Flamingo South Beach North Tower Canceled?
February 16, 2008 by Lucas Lechuga
Earlier this week, I received an email from someone stating that they had heard rumors that the North Tower of Flamingo South Beach had been canceled. I asked around and it seems that, while nothing has officially been announced, there are plans to give deposit money back to contract holders of units in the North Tower of Flamingo South Beach and to maintain it as a rental building. I'm assuming that the option to convert the Center Tower will not be exercised by MCZ/Centrum and that it too will remain as a rental building.
This is actually great news for owners of condos in the South Tower at Flamingo South Beach, as well as for owners of condos located in the surrounding neighborhood. There will now be much less condo inventory hitting the market. The three towers comprising Flamingo South Beach have a total of 1,688 units. I'm not sure how many of these are situated in the North and Center Towers, but my guess would be that it is something close to 1,100 units. That's 1,100 less condos that would have otherwise become available on the market (if my estimate is accurate).
I'm just wondering if this will mean that the plans for the courtyard will now be scrapped. The renderings for the courtyard looked fantastic! I'm sure this additional element calculated into the decision-making process of someone who purchased a condo in the South Tower of Flamingo South Beach.
although mcz isn’t going to fail anytime soon, this is a major blunder on their part. they bought at peak prices (it was the biggest condo conversion purchase in s.fla in terms of dollars). no way are they rolling in enough cash to service their debt. considering what they were trying to do, i’m assuming they had a two year i/o loan that’s already been refinanced or extended by now. that must be some pricey debt.
As a local South Beach realtor, I have also heard these rumors. The prices were way too high for a building that was built in the 1960’s. The developers were very lucky to have sold the units in the south tower at the top of the market. It most likely means they are going to scrap the designs they had for the courtyard. However, doesn’t it mean that condos owned in the south tower will be worth even less because now they are sharing property with a rental community
jcrimes,
I may be wrong but the way I understood it is that MCZ purchased an option to convert each tower. They exercised the option to convert the South Tower. I guess they are deciding not to exercise that option for the North and Center Towers. I don’t think they actually paid for all three towers upfront. I may be wrong though but I remember reading something about that when the “acquisition” announcement was made.
Here is the url to the news story about flamingo apts sale:
http://www.bizjournals.com/southflorida/stories/2006/02/20/daily8.html
Here is a blurb:
The deal includes Denver-based seller AIMCO’s rights to the rental complex’s marina on Biscayne Bay. MCZ/ Centrum Developers also plopped down $5 million – non-refundable – for the option to buy the 614-unit north tower for $169 million and the 513-unit center tower for $267.5 million.
If MCZ/Centrum Developers exercises those rights, it will spend $600 million for the 1,688-unit complex.
—————-
So, MCS/Centrum has an option to buy each tower and paid a fee for that right. I do agree that they bought at or near the peak and now it is all downhill.
I have friends who live in Flamingo..it is a great place with a great party scene. But I would not pay $2700 for small 2brm apt overlooking the bay. I would pay that overlooking the ocean, but not the bay.
In my opinion, the view of the bay is much better than the view of the ocean. However, being able to walk down to the beach within 5 minutes is worth a lot.
I live in Flamingo North Tower & this cancellation does not surprise me a bit – the amount of money they asked for 2/2 on 7th floor was just ridiculous – well over 500K. North & South Towers were built in 1969 and do not constitute to luxury by today’s standards – but they want ultra lux prices. At least rent is somewhat reasonable – and it is a nice community geared towards European taste
Definately expected. The building was once a rental tower owned by one landlord, and turned into a rental tower owned by hundreds of different landlords. Certainly not a place to live full time as an owner if you’re spending $500k+.
Also Lucas…I wouldn’t call it a 5 minute walk to the beach unless you are running full sprint and not waiting for stop lights! That is a very long walk, especially in the hot summer!
