Due to strong buyer demand, developers have specialized entirely in condominiums for short-term rental.
The large number of these projects, most of which are rebranded condo hotels, should be cause for concern for prospective buyers — or at least something to consider. Owners of about 11,000 units in 36 condo developments planned or under construction from Miami’s Coconut Grove to Hillsboro Beach in Broward County can lease them out on a short-term basis.
That’s about half of all new condo projects. And developers aren’t really letting up. They’re continuing to sell new condo towers because buyers are interested.
When these buildings are completed, the increased supply will likely put downward pressure on day-to-day prices and reduce investors’ profits. Their success will depend on the location, design, price and management of the project.
Brokerage chief Craig Studnicky expects there to be a “bloodbath of competition.” He avoids taking on exclusive sales of condominium projects for short-term rentals.
Condo-hotel developers exaggerate the revenue their buyers will get from their units, Studnicky and others say. Roman Pedan, CEO of a short-term and hotel startup called Kasa, says that’s frustrating for buyers after closing, and ultimately affects their resale value.
Condo-hotels historically do not retain their value, Studnicky says. Of the condos resold in 2023, only 2 percent were condo-hotel units.
I spoke with a buyer of Rilea Group’s Rider Residences, a 12-story, 146-unit building to be built near the proposed Brightline station in Wynwood. Buyers will not face rent restrictions and can enroll their units in a rental program or manage them themselves.
The buyer, Matthew Birnholz, who owns a finance company called Capital Infusion, has signed a purchase agreement for a one-bedroom apartment for just under $1 million. Birnholz said he came across the project through an ad on Instagram. He liked it because he can live there whenever he wants and rent it out the rest of the year.
He found his own comparison deals by checking Airbnb and finding out how much a property manager would cost him.
In theory, investors who purchase these condominiums for short-term rental purposes can use the income generated to at least cover maintenance and other expenses.
Birnholz hopes the unit will appreciate in value by 35 to 40 percent by the time Rider Residences opens.
Studnicky said buyers of short-term rental condos have better opportunities to invest their money.
“You would be better off buying shares of Amazon or Tesla,” he said.
What we think: Mill Creek has scaled back plans for the second phase of an apartment project in Aventura as South Florida sees record levels of apartment construction. What other signs of a slowdown in the multifamily market are