🌇 Condo Cornucopia!

Happy Friday Highest & Best! This week brought lots of condominium news for South Florida:

💰 Insurance costs are making condos unaffordable

🚘 The Mercedes of condo buildings (literally!)

🛋️ Miami is the “most competitive” U.S. rental market

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Let’s get to it!

What’s Eating Florida Condo Values?

It’s getting less affordable to own a condo in Florida.

Florida’s property insurance premiums are the highest in the U.S. — and rising. Those costs are getting passed on to condo owners (many older and on fixed incomes) through higher homeowners association fees each month.

If that weren’t enough, HOA fees are skyrocketing for another reason: a new state law requires condos to set aside funds for their biggest maintenance expenses. (The law, passed in the wake of the deadly 2021 collapse of Champlain Towers in Surfside, overhauls the time-worn condo board practice of punting on costly capital expenses).

All told, that’s tallying up the financial strain on Florida’s condo owners, according to a report this week from brokerage Redfin. Now many owners are looking to sell — and condo prices are dropping.

“New condo listings are soaring as sellers try to offload their properties,” Redfin said in its Florida report. “That differs from the U.S. as a whole, where condo prices are rising, sales are holding steady and new listings are increasing at a much slower rate.”

Redfin looked at Florida condo sales in January and compared them to a year earlier. It found that:

OK, BUT: “While condo prices are down from a year ago, they’re still much higher than they were before the pandemic,” Redfin notes in its study.

That’s good news for sellers. But buyers struggling to afford a condo purchase are being pushed further from a deal when it becomes clear what it costs to actually own a property.

“Condo costs are shocking,” Juan Castro, a Redfin agent in Orlando, said in the report. “Condos that used to have a $400 monthly maintenance fee may now have a $700 fee. It’s causing buyers to rethink their plans.”

⏪ Catch up on recent Highest & Best issues:

• Billionaire Name Game, Feb. 23, 2024

• Storage Wars, Feb. 16, 2024

• Three Cars Inside Your Condo, Feb. 12, 2024

Live What you Drive: Mercedes Condos Unveiled for Miami

Can a Mercedes feel like home? In Miami, perhaps it will.

Mercedes-Benz announced this week that it’s partnering with JDS Development Group to build a luxury condo tower carrying the automaker’s name.

The planned 67-story Mercedes-Benz Places in Miami’s Brickell neighborhood, will offer 791 condo residences and a 174-room hotel, according to a press release by JDS. There will also be 200,000 square feet of new office space, because, sure, why not?

Condo sizes will range from studios to three-bedrooms, and prices begin at $500,000, according the development’s website. Work on the building’s foundation has already begun, and the tower’s completion is expected in 2027, JDS said.

The project marks the fourth condo tower in Miami branded with a luxury automaker’s name. Porsche Design Tower, with an elevator that shuttles cars up to their owners’ apartment, was completed in 2017. The more recent crop of car condos include: Aston Martin Residences, and Bentley Residences, which we profiled two weeks ago (See: “Three Cars Inside Your Condo”). Bentley just broke ground this week.

The auto branding plays well in a car-centric and luxury-obsessed market like Miami — in a way that it wouldn’t almost anywhere else.

“There’s been a history of this kind of marketing in this location and it seems to work. So why not do more of it?” said Jonathan Miller, president of appraiser Miller Samuel Inc. which tracks the Miami condo market.

“With the acceleration of development in the post-pandemic era, the need to differentiate becomes more important, which suggests there’s going to be more of this,” he said.

Listings of condos for sale in Miami-Dade County jumped 61% in January from a year earlier, to 1,863, according to data from Miller Samuel and brokerage Douglas Elliman. Contracts to purchase condos climbed 5.1%.

Mercedes has one other branded condo project — in Dubai. That one is a 1,118-foot high tower under construction, where some units run as high as $10 million.

The 791 units planned for Mercedes’ Miami project is quite a hefty addition to the area’s condo supply, Miller said. But migration patterns to Miami, while slowing, still suggest there’s enough of a buyer pool, he said.

“My overview of this region is one of growth for an extended period of time, enabled by work from home,” Miller said. “It might take longer to absorb, but it seems in sync with the expansion of the region.”

There’s a blitz of apartment rental construction going on in South Florida. But as of now, the Miami rental market remains the nation’s “most competitive,” according to a study this week by data firm RentCafe.

On average, 14 renters compete for every vacant apartment in Miami, the most of anywhere in the U.S., the firm said. It takes 36 days for a vacant unit in Miami to find a tenant.

Only 3.5% of the area’s total rental units were available to apartment seekers, as more tenants stayed put and renewed their leases, the firm said.

RentCafe estimated last year that 20,906 newly built rentals would be added to the Miami metro market (see “Skyline Gold Rush”). The city of Miami alone was expected to add 9,362 apartments, one of the highest tallies of any city in the country.

At the start of this year, however, newly built apartments accounted for less than 1% of the units available for lease, according to RentCafe.

That’s it for today!

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