As the condo market in coastal Miami-Dade County increasingly shows signs of stalling because of a slowdown in foreign investment activity, the conditions some 20 miles to the north in the domestic-oriented downtown Fort Lauderdale and Beach area suggest a growth spurt is underway in Broward.
Riding the momentum created by the return of the U.S. buyer, coupled with generally cheaper prices compared to neighboring markets to the south in coastal Miami-Dade, the downtown Fort Lauderdale and Beach area is experiencing a surge in newly proposed condo projects.
Within the last year, developers have announced plans to build about 27 new condo buildings with nearly 2,500 units in the downtown Fort Lauderdale and Beach market.
Today, some 42 new condo buildings with nearly 3,300 units are currently proposed for the downtown Fort Lauderdale and Beach market compared to about 15 buildings with less than 800 units announced back in June 2014, according to the preconstruction condo market website CraneSpotters.com.
Even with the recent spurt of new condo towers announced, the downtown Fort Lauderdale and Beach market accounts for only less than 8 percent of the nearly 43,150 units proposed east of Interstate 95 in the tri-county region of Miami-Dade, Broward and Palm Beach as of June 22, according to the data.
Greater downtown Miami, by contrast, accounts for about 46 percent of the total new condo units that are proposed east of I-95 in South Florida during this real estate cycle that began in 2011.
Increasingly, some of Miami-Dade’s most active condo builders, such as the Related Group and the Newgard Development Group, are expanding their focus northward and launching new projects in the downtown Fort Lauderdale and Beach area to take advantage of the changing market conditions.
In the past year, many of the international investors who have an interest in buying condo units in Miami-Dade have seen their purchasing power eroded as the dollar has strengthened significantly against most foreign currencies.
For example, the dollar is up about 17 percent against the euro, 28 percent against the Brazilian real, 26 percent against the Colombian peso and 37 percent against the Russian ruble compared to a year ago, according to the currency exchange website OandA.com.
In addition to the currency swing, foreign buyers have had to deal with asking prices for condo units in coastal Miami-Dade that are equal to or higher than the levels reached at the peak of the last real estate cycle in 2006.
This combination of factors has led to a slowdown in condo resale transactions and a growing supply of units available for purchase in coastal Miami-Dade.
Greater downtown Miami currently has more than 17 months of supply of resale units available for purchase based on the sales pace in the first five months of this year. Miami Beach has more than 10 months of supply of resale units on the market, and Sunny Isles Beach has 14 months of supply available, according to data from the Southeast Florida MLXchange.
A balanced market is considered to have about a six month of supply available for purchase. Fewer months of supply suggest a seller’s market; more months indicate a buyer’s market.
In the downtown Fort Lauderdale and Beach area, the supply of resale condo units on the market stands at less than seven months, according to the data.
The downtown Fort Lauderdale and Beach market finds itself in a relatively acceptable range for condo resale supply despite the average transaction price increasing by 10 percent on a year-over-year basis to nearly $305 per square foot in the first five months of 2015, according to the data.
It is worth noting, the current resale price for a condo unit in the downtown Fort Lauderdale and Beach market is still about 20 percent less than the average transaction amount of $379 per square foot achieved in the first five months of 2006, according to the data.
The unanswered question going forward is whether domestic and foreign buyers alike will increasingly bypass the coastal Miami-Dade condo market for the lower prices currently being asked by condo sellers in the downtown Fort Lauderdale and Beach market.
Peter Zalewski is a principal with the Miami real estate consultancy Condo Vultures. Zalewski, a licensed Florida real estate professional since 1995 and founder of CVR Realty and Condo Vultures Realty LLC, advises developers, lenders and institutional investors. Zalewski also runs the preconstruction condo project website CraneSpotters.com in conjunction with the Miami Association Of Realtors.