Las Vegas casino mogul Steve Wynn said he supported a gambling resort at the site of the Miami Beach Convention Center — not as part of a teardown, but an expansion. “I think Miami Beach is the best destination resort in America,” he said. The neighborhood around the convention center has smaller buildings than, for example, downtown Miami or Collins Avenue, but it’s possible a potential gaming resort could go in the area near the Jackie Gleason theater and the New World Center. Wynn is among those interested in bringing gaming to Miami, following the high-profile plans of Malaysian firm Genting. Wynn reportedly checked out the Miami Worldcenter last month.
Real estate brokers assembled in Miami yesterday said they expected the market’s international sales to be even stronger in 2012, following a period of purchasing, particularly from Latin America, that Related CEO Jorge Perez said “saved” Miami’s residential sector. “You have a unique opportunity for the next few years,” said Moe Velssi, the president-elect of the National Association of Realtors at the International Real Estate Conference in Coral Gables. “This will be a record-breaking year for the number of sales in the Miami market,” said Teresa King Kinney, the CEO of the Miami Association of Realtors. “There’s no other market in the United States can boast these kinds of numbers.” – Miami Herald
A modified Florida law making it easier to dissolve condominium associations has led to a number of condos being converted back into rental apartments, especially in the state’s suburban areas, according to the Sun Sentinel. “Most people see this as a way out because it should not have been a condo in the first place,” said Jennifer Drake, an attorney for Becker & Poliakoff in Fort Lauderdale. At least 36 condos in Broward and Palm Beach counties have been changed back into apartments in the last three years. But the movement is finding opposition. “I don’t want to live in a rental community; that’s why I bought a condo,” said William Bush, a board president in Weston. “I think people would be dead-set against it.” [Sun Sentinel]
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.”
Home remodeling is big these days, even in a sour economy. Or maybe because of it.
The BuildFax Remodeling Index released this week showed that August had the highest amount of remodeling since the index started in 2004, and it was the 22nd consecutive month with an increase.
BuildFax estimates that more than 3.3 million home remodeling projects in the U.S. will be completed this year. The company, based in Texas, says it tracks construction records on millions of properties from cities and counties nationwide.
“As mortgage rates hit record lows, it is apparent that millions of Americans are refinancing their homes and using some of their new monthly savings to reinvest in their homes with remodeling projects,” Joe Emison, a vice president at BuildFax, said in a statement.
Presumably, remodeling also is popular in places such as South Florida where people can’t sell their homes because their mortgages are “underwater.”
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What if the 30-year mortgage rate fell below 4% and few people cared?
We may not have to wonder much longer. The average 30-year mortgage dropped to 3.94% for the week ending Wednesday, according to Freddie Mac’s weekly rate survey released on Thursday.
Reflecting both tight credit standards and anemic demand, applications for mortgages actually fell last week, according to a separate report from the Mortgage Bankers Association on Wednesday. The MBA said overall mortgage application volume was down by a seasonally adjusted 4.3% from the prior week.
Many borrowers can’t refinance today because they don’t have enough equity or they can’t qualify under lending standards that are far tougher than when they initially obtained their mortgages.
Rates also haven’t fallen as much as might be expected, given recent drops in banks’ borrowing costs, because banks are short-staffed. To manage volumes, they’ll sometimes raise the spreads between their borrowing costs and the rates that are offered to consumers.
Refinance applications were down by 5.2% from the prior week, while home-purchase apps were down by 0.8%, according to the MBA.
More troubling for the housing market is the fact that home-purchase applications were down 12% from one year ago—a signal that worries about the economy and potential home price declines are keeping borrowers on the fence, even though mortgage rates have probably never been this low.
Freddie Mac says the rates are the lowest since its survey began in 1971, and academic research suggests that rates for 30-year mortgages were as low as 4%—but not any lower—under a loan program for war veterans in the mid-1940s. Eric Rosengren, president of the Federal Reserve Bank of Boston, spoke to the problem facing policy makers’ inability to help consumers benefit from low rates in a speech last week in Sweden. Falling home prices “have disrupted the transmission of monetary policy,” he said, resulting in “a situation where the availability of credit is more important in many cases than the cost of credit.”
Low rates could give more urgency to a recent push by the White House to fix an administration effort that allows homeowners to refinance their mortgages if they owe more than their loans are worth. The program is open to borrowers with loans backed by Fannie Mae and Freddie Mac.
“Clearly getting more money into the hands of homeowners who would spend it could help to fuel GDP growth,” said Mr. Rosengren.
Miami’s first new condo high-rise since the housing bust is set to begin construction next spring, developer Newgard Development Group announced Monday.
Called Brickell House, the $170 million project is part of a new wave of condo towers planned for downtown Miami, which saw development grind to a halt after the building frenzy that lasted from 2003 to 2008.
“Almost all of the [outstanding] inventory that we had has been absorbed in the last 18 months,” said Harvey Hernandez, managing partner and chairman of Newgard Group. “It could not be a better moment for us to launch a project.”
The 46-story tower is slated to have 374 residences, ranging from one bedrooms to penthouses. Specs include a rooftop sky deck, pool on the 46th floor and an automated robotic parking garage.
Buyers in large part will be charged with paying for the construction of the glossy tower under a financing model that will require purchasers to pay 70 percent of the asking price before construction is completed. That financing model — which is also being used for new condos recently pitched by Related Group — is more common in Latin America, where Brickell House will be heavily marketed. Prices start around $200,000.
“Let’s be realistic. The majority of buyers in Miami come from outside of the country,” Hernandez said. “Our buyers here, nobody has 70 percent. Nobody can afford that.”
Hernandez said he believes the housing market will have substantially rebounded by the time the project opens, with strong international demand and a more vibrant downtown.
Peter Zalewski, of Bal Harbour-based CondoVultures, said he’s not so sure. He said sales of new downtown condos have begun to slow down, and supply is set to increase dramatically as a slew of new projects begins to come online.
“There are too many [projects] that are suddenly all popping up at the same time,” he said. “At least from a promotional perspective, it’s starting to look like 2005 and 2006 again.”
Additionally, a condo tower called Villa Magna is approved to open on a nearby plot with more direct water views than the land-locked Brickell House site, potentially providing stiff competition.
The Chophouse Miami Bisro & Lounge will go under the knife, after being purchased by chef Jacques Van Staden. The project, which will involve the addition of a sushi bar and a cigar-friendly outdoor patio, is slated for completion by Thanksgiving. “When the opportunity arose for me to take it over and remake it as my own, I couldn’t resist,” he said. The restaurant is located at 300 South Biscayne Boulevard in downtown Miami.
Construction will begin on a $170 million, 46-story, 374-unit condominium in Miami come next spring, the Miami Herald reported, marking the first new high-rise condo since the housing bust.
Developed by Newgard Development Group at 1300 Brickell Bay Drive, the tower, called Brickell House, is slated to include a rooftop sky deck, a pool on the 46th floor and an automated parking garage. Newgard said it’s a good time to begin construction as much of the firm’s inventory has been absorbed over the last 18 months.
Newgard will depend on prospective buyers to finance construction. Purchasers will need to pay 70 percent of the asking price before construction is completed. It’s a model that is typical of Latin American construction, which is appropriate for the development that Newgard plans to market to foreign buers.
“Let’s be realistic. The majority of buyers in Miami come from outside of the country,” said Newgard Chairman Harvey Hernandez. “Our buyers here, nobody has 70 percent. Nobody can afford that.”
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