As vacant land disappears and more out-of-state homebuyers flock to South Florida, the region’s aging beachfront high-rise condominiums are a gold mine for local developers who are looking for redevelopment opportunities.
This trend is providing some condo owners with hard-to-refuse buyout offers, according to a press release by Florida Realtors.
These premium offers are prompting owners to seriously consider selling and relocating. “It does seem to be a growing trend,” said Gerard Yetming, executive manager of Colliers. “They begin to realize, ‘This is something we should explore in an organized fashion.’”
However, many buyout initiatives fail amid bidding wars or internal disagreements over whether or not a sale should occur. A consensus among unit owners is required for a buyout to proceed.
In addition to the premium payout from developers, the rising cost of building maintenance and renovations is another motivating incentive for condo owners to sell. For years, members of many condo associations have deferred repair projects due to expenses.
A potential consequence of deferred maintenance came into view after the terrifying collapse of the Champlain Towers in Surfside, which took 98 lives, the release noted. The disaster caused a major ripple effect of concern among residences of other older condo buildings along the Gold Coast.
“The trend really started because we’re getting into the period where condos developed in the ‘70s or ‘80s are becoming functionally obsolete,” said Joseph Hernandez, partner and chair of the real estate practice group at the Weiss Serota Helfman Cole & Bierman law firm in Coral Gables. “Now, people are much more in-tune with the issue. They’re focused on trying to band together and sell their property in a way they weren’t before.”
Still, it’s bottom-line economics that decides whether a deal will materialize. “The only time this makes sense is when the value of the underlying land is significantly more than what the collective units are currently selling for,” Yetming said in the release. “Why else would somebody want to sell their property unless they can make a significant profit?”
Nick Perez, a vice president at Related Group, said the Beach Villa owners in Pompano sold after realizing they could double or even triple their money against their original purchase prices.
According to Zillow, some homeowners received up to $800,000 for their 302-square-foot condos with market values just below $200,000.