Demand Outpacing Supply for Downtown Miami Condos

MIAMI—Demand for condos is outpacing supply in Downtown Miami. So says the Miami Downtown Development Authority’s third quarter Residential Market Trend Update.

Over 95% of all residential units in the downtown Miami area are occupied, including the limited remaining inventory of developer-owned condo units and units still held by major investors. Meanwhile, the inventory of new, unsold condominium units still subject to first time market sales in the downtown area dropped to 2,200 units. That’s down nearly 50% from a year ago and reflects an average of about 100 new unit sales per month during the third quarter.   

“The Miami DDA has been tracking condo sales and rental activity since the market bottomed out a few years ago and what we are seeing is a migration into our urban core, which is not only reducing inventory, but stabilizing prices,” Alyce Robertson, executive director of the Miami DDA, tells GlobeSt.com. “Foreign investment is certainly playing a part in this growing trend, which combined with residential living, is creating a tightening of the market much faster than most analysts would never have predicted.”

Year-over-year, the total of 2,900 sales in the first nine months of 2012 was up about 8.8% from 2,665 during the first nine months of 2011. Average unit sales price in the third quarter of 2012 was $419,538, up 21.4% from the 2011 third quarter average of $345,678.  At $397,667, the average sales price for the 12-month period ending Sept. 30 was 11.6% higher than the same period a year earlier. Overall, the average unit price for new and resale has increased about 25% per year since 2009. And residential leasing velocity reaccelerated in the third quarter of 2012, with the average number of leases closed monthly up 30.6% from the 416 units per month average recorded during the second quarter of 2012.
 
With limited inventory remaining, a new wave of residential construction is underway in Miami’s urban core.  Marc D. Sarnoff, City of Miami District 2 Commissioner and chairman of the Miami DDA, said, “The vast increase in new construction is further proof that the world considers Miami to be a major center for investment and innovation.”

The report reveals there are at least eight projects spanning about 3,600 units actively under construction right now and others in preliminary planning stages. Most of those in the pipeline, including BrickellHouse and MyBrickell, are already reporting pre-sales to be nearly sold out, which further reinforces a tightening of the market despite the lack of traditional financing available.