Condo Prices Skyrocket in Downtown Miami
- Jul 25, 2014
Miami—As the current wave of development nears the halfway point, downtown Miami condominium prices are soaring. Prices for existing (prior cycle) resale condo units in the city’s downtown district have ballooned 75 percent over the past 24 months.
In that time, prices have risen from an average of $230 per square foot to $400 per square foot, according to a new study by the Miami Downtown Development Authority (DDA), conducted by Integra Realty Resources (IRR).
The preponderance of this appreciation can be attributed to value recovery flowing from market stabilization and new product launches since 2011. International buyers are accounting for 90 percent of the condo purchasers, the study found.
Result: condominium prices in downtown Miami are approaching pre-recession levels.
“Strong buyer demand, appreciating prices, and growing appeal among renters continue to fuel the downtown Miami condo market,” says Anthony M. Graziano, senior managing director for IRR in Miami. “While we expect price increases to slow with time, downtown is well positioned to absorb the new condo inventory currently under development should present-day buyer trends hold.”
In total, approximately 8,700 condominium units were for sale or under development through June 2014. Most of this inventory is slated for 2017 delivery, evidence that the market is in the early stages of mid-cycle development.
The growing appeal of living in downtown Miami is also fueling demand for rental units. Some 400 to 450 leases have been signed in the larger downtown area monthly over the past three years. Average monthly rents have climbed from $2,198 per unit in 2011 to $2,429 through the second quarter of this year. More than 4,600 new apartment units are being planned or already under construction.
The greater share of these apartments is expected to deliver in the Brickell submarket, Miami’s financial center. There more than 4,800 residential units are being constructed, accounting for almost a 25 percent growth rate in the submarket.
Though submarkets throughout Miami’s downtown core are witnessing development activity, the fastest-growing market is the Edgewater neighborhood of Miami, situated north of the central business district along the Biscayne Boulevard corridor. A 67 percent inventory increase there translates to more than 1,900 units in development.
“Downtown Miami has long been viewed as a business hub, but we are quickly gaining a reputation for our lifestyle offerings, everything from the Adrienne Arsht Center for the Performing Arts and Pérez Art Museum Miami, to a growing number of high-end hotels and restaurants and the addition of luxury retail,” reports Alyce Robertson, executive director of the Miami DDA. “Overseas buyers eyeing U.S. real estate are finding that downtown Miami has all the amenities of a major cosmopolitan city, along with competitive pricing and easy access to Latin America and Europe.”