Developers are reacting to the unexpectedly swift condo recovery in a predictable way: they are building more condos.
The most ambitious project by far is the $1.05 billion Brickell CityCentre, a 5.4-million-square-foot mixed-use development that will add about 800 condo units in two 43-story towers to the central business district, a hotel, a luxury movie theater, and a wellness center aimed at tourists from Latin America. With the Brickell CityCentre, the downtown neighborhood will have its first upscale shopping center and its first office building since 2007.
The Miami construction boom — with its own local idiosyncrasies — comes after a broad revival in the real estate market.
As demand rises and supply shrinks, cities around the country are experiencing a residential rebound.
In February, national home prices jumped by 9.3 percent over the same month a year ago, the highest growth rate since May 2006, according to data released on Tuesday by the SP/Case-Shiller index, which measures 20 major cities.
Miami fared better than most, with home values rising by 10.4 percent. The local condo market, which is not counted in the Case-Shiller data, is equally robust. Prices of condos in downtown Miami increased to $440 a square foot in the last quarter, compared with $400 in the same quarter a year ago, according to Condo Vultures, a local brokerage.
With foreign buyers scooping up properties, developers are trying to capitalize on the demand.
In the last two years, 25 new condo projects have been announced in the downtown area, although it is far from certain they will all be completed. Within sight of Brickell CityCentre alone, eight residential buildings are under construction, including three being developed by the Related Group, an affiliate of the Related Companies of New York.
“We seem to be on the cusp of another boom,” said Peter Zalewski, a principal at Condo Vultures. “The question is whether this will be a controlled boom or another out-of-control boom, which is what we’re known for.”
The developers of Brickell CityCentre, Swire Properties, a division of the Hong Kong conglomerate with deep roots in Miami, are trying to balance the various market forces. While the residential market is looking healthier, demand for office space is still weak.
Swire also sees a strong need for high-end shopping in the rapidly growing downtown neighborhood. The company’s partner in the 500,000-square-foot retail component at Brickell CityCentre is the Whitman family, the owners of Bal Harbour Shops, a hugely successful open-air shopping center just north of Miami Beach.
On the office side, Swire is remaining cautious. The vacancy rate in the city’s financial district is well into the double digits at roughly 16.7 percent, according to CBRE, a real estate services firm.
Swire hopes eventually to include an office tower with 750,000 square feet, but for now, the office component of the project will contain only 120,000 square feet. Diana L. Parker, a senior vice president at CBRE, said the new office space would be available just as a number of leases downtown were expiring. “Their timing is impeccable,” she said.
The plans for Brickell CityCentre reflect Miami’s desire to bring its downtown in line with trends occurring in business districts across the country, where developers are being encouraged to provide convenience to public transportation, street-level retail and underground parking. Occupying four blocks, the Brickell CityCentre is next to the 8th Street station serving Metromover, a free transit line that circulates downtown.
Article source: http://www.nytimes.com/2013/05/01/realestate/commercial/miamis-condo-market-rebounds-stoking-a-fresh-building-boom.html?partner=rss&emc=rss