Miami Condo Developers Slash Prices on Existing Inventory

March 16, 2009

It’s no secret that most condo developers in Miami are still left with a large supply of unclosed condos.  These developers pretty much have three options: (1) Do nothing and continue to bleed money by paying interest on the outstanding debt, (2) Sell condos in bulk to a vulture fund at a very big discount, or (3) Slash prices to end users and pay the principal and interest on the outstanding debt over time.  Option number 3 was something that should have been done a long time ago.  Over the past year, sales agents working for various condo developers have made it known to real estate agents that “developer prices are negotiable” or that the developer is “willing to listen to any reasonable offer”.  However, with the exception of Groupe Pacific with Brickell of the River South, none of the Miami condo developers would go so far as to publicly reduce their prices.  It didn’t make sense to me.  The only logical explanation that I could come up with is that developers were afraid of the backlash from current condo owners.  The days of name calling and finger pointing are over.  That was so 2008.  It’s in everyone’s best interest, current condo owners included, that each condo development close as many condos as possible.  This has been especially true since Fannie Mae revised their guidelines for Florida condos.  Reaching the all-important 70 percent mark for closings is so critical in this market.

It seems that Miami condo developers are finally turning to option 3.  Over the weekend, two major condo developments announced large price reductions.

• 500 Brickell – On Sunday, I received an email from a 500 Brickell sales agent announcing “much lower pricing” on all remaining developer condos and that “prices have dropped up to $100,000”.  The email revealed that one bedroom condos now start at $180,000 while two bedroom condos now start at $295,0000.  I think a good old-fashioned price reduction is a MUCH better idea than including a Mini Cooper with the purchase of a condo at 500 Brickell.  I think we’ll finally start to see a dramatic improvement in the closing rate of condos at 500 Brickell.  I’d love to see a price sheet of all of the remaining condos to see if the reductions were made across the board.
• 1800 Club – I found out about this one on Saturday and actually visited several of the developer units on Sunday.  I can honestly say that 1800 Club now offers the best deals in Miami.  Where else can you find a condo with a water view for $173 per square foot in a recently constructed condo building in Miami?  Unit 1715 is a very large 2 bedroom/2 bath condo with 1,810 square feet of interior that is now priced at $314,000.  It doesn’t have a direct water view but it’s actually not bad, given the price.  Below, I’ve included a picture of the water view from within the condo.  As I was writing this, I received a text message saying that an offer was submitted to the developer today for unit 1715.  As of the February condo closing rate update, 1800 Club was able to close 68.59 percent of its overall units.  I think by the next update, we’ll see its closing rate push well past the 70 percent mark.

Within the next couple of days, I’m going to publish a more in-depth post about 1800 Club and the deals that are now available, along with pictures of the units that I saw on Sunday.  It should be duly noted that the 2 bedroom condos facing direct east towards Biscayne Bay have not been reduced much from preconstruction prices, if at all.  For example, unit 3505 which is a 2 bedroom/2 bath with 1,222 square feet of interior is priced at $385,000.

Below is a list of the other condos that I viewed on Sunday.  As I said earlier, I will do a follow-up post within the next couple of days that will include pictures of these units as well as of the amenities and common areas.

• Unit 1411 – $235,000 – 1 bedroom/1.5 bath with 1,095 square feet of interior facing South
• Unit 1504 – $167,500 – 1 bedroom/1 bath with 822 square feet of interior facing West
• Unit 1002 – $425,000 – 2 bedroom/2 bath two-story townhouse facing South (I need to find out the square footage of this one but it’s big and has two large terraces.

I guess time will tell if other Miami condo developers will follow suit by repricing their existing inventory and disclose those new prices to the public.  I think it’s a good step in the right direction.