Demand for condo sales and rentals slated to exceed supply
We have been tracking condo sales and rental activity in downtown Miami since the market bottomed out three years ago, and what we are seeing is a clear trend toward urbanization, with demand increasing year-over-year. In fact, according to the Miami Downtown Development Authority’s (DDA) 2012 Q3 Residential Market Trend Update, demand for residential living is quickly outpacing supply.
Report indicates continued growth in sales and leasing activity
Key findings from the Miami DDA’s 2012 Q3 report, which assessed sales and leasing activity within downtown Miami, include:
- Continuing demand for limited remaining inventory: Year-over-year, the total of 2,900 sales in the first nine months of 2012 was up about 8.8% from 2,665 during the first nine months of 2011.
- Sales prices still on the rise: Average unit sales price in the third quarter of 2012 was $419,538, up 21.4% from the 2011 third quarter average of $345,678. The average sales price for the 12-month period ending September 30, 2012 ($397,667) was 11.6% higher than the same period a year earlier ($356, 378). Overall, the average unit price for new and resale has increased about 25% per year since 2009.
- Occupancy breaks 95% threshold: Over 95% of all residential units in the downtown Miami area are estimated to be currently occupied; including the limited remaining inventory of developer-owned units and units still held by major investors (i.e. project lenders, institutional investors, etc.).
- Remaining unsold inventory diminishes: The inventory of new, unsold condominium units still subject to first time market sales in the downtown area dropped to 2,200 units as of September 30, 2012, down nearly 50% from a year ago and reflecting an average of approximately 100 new unit sales per month during the third quarter.
- Leasing velocity reaccelerates: Residential leasing velocity reaccelerated in the third quarter of 2012, with the average number of leases closed monthly up 30.6% (544 units per month) from the 416 units per month average recorded during the second quarter of 2012.
The report’s findings underscore an accelerated market recovery in Miami, as a result of continued absorption and a new wave of construction spurred by its increased attractiveness as a global center for investment. In fact, there are at least eight projects spanning approximately 3,600 units that are actively under construction right now, with a number more in preliminary stages. Most of these projects in the pipeline, including BrickellHouse and MyBrickell, are already reporting pre-sales to be nearly sold-out, reinforcing a tightening of the market despite the lack of traditional financing available.
Downtown Miami, which once stood as the epicenter of the real estate crash, now stands tall as one of the fastest growing urban centers in the country. With sales and leasing activity continuing and new construction well underway, our urban core is poised to emerge as a major center for investment and innovation.