Miami Beach requires a 40 year certification for older buildings. Anything in regards to life safety, electrical and structural will need repaired. Good luck buying an older building that only had cosmetic improvements. Good luck to the landlords who haven’t found flippers to buy your old rental building. Good luck to residents who purchased the first phase of a glorifyed rental community.
Brian,
I wasn’t referring to Flamingo South Beach when I said that it would take 5 minutes to get down to the beach. I was referring to condo buildings residing on the beach. I figured that it would take 5 minutes by the time you left your condo, took the elevator down and made your way to the beach.
I was basically saying that the view from the bay side is much better but the accessibility of the beach from the beachfront condos is a big plus.
Lucas – I misunderstood your first statement. You are correct.
But views of the ocean are much better in my opinion, especially in the day time. But views help sell units, but people enjoy location much better. And west avenue just isnt a nice location compared to the rest of south beach or miami beach on the ocean or south point side.
Legal disclaimer –this entry below is based on rumors of MCZ dropping their tower conversion plans-
I don’t think MCZ and AIMCO ever planned on this potential outcome and I would assume a big mess with lawsuits if the project stops with only the South Tower being converted.
To say the least, having 1 tower condo-only is a very awkward layout when you have 3 towers looking into 1 shared courtyard and shared parking/amenities. Right now, there is a cordial relationship as MCZ and AIMCO are “partners”, but what happens if/when this partnership ends.
What happens when/if MCZ leaves the picture and a proactive condo board takes control of the South. Can the condo elect not to let renters into their South Pool…. if so, can the Rental elect not to let the condo owners to pass over the rental part of the complex? ie. you need to traverse the Rental part to get to the much nicer North Pool, parking area, and David Barton Gym. Can the Condo owners allow condo dogs to poop on 1/3 of the courtyard while the rental maintains a no poop policy?
Will there eventually be 2 security and maintenance staffs? If a condo visitor enters from the front and needs to valet their car, can they use the Rental valet which would be in the rental parking lot or does the condo have to set up their own valet area now.
This would be hilarious -and I hope it happens in a perverse way-… could the condo elect to erect a fence starting from the docks (which MCZ purchased with the south tower), along the seawall till they get to about 1/3 of the courtyard and take the fence across the courtyard to the front gates and just “wall off” the condo part… Would they be in their rights to do that?
It’s ironic, I used to ask that question about “what if” to managers on the AIMCO and MCZ sides during the Go-Go years (lol, a long 18 months ago) and they both were adamant that the 3 tower conversion was a done deal and the only reason the deal was structured piece by piece was more for tax issues/financial engineering. Supposedly, there is a very hefty penalty for MCZ to back out that may not be reflected on the surface of what was published regarding the contract, large enough that nobody would expect MCZ to back out. As most people know, the headlines of a large Real Estate deal are often for marketing purposes and don’t really give a good understanding of the underlying deal. On the surface, it looks like MCZ paid a $5 million option to buy the North and Center towers, but I’m guessing there is much more to it than that.
Anyway, I find it funny that what nobody expected to happen might happen. If the North and Center towers remain with the Rental/AIMCO and an independent condo board takes over the South, what if personalities collide?
If you look at current marketing materials on the flamingomiami website, it seems they are advertising to prospective condo buyers that the whole resort comes with a condo purchase… not ownership of part of the resort with many of the amenities residing on the rental part of the complex. I think quite a lot of South Condo unit owners might have a legitimate legal beef as to how the Condo may have been marketed to them. Was it marketed as, if you buy a South tower unit, you will get 100% of the resort only if all the towers are bought; and if all the towers aren’t bought, well you got to work it out with the rental company/AIMCO?
I’m also assuming many South tower buyers bought with an “understanding” that the Flamingo would tone down with the whole complex turning condo (case in point, the Waverly is night and day different now as a condo versus it’s years as a rental). If the conversion stops now, you are going to keep the overriding frathouse atmosphere at the Flamingo and I don’t think that’s what South owners were expecting and they really might decide to wall off the South Tower from the rest of the Flamingo LOL.
