Miami’s auction era in the real estate downturn may be shorter lived than was originally expected if the first public offering of a trouble project is any indication of the future.
After more than a month of continuous publicity and advertising, the developer of the troubled 22-story Platinum Condominium on Northeast 30th Street in Miami’s Biscayne Boulevard corridor sold only nine condominiums from an available pool of 20 units.
This despite a turnout of more than 300 would-be buyers who were greeted by a DJ, a cash bar, and a wall of local and national television crews camped out in the back of the Marriott Hotel conference room just north of downtown.
All nine sales were of condos being marketed as absolute units that would be sold regardless of price. The absolute units sold for an average of $192 per square foot despite construction costs for replacing the exact same unit averaging more than $300 per foot.
Bids on seven more units totaling $1.85 million, or $204 per foot, were submitted but later rejected by the developer for being too little. Four units failed to receive a bid at the developer’s minimum amount.
Originally the developer had planned to sell only eight absolute units regardless of price but the low bids forced organizers to unload a ninth unit to meet a pre-established minimum gross sale amount.
The lack of offers from more than 250 registered buyers in person and online prompted auctioneer Louis B. Fisher III at one point to abandon his scripted presentation and remind the crowd that the units were being sold at a discount.
“You’re not supposed to make me work this hard,” said Fisher, of the Fisher Auction Co.
Industry watchers are wondering if developers faced with similar situations in the future wouldn’t be better off selling the remaining units to a bulk buyer. By dealing with one of the several bulk buyers shopping for a South Florida deal, sellers could potentially move quietly to unload the unsold units at a price comparable to the auction. More importantly, a quiet bulk sale would also likely limit the possibility of litigation being brought against the developer by disgruntled owners who bought at retail prices.
The Platinum condo units that did sell traded for a combined $2.28 million, or roughly $254,000 per unit. The lowest price per square foot paid for a unit was $175 for Loft 107, while the highest price was $244 per foot for units 1905 and 1602.
An additional seven units received bids that the developer ultimately rejected. The rejected bids averaged $264,000 per unit. Of the rejected offers, the lowest rejected bid was $300,000, or $176 per foot, for unit 501, a three bedroom and three bathroom unit with 1,700 square feet. The highest offer per square foot that was rejected was unit 1705 with two bedrooms and two bathrooms with 1,005 square foot. The developer was offered $230,000 or $229 per square foot.
One factor buyers were sure to calculate in their bid price was the amount of inventory actively available in the building. Besides the 20 units being auctioned, there are an additional 14 units actively listed in the 119-unit building. That equates to 29 percent of the building being for sale.
Current pricing in the Platinum ranges from $349,000 to $699,000. On a price per square foot perspective, the pricing starts at $347.10 and goes up to $546.18, but that is sure to drop with the auction.
Here's a breakdown of the sales prices for the absolute units that were sold regardless of price:
- $320,000 ($188 psf): Unit 301, 3 bedrooms / 3 bathrooms, 1,700 sq ft;
- $295,000 ($180 psf): Unit 1001, 2 bedroom / den / 2 bathrooms, 1,375 sq ft;
- $295,000 ($214 psf): Unit 1907, 2 bedroom / den / 2 bathrooms, 1,380 sq ft;
- $295,000 ($214 psf): Unit 1607, 2 bedroom / den / 2 bathrooms, 1,380 sq ft;
- $295,000 ($214 psf): Unit 707, 2 bedroom / den / 2 bathrooms, 1,380 sq ft;
- $245,000 ($244 psf): Unit 1905, 2 bedroom / 2 bathrooms, 1,005 sq ft;
- $200,000 ($244 psf): Unit 1602, 1 bedroom / 1.5 bathrooms, 819 sq ft;
- $175,000 ($212 psf): Unit 1806, 1 bedroom / 1.5 bathrooms, 826 sq ft;
- $160,000 ($175 psf): Unit Loft-107, 1 bedroom / 1.5 bathrooms, 913 sq ft.
A complete list of every high bid is also available from Condo Vultures™ LLC.
Peter Zalewski is a principal with the consulting company Condo Vultures™ LLC and a licensed real estate broker with Condo Vultures™ Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com.
Copyright © 2007, Condo Vultures™ LLC
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