Related Group recently broke ground on its 42-story Millecento Residences development in Miami. Plaza Construction is the contractor for the $105-million project. (Photo courtesy Plaza Construction)
As ENR Southeast noted in its March 11 issue, Miami's condo boom is back. Big time. The city's residential surge has even caught the attention of National Public Radio, which last month reported on the South American-led construction rebound and its newfound financing plan, which mostly involves getting large deposits from buyers up front.
No, this is not a case of a formerly robust construction market slowly coming back to life after the downturn. According to all reports—including from officials with two Miami contractors snapping up contracts—the city's condominium construction market is picking up some serious speed, and is poised to keep up the pace. For a hint of the market's future ambitions, for instance, consider the following Youtube video, touting developer Gil Dezer's Porsche Design Tower Miami, which will supposedly feature private elevators that owners can use to park their cars inside their condos. (A website selling units in the development says purchasers will receive a Porsche, up to $90,000 in value, upon closing.)
Youtube video highlights the automobile elevator system being planned for this project proposed for Sunny Isles Beach.
"It’s unbelieveable what’s going on right now," says Thomas P. Murphy Jr., chairman and CEO of Miami-based Coastal Construction Group. (He might've had that Porsche project in mind when he said that; McGraw-Hill Construction's Dodge database lists Coastal as the general contractor for that project, with Sieger Suarez Architectural Partnership as the architect.)
ENR Southeast readers may recall that Murphy forecast much of this back in the summer of 2011, when he predicted an "unprecedented" building boom—and thus earning several disbelieving comments from readers in the process. But nearly two years later, he's not backing down.
"This town is on fire," Murphy says today. "As a town, we’ll build more here in the next 10 years than we did in the last 15." Moreover, Murphy says Coastal started about $500 million in projects during 2012, and expects another $750 million in new contracts to move ahead in 2013. For 2014, he suspects Coastal could start another $1 billion worth of new projects.
"It could be quite a bit more than ($1 billion), actually," he adds.
As NPR and other media have reported, developers are using an altogether different financing plan this time around. Selling primarily to investors from South America, where buying second homes with cash is apparently more common, Miami developers are funding their projects with large, up-front deposits.
"Nobody’s depending on the banks right now," Murphy says. "Miami is really attracting rich (South Americans), and so many of them are used to not financing their second homes. So nobody’s primarily financing these projects with bank loans. They’re basically being paid as they go, and most of them have their buildings 50-70 percent sold before they start."
In Miami's Mary Brickell Village, Plaza Construction is building the 34-story EnV apartment building project for San Antonio-based multifamily developer Lynd. (Image courtesy Plaza Construction)
Another firm scooping up its share of contracts is Plaza Construction of Miami. Brad Meltzer, president of the contractor's Southeast office, says he sees another difference with this latest condo craze.
"This go-around, the developers appear to be more cautious," he says, noting the pre-construction sales requirements.
He adds, "They’re being selective about their product, and selective about their designs. (They're) understanding that they need to separate themselves in the marketplace from a product perspective, but also being smart and savvy about how they spend their money."
Meltzer adds that the latest construction boom isn't being fueled entirely by Miami developers, but that multifamily owners from across the country are active, too. Plaza is currently building the 34-story EnV luxury apartment project for San Antonio-based Lynd, for example.
And while neither Murphy nor Meltzer see any problem finding enough construction workers for the current wave of construction, both think the volume could eventually make it an issue.
"Projects coming out of the ground (now) might not struggle to find quality workers, but a year from now, things might be different," says Meltzer. "The recruiting of quality workers by our subcontractors is going to play a critical role over the next 24 months."
What do you think about Miami's latest condo boom? Is the residential resurgence sustainable? Could this have an impact on other markets? Share your thoughts below.