As the last three residential construction cranes move closer to being disassembled in the oversupplied Downtown Miami condo market, four additional cranes - against steep odds - have suddenly sprung up on a new speculative oceanfront condominium project proposed in the barrier island city of Bal Harbour in northeast Miami-Dade County.
The newly installed construction cranes have been erected to facilitate the building of the proposed St. Regis Bal Harbour Resort & Residences condominium and hotel on an 8.9-acre site where the Sheraton Bal Harbour Hotel once stood.
The planned three-tower St. Regis complex is proposed to have 268 condominium units, 36 condo-hotel units, and 24 fractional units for sale to the public plus 182 hotel rooms and a presidential suite that will be owned by the developer, 9701 Collins Avenue LLC.
Prices start at more than $1,000 per square foot. An unknown number of units are under contract.
The development schedule calls for topping off the trio of 27-story glass towers in autumn 2009, and delivery in late 2010.
“The development team appears to be so confident that this project - modeled after the ultra-luxury and pricey Apogee condominium in South Beach - will be a success that they are building on speculation that the units can be sold once delivered,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures® LLC. “This goes to show how difficult it is right now to obtain financing for a new South Florida condominium project. When a development team with the background, experience, and war chest of 9701 Collins Avenue LLC opts to self finance a project of this magnitude, you have to conclude that construction financing is all but nonexistent today.”
The development entity – 9701 Collins Avenue LLC – building the St. Regis Bal Harbour is a partnership between Starwood Resorts & Hotels Worldwide Inc. – which besides St. Regis also owns the brands Westin, W Hotels, Sheraton, Le Meridien and Four Points - and the nation’s largest condominium developer The Related Group .
The project received a financial boost from Starwood Vacation Ownership Inc., which provided a $30 million loan to 9701 Collins Avenue LLC, according to public records.
The loan is secured by the waterfront land that had been long owned by the Sheraton Bal Harbour Joint Venture before the deed was transferred to 9701 Collins Avenue LLC in July 2007. Miami-Dade County’s Property Appraiser assessed the value of the land at $125.6 million, or $325 per square foot for the dirt, in 2007.
“Aside from the trophy location and international name brand recognition, the St. Regis Bal Harbour stands to benefit from what a growing number of industry professionals see as a leveling off – and in some cases strengthening - of prices in the condo market on the barrier island of Miami-Dade County,” Zalewski said. “The barrier island, which didn’t have the same extent of condo building as Miami’s mainland, is a popular destination for locals and second-home buyers alike who prefer the combination of sand, water, restaurants, and nightlife.
“Second-home buyers purchasing today tend to opt for the barrier island even though the bigger discounts are more prevalent on the mainland of Miami.”
Mainland Miami’s biggest challenge has been absorbing all of the 22,737 new condo units – 88 percent of which have already been delivered – that are completed or under construction in the Greater Downtown Miami area, which is comprised of the neighborhoods of Brickell Avenue, Downtown, and the Biscayne Boulevard Corridor, according to the Condo Vultures® Official Condo Buyers Guide To Miami™ .
On the barrier island, the amount of new condo construction is estimated to be less than half of the Greater Downtown Miami total.
Average discounts being tracked in the Vultures Database™ highlight the price differences by submarket.
On the barrier island from Miami Beach north to Surfside, Bal Harbour, and Sunny Isles Beach, the average price drop per condo unit in the Vultures Database™ is -25 percent. Average prices stand at $460 per square foot today compared to a historical high asking price of $618 per square foot.
In Bal Harbour, where the St. Regis is going up, the average price drop is -22 percent with an asking price today of $714 per square foot compared to the historical high average of $914 per square foot.
On the mainland in Greater Downtown Miami, the average price drop per condo unit in the Vultures Database™ is -32 percent. Prices are currently $314 per square foot compared to a historical high asking price of $463 per square foot.
The Vultures Database™ is comprised of nearly 5,000 condos, townhouses, and single-family houses east of Interstate 95 in Miami-Dade, Broward, and Palm Beach counties that have been reduced in price by at least -10 percent and/or $100,000.
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. Be sure to check out Peter’s blog at CondoDump.com. Don't forget to sign up for our weekly Market Intelligence Report. Looking for a property at a deep discount? You are encouraged to take a peek at the Vultures Database™.
Copyright © 2008, Condo Vultures® LLC
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