As South Florida’s Beachfront Condos Age, Developers Look to Homeowners Ready to Sell |
FORT LAUDERDALE, Fla .– For some South Florida condo dwellers, that pat on the shoulder could be the deal of a lifetime.
The burning tri-county real estate market prompts developers to take stock of the region’s oldest waterfront skyscrapers as potential buyout candidates for the redevelopment. While not new, the trend has grown in importance as vacant lots disappear and more out-of-state residents move to the southern part of the country. Florida in search of luxury digs.
Homeowners who wouldn’t have thought of selling before now take the idea of relocating seriously when faced with high buyout bids, industry analysts and lawyers say.
—In Pompano Beach, The Related Group recently acquired the owners of the 46 low-rise Beach Villa units at 900 North Ocean Drive. The resort was built in 1978. The company recently obtained city approval to rezone the property so that it could build a 21-story luxury tower in place of the Beach Villa.
—In Miami Beach, the owners of the Castle Beach Club, a 17-story skyscraper circa 1966 on Collins Avenue, received so many unsolicited offers from various unidentified suitors that they hired Colliers, the real estate services company. , to sort them.
—In Sunny Isles Beach, Related Group and Dezer Development are celebrating the sold-out sale of their sleek 55-story new Armani / Casa luxury tower. The project, which began in 2016, came after developers took over a site that housed the decades-old Seashore Club, a low-rise 170-unit complex, which they bought.
While this latest deal dates back about five years, it is emblematic of how new high-end condo projects are increasingly displacing long-standing residential sites whose early years are distant memories.
“It appears to be a growing trend,” said Gerard Yetming, executive managing director of Colliers, the real estate services company. “Really, there are very few opportunities to build a new skyscraper in such a desirable location as on the beach. “
Render of The Related Group 21 story luxury tower on the beach at 900 N. Ocean Blvd., Pompano Beach. The developer has purchased the 49 condo unit owners from the Beach Villa, which covers just over 3 acres of oceanfront property adjacent to State Road A1A.
Render of The Related Group 21 story luxury tower on the beach at 900 N. Ocean Blvd., Pompano Beach. The developer has purchased the 49 condo unit owners from the Beach Villa, which covers just over 3 acres of oceanfront property adjacent to State Road A1A. (Arquitectonica via City of Pompano Beach / Courtesy)
How it works
Yetming said the obvious draw to homeowners selling their older units is the high price developers are willing to pay for them.
“They are starting to realize that this is something that we should explore in an organized fashion,” Yetming said. “Only with the right collective goals and a counselor can you do anything. “
He said there were a lot of buyout initiatives that we don’t hear about. Many fail, he said, amid bidding wars or internal disagreements over whether a sale should take place in the first place. It always takes a consensus among unit owners to move forward, he said.
“These are more of the exceptions than the rule,” he said of successful buyouts.
“It’s not for all buildings,” Yetming added. “There are a lot of well-constructed, well-located, well-managed buildings that are probably not good candidates. There has to be a very specific set of circumstances for these agreements to work. “
Once an older building is acquired, the time between the sale and construction of a new project ranges from 18 to 24 months, said Eric Fordin, general manager of the condos division of Related.
“Once the buyout is complete, it takes 6 to 9 months to get site plan approval,” he said. “Then the sales and marketing process varies by market but usually takes 6 to 9 months as well. From when we release construction documents to obtaining a permit, it usually takes 12 months as well.
The factor of the Champlain towers
Some sales drivers include increasing building maintenance costs.
For years, members of several condominium associations have postponed repair projects because of their expenses. A potential consequence of deferred maintenance became clear after the terrifying collapse of the Champlain Towers at Surfside, which claimed the lives of 98 people.
The disaster caused a major ripple effect of concern among the residences of other older buildings along the Gold Coast.
“The Champlain Towers incident is really, really pushing this trend,” said Joseph Hernandez, partner and chairman of the real estate practice group at law firm Weiss Serota Helfman Cole & Bierman in Coral Gables.
“The trend has been going on for quite some time,” he said. “I have been doing these transactions for 10 years. The trend really started because we are entering the period where condos developed in the 70s or 80s are becoming functionally obsolete.
“Now people are listening to the problem a lot more,” Hernandez said. “They are trying to come together and sell their property like they weren’t before.”
He added that he had seen “a two to three-fold interest in these transactions in the last year since the Champlain Towers”.
“Normally I work on a few of these deals” every year, he said. “I’m currently working on seven or eight major transactions. “
Preferential prices for top-notch properties
Yet it is the economy of results that decides whether a deal comes to fruition, Yetming de Colliers said.
“The only time it makes sense is when the value of the underlying land is significantly higher than what collective units are currently selling for,” Yetming said. “Otherwise, why would anyone want to sell their property unless they can make a big profit?”
Jamie Sturgis, founder and CEO of Native Realty Co. in Fort Lauderdale, said “all-time records” are paid for multi-family buildings as new residents arrive in South Florida from outside from the city and from outside the country.
“I would say the vast majority of the targeted sites are on the beach, in light of what has happened in Surfside,” he said.
Many owners are snowbirds who see this as “an opportune time …
Nick Perez, vice president of The Related Group, said the owners of Beach Villa in Pompano sold after realizing they could double or even triple their money from their original purchase price.
“At the end of the day, that was the price they were getting for their units,” Perez said. “I would say they were getting well above the market price for their units. No one has to sell. Fortunately, I was the only one trying to acquire all the units and I didn’t have a bidding war.
He said he met 26 or 27 of the 46 owners.
“There was a bit of a grip,” Perez said. “They didn’t want to leave the beach.
Some wondered where they would live next. Attached allows vendors to stay until the end of the winter season.
“The ultimate deciding factor was that if they sold to another end user than what I was offering, they would have gotten a significantly lower amount of money,” he said.
Perez did not provide any sales figures.
But sales data uncovered by Zillow, the national online real estate research and investment firm, revealed some homeowners were awarded as much as $ 800,000 for their one-bedroom, one-bathroom and one-bedroom units. of 302 square feet with a market value of just under $ 200,000.
It is not difficult to understand the appeal of Related. The 3.07 acre complex of one and two story buildings is located directly on the beach between the Atlantic Ocean and the A1A state road. The property offers extensive green areas and a community pool at the back.
In Its Place: Related is planning a 21-story mixed-use luxury condominium tower with 119 condo units and approximately 2,200 square feet of retail space, according to a filing with the City of Pompano Beach.
A short distance to the north, Related is building another luxury skyscraper called the Solemar, which the company says is 99% sold.
The quick sale, according to the company, is an example of the searing demand for beachfront properties.
“There really isn’t any real vacant land ripe for development right on the sand,” Perez said. Forty-year-old low-rise buildings are the second best thing.
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