The idea of a vibrant city center in Miami is bolstered by a Downtown Development Authority finding that condo sales -- and prices -- are going up
Residents and officials longing to see downtown Miami transformed into the nexus of a bustling, 24-hour city are beginning to see a little cooperation from the market.
Even as home prices have continued to drop across South Florida, downtown Miami -- the hub of the over-development that many believe sparked the housing market collapse -- seems poised for a comeback, a new study released by the Miami Downtown Development Authority shows.
The report found sales of downtown condos have accelerated during the first half of this year, and the inventory of empty new condos on the market is steadily declining. Prices are on the rise as well.
In the first six months of this year, there were 1,933 units sold in Miami's downtown area, which stretches from Brickell north to Midtown and from I-95 east to Biscayne Bay. That's an increase of 110 percent over the first six months of 2009, when 919 units closed.
"Downtown is an exciting place to be right now, with everything going on, and the report shows that people want to live downtown. They want to live in the heart of the city,'' said Leo Zabezhinsky, the DDA's manager of business development, real estate and research. Zabezhinsky moderated a downtown-themed discussion during the Greater Miami Chamber
of Commerce's Real Estate Committee meeting on Tuesday.
The average sales price of a downtown home was $356,100 in the first six months of the year, up about 16 percent from the first two quarters of 2009, when the average unit sold for $306,700. For comparison, existing condo prices across Miami-Dade County dropped about 9 percent between June 2009 and June 2010 to $128,800.
The inventory of new, unsold condo units in the downtown area stood at an estimated 5,400 units as of June 30.
About half of the unsold units in the downtown area are in the Brickell area. The Central Business District, bounded by NE Fifth Street on the north and the Miami River on the south, contains nearly a quarter of the remaining new condo units.
At the current sales pace, downtown Miami's glut of new condos could be absorbed within the next 18 months, but there are a couple of caveats.
First, the DDA's numbers do not include the 870 units at the completed Mint at Riverfront and Paramount Bay buildings, currently empty but set to begin sales in the near future. Secondly, much of the sales activity has been generated by investors, who are largely expected to unload these properties back onto the market once prices rise and the housing picture brightens.
"Resale of investor-owned properties could continue for four or five years,'' said Craig Werley, president and owner of Focus Real Estate Advisors and one of the authors of the study.
In the meantime, those hoping that an active rental market can spur the type of downtown renaissance longed for by a growing group of supporters are encouraged by an occupancy rate inching towards 75 percent. The DDA's report shows leasing activity up 14 percent in the first six months of the year compared to 2009, with average rent down about 1 percent, to $1,787.
Another potential economic stimulator for the area, though still untested, is the arrival of the revamped Miami Heat team at downtown's AmericanAirlines Arena. With LeBron James, Chris Bosh and Dwyane Wade promising multiple championships, the effect on AAA's neighborhood could be transformative, said William Talbert III, president and CEO of the
Greater Miami Convention and Visitors Bureau.
"Just think about all the restaurants that are going to open up,'' he said. "You talk about a stimulus package -- that's one.''
But a number of major issues still hinder Miami's downtown from rivaling some of the other metropolitan hubs like Chicago and New York, said Sharon Dresser, co-founder of High Street Retail USA in Midtown.
The lack of flagship shopping destinations, inadequate public transportation between central downtown and areas like Midtown and the Design District and "real or perceived'' safety issues all need to be addressed, she said.
"If you want to do serious shopping, you have to leave the downtown area,'' she said.
By Toluse Olorunnipa
tolorunnipa@miamiherald.com
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