Some condo developers experienced slower sales in 2024. That didn’t stop developers from launching more projects.
Expect more of that this year, developers and brokers say.
The consensus is that condos are still “where we can make the numbers work,” says developer Gaetano Caltagirone. Multifamily is way more challenging (see last week’s Weekly Dirt) and some of those buildings will mark a “great opportunity” to be converted to condos, broker Craig Studnicky tells me.
Rents have softened, and “we need the inventory,” Studnicky says.
Developers don’t want to come off as negative, but challenges remain. High insurance costs and permitting delays are among their concerns. And there is the potential (I think we’re already seeing it) for a glut of inventory in the pipeline.
“We’ve seen renewed momentum and optimism,” says developer and broker Edgardo Defortuna, referring to after the election and the holidays.
Optimism can be dangerous. Defortuna is still cautious.
“[Developers] need to be very careful on launching new projects at this stage in the game,” he says. “There’s some that make sense and many that don’t.”
Much of the pipeline is branded condos, continuing a trend that exploded last year.
Vertical Developments’ Fernando de Nuñez y Lugones is betting on more out-of-the-box, non-hospitality brands this year. De Nuñez y Lugones says hospitality brands are “overused.” Many developers will disagree with this hot take, as hospitality brands have mastered servicing these condos.
Projects that are under construction, including those that will be completed this year, are in the best position. Ned Grace, whose NDT Development is building the Nora District in West Palm Beach, predicts the market will be gassed up by a wave of project deliveries this year.
“You’ll see the development cycle that built in Covid start to deliver in ‘25,” he says.
Developer Raimundo Onetto says buyers are running away from older buildings. Normal people (a.k.a. not the super wealthy) are looking for new condos they can afford.
Onetto went back to an earlier point about permitting. Time is money.
“Everyone is complaining about the interest rates,” he says. “The issue that’s really affecting the returns on the projects is the time needed to spend on the entitlements.”
Prospective buyers of new condos, Studnicky says, are less anxious and more discerning than they were during the pandemic boom. Demand is strongest in the $500,000 to $1.5 million range.
In 2025, he says, “I see the roller coaster ride of South Florida sobering up.”
Kate Hinsche contributed reporting.
What we’re thinking about: How will the stigma associated with the Surfside condo collapse affect sales at Damac Properties’ ultra-luxury condo project? Send me a note at kk@therealdeal.com.
CLOSING TIME
Residential: A member of the Cafaro real estate family paid $55 million for the waterfront spec estate at 16171 Quiet Vista Circle in western Palm Beach County. The purchase price includes furniture and personal property. Developer Aldo Stark sold the seven-bedroom, nine-and-a-half-bedroom mansion, which is in Stone Creek Ranch, a gated community west of Delray Beach.
Commercial: Brookfield Asset Management sold the PGA National Resort in Palm Beach Gardens to Henderson Park, Salamander Collection and South Street Partners for more than $400 million. The 807-acre property at 400 Avenue of the Champions includes the 360-key resort and six golf courses.
NEW TO THE MARKET
One of the Links Estates spec homes hit the market, asking $49 million. Bespoke broker Zach Vichinsky is listing the six-bedroom, seven-and-a-half-bathroom mansion that’s under construction at 1006 Links Drive on Fisher Island. The 12,470-square-foot house sits on a 0.4-acre lot. It’s part of a 12-home development on the ultra wealthy island.
A thing we’ve learned
A website called HowardOutNow.org is demanding the resignation of Howard Lorber as executive chairman of Nathan’s Famous hot dogs. Lorber, Douglas Elliman’s former chairman and CEO, has been on Nathan’s board of directors since the late 1980s. He resigned from Elliman in October following an investigation into the company’s workplace culture.
Elsewhere in Florida
- Surfside is considering strengthening regulations for newly constructed projects in response to a University of Miami study that found nearly three dozen oceanfront towers in Miami-Dade are sinking more than previously expected, the Miami Herald reports.
- Swire Properties pulled the plug on a planned office supertall in Brickell and put the site on the market. It planned to develop One Brickell City Centre with Steve Ross. Instead, Swire plans to redirect any sale proceeds to its planned Mandarin Oriental-branded condo and hotel project on nearby Brickell Key.
- Gov. Ron DeSantis said he would veto legislation passed by Florida lawmakers strengthening immigration enforcement, a move that escalates the power struggle between DeSantis and Republican leaders in the state. DeSantis said the bill doesn’t go far enough, according to the New York Times.
- Fear and anxiety have spread across schools in South Florida due to the federal policy changes allowing immigration officers to search for undocumented students and arrest them on school grounds, WLRN reports. The Department of Homeland Security Secretary removed restrictions that previously prevented Immigration and Customs Enforcement from raiding schools, places of worship and hospitals. Late Friday, the Washington Post reported that the Trump administration is working on directives that would allow immigration officers to access databases with information about hundreds of thousands of immigrant teens and children.