Residential Closings & Occupancy Study
Residential Closings & Occupancy Study – 2011 Annual Update
Downtown Development Authority District and Adjacent Areas of Influence
Prepared by: Goodkin Consulting & Focus Real Estate Advisors
Prepared for: Miami Downtown Development Authority
MAJOR FINDINGS
As of December 31, 78% of total units in completed new buildings were sold (first-time sales), up 10 percentage points from 68% one year ago. Occupancy in new condominium buildings including owners and renters climbed 11 percentage points from 74% to 85% of completed units. Completed buildings studied include 76 condominium buildings representing a total of 22,439 units. Only one major building (346-units) remains in the active pipeline of new condominium inventory expected to be brought on line and begin closing sales in the downtown area in the near-term.
Closed sales recorded in new downtown area condominiums through December 2010 totaled approximately 17,500 units, representing 78% of the 22,439 total residential condominium units in the 76 completed condominium buildings included in this market update.
The inventory of unsold new condominium units in the Downtown Miami area declined nearly 30% over the past twelve months.
Occupancy of new condominium units in the Downtown Miami Area as of December 31, 2010 is at 85%, up from 74% in February 2010.
Total condominium sales (new and resale) in the Downtown Miami Area in 2010 were up approximately 36% from 2009. Monthly residential sales averaged 315 units per month in 2010 compared to 232 per month in 2009.
Average unit sales price in 2010 was $347,729, representing a 15% increase from the average unit sales price of $302,254 in 2009.
Average condominium sales price per square foot in 2010 was up 10% to $300 per square foot from $273 per square foot in 2009.
Average monthly residential leasing velocity in the downtown area during the past twelve months averaged 370 units per month, up 7% from the 2009 average of 345 units per month.
Renters account for approximately 56% of occupied units in completed condominiums, up from 52% a year ago.
The unsold inventory of new condominium units in the downtown area declined to 4,960 units at year-end 2010, down from over 7,000 units a year ago.
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The acquisition in Q4 2010 by Rockwood Capital Partners of the remaining units at Everglades on the Bay represents continued stabilization of condominium projects sold out of distress in the Downtown Miami Area.
Assuming continuation of the new condominium sales pace evidenced in 2010, the remaining unsold inventory of new condominium product could theoretically be sold-out over a ±26-month period.
While the state of the Miami condominium market has caused hardship for many developers and lenders, the continued availability of good rental and for-sale housing values enhances potential for attracting business investment to the downtown area and supports demand growth for locally available goods and services.
Residential sales in the Downtown Miami Area in the 4th quarter of 2010 averaged 342 unit sales per month, which was up 25% from the 3rd quarter 2010 average of 274 sales per month. Total sales in 2010 were up about 36% (3,780) from 2,787 unit sales in 2009.
The inventory of unsold new condominium units in the Downtown Miami area declined nearly 30% over the past twelve months. Robust rental market demand drove the occupancy level in new downtown area condominium units up from 74% in February 2010 up to 85% as of December 31, 2010. The influx of population and households in the downtown area evidenced by these statistics supports expanding interest and opportunities for retail, services and restaurants. In addition to downtown residential growth, new hotels such as the JW Marriott Marquis Miami and EPIC Hotel are supporting an expansion of tourism volume in the downtown area and reinforcing opportunities for retail, dining and entertainment.
A number of factors continue to distinguish Downtown Miami from most other U.S. urban centers, resulting in positive implications for the future viability and economic health of the downtown area:
1. The City and downtown area’s established image and function as an international banking, business and commerce center.
2. Rebounding domestic and international tourism in Miami and the downtown area, having experienced notable gains in visitors and overnight stays.
3. Expanded housing capacity and affordability including opportunities for ownership as well as rental housing alternatives.
4. Condominium inventory and discounted trading prices continue to enhance the attractiveness and affordability of the urban lifestyle in the downtown area.
Occupancy is expected to continue to increase in the downtown area subject to the availability of remaining vacant condominium units for rent. As noted previously, an average of 370 units were leased per month in 2010. The estimated current remaining inventory of 3,417 vacant units could be fully absorbed by the fourth quarter of 2011 assuming continuation of the leasing velocity experienced in 2010.
Assuming continuation of the new condominium unit sales pace evidenced in 2010, which averaged 190 sales per month, the remaining unsold inventory of new condominium product (4,960 units) could theoretically be sold-out over a + 26-month period, which would extend into early 2013.