Analysts Skeptical About Condo Developments Near River
By Armie Margaret Lee
More residential projects are envisioned for the banks of the Miami River as builders remain upbeat on the market.
At least 10,000 units are under construction, recently completed or in the final stages of permitting, said Brett Bibeau, managing director of the Miami River Commission, a state-created watchdog group that oversees the 5.5-mile river.
Among projects recently entering the permitting process, Mr. Bibeau said, is Miami River Rapids, which comprises five 20-story buildings with more than 2,250 residences and 38,960 square feet of retail space.
But real estate analyst Michael Y. Cannon, managing director of Integra Realty Resources South Florida, said he doubts most of the planned projects will get off the ground.
"I see very few of them being built," he said. "The question is, ‘why aren’t they being built if they got approved?’ "
The market, he said, "may be not be responding to these approvals" and is looking elsewhere instead.
The number of residences planned along the river could prove to be a headache for developers, some experts warn.
"Real demand – from people moving in, renters who are going to be buyers and foreign buyers – does not equal supply," said Jack Winston of Goodkin Consulting Corp. "You’re going to have a lot of units sitting in the market."
The number of households in Miami-Dade increases by about 15,000 a year, he said, "but how many of them can afford units priced at $300,000? They would have to be earning $50,000-$70,000 a year."
Also, Mr. Winston pointed out, other areas in the county, such as Sunny Isles Beach, Aventura and downtown Kendall, are intensifying the competition in the condo market with developments of their own.
He said the current flurry of real estate activity conjures up images of the dot-com era, where some investors plunged in without a firm grasp of the market they were entering.
"The same kind of frenzy is going on now," he said.
"The real question is, after the building is completed and sold, whether or not people will actually close," he said. "It could be a problem to the developer or the lender."
But developers appear to be unfazed by caution warnings.
Edwin Verdezoto, chief executive of Royal Atlantic Developers, which is planning a mixed-use, two-tower project with 576 units, said there is "adequate demand" for residences along the river.
"We’ll be going in for the building permit this month," he said, adding that construction for Rio, whose units are priced from $200,000 to $500,000, could begin in January or February 2006.
Maurice Lemoine, with Cervera Realty, said that of the 455 residential units at the Latitude on the River, only 50 remain, citing the building’s location as the main drawing factor.
The 44-story building, with units priced from $300,000 to $790,000, is scheduled to be completed in the first quarter of 2007.
"We expect it to be sold out in less than three months," Mr. Lemoine said.
Meanwhile, all 700 units at the two-tower Brickell on the River, a sales associate said, have been sold out since last year.