Prodigy Network sent me an email recently, announcing “exciting news” about the “progress” of the Beach House Designed by Richard Meier in Surfside. My new concerns stem from the fact that during the last two years or so, this project has switched developers twice. In April of 2006 the original developer, Lynx Strategic Development, announced a new partner, Turnberry Developers, a well-known and well-respected residential and commercial developer. Fast forward to my email of last week, yet another TOTALLY different development team, Wavestone & Development Services Solutions is in place and “ready to bring to life the design of one of the masters of modern architecture”. So for me, this email did not offer “exciting news”. Quite the contrary; this email reinforced concerns I already HAD regarding this project, and raised some new ones on top of that.
1. Who are the new developers? What is their track record?
2. What happened to Turnberry? With all the resources available to Turnberry, did they not feel this project was worthwhile, and if so…WHY?
3. Why has it taken three developers to bring this project to where it is today? (two years behind schedule)
4. If pre-sales were so strong, why would it take so many development teams to get this project built?
Regarding #4 above, attached to the email was an inventory list of available units. What surprised me was the low number of units available, as I know this project well and remember in April, 2005 (coincidentally the pinnacle of the recent real estate boom in Miami) bringing clients to the project when it was first announced. Even back at the beginning, this project was, in my opinion, both chaotic and disorganized. So much so that my clients and I put The Beach House on the back burner. We just didn’t get a good feeling and decided not continuing to pursue purchasing at the Beach House. Sometimes you have to go with your gut, even when you can’t put your finger on the concern in a factual way.
I’m not saying that this is a bad or undesirable project, what I am saying is that the history of this project gives me cause for concern. In fact, I hope that “The Third Time’s A Charm”, and the Wavestone Group can deliver the unique design of Meier’s vision. But this situation with The Beach House, highlights the risks of preconstruction development I have addressed in the past. Even with a strong developer involved like Turnberry, markets change, construction costs vary, and projects may never be built. In Florida, it is likely that only the first 10% of the monies paid to the builder are placed in a protected escrow account. Any additional deposits, or pre-payments of upgrades, may be used by the developer for construction costs. If the developer shuts down, some portion of the buyer’s money could be at risk.
That said, even with all the uncertainty of the market and the development teams, Richard Meier’s name and design, combined with a prime oceanfront location, has created a lot of interest among the international elite. I wish them well and will take a fresh look at the project as it moves forward. Everyone is best served when a new construction project finds its way to a satisfactory resolution. I always hope for the best, as a bad market is bad for everyone. But this project will have to prove itself to me, and I will have ten times the questions I might normally have, given its history, before I could comfortably recommend it to my clients.