South Beach Condos Blog

With the real estate market in a state of flux, absorption rates are increasingly used as an indicator to assess how long it would take to sell ALL the existing condos in each condominium, assuming the rate of sales stays constant and no new listings are added to the inventory. Additionally, absorption rates are the best way of tracking market performance. They are usually used to indicate “overall real estate market performance,” or how an entire market is doing.

To calculate monthly absorption rate, I have taken all the condos that are currently on the market in each building in the South of Fifth Street (SoFi) neighborhood of South Beach, and divided them by the number of listings that have sold in their respective condo in the past six months and divided that number by six. Many people compute absorption rates by using the number of sales in a one month period, but I use a six month sales average so it “smoothes” the seasonal “peaks and valleys” to gauge the true overall activity.

The data was based on information from the Southeast Florida Regional (SEFR) MLS or from the associations participating in the SEFR for the period 1/1/07 through 9/3/2007.

Here’s the math:

Number of listings: 40

Number of sales in the last six months: 8

8 divided by 6= 1.33 sales per month

Number of listings: 40 divided by number of sales per month: 1.33= 30 months of supply

Key for South Beach Condos-Absorption Rates

The chart below illustrates the absorption rates for the Continuum, Murano at Portofino, Murano Grande, ICON South Beach, Portofino Tower, Yacht Club at Portofino, and South Pointe Tower, and shows how each building is performing relative to the amount of inventory and the amount of sales.

Red Hot Condo Buyers Market in South Beach

From the graph it is clear the Portofino Tower is a “red hot” buyers market with 34 months of inventory. Also, ICON and Yacht Club at Portofino are good condominiums to focus on as well. A balanced market is generally anywhere between six to nine months of inventory, anything above nine months is considered a buyers market.

What Does This Mean for Miami Beach Condo Sellers?

If you are looking to sell your Miami Beach real estate, make sure your prospective real estate broker keeps you informed about the market conditions in your specific area and building. Knowing the absorption rate for your South Beach condo will help you determine how aggressive you need to be with pricing, staging, and marketing your condo to maximize the likelihood of a prompt sale!

South Beach Luxury Condos in 33139: Continuum, Murano at Portofino, Murano Grande, ICON South Beach, Portofino Tower, Yacht Club at Portofino, South Pointe Tower

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Ok, so everyone is talking about this Platinum auction thing like it is some bellwether of things to come.  I did not attend.

Reading all the “coverage” on the event was humorous, to say the least.  From all accounts, it was the same old feeding-frenzy that has captivated Miami real estate for the last five years.  Here is the down and dirty:

• The media running around like moles looking for the next doom-and-gloom story
• Developers looking to “outsmart” the current market by pulling a fast one
• “Vultures” or whatever the new term is for former “condo flippers,” looking to rape the market of a quick $100K —speculators just love the new Maserati
• Bystanders on the sidelines waiting, and hoping, for lots of blood–just for the fun of it; kind of like “rubberneckers” on I-95

Are Bad Real Estate Decisions an Airborne Illness?

I’d have to say that the greed and the need to out-smart or out-maneuver the competition in Miami drives many people to make bad, bad, BAD decisions. In my opinion, many people got caught up in the hype of pre-construction condo speculation, and I foresee just as many people getting caught up in the hype of condo auctions, should they continue to occur.

From looking at the numbers, the people who bought the “absolute” units probably got a fair deal.  Platinum is in an inferior location (north of the P.A.C., not waterfront), and all the real estate market fundamentals that didn’t matter much during the frenzy (location, supply and demand; little things) will now become more important than ever.

I said it before and I’ll say it again:  during the last few years of boom, the pre-construction condo buyer got “sucked” into paying the price that the developer deemed the property would probably be worth upon completion, not the current market price.   I’ve have been told that the buyers of the “absolute” units are end-users.  As always, the end-user is the one who sets the market price, not the speculator.

Real estate analyst Lew Goodkin said it best:

…better bargains should come in 2008 when the market is even softer.

It will be interesting to see if any of the units that were bought at auction come back to market, and at what prices.

According to the Miami Herald, the Regent Hotel has left as operator of the new hotel at 1458 Ocean Drive in South Beach.  The new hotel operator is Vincci, a Spain-based hotel chain.  The 80–unit property opened nine months ago were sold as condominium hotels.

If I were a owner of a unit, I would be pretty annoyed.  That is one of the risks of buying a condo-hotel unit.  It would be like the equivalent of buying a unit at The Ritz Carlton and ending up with a Super 8 operator, or worse yet, a Nicky O!

Speaking of Nicky O’Hilton

The Bentley Beach, a 109–room condo-hotel located at 101 Ocean Drive in South Beach, will become a Hilton next week.  The Hilton was famous for operating The Fontainebleau Hotel on Collins Avenue up until 2005.  Since 2005 Hilton has not operated a hotel on Miami Beach.

What’s Up With Paradiso Condos/Gansevoort Hotel?

It seems that the Chetrit Group, L.L.C., has sold the project to the owners of the Gansevoort Hotel in NYC.  Gansevoort Hotel owners, William and Michael Achenbaum, were originally tapped to be the hotel operator for the South Beach project.

A source has informed me that a mortgage was recorded on the property, by CSFB, earlier this summer for $370M.  Calls to the sales office have confirmed that Chetrit Group, L.L.C. is no longer the developer. Closings of Paradiso condominiums are scheduled to begin in October while the Gansevoort Hotel is slated for opening in November. 

Michael Achenbaum tried unsuccessfully to take over the Royal Palm Crowne Plaza Resort in 2004.

Gansevoort Hotel, Paradiso South Beach, Miami Beach condo-hotels

Foreclosure at 1440 W. 23^rd Street, Miami Beach

It is very rare for a home in a neighborhood like this to be in foreclosure.  The home has four family bedrooms and one maids room, 6,121 interior square foot and a 18,813 square foot lot.

Built in 1957, the home was completely renovated approximately seven years ago by Wallace Tutt, whose credits include Cher and Gianni Versace’s Miami residences.  Unassuming style and understated elegance resonate throughout the one-story waterfront home.

For boaters, the house has 107.5 feet of water frontage and an oversized dock with lift.

The Sunset Islands are gated islands popular for their proximity to South Beach and Lincoln Road. 

This home has always been a favorite of mine because of its high ceilings, voluminous rooms, and quality of finish. 

Click here for more info on 1440 W. 23rd Street