The million dollar condos

South Florida CEO, June, 2002 by Johanna Marmon

It feels like the final wave of a gold rush: All up and down the coast of South Florida, the remaining slabs of waterfront property are being developed, vertically, for dozens of high-rise projects that all boast the last, best views -- along with unit price tags that quickly leap past $1 million each dressed guests filled a massive patio on Biscayne Bay in South Beach. A hip-hop DJ pumped syncopated sounds out of speakers the size of Dolphin linebackers, while waiters passed through the crowd offering lamb chops and sushi. Everyone was waiting for the show -- the American premier of the Piedras Swimwear Collection, a Brazilian blast of bikini-clad models who were set to parade across a translucent plastic runway suspended over the Olympic-sized swimming pool.

The event? Something that could only happen in South Florida: the celebration of a luxury condominium's completion. In this case, it was the Murano, a curvaceous bayfront tower and the latest to be finished by developer Jorge Perez. With eight more projects in the works, The Related Group has led the region in new condo sales for the last two years running.

Underscoring the importance of the condominium market in South Florida, where the sale of residential property leads the economy, County Commissioner Gwen Margolis was on hand to declare the day Jorge Perez Day. Miami Beach City Commissioner Simone Cruz was also on hand to compliment the event; the Mayor of Miami, who was busy with a city commission meeting, sent a statement of congratulations for the achievement.

Perez, like other major developers, is riding the crest of a seemingly unstoppable wave of condominium sales, especially sales in the "luxury" category, which starts at about $500,000 and quickly climbs into the multi-million dollar realm.

The numbers speak for themselves. Michael Cannon, managing director of real estate consultancy Integra Realty Resources-AREEA-South Florida, says that $1.9 billion worth of new condos were sold -- and these are closed sales -- throughout Miami-Dade, Broward and Palm Beach counties in 2001. That figure represents an astounding 33.7-percent increase over 2000. Almost $1.5 billion of the total sales came from Miami-Dade County alone, 78.8 percent of the total. "In the history of South Florida that [total] number is unprecedented," says Cannon. "We do not see the [luxury] market subsiding."

Apparently not. As Cannon notes, sales of new condos hit a 10-year high in 2001. It was the most successful year since 1981, when new condo sales topped $2 billion. And, while Cannon says 2002 may not hit the levels of 2001, he's quite optimistic. "Because we have had such a strong run, we may be returning to what's considered a normal market," he says. "Normal might not be what we are accustomed to, because we have been on an increase since 1992."

So who's buying all these luxury condos in hot spots such as South Beach, Aventura, Sunny Isles, Fort Lauderdale, West Palm Beach and Palm Beach? Certainly, developers rely heavily on the domestic US market, including South Floridians, and there has traditionally has been a strong presence from foreign buyers, particularly from Latin America. (Europe also brings business, but isn't nearly as significant as the Americas.) On the domestic side, the Northeast remains strong, while the Midwest is picking up steam. But the buyer profile generally remains the same, no matter where they're from: empty-nesters, wealthy professionals, retirees, baby boomers who want to give up the four bedroom house in suburbia for sleeker digs on the water.

"I'm building for early baby boomers who have done well," says Palm Beach developer Gordon Deckelbaum. "They want everything you would get in a home, plus the alleviation of all the headaches that a house has."

At the same time, however, where the buyer comes from differs slightly from county to county. Miami-Dade, for example, has the highest number of Latin American buyers. "We're seeing a lot of buyers bring flight capital from Brazil, Argentina and Colombia," says Steve Wolfson, vice president of sales at Bella Mare, a luxury development by Bonita Springs-based WCI Communities that's going up on the last parcel of available land on Williams Island in Aventura.

As you move northward up the coast, however, things change slightly. Broward and Palm Beach counties cull more residents from local and domestic markets. "We're getting some northeasterners but very few Latin Americans," says Walter Collins, president of Sea Ranch Properties, the Fort Lauderdale-based company that's developing the $115 million Las Olas Grand in the city's downtown. "It's basically local people who know and love the area and who are not necessarily sunbathers and beach people." Collins says most buyers at the 211-unit, 38-story Las Olas Grand -- with prices ranging from $500,000 to more than $3 million -- already have a house in the Fort Lauderdale area. Richard Zipes, developer of the Las Olas River House, also in downtown Fort Lauderdale, agrees with Collins. "Latin Americans tend to stay in Miami-Dade because that's the area they know best," he says. "Up in Broward, we're definitely drawing on a more local crowd."