JL
Brian,
I do agree that beachfront condos do deserve to be priced much higher than bayfront condos because of fact that the beach is easily accessible but I would like to add a few reasons why bayfront condos may hold an advantage to beachfront condos.
1) Views are much better on the bay side, especially at night. Your view from the oceanfront condos at night is nothing but blackness. The bayfront condos have a beautiful view of the Miami skyline.
2) The traffic can be horrendous if you live on the beach side of South Beach. I picked up a reporter last weekend on 15th and Ocean Drive. It took me 30 minutes just to get from 5th Street to 15th Street. However, the traffic isn’t too much of a problem for condos located south of 5th. I wasn’t complaining much about the traffic though because the eye candy is outstanding on Ocean Drive.
3) In my opinion, the bay side is much cleaner and quieter. Take a look at the beach side of South Beach during Spring Break and you’ll see beer bottles on the sidewalk. You likely won’t find that on the bay side. The west side of South Beach has more year-round residents while the east side is more transient. The east side also has a ton of nightclubs nearby. That can either be an advantage or disadvantage depending on your lifestyle.
Lucas
JL,
I could not agree with you more. I have been thinking the same thing since The Flamingo went Condo. I used live there and the developer offered me my unit at $500 sq ft. I simply laughed. For years now I kept saying there is now way for them to sell the entire project. IF THE RUMORS ARE TRUE, than I am not sure what is going to happen.
am i glad i found this site we were on the verge of buying a unit in north tower. the developers were trying to say they had a better location in the south tower we should consider now i see the truth behind all this you may have saved me a lot of headaches
Lucas,
We are due for a closing count.
Suspect that the Flamingo is run by a Master Association which the developer/landlord will always control. The condo boards for each tower probably have a minimal say in certain tower specific issues and a budget accordingly, but basically it wouldn’t be in their remit to change things as discussed here.
But if not….
I don’t know that I’d be too happy about this if I were an owner of one of the South Tower units.
Yes, there will be less supply on the market, which is a good thing, in general.
However, this cancellation (assuming it happens) would be a very public admission by the developer that those units are not worth what the South Tower people paid for them. If they were, then the developer would proceed with selling more of them in the North and Center Towers. So, clearly, the South Tower owners are underwater.
Also, owning a condo in a development where a majority of the units will remain rentals is not a good thing. What is the point of owning one of these things when you can rent one for much less? Either way, you’re living the “rental” lifestyle – with the worst of neighbors.
Lucas,
I agree wholeheartedly that the west/bay side of South Beach is, in many cases, preferable to the east/Ocean side.
Along West Avenue and Bay Road, the environment is much different than what you get on Washington/Collins/Ocean. The west side is a much quiter, cleaner, safer neighborhood with the tourist and traffic-related headaches. As a result, you find far more working professionals and year-round residents on the west side of the island, which is simply more livable. And yeah, that bay view is pretty nice as well.
If you’re on vacation, go near the ocean, but if you plan on actually living there, it’s a no-brainer to go with the west side of the island (or South of Fifth if you have that kind of $$).
Apartment to condo conversions rarely financially benefit the eventual condo owners.
Condo Owner –
Nonsense. Everyone who flipped their condo conversion unit in 2005 and 2006 made out like bandits.
Something very similar happened to my mother-in-law in Fort Myers. They had the downpayment taken care of for their new condo and 2+ years later it still hasn’t been completed. Now, they have to fight to get their money back.
I’ve heard many stories about this type of thing. Too bad it isn’t better regulated or something. It just doesn’t seem right!
Confirmed…..
http://www.bizjournals.com/southflorida/stories/2008/02/18/daily7.html?ana=from_rss
Tony,
Thanks for the link. I guess the rumors were true. It’s good to see that I beat the newspapers to the punch. Keep sending me rumors and I’ll do my best to validate them.
Lucas
thanks for the correction. on second thought, these guys were brilliant for giving themselves an out.
jcrimes,
“Always leave yourself outs. Applies to a player’s life away from the game as it does at the table.” That’s a quote from one of my favorite movies “Rounders”. I guess MCZ was smart enough to leave themselves an out.
I’m curious how the foreclosure situation is in the Flamingo South Tower. Is it too early after closings for foreclosures to start piling up… if it were to pile up? One of the things that made me go Hmmm a few months back is that 2 recent MCZ/Centrum South FL condo Conversions -Cite and the Tides- were making the “Most Foreclosures” lists in mid 2007.
“The leading condo developments on the foreclosure list were Sailboat Pointe in Oakland Park, Jade Residences at Brickell Bay in Miami and The Tides of Hollywood Beach. Twenty condo owners at Sailboat Pointe, a condo conversion, had foreclosure proceedings initiated against them, Jade had17 foreclosures, and The Tides, another conversion, had 16. Other condos with a high volume of foreclosures include the Four Ambassadors near Brickell Avenue and Cite on Biscayne Boulevard”
It could be bad luck, but I’m wondering if there were some sloppy lending practices going on at the MCZ conversions, and if so, if they were repeated at the South Tower of the Flamingo.
BTW, the Flamingo South Tower is where the assistant pizza shop manager I knew scored a 400K mortgage. He left for out of state 1 year ago, and I don’t know what became of his unit.
JL
BE CAREFUL NOW LUCAS…….you don’t want to say anything that’s going to get ANYONE in an uproar and start suing again……LOL
Yes, always leave some outs! MCZ/Centrum are very experienced developers and purchased the South Tower outright, then had options. They never had to carry the North as far as financing. The team sold 700 units in the last 20 months, one of the worst in recent history. Even though the South went fast and was 97% sold out, the North seemed to stall at 33%, not a chance in this environment to have a bank finance the North with only 33% pre-sales no matter what the track record on the South.
True, the rest of the courtyard won’t be redone anytime soon. But the improvements to the South are spectacular. Glass balconies, sound proof updated sliding doors, heavy entry doors, 24 hr concierge all make for an elegant living experience. This is a 180 degreee difference from the North Tower (a short walk away). While North Tower residents complain of noisey neighbors, uncontrolled lobbies, leaky and dated sliding glass doors, and fire alarms that go off in the middle of the night, the South Tower residents mostly complain about the North tower residents!
MCZ/Centrum has there outs, NT buyers have their deposits back (some happily, some angry that the North won’t be a as nice as the South, and some will transfer their deposits to the few units left in the South), and the owners of the South are very happy!
The amenities are beyond compare…boat docks, 10,000 square ft David Barton Gym (gratis w/maint.), two pools, two Jaccuzzi’s, beach, etc, etc. and now less competition in the marketplace.
Flamingo South Tower,
Your points are well taken. The only problem is the South Tower will be sharing property with a rental community. That in its self could pose a problem with regards to value. Also, just wait till other owners who paid top dollar for the condos stop paying the condo fees thus potentially creating assessments for those who actually want to live at The Flamingo. This seems to be a new trend in many of the condos in South Beach. The people in the rentals also share the same amenities you have. Just my opinion.
Does anyone know the status re sales at the Mondrian?
TO: Flamingo South Owner
Knowing what you know now. Would you still buy your condo for the same price?
There’s going to be a lot of litigation regarding this issue. The fact is you were sold something that is not going to be finished.
What a ripoff to Flamingo South owners!!!!! They should give a partial refund or pay maintenance fees for 2008/9 in return
I been several times to the Flamingo in the last 2 years and for me, it is simply paradise…. filed with beauties and sun. If the possible cancellation of the conversion of the two remaining towers cause to keep the current beauties-euro-latina crowd, and the fabulous sunday party at the north pool, then the south buyers will have made the best deal of their life when buying in Flamingo !!!
But the paradise has its price… for the price asked for a small studio facing the wall, I got a few month ago a 2200 scare foot brand new home, with 4 bdr, 3 living, garage, fireplace… and by far this winter 6 feet of free snow… just north of Montreal. Anybody willing to make an exchange???
I’m sure the 100 or so (according to MLS listings) people that own south tower units that are trying to sell them right now are thrilled by the fact that they’re only going to lose maybe 30% of their purchase price instead of 50%.
And to the owners who are not planning on selling – they must be happy knowing that it is costing them twice as much to live there as it does their neighbors who are renting and enjoying the exact same lifestyle for a fraction of the cost (you can rent a South tower unit from one of the underwater owners if you like it better than the north tower).
Paradise has 2 prices – one (renting) is about 50% less than the other (buying right now).
So it is NOT canceled – http://www.bizjournals.com/southflorida/stories/2008/02/18/daily7.html?ana=from_rss – just trouble with selling enough crap at sky high prices.
That just gives me an excellent business idea – why dont I become a developer & make bamboo huts and sell those for $million$ dollars :+)
Margus – Be sure to put granite countertops in those bamboo huts so you can get double the price!
Actually at the moment there are about 17 listings for sale in Flamingo South Beach: http://miami.condo.com/BuildingDetails/AvailableUnits.aspx?ID=1403088
And 4 foreclosures ( http://www.condo.com/MapSearch/MapSearch.aspx?LocationID=72595 – you need to zoom in & uncheck “has photos”)
Actually there are 90 units listed at the Flamingo as of 11:40pm , Feb 20, 2008. Not sure where 17 came from.
Yep, 90 listings. I guess the condo.com site doesn’t pull all of the listings or something.
There was some issue with our mls data yesterday – at the moment we have listed 78 for sale and 44 for rent
I wonder if anyone got any money back, I went to the sales office this morning and they said that they are not giving the deposits back, so if any one got it please post it.
Thanks
Lucas,
In your capacity as a realtor, are you able to contact Flamingo to confirm if deposits are or can be returned?
edgar, So you’re saying that they are canceling the north tower but not giving deposits back to contract holders? Like ever or just for the moment?
liv, they won’t be any more inclined to tell me then they would be to tell you.
Lucas,
From the article, I didn’t get the impression that they are canceling the north tower…just waiting until “sales hit the critical threshold”.
But the article did say they are giving back deposits, so a little strange what was relayed to edgar.
edgar…did u show the article to the sales agent?
I own in the south tower and have already contacted attorney. this is going to be a mess of epic proportions.
The best about this is that now we can proceed knowing what the units will be worth and strategize in order to maximize the profit of these investments.
Can Margus or someone explain how you accessed the foreclosure site and determined the number of foreclosures? I got directed to a US Map and put in Miami Beach, FL and got 39 pages. Any way to narrow this?
FYI I have a deposit on a unit in the North Tower and was told to email the Sales Director, which I did Sat., and they would send the forms to get my deposit back. Not sure how long it will take.
I think everyone should just calm down. It doesn’t sound like they’re canceling the conversion but they haven’t reached the 80% threshhold of units sold to complete the conversion and so if people are getting antsy they’ll give them back their deposit. I absolutly love living at the Flamingo and don’t regret buying my place for a minute (I was a renter and got a discount so I paid a fair price pe square foot for South Beach). As far as sharing with renters – isn’t that all of South Beach / Miami Beach? All condo buildings have renters in them. If you bought to flip, then yes, you’re hard hit in this market right now, but if you bought to hold on, everything will be just fine. There’s no other place like the Flamingo in South Beach – we have the best grounds of any condo complex around! Be thankful and appreciate it!
owner in south beach you are right about the flamingo being a nice place however you are misinformed about the develpers plans. they are bailing from the project. none of the work to the common grounds will be completed. the gym and parking lot will be in buildings owned by Aimco. the north tower will not be updated to match the south tower.