Forecast looks sunny again for Miami condo sales
The New York Post, October 27, 2011
Summer was hardly a vacation for those in the business of selling Miami real estate.
“I didn’t go to St. Tropez because of this,” says developer Gil Dezer, whose Sunny Isles Beach condo projects include the 384-unit Trump Royale and the three-building, 813-unit Trump Towers.
Dezer reports that he sold more than $100 million in Trump units during June, July and August ($50 million alone in August, including a $29 million, 34-unit bulk deal). He’s closed more than $1 billion in Trump condos overall and has only about 75 units left.
Recent Trump sales have been priced at about $525 per square foot. That’s significantly less than the $1,000-per-square-foot contracts buyers walked away from in 2009 after the financial crisis hit, but Dezer, who’s paid off the construction loans for all four buildings, seems satisfied. (Donald Trump participated in a ceremonial Trump Royale mortgage-burning ritual, lighting the document on fire himself, in January.)
The downturn “made the job challenging,” Dezer says. “Every day was a battle. But when you’re winning, it’s fun.”
Winning could also be used to describe the situation at Icon Brickell. That nearly 1,800-unit downtown colossus, built by the Related Group with designs by Philippe Starck, seemed to be in peril not long ago, and two of its three towers were deeded back to its lenders in May 2010. But Icon Brickell’s now nearly sold out, with more than 1,500 units closing for a total of more than $700 million. When you factor in units in contract, only about 30 condos remain.
“I think the market has consumed the inventory in a much more rapid way than I and probably everybody thought,” says Related Group chairman and CEO Jorge Perez, who adds that most buyers have been foreign. “The Latin American economy has been strong.”
“The forecast was that we would sell all the units in three years at an average price of $350 per square foot,” says Edgardo Defortuna, president of Fortune International Realty, which started selling Icon Brickell in June 2010.
Less than a year and half later, Fortune is almost done and seeing prices at about $400 per square foot.
Demand has been so strong that Perez is now building another downtown development. The 192-unit MyBrickell is a couple years away from completion, but Related’s received “over 60 reservations” for condos before officially launching sales. Unlike Icon Brickell, MyBrickell isn’t on the water, and Perez is “passing on the cheaper construction costs and the deal we got on the land” to offer units, with interiors by Karim Rashid, for about $300 per square foot.
Defortuna, meanwhile, is now selling downtown’s Paramount Bay, a 346-unit building resurrected out of foreclosure by owners iStar Residential and ST Residential. Musician Lenny Kravitz’s Kravitz Design firm is working on the building, where prices are about $400 per square foot.
South Beach, with significantly pricier properties, is seeing lots of action, too.
“The summer was uncharacteristically busy,” says Vanessa Grout, president of Douglas Elliman Florida, which has three South Beach offices. “We certainly didn’t take a vacation.”
According to Douglas Elliman’s latest Miami market report, South Beach condos sold for an average of $515 per square foot during the third quarter. But this factors in distressed properties, including units bought out of foreclosure.
At the market’s top end, the W South Beach Hotel & Residences has closed about $260 million in condos at an average of $1,700-plus per square foot, developer David Edelstein says. The W sold more than $50 million during the summer.
“One penthouse went for $7.7 million, north of $3,000 per square foot,” Edelstein says.
As with much of Miami, foreign buyers have been key at the W. (Douglas Elliman translated its market report into Spanish and Portuguese to spur international interest.) From May through September, about 65 percent of Edelstein’s purchasers were foreign, and about half of those were from Brazil.
The allure of the W has helped nearby condo buildings lure in buyers, including those from New York.
Fashion designer Irina Shabayeva, who won season six of “Project Runway,” owns a one-bedroom with a balcony at the 52-unit Boulan South Beach development just south of the W, but on the other side of Collins Avenue.
“I like the Boulan because it was so new, really fresh and modern,” says Shabayeva, who primarily lives in the East Village. “And it’s across the street from the beach and the W.”
Shabayeva says she enjoys the New Yorker-friendly amenities at the W, which include a Warren Tricomi salon and a Mr. Chow restaurant. And Edelstein says that the Dutch, an outpost of Andrew Carmellini’s SoHo restaurant, will open in the W by Thanksgiving.
Boulan, which has sold 22 condos and has one-bedrooms on the market for upward of $600 per square foot, is busy filling its own retail spaces, as well. An art gallery should open in time for December’s Art Basel festival. A Mexican/Asian fusion restaurant and a nightclub are also in the works.
Neighborhoods all over Miami are getting big residential and retail makeovers. The 56-acre Midtown Miami development’s second phase, which will start next year, will include a boutique hotel, a movie theater and 100,000 square feet of retail.
“We’ll definitely have a fashion component,” says developer Jack Cayre.
And the nearby Design District is getting a Louis Vuitton store.
“There was probably a point in time here someone said, ‘What’s Chelsea?’ or ‘What’s Meatpacking?’ — and eventually, they became a place because New York was ready to have another place,” says Greg Masin, senior director at commercial real estate firm Cushman & Wakefield. “When we look at the Design District and at Midtown, what we see is the evolution of the next place in Miami.”
Plus, the downtown Metropolitan Miami development’s third phase will include rental apartments and a Whole Foods Market. Plans for downtown’s eight-block Miami Worldcenter site include residences, restaurants and retailers. And the Genting Group, an Asian casino operator, has unveiled plans for its $3.8 billion Resorts World Miami mixed-use complex. But the scope of the latter two projects will depend on approval for casino gaming, something that’s the object of much speculation and uncertainty all over Miami.
Dezer says he has been talking to major Las Vegas casino operators about land he owns in Sunny Isles (13 1/2 acres on the beach and 6 1/2 acres “directly across the street that hits the intracoastal waterway”) that could accommodate a gaming resort with more than 2,000 rooms and 3 million square feet.
“They’re both good real estate,” Masin says of the Genting and Dezer sites. “If they both had a casino, they’d both be successful.”
Whatever happens, Dezer has options.
“We originally bought [the land] to build condos,” he says. “We could build five condo buildings.”
That idea would have seemed ridiculous in 2009, but now it’s more plausible.
Defortuna has sold out the 256-unit Jade Beach condo building in Sunny Isles Beach and has just three apartments left (for about $700 per square foot) at its 252-unit Jade Ocean sister property.
“In terms of quality inventory, oceanfront,” he says, “you can make a strong argument that you need to start building now.”