Creating Condo Demand From Short Supply Of Waterfront Property
Real estate in Miami-Dade County has ebbed and flowed according to the waters bordering it – the tenet of location, location, location.
The tide has since turned, though. The city is looking upward, building condos that tower above the ocean.
But the supply of waterfront property is eroding. This has led some real estate developers to buy condo buildings, tear them down and replace them with something bigger and newer.
The process is called condo termination. Not all South Floridians are onboard.
La-Shanda West would rather see eco-friendly condos with solar panels. Joel Eriksson in Fort Lauderdale already thinks tearing down and building up are a problem in his neighborhood.
"All these plans for new condos going up are only going to add more and more problems," he says. "I see it firsthand every single day."
Sonya Arias, 26, has been looking for apartments for months. She says if an old condo is knocked down and replaced, new affordable housing should go up in its place.
"If anything needs to go up, it's apartments for us, so maybe I can leave the nest," Arias says.
NADEGE GREEN: Brian, why is this happening?
BANDELL: There's been a run on land values in South Florida – a huge increase in development – and it just so happens that some of the best sites for development have older condos on them. Buildings from the '50s and '60s that happened to be on the waterfront in Brickell or on Miami Beach. And if a developer is able to buy out enough of those units, they can then terminate the condo association, knock the building down, and build something in place that is much more valuable.
NG: Rene, can you talk more about terminating a condo building? How do you sell an entire building with dozens of individual owners? Surely, there's some pushback.
RODRIGUEZ: There can be. The first thing you have to do is you have to identify a lot of land, like an acre of land, where the value of the land is worth more than the building that's sitting on it. These tend to be older buildings that were built in the '50s and '60s, or even in the '70s, that haven't been built to current hurricane codes. So it would cost the owners of those condos more money to renovate their buildings and put in new windows, put in new roofs, than it would to just sell the unit outright.
TOM HUDSON: Rene, these buildings are ancient in terms of South Florida standards, right? The '30s, '40s, '50s, '60s and '70s. So it's the best land, right? I mean it was the land that was first built upon.
But how did the developers then match what's there now with modern zoning? I mean you got to be able to put a big enough building there in order to reap big enough profits to just buy out all the condominiums don't you?
RODRIGUEZ: That's correct. The zoning laws have to be in place so you can build out a much bigger structure than what's there now. The particular example that we wrote about at 175 SE 25 Road, that area is zoned for a building of up to 48 stories. The condo building that developers bought was 11 stories, so you can see how you could maximize the potential value of that land. You can triple or quadruple it by building a new structure.
BANDELL: And the same in Sunny Isles Beach. You see all the huge skyscrapers there. There's still a bunch of old hotels and condos there. So if you can buy a 10-story condo from the '60s, knock it down, build a 50 to 60-story building, that's an easy way to make a lot of profit for a developer
NG: Brian, what would replace the buildings that are going to be torn down? What happens when you take an older building that might be more affordable now, then tear it down?
BANDELL: I've seen a couple different things. And with the OKO group, they're getting a condo called Una where you know you're having units start at $900,000 for just one bedroom. So that's a high-end, luxury-type building.
On Miami Beach there are some condo buildings that are being converted into hotels. It really depends on what is the best use of the land. And unfortunately, you're not going to see anything more affordable. They're doing this in order to maximize the value, which means high-end in some capacity.
TH: You're really reshaping neighborhoods, and some of these older neighborhoods with these older buildings, right, Rene? If you're taking a building that you wrote about there on the south end of Brickell that's under 12 stories, replacing it with a 47-story building with an entry price of $900,000 for a one-bedroom apartment, that is significantly changing the character of that neighborhood.
RODRIGUEZ: Absolutely. This street is a cul-de-sac. There's no through traffic in it, so there's not a lot of cars. And you have these amazing views of the bay.
One interesting thing about this particular project is they also tried to buy an addition to the building that they bough. They tried to buy a smaller building that was just adjacent to it. And they were unable to buy that one because once people in that building got word of the fact that the developers were interested, they started jacking up their prices. So, it didn't make good business sense for them to buy the other building.
The bad news for those people is that now they're going to be living next door to a construction site for two years. And their view of the bay is going to be blocked by this giant 47-story tower. But it does absolutely change the tenor of a neighborhood but it could also conceivably bring up the value of those properties.
WLRN: With developers buying out condo buildings to build something new, What would you want to see in place of an old condo building?
Albert Gomez from Coconut Grove: I would want to see buildings built to new standards. I would want them to consider density and the type of neighborhood that it was prior to the purchase.
Carolyn McCrossin from Margate: I'd like to see attraction, multistory condos or rental buildings, with stores on the first floor—not tourist traps, but actual neighborhood stores. Think NYC.
Kelly Cox from Coral Terrace: As older condos get developed, we’d like to see something more sustainable and resilient take their place. Structures that plan for sea level rise and storm surge through techniques like living shorelines are essential.
Camila Prada from North Miami: I would NOT want to see buildings. We need more green out here, trees, maybe a park with benches to enjoy the outdoors.
Victor Tejera from Coconut Grove: I would love to see equal opportunity housing. Doubtful Miami and its developers actually care about providing all factors of our community (poor and not) with waterfront residence opportunities. The average middle class Miamian needs help for secure housing.