Postcards from the Bust
Drive down Biscayne Boulevard or Federal Highway in Broward, and the "For Sale" signs seem inescapable. Every lonely strip mall storefront and empty condo complex pleads to become someone else's problem.
Of the empty joints, high-rise condos are perhaps the most depressing. During the boom years, an endless parade of concrete towers competed for space on South Florida's skyline, but now only a handful of their windows light up at night.
Miami alone has produced 23,000 new condo units since 2003 and is experiencing the worst condo meltdown of any city in the nation, according to Jack McCabe, a local real estate analyst. Broward and Palm Beach counties built or permitted more than 18,000 condos. As a region, South Florida is probably the worst hit, McCabe says. "I think our population growth is about zero right now, and we're not creating any jobs," he says. "Who is going to live in these things?"
Miami's condo bust
Some developers appear to be in denial, masking empty units with a façade of glamorous amenities while legions of buyers file lawsuits to avoid closing on their purchases. Others survive by accepting renters and auctioning off unsold units. Then there are complexes with so many empty units that crime has begun to invade. The resulting fear prompts more owners to flee.
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Miami's Downtown Development Authority issued a report last week that stated less than two-thirds of the condos built in downtown since 2003 are inhabited. Incredibly, this was considered good news and a story about the report appeared on the Miami Herald's front page.
So here's a tour of some once-celebrated condo projects. Welcome to condo living — after the boom.
The $1.3 billion luxury Icon Brickell is adorned with enormous glowing chandeliers, golden sculpted chairs, and $5 million Easter Island-inspired pillars. It rests like a relic of better days on Biscayne Bay.
But the driveway is eerily empty. A stylish receptionist struggles to stay awake in the lobby. It seems nobody is around to enjoy the decadence.
Outside, a baby-faced 25-year-old security guard who declines to give his name checks his watch: Four more hours to go. "I sit here by myself and go crazy," he says, shaking his head. "It's sooo slow."
He puts his hands in the pockets of his crisp black uniform. He gestures toward a building that could be mistaken for a skyscraper. "That's tower one; nobody even lives in there," he says. "Over in tower two, there are only 15 residents." (Jorge Perez, CEO of the Related Group, which owns the complex, recently claimed it would take three years to fill up the place.)
The condos, located at Fifth Street and Brickell Avenue, once sold for $600 per square foot, says Peter Zalewski, a principal with Miami-based company Condo Vultures. Now he estimates they're worth about a fourth of that.
"This is the best of the best and they're sitting here vacant," he says. "It's Miami's Machu Picchu."
Sara Gordon is convinced she got an amazing deal when she bought a place at the Radius at the eastern edge of downtown Hollywood. The 28-year-old paid $300,000 for a two-bedroom condo with views of the Atlantic Ocean.
"It's super-cool," she says. "I have Starbucks in my building."
This kind of enthusiasm is what investors had in mind when 200 people camped out on the street five years ago to buy homes in Radius. The 311-unit pair of curved white towers was to be the first large residential development along Young Circle in three decades. The city chipped in $11 million in incentives.
But recently, Radius has given up selling glamour in favor of selling anything at all. "You've got to redefine success," says Andrew Gardner, VP of condo operations for Lane Company, which partnered with Hollywood developer Firm Realty to build Radius. "Success right now, for any developer, is to get rid of its inventory at a number that allows it to fight another day."
Radius was approved for occupancy in December 2007, and 190 of the original buyers closed deals before the real estate market collapsed, Gardner says. After that, his company's strategy was to sacrifice profits in the name of survival. Last November, Lane auctioned off 40 Radius units at prices that began as low as $90,000. "Compared to three years ago... it's a bloodbath," Gardner admits.
He estimates the building is about 64 percent occupied — and that includes renters and seasonal residents.
Tom, a 30-year-old renter who declined to give his last name, complains the building has too many maintenance problems. His bathroom door was installed backward, the dishwasher leaks, and the gym spa was closed for a long time. "I think they just threw the building up too fast," he says. The emptiness, he says, "feels like the movie The Shining when you're walking down the hallway."
The 26-story Tao Sawgrass is built above a parking garage. Right now, most of the visitors are employees — the security guard at the front desk, the woman who sells the condos — because no one lives there. Not a single resident, in 396 units. "Not that I'm aware of," says a security guard named Hugo.
Carolyn Van Gorder, marketing director for Hyperion Development, which is selling Tao's units, said she could not confirm or deny the presence of residents.
Tao, which broke ground in January 2006, was supposed to attract wealthy new residents to the Sawgrass Mills outlet mall. The condos pre-sold for $300,000 to $800,000. Buyers were wined and dined at the BankAtlantic Center.
Today, money problems and lawsuits are quietly wreaking havoc on the project. Last November, Tao construction lender Corus Bank took the project back from developer Harry Weitzer and his partners. By then, some of the construction still hadn't been completed, and none of the buyers had closed on deals. Although the building is now finished, sales have not improved much since the bank took over.
By mid-June, only 33 units in the building had sold and closed, according to the property records. Some Tao buyers have filed lawsuits in Broward to get their deposits back, alleging a breach of contract because their units weren't ready by the February 2008 completion date. Others are still trying to negotiate lower prices.
Oswaldo Mateus and his wife were among the first people to buy at Tao two years ago, putting down a 20 percent deposit for a $300,000 unit. But they never closed or moved in. Since then, they have moved to Bogota, Colombia, because it's cheaper to rent an apartment there. He's not eager to be the lone resident of an empty building. "It's kind of unsafe to move into a place like that," he says.
On 17th Way in Fort Lauderdale, Villa Medici was supposed to bring a "new level of luxury" to the city, with some units boasting private elevators. As recently as March 2008, one townhouse sold for $675,000.
But the complex has since become an uncomfortable example of how crime and a collapsing economy can sabotage a development. Andrea Stern began renting in Villa Medici in May 2008 and witnessed the downfall firsthand. First, she was robbed. A burglar broke in through an open garage door while she and her roommate were sleeping; swiped two Wiis, her laptop, and even some vodka; and then took off in her Scion.
Then, on September 18, Richard Shepherd was upstairs in his townhouse watching television when he heard a doorknob turn. His dog began barking and ran downstairs. Shepherd, age 26, got up to investigate and heard a gunshot — then the pitiful sound of his dog whimpering.
As a panicked Shepherd called police, the crook had already found more victims. A few doors down, Viviana Garguilo and 11-year-old Valeria Balcarce had just pulled into their garage and were getting out of the car when a man with a gun tried to push the girl away from the driver's side door, according to a police report. Garguilo and Balcarce began screaming and then escaped.
Watching Shepherd's dog being taken away in a body bag, Stern knew she'd had enough of Villa Medici. "After that, a lot of people got scared," she says. She moved out that month.
In the past ten months, there have been at least 15 foreclosure filings in the 118-unit Villa Medici, according to BlockShopper South Florida. In early May, 19 townhouses were listed for sale, including several three-bedroom units listed between $161,000 and $199,000.
Ads for the place read this way: "Seller is motivated! Everything is negotiable! Bring all offers!"
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