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(This story, in slightly different form, originally appeared in Incisive Media’s Daily Business Review.)

MIAMI-Construction lender Goldman Sachs Commercial Mortgage, which foreclosed on the Downtown Dadeland project in southwest Miami-Dade County, has put the massive mixed-use project up for sale. The division of the investment banking giant, wants to unload the project’s 126,920 square feet of retail space on the ground floor of seven residential towers and 158 unsold condo units.

No asking price was set by the lender. The components can be sold together or separately, according to CB Richard Ellis, which is marketing the property.

Goldman Sachs got stuck with the 416-condo and retail complex after taking title to the new development in December. That was the last step in a foreclosure action that it brought against the developer of the project in late 2007.

Downtown Dadeland was the first large development in South Florida to succumb to the housing meltdown. A construction boom fueled by cheap money and rampant speculation collapsed in 2007. Since then, developers have defaulted on construction loans and increasingly faced foreclosure. A frozen credit market has made it difficult for them to refinance existing loans or get new loans for their projects.

South Miami-based Gulfside Development walked away from the unfinished, 590,000-square-foot Downtown Dadeland in November 2007 as the housing market collapsed. Condo sales plummeted, and Gulfside principals, Jackson Ward and Stefan Johansson, could no longer make payments on the $224-million construction loan.

The partners stopped paying Goldman Sachs in August 2007 and owed the lender $222.6 million in principal, interest and fees as of November 2008, according to Miami-Dade County property records. In late 2007, Goldman Sachs successfully petitioned to have a court-appointed receiver oversee the completion of the project and collect rent on behalf of the developer.

The last of the seven buildings was completed earlier this year, but sales at Downtown Dadeland remain sluggish. Four units have sold since Goldman affiliate Dadeland Condo I LLC took title to the project five months ago, said Adam Cappel, president of CondoReports.com, a condo research firm.

“There hasn’t been much in the way of recent closed sales,” Cappel says. The asking price for condos at Downtown Dadeland, as in most projects in South Florida, has fallen in the past two years with some units being marketed at $165,000 or $211 per square foot, he says. At the height of the housing boom in 2006, the average sale price there was $258 per square foot, he says.

Goldman Sachs hasn’t set a price for the property, but CBRE says the cost of the land and construction of Downtown Dadeland is about $400 per square foot, or about $70 million for the unsold condos and $51 million for the retail space. About 40% of the retail space is leased out and generates a net operating income of nearly $1.1 million.

Once all the retail space is leased, the net operating income could jump to $4.8 million, according to CBRE. The base rent for the retail space in that area ranges between $25 and $50 per square foot.

Downtown Dadeland, designed as a walkable community, sits across Kendall Drive from the 1.5-million-square-foot Dadeland Mall. The condos being offered in bulk are vacant, and the buyer could rent out the units for about $2 per square foot, CBRE says, and once the housing market turns, the condos, which average 1,100 square feet, could sell for $260 to $300 per square foot.

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