Building boom deals collapse in Miami-Dade
Amid a historic building boom, a slew of proposed projects are up for sale.
BY MATTHEW HAGGMAN
The two-acre parking lot next to the Bank of America Tower in downtown Miami rode the building boom to the top.
In 2003, it sold for $8.8 million to local investors. By spring the next year, a development group backed by Latin American buyers agreed to pay nearly $24 million. And just months later, they agreed to flip the land for $46.5 million.
The plans were grand, and better still, they were approved: A sleek 746-foot office, hotel and condo tower called Lynx designed by architects Chad Oppenheim in Miami and the two sons of world-renowned I.M. Pei in New York.
Today, there is no construction on the site. The deals have collapsed, the buyers are locked in a court fight, and the original owners have the property back up for sale — spiffy building plans and all.
Across South Florida a historic building wave is remaking cities and shorelines, but it has also produced a slew of proposed projects — some very ambitious in scope — that are now on the sales block.
In some cases, the slowing market killed the projects. In other cases, it was the rising cost of construction, the spike in insurance, novice developers or all of the above. Whatever the reasons, the fervor to build spurred developers to spend millions on land, lawyers, architects and government approvals, only to decide against building.
”There is a lot out there for sale,” said Adam Greenberg, president of BayBridge Real Estate in Miami. “But a lot don’t make sense because they come with designs that are very expensive to build or with condo sales contracts that are below market.”
There are plenty of vacant lots sporting both big plans and big for sale signs:
• The soaring 70-story Brickell Flatiron, comprising condos and offices, designed by increasingly acclaimed Mexican architect Enrique Norten. The tower is slated to rise on a triangular parcel just west of Brickell Avenue.
• Ellipse, a 266-unit condo fronting Biscayne Boulevard a few blocks north of the Carnival Center for the Performing Arts.
• A mid-rise condo tower called Elektra on North Miami Avenue across from the Shops at Midtown Miami.
• Onyx 2, a slender high-rise condo on Biscayne Bay in Miami’s Edgewater neighborhood, and Premiere Towers, a condo project comprising two oval condo buildings, next to the restaurant and shopping complex, Mary Brickell Village.
Commercial real estate agent Edie Laquer said sales contracts have been signed for these two projects but have yet to close; she refused to disclose price or purchaser.
NOT ALWAYS A FAILURE
Some of these vacant lots are the forlorn reminders of high-profile flameouts, from a proposed Edgewater condo called ICE to 1390 Brickell Bay, a condo slated for a block off Brickell Avenue. But the fact that a project is for sale doesn’t always mean a business failure, Laquer said — especially if it is indeed sold.
”In some cases clients are making as much money selling as they would have if they developed a site,” said Laquer, who is selling a host of property and projects in Miami’s downtown and Biscayne Boulevard corridor. “Others have chosen to make a smaller profit and have a very comfortable flip.”
Laquer claims that 65 percent of Miami properties she’s selling with approved building plans are in contract, and everything else is in “advanced negotiations.”
One reason for the interest in lots with plans is that, for the right buyer, they present an unusual opportunity to snap up prime property already entitled for building.
The approvals can shave months to more than a year from the time between buying and building. Instead of navigating a lengthy process with city planners and political leaders, a buyer with approved plans can line up financing and quickly dig a shovel into the ground.
However, the problem is that many of the projects approved in the recent boom were for condos. And some builders — and bankers — want the record spate of condo construction to be digested before putting up more.
There are 22,254 condo units under construction in Miami, according to the city’s planning department. That’s compared to 15,525 total units that went up since 1995.
Meanwhile, 29,558 condos have been approved by city commissioners for construction, and developers have proposed another 30,674 units that city planners are reviewing. These number say nothing of the building in other towns across Miami-Dade and Broward counties.
Some would-be buyers are considering converting already-approved residential projects to other uses, observers say — a reversal of the boom-time trend of building condos on lots previously set aside for offices.
”Some are going back to commercial, office and retail,” said Rosendo Caveiro, senior director at Cushman & Wakefield in Miami. “There is also tremendous demand for residential rental housing.”
Of course, some sellers with lots up for sale are just staying put. For the moment, land prices are holding steady, observers say. That is prompting some owners with staying power to just hold on and let the market to shake out if the right offer doesn’t come along.
Caveiro said the betting is that well-designed and well-located projects will keep interest.
”We think construction costs will come down and expect insurance to get under control,” Greenberg said. “So we are telling a lot of our clients to sit tight.”