Hot, Hot Hot!
‘Hot Condo Market’ report deems city center for growth
By Bari Auerbach

The sizzling U.S. condo market continues to make headlines – and now local good news is Sunny Isles Beach has been deemed “the center for new growth” in the Miami area – ranked number one in the nation for units under construction.

The “Hot Condo Market” report recently published by RealEstateJournal.com also highlights the fact that for 2005 alone, the number of new condos under construction in Miami is almost double that of other “hot markets” identified including Fort Lauderdale, New York, San Diego and Washington D.C.*

According to the report, condos are also a conduit for economic prosperity as the median price for a condominium surpassed that of a single family home for the first time last year.

“It appears 2005 will be the tenth consecutive record-making year in terms of rising U.S. condo prices and the number of condo sales,” said Walter Molony, a spokesman for the National Association of Realtors. As of September, the U.S. median condo price of $213,600 was up 9% from September 2004. Meanwhile, the most exclusive luxury developments in Sunny Isles Beach have easily sold luxurious oceanfront condos priced well into the millions.

From the rubble of yesteryear’s rundown motels, the best new addresses on the east side of Collins Avenue began emerging - and following incorporation in 1997, the “hot market” hasn’t cooled down. Just some of the “who’s who” list of developers recognizing the win-win venture to revitalize Sunny isles Beach includes The Related Group of Florida, J. Milton & Associates, Donald Trump and the Dezer Family, the Trumps of Williams Island, Fortune International and Turnberry Associates.

Beyond exclusive highrisers generating sky high resale values throughout the city as well as a soaring tax base (facilitating a property tax cut this fiscal year), the condos have also been a catalyst for capital improvements.

‘Seeing Green’
The Sunny Isles Beach City Commission recently voted in favor of amending land development regulations pertaining to transfers of development rights (TDR’s) and the bonus program within the zoning code. The amendments were drafted to encourage developers to dedicate land that can be used for parks, open space and other public amenities while ensuring property owners as well as the city are fairly compensated.

The ordinance pertaining to TDR’s that passed awards extra incentives to property owners of privately owned sites utilizing TDR’s to donate parcels of three acres or more to the city. The incentives allow developers to have an increase in floor area ratio to 3.75; and an extension of up to five years to transfer development rights.

“This is an effort to try to get valuable property adjacent to Collins Avenue needed for the west side to ‘tone down’ development and allow [for the creation of] public plazas,” Commissioner Danny Iglesias explained. “Most importantly, the fact still remains that if at any time the City, in any way shape or form, doesn’t like what’s going to be developed or the land the property owner wants to give - we have a right to reject it…so it’s really a win-win situation for the city and residents.”

Ultimately, the TDR ordinance paved the way for the donation of parcels of three acres or more, prompting Mayor Norman Edelcup to say, “Residents of Winston Towers please note - you’ve finally got your park.”

‘How the Park was Won’
Following approval of plans for the Ocean Four and Trump Royale condominiums, public enhancements were set in motion including the Town Center Park recently constructed across from the Ocean Four site on the west side of Collins Avenue by The Rascal House restaurant at 172nd Street; and the expansion of an existing 10,000 square foot beachfront park behind the Trump International Sonesta Beach Resort by another 5,000 square feet to the north.

The Related Group had originally proposed a 29-story condo project for the Casino property, which was denied by the City Commission in 2002. Subsequently, the city decided to carve out a Town Center zoning district encompassing the area where the Town Center Park is now located (17200 Collins Avenue).

‘Bonuses for Bonuses’
To address the “changing face” of Sunny Isles Beach, the City Commission also passed an ordinance in 2004 increasing the price developers pay for a bonus participation unit from $14,000 to $35,000 in certain zoning districts.

At a City workshop held on Oct. 27, 2003, former City Attorney Lynn Dannheisser addressed the Commission about the need to amend the City’s bonus program. “What we’re striving for is something that is in fact ‘fair market value,’” she said. “When our bonus program was devised several years ago, there were some seedy motels, very little development or re-development and poor infrastructure…It was critical that we give enormous incentives to get [developers] to come here…Now we’ve gotten their attention…We have the second tallest buildings in Miami-Dade going up here…When you look at [the city’s original bonus system], it’s probably outdated now…We need to look at both the categories and the kinds of things the city needs now…what we do and don’t need to incentivize and what we’re charging.”

Shortly thereafter, proving expediency in city government, Mayor Norman Edelcup announced “The price [the City] is charging for bonus units will [now] be two and a half times what we were previously charging - $35,000 instead of $14,000. As a result, the City’s revenues will go up to reflect inflation that has occurred as well as actual construction that has happened since the time we first set up [the bonus program].”

Providing background information, Edelcup explained, “About four years ago, the City set up the cost of bonuses where [developers could purchase] increased FAR (floor area ratio). In light of current inflation and construction costs occurring since we set these rates, city staff studied this concern using actual factual data we gathered over the years.”

In return for being able to increase FAR, developers will still have to abide by the existing bonus system categories including beach access; a beach access trust fund; public beach recreation, Collins Ave. streetscape; public parking bonus; and public oceanfront park bonus.

“The city now has a track record of development and real estate costs in addition to a long term capital improvement program and projections as to the long term needs of the city which necessitates a closer nexus between the value of the bonus program and the capital improvement program,” said zoning administrator Jorge Vera, providing insight into the city’s perceived need for adjusting the bonus system.

‘Hot Property’
As luxurious new condo/resorts on the east side of Collins Avenue continue to contribute to the city’s “Hot Condo Market” reputation, communities on the west side of Collins Avenue are also reaping the benefits of greater re-sale values.

Beyond the windows of homes with beautiful views, residents also appreciate the priceless value of ongoing capital improvements, beautification projects, an influx of high caliber retailers and a plethora of many other desirable amenities leading some to surmise there just may be more pros than cons associated with condos on the rise in Sunny Isles Beach.

*Based on a quarterly survey tracking projects with 35 or more units and smaller projects in markets where lower density is customary.

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