inventory could have been greater if not for several proposed projects being ultimately cancelled or delayed.

On a project-by-project basis, ICON Brickell experienced the most sales activity of any condominium in Greater Downtown Miami with 164 units transacting between January and March of 2010.

The strong sales activity was prompted by deep discounts that reached as low as $216 per square foot from preconstruction contracted prices greater than $600 per square foot, according to a Condo Vulture's report based on Miami-Dade County records.

Wind by Neo, a troubled project located on the north bank of the Miami River, offloaded 154 units in the first quarter at an average price of just over $200 per square foot. The average closed sales price in the project prior to the fire sale was greater than $370 per square foot, according to Condo Vultures.

Rounding out the top five projects for new condo sales in the first quarter of this year are the 500 Brickell condominium with 72 sales, the Gallery Art condominium with 57 sales, and 900 Biscayne condominium with 46 sales, according to the report.
 
On a submarket-by-submarket basis, 79 percent of the new condo units in the Biscayne Boulevard Corridor area are now sold. An additional 70 percent of the Brickell Avenue Area new condos are sold. In Downtown Miami, about 65 percent of the new product is sold, according to the Condo Vultures® White Paper™.

By comparison, at the end of the first quarter of 2009 some 54 percent of the Downtown Miami market was sold, 69 percent of the Biscayne Boulevard Corridor market was sold, and 56 percent of the Brickell Avenue Area market was sold, according to the report.

Individual buyers purchased for investment and/or a second home have acquired a number of new units in Greater Downtown Miami.

Another significant factor contributing to the increased condo sales in Greater Downtown Miami is the emergence of the bulk buyer.

Since July 2008 when the first transaction occurred, private equity groups, family offices, and wealthy individuals have completed 18 bulk deals for more than $219 million in Greater Downtown Miami. These transactions total more than 1,000 units and 1.2 million square feet of residential saleable space, according to Condo Vultures.

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