Waterfront development land running dry
Written by Vanessa Zambrano on September 18, 2013
As real estate demand and prices keep soaring, developable land has been on the decline in Miami-Dade, especially oceanfront sites.
Even though they agree it depends on the type of use, developers and realtors say land is in short supply to start projects, unless properties on existing sites are razed and replaced.
“The county is composed by very different submarkets; there could be a potential land shortage. In Doral, where we’ve acquired 400 acres, there is a shortage. In Homestead there are many developable lots but it’s more suburban,” said David Martin, chief operating officer of Terra Group, which is building the Grove at Grand Bay condos.
Land shortage is also evident in Coconut Grove, he said, but some can still be available along Brickell and in downtown.
“There is a lack of supply of land, but it depends on the product. Miami Beach has a lack of oceanfront land for a high-rise residential condominium,” Mr. Martin said.
He said Terra Group’s goal has been to find and develop land in Doral, Coconut Grove, Miami Beach and the Design District based on availability.
Gil Dezer, president of Dezer Development, agrees the greatest shortage is along the water.
“My specialty is the oceanfront: it’s running out and the value and prices are going up. You see less and less. The scarcity of the land is pushing up values,” said Mr. Dezer, who has developed six Trump-branded residential condo towers and a resort hotel and is now developing Porsche Design Tower Miami in Sunny Isles Beach.
Along the oceanfront, Mr. Dezer said, as few as 10 lots are available for development.
The scarcity, the developers said, has much to do with the county’s physical barriers to each side: the ocean and the Everglades.
“People tend to look north, Broward or Palm Beach to find more land,” Mr. Dezer said. “Places like Weston also came up because of Hurricane Andrew, for instance.”
Land is scarce, he said, and the realty market is driven by condo sales, not home sales.
The shortage is evident for developing garden-type properties, which are composed of about 35 units per acre, said Ronald Krongold, managing partner of Gold Krown Financial, which owns Midblock, Midtown 2 and Midtown 4 in Midtown Miami.
“You can see it in those types of properties by looking at the price by unit,” he said.
However, Mr. Krongold says office vacancy is still high – which would not require new developments – and there is no shortage of land to build condos, especially because old properties are being torn down to be replaced by new ones.
Mr. Krongold doesn’t see shortage in space for retail, either: “They’re going vertical now.”
Senior realtor at Fortune International Realty Santiago Villegas, however, said the land shortage is real for the Miami-Dade metro area, and that multi-family properties can’t be developed in the suburban areas.
Costs of land have been increasing, driven by the shortage, so property prices increase as well, Mr. Villegas said. “Anything by the water is front row; people will pay anything. As there is less land to acquire, people think ‘If I don’t get more for my property, I won’t sell’.”