😭Broken Condo Blues

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Happy Friday Highest & Best! Today we’ve got old condos, a private island and a peninsula, for good measure. Here’s the playlist:

⌛ A race to sell old condo units by January.

🏝 $31.5 million for a (partially) submerged island

🏩 A peninsula hotel— just not The Peninsula

💰 Miami draws the most home investors

But first, how about some Construction Calisthenics? Check out this morning workout at a Miami building site:

Fire Sale on Old Florida Condos?

It’s not a great time to own an aging condo in Florida. But is it also a bad time to buy one?

📜 A new state law requires older buildings to meet certain safety standards, and mandates they set aside funds for their biggest maintenance issues. (The law, passed after the deadly 2021 collapse of Champlain Towers in Surfside, overhauls the time-worn condo board practice of punting on costly capital expenses).

🤯 That’s tallying up the financial strain on owners of Florida’s oldest condos — many on fixed incomes— who are suddenly faced with as high as six-figure special assessments to pay for the required repairs. Now many owners, faced with a cost that eats into the value of their units, are scrambling to sell, swelling the condo market with listings and pushing down prices, the Wall Street Journal reported this week.

⌛ These sellers are hoping to offload their units before January 1, the deadline by which building reserves must be fully funded to be compliant with the law, the Journal said.

And here’s what that looks like in the market:

📈 84% of all condos listed for sale in South Florida in the first quarter were in buildings that are over 30 years old, according to a report by brokerage ISG World. That’s 15,759 such condos, to be exact.

🙁 Owners are struggling to find all-cash buyers because mortgage lenders are increasingly unwilling to take on the risk associated with these units, the Journal said.

😧 At the Cricket Club, a bay-front condominium in North Miami, 40 units are listed for sale at unusually low prices after the condo association levied a $30 million special assessment — which works out to about $134,000 per owner— on the building, according to the Journal.

“Owner very motivated to sell,” reads this Cricket Club condo listing seeking $330,000 for a 1,950-square-foot apartment. “Seller ready to sell!!” exclaims this one for $299,000.

And distress over the surging costs of staying put is happening to condo owners statewide. Like here:

Here:

Or here:

⏪ Catch up on recent Highest & Best issues:

• Top-Shelf Tear Downs, May 10, 2024

• Blackstone Shops Florida, May 3, 2024

• No Apocalypse Now, April 26, 2024

Miami Island for Sale (Partially Underwater)

Browse Miami’s priciest home listings and you’ll find this: a private island in Biscayne Bay is being offered for sale.

Bird Key, an uninhabited patch of land 500 yards offshore of Miami is seeking a buyer at $31.5 million, according to a listing by Compass.

That price buys an island shaped like a toothpaste squirt, with perfect skyline views…..and the rights to build homes on it. Including on parts currently underwater.

“This gem is zoned residential,” reads the listing, which promises a 37.5 acre development “opportunity” — of which 33 acres are submerged in the bay.

If uncovering an underwater island isn’t your thing, the broker listing isn’t short on other ideas for the site.

“One could acquire it to donate it to the public as an environmental treasure,” the Compass listing suggests. Or “a very lucky individual may create Miami’s most exclusive address.”

Transportation not included. So BYOB— Bring Your Own Boat.

Not That Peninsula Hotel

This 20.6 acre peninsula runs parallel to a runway at Miami International Airport.

It’s there that MCR, the third-largest hotel owner in the U.S., wants to build two new hotels, surrounding another it already owns there.

New York-based MCR filed plans this week for twin, eight-story properties, with 200 rooms each, the South Florida Business Journal reported. The new hotels would sit next to the Hilton Miami Airport Blue Lagoon, a 508-room (and 40-year old) property that MCR bought just last year for $118.3 million. .

Seems MCR is banking on heightened demand from Miami inbound travelers.
Miami International Airport welcomed a record 52.3 million passengers in 2023 — topping a record set just the year before, Business Traveler reported last month.

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This tiny company has all but cemented itself in the future list of bitcoin mining giants.

An industry shakeup of environmental regulations could spell catastrophe for others, while this company begins to soar.

The underlying factors?

Cheap production and carbon neutral mining.

But that’s just the start of it.

Here’s the real kicker…

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Miami’s Number 1… in Homes Sold to Investors

Miami is number one in the country — for the share of homes bought by those who aren’t planning to live them.

Investors bought 31% of all homes that sold in Miami in the first three months of this year, according to a report this week from brokerage Redfin. That’s far higher than the national average for investor sales which was 19%.

Rising U.S. rents are bringing home investors back to the market after a year-long lull, Redfin said. Most pay in cash — 69%!! — so they’re less sensitive to mortgage rate fluctuations than regular buyers.

Here’s the top markets for investor purchases in the U.S., per Redfin:

Look! I’m a Talking Head!

Last week, I appeared on The Miami Reporters Roundtable, a weekly podcast discussing Florida real estate hosted by Peter Zalewski, the founder of real estate consultancy Condo Vultures.

We discuss Blackstone, insurance, condo buyouts, fancy real estate parties and a condo sales center that went up in flames. Link here:

That’s it for today!

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