The WPJ
Residential Real Estate News
1 in 4 South Beach Condos Still Remain Unsold
(MIAMI, FL) -- According to a new report by Condo Vultures, nearly 1,450 of the 5,600 new condominium units developed in Miami Beach's trendy South Beach neighborhood were still unsold as of January 2010.
The unsold units represent 26 percent of the new inventory built since 2003 in 37 condominium projects developed in a 24-block stretch of the barrier island neighborhood. South Beach is defined as South Pointe Drive north to 24th Street, the Atlantic Ocean west to Biscayne Bay, according to Condo Vultures.
"South Beach is some of the most expensive real estate in South Florida as the inventory is limited and the demand is infinite given the international exposure the barrier island neighborhood receives," said Peter Zalewski, a principal with Condo Vultures, LLC. "Prices have remained surprisingly high in South Beach despite the problems that have plagued the overall South Florida market.
"The strong international demand for sun, surf, and sexiness has made South Beach one of the few South Florida submarkets where developers and lenders are not negotiating to any great extent on price."
Since 2003, developers have successfully closed nearly 4,150 new condo units for nearly $3 billion, an amount that works out to an average of $891,000 per unit and $773 per square foot, according to a new Condo Vultures.
Of the three dozen projects developed in the last seven years, only 16 projects - or 43 percent of the total - are completely sold out, representing nearly 3,200 units. Eight more projects with a combined 1,000 units have sold between 50 percent and 99 percent of the newly developed units.
The remaining 13 projects with 1,400 units have sold less than 50 percent of the new inventory, with 11 of the projects having sold less than 10 percent of their respective product, according to the report.
A key factor why the prices have not fallen more dramatically in the area is the new product represents about 27 percent of the overall South Beach condo inventory.
Some 135 projects with more than 16,000 units are located in condominiums with at least 30 units.
An estimated 5,000 remaining units are located in smaller multifamily projects in the Art Deco District that Condo Vultures did not research in detail.
A condominium explosion has occurred in the Miami Beach neighborhood of South Beach in the two decades since investors first began pumping money into refurbishing the pastel-colored submarket that had been known for an antiquated infrastructure inhabited by retirees and outlaws.
Capitalizing on the international curiosity to the "Miami Vice" television series of the mid-1980s, developers flocked to Miami Beach, building dozens of new towers and converting hundreds of existing Art Deco apartments into condominium units to create housing supply being demanded by investors.
The more attention South Beach receives in the movies, television, newspapers, and magazines, the more visitors that flock to the barrier island neighborhood that is 24 blocks long and 13 blocks wide.
With millions of people coming and a limited land supply, residential pricing has spiked and continues to command some of the richest premiums in the region.
Prices for condo units today range from more than $1,250 per square foot for luxury unit with floor-to-ceiling windows overlooking the sand and Atlantic Ocean to $250 per square foot for a renovated studio apartment with no view or assigned parking space in a building constructed 60 years ago. At these prices, parking may or may not be included.
South Florida's condo crash that has been so well documented internationally has for the most part left South Beach unscathed. The strong demand for South Beach real estate has limited the discounts to a unit-by-unit basis.
The dramatic drops and steep discounts are primarily concentrated across Biscayne Bay in Greater Downtown Miami where 83 towers with less than 23,000 new condo units were built in an area that had developer 11,500 units in 40 years prior, according to the Condo Vultures.
"The challenge for many buyers has been trying to figure out how to carve out a piece of the Miami Beach real estate market at the right price," Zalewski said.
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