Miami Developer To Auction Off Condos
How motivated are some developers getting to unload their unsold condo units? How about auctioning off their last 20 unsold units, 8 of which will have no reserve. The following article appeared in the Miami Herald a short time ago:
Panoramic views of Biscayne Bay. A short distance to the Carnival Center and downtown Miami. Living in the heart of Miami’s emerging Edgewater neighborhood.
It’s all yours ” for auction next month inside a Marriott Hotel ballroom.
In what may preview the straits the ailing South Florida condo market faces in the coming months, developers of the Platinum condominium are auctioning 20 condos in its 119-unit, 22-story tower. Eight will go to the highest bidder, no matter how low the sales price. The rest require the developer’s approval.
Carmen Redondo, a principal with Maysville, the property’s builder, said buyers started closing on units at Platinum, 480 NE 30th St., in May, but the remaining inventory couldn’t attract enough interest in the sluggish market. We decided to auction the last 20 units so we can finish this project and go to a new thing,” Redondo said.
The move echoes the condo bust of the 1980s, when new units were auctioned in bulk across South Florida. Recently, individual condo owners, companies converting apartments into condos and single-family builders have already experimented with auctions, both online and in person with full-throated auctioneers.
But South Florida condo builders, who are completing a record spate of new towers, have been slow to adopt auctions to move unsold units.
This may be among the first auctions for new condos in South Florida in the current downturn, said Jack McCabe, a Deerfield Beach real estate analyst who has long warned about condo overbuilding.
Market watchers bet more are to come, given conditions in the condo market. In June, the number of Miami-Dade condos sold dropped 52 percent from the same month a year earlier ” although prices held on, gaining 7 percent year-over-year to a median price of $275,500.
Richard Swerdlow, chief executive of condo seller condo.com, said the company is launching an online auction business for new condos within the next two months.
Real estate analyst Michael Cannon said auctions are not necessarily a sign of distress but another marketing tool. Developers have adopted a range of measures to sell units, from lavishing incentives on buyers to offering to temporarily lease back units.
Cannon also said the 1980s auctions were not always successful. The state of the market was so depressed then,” he said. That is not necessarily the case today because there are still buyers in this market. They are just looking for better deals.”
The Platinum auction, meanwhile, presents an interesting twist. Typically, auctions establish a floor price at the start of bidding. If the minimum is too high, bidders sit out and the seller keeps the unit. But at the Sept. 20 auction, eight of the 20 units will be sold without any minimum ” meaning the highest bidder, no matter how low the winning price, gets the unit.
It will be very interesting to see what prices they fetch for those,” Swerdlow said. I may go down there and buy a unit.”
Miami Herald staff writer Steve Rothaus contributed to this report. Copyright © 2007 The Miami Herald, Matthew Haggman.
What does this mean for investors looking to invest in Florida Commercial Real Estate? It means you need to have someone working with you who can not only advise you on the current market but recognize and forecast market trends to help you invest wisely. Part of the CCIM training is dedicated to market and area analysis and it is a powerful tool to have at your disposal. Contact J.A. Barnett Realty Group today for an in depth analysis of your current portfolio of investment properties or help with a purchase of a new property.
Peter J. Barnett, CCIM
