MAY 2013: Property Market insight; Kevin MaloneyMay 4, 2013
MAY 2013: Property Market insight; Kevin Maloney
Today, Maloney has four luxury condominium projects in South Florida, including one on Miami’s Brickell Avenue that will shoot up 750 feet.
“Real estate is back,” Maloney said with a laugh as he sat down for a conversation in the New York office of his Property Markets Group.
Right now, Maloney has more than $1 billion in construction going up in the three cities. In early April, he announced his biggest project in the Sunshine State yet — the 250-unit Echo Brickell, in the heart of Miami. Also in the works: the 190-unit Echo Aventura, on Biscayne Bay; Surfside’s 95th on the Ocean, with just seven four-story homes; and the 24-unit Sage Beach in Hollywood Beach
Like the speedy recovery, the rising prices stun Maloney. He talked of the numbers in the New York super-luxury market — $5,000 for the lowest penthouse in one of his towers — and how South Florida, at the beach, is mirroring the madness.
“When the market crashed, there were crazy, crazy [high] prices,” he said, “and now it’s 20 to 60 percent higher than it was at the peak.”
On his confidence in the South Florida market:
The difference between today’s cycle and that cycle, where in 2006 you had 25 cranes up in the air, there’s really only about 3,000 units available and maybe a half-dozen cranes between Brickell and South Miami Beach to Sunny Isles. There are not a lot of sites left to develop, certainly beachfront sites, so the amount of inventory is very moderate, and just keeping demand very high. The supply just isn’t there anymore, so I’m bullish about this market because it’s much more controlled.
On the availability of land:
Every piece of land has been bought, well, not every, but about 98 percent of the sites are controlled under some form of construction. We chase every site possible, and we’re fortunate to pick up a few, but it is very, very difficult now to find a site in South Florida, on the beach or on the bay. Downtown Brickell still has about half a dozen sites in play, and that market is very, very robust. But even if you built that amount of inventory, it’s not enough over a 10-year period to affect the pricing.
On how, with no vacant lots, construction is still going on:
What’s happening now in South Florida is people are actually assembling existing condominiums and buying them out, and then tearing down condos that they built years ago, and then trying to rebuild. They are tearing down existing housing, so you’re going into a condominium and you have to buy 300 people out.
On what he still wants to build in South Florida:
I would like to do a rental in downtown Brickell, and we have some sites in the pipeline. It’s really about the cost — because in South Florida, the cost for construction is going up. As costs go up, you push beyond the cap rate that you’re going to build into, and then ultimately your only strategy is to become a condo. We also are entertaining sites in the South of Fifth area. [Sales there] really start at $2,000 a foot, and the sky is the limit. It’s exciting.