Brittex Blog

So how big was Miami's downtown building boom?

In the last six years, 22,737 units were built or are now under construction in Miami's urban core -- more than double the number built in the nearly 40 previous years, according to a new report.

That's a huge figure, but still less frothy than some predicted.

The number of new condos in downtown Miami -- a number that's been hotly debated -- has important implications for the overall sales outlook of the condo market. Perhaps no corner of Florida has seen more building in recent years than Miami's urban core.

Cranes became a fixture on the city's skyline as new condo towers sprouted on once-forlorn lots, bankers handed developers billions to build, and the frenzied market prompted thousands of eager buyers to purchase units sight unseen.

Some warned too many condos were going up at a rate and at prices that far outstripped demand, equating the Miami land rush to the tech stock bubble and predicting home prices would fall just like share prices did.

Yet, with the housing market turning cold in 2006, the credit crunch spreading in 2007 and inexperienced builders tripping up on everything from rising construction costs to plain mismanagement, many proposed projects were scratched.

With few new projects starting, the real scope and size of Miami's downtown condo craze is starting to come into focus.

''It's not as big as we all thought it would be,'' said Jack McCabe, a Deerfield Beach real estate analyst who has long said way too many condos are going up than current market conditions support. ``Less than half of all announced projects are actually being built -- two years ago it looked liked everything would get funded.''

To be sure, many observers, including McCabe, say it doesn't change their analysis: The downtown market still has a vast surplus of condos.

''It's kind of a double-edge sword,'' said Peter Zalewski, a principal at CondoVultures.com, which conducted the survey on downtown condos. ``On the one hand, it is not 50,000 or 80,000 new units, it is 22,000 new units. But the bad part is that it is still 22,000 new units.''

The report by CondoVultures.com, a brokerage and advisory firm in Bal Harbour that helps individuals and investment funds find condo bargains, examined the swath of land from the Julia Tuttle to Rickenbacker causeways and from Interstate 95 to Biscayne Bay.

The surveyed area includes Miami's Brickell, central business district and Midtown areas.

Zalewski hired three researchers who went block by block and reviewed public filings to total the number of condo units. The aim was to ''quantify the market,'' said Zalewski, who took 4 ½ months to complete the study.

Since the boom erupted, developers filed proposals with Miami government planners to build more than 90,000 condo units across the city, including downtown. A persistent question has been how many of the announced projects, complete with fancy architectural renderings, would actually turn into buildings.

The study's findings: an area that built 11,517 condos between 1963 and 2002 will now have 34,254. Since 2003, the flurry produced 73 condo projects comprising 163 new buildings, 2,672 floors and 22.5 million square feet of livable space.

The results are another illustration of how Miami's downtown core is being remade by a historic building boom, underlining the region's ongoing transition from a sprawling, suburban metropolitan area to a modern urban center.

But some parts of the picture remain fuzzy -- namely, how quickly all the units will be occupied, when prices will stabilize and begin to rise again.

Miami's biggest urban boom is wrapping up at a time when the broader South Florida housing market remains mired in a deep slump and the economy is sputtering.

Yet, the renewed desire for urban life and the ongoing trend of road-weary suburbanites returning to the city is getting an added kick: $4 gas prices that give more incentive for living where the car is used less. And Miami's urban center is attracting more people, the busy restaurants near Brickell Avenue being an example.

''The issue is, have we made this a more livable downtown and the answer is absolutely yes,'' said Jorge Perez, chairman of condo builder Related Group. ``Will within a certain period of time 22,000 units be consumed? Yes.''

Perez, who is behind a dozen downtown condo towers, added that despite the current market pain, few observers deny Miami's long-term prospects are bright -- predicting that over the long haul the current condo surge will be subsumed by even more development.

''If we are ever to have a viable, 24-hour downtown, this is a minimal amount of units,'' he said. ``What is 22,000? It is nothing.''

Thus far, according to Miami real estate analyst Michael Cannon, 13,430 units in greater downtown Miami have been completed. Of that, 9,494 -- or 74 percent -- have closed.

But the analyst, who said the CondoVultures.com total downtown condo count is similar to his own tally, cautioned against looking at the greater downtown as a whole.

Cannon predicted there will be significant differences from project to project and neighborhood to neighborhood within the greater downtown. Differentiators range from the quality of a building to whether a neighborhood already has restaurants or shops.

''You have successful buildings next door to troubled projects that should never have been built,'' said Cannon, managing director of Integra Realty Resources. ``And, more broadly, we know Brickell is a successful market but we don't know what type of person buys in the central business district, or in Midtown. The jury is out.''