Downtown Miami Had Total of 2,350 New Condos Sell In 2009

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(MIAMI, FL) -- According to Condo Vultures LLC, a Bal Harbour Florida consulting firm, 700 new condos where purchased from developers in Greater Downtown Miami in the fourth quarter. This pushes the total number of transactions for 2009 to more than 2,350 units. Downtown Miami is considered by many as the epic-center of the Miami condo crash.

These Q4 numbers represent a 27 percent decrease on a quarter-over-quarter basis compared to the 955 closings in the third quarter of 2009, according to the Condo Vultures report.

In the first half of the year, there were 246 new condo closings in the second quarter and 465 new condo closings in the first quarter in Greater Downtown Miami, according to the report.

"Buyers, primarily with cash, purchased an average of 6.5 new condo units per day from developers in 2009," said Peter Zalewski, President of Condo Vultures. "The buying activity really picked up velocity in the second half of the year once retail condo prices were slashed by lenders from $300 per square foot down to $200 per square foot, which is in many cases below the replacement cost of the finished product.

"The new prices triggered a buying frenzy by foreign nationals with strong currencies and private equity groups that finally began to purchase, completing a dozen condo bulk deals in the Brickell Avenue Area, Downtown Miami, and the Biscayne Boulevard Corridor in 2009."

Zalewski said it is unclear how much of an effect the lack of condo financing in Greater Downtown Miami had on the final transaction totals for 2009.

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

Between 2003 and 2010, developers constructed 82 projects with nearly 22,250 units in Greater Downtown Miami. Compare that to the four prior decades between 1963 and 2002 when only about 11,500 units were developed in the Greater Downtown Miami submarket, according to the Condo Vultures.

The 2009 buying activity combined with the recent cancellation of the proposed 32-story Loft III project in Downtown Miami by the Related Group, South Florida's largest condo developer, leaves less than 7,300 new condo units, or 34 percent of the product, still in the hands of developers and lenders.

At the end of 2008, developers controlled 43 percent of the new condo inventory in Greater Downtown Miami submarket, according to the report.

Of the 82 projects constructed in the past seven years in Greater Downtown Miami, 34 of the new condo towers have been completely sold out. Of the remaining 48 projects with some available developer inventory, the closed sales ratios per condo tower are as follows:

• Nine projects have closed between 90 percent and 99 percent of the developer units;

• Six projects have closed between 80 percent and 89 percent of the developer units;

• Six projects have closed between 70 percent and 79 percent of the developer units;

• Two projects have closed between 60 percent and 69 percent of the developer units;

• Three projects have closed between 50 percent and 59 percent of the developer units;

• Five projects have closed between 30 percent and 39 percent of the developer units;

• Three projects have closed between 20 percent and 29 percent of the developer units;

• Three projects have closed between 10 percent and 19 percent of the developer units;

• Four projects have closed between one percent and nine percent of the developer units;

• Closings have not yet begun at seven projects that have been built or are still under construction.

It is worth noting that nearly half of the remaining new condo product in Greater Downtown Miami is controlled by two groups.

The Related Group developed and still possess about 28 percent of the remaining inventory, according to the report.

Starwood Capital, which purchased the condo construction loan portfolio of the failed Corus Bank from the Federal Deposit Insurance Corp, controls about 19 percent of the remaining inventory.

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