Undeterred by fears of a real-estate downturn,
rising interest rates, tightening credit and rising building costs, developers
have a record number of plans on file for high-rise projects in Miami.
By MATTHEW HAGGMAN AND ANDRES VIGLUCCI
Brace for still more giant cranes draping across Miami's changing skyline.
Despite worries of an overheated real-estate market, developers are continuing to unveil high-rise condominium projects in Miami that are record in number and unprecedented in size -- one proposed two 1,200-foot towers on Biscayne Boulevard at Northeast Third Street.
Now some 14,000 condo units are under construction and more than 63,000 units are approved for construction or in the permitting process, according to the latest Large-Scale Development Report by the city of Miami's Planning Department.
By contrast, just 9,250 units were completed in Miami in the past 10 years, according to the report issued Friday.
''It's a scary number,'' said Jorge Perez, CEO of the Related Group of Florida. He has several major Miami projects ongoing but is not looking for any new ones in the city because of high land prices and other factors.
The frenetic boom -- which amounts to $5.6 billion in current construction, according to the city's report -- comes despite an unremitting wave of headlines warning of a real-estate meltdown, banks tightening the reins on lending, construction costs skyrocketing, and rising competition for skilled construction labor. Furthermore, the U.S. Federal Reserve has raised interest rates 11 consecutive times.
Yet, the pace of new projects in Miami continues at breakneck speed, even by the yardstick set by Miami's red-hot building boom.
In June, for example, when the construction boom was already well underway, there were 61,975 units either under construction, approved or in the permitting process, according to the Planning Department report. Since then the total number has jumped to 78,342 units.
To be sure, many of the plans now on paper will never be built.
''To get a project through the approval process, all you have to do is pay an architect and lawyer,'' said Daniel Kodsi, CEO of Boca Raton-based Royal Palm Communities, which has plans to build two high-rise condos in Miami. ``But to take a building to construction is a whole different ballgame.''
BEYOND THE PLANS
Kodsi said the relevant number is the units under construction, not what is approved or planned.
Indeed, many projects may struggle to get out of the ground, because of rising construction costs and increasing difficulty to win financing.
''The facts have not changed materially over the last year, but the constant barrage of press about the national housing bubble and Miami in particular has taken root with some investors,'' said Timothy Martorella, managing director of Miami-based Madison Capital Group, which seeks financing for condo developers. ``There are projects out there that will not get financed.''
Developers, meanwhile, continue to report strong demand for units and most agree that Miami's long-term prospects are bright, given the region's appeal to a broad market, from aging boomers to international buyers.
That is prompting some developers to go forward with plans despite market fears, Perez said. And Kodsi noted that some land owners are seeking to win building approvals in hopes of selling the land for a windfall in the red-hot market.
What's more, city officials believe some developers are rushing applications to beat Miami 21, which is an effort to rezone the entire city.
SOME PLANS UNCLEAR
Some developers have submitted plans that aren't fully fleshed out in the apparent hope of getting ''grandfathered in'' before the commission votes on zoning changes for the city's northeast quadrant, which is expected to happen around January, said Assistant City Manager Otto Boudet-Murias, who oversees planning and zoning.
''I'm sure some of them are submitting faster because of Miami 21 and anxiety over possible changes,'' Boudet-Murias said. ``My direction to staff is that if they see drawings that are not complete, to reject them and let developers and property owners know they need to provide more detail.''
The administration will also ask the city commission for an ordinance explicitly barring new projects from getting grandfathered in under the old rules unless applications are submitted in complete form, including traffic and economic impact studies, before the commission vote.
''Submitting schematic drawings will not grandfather you in,'' Boudet-Murias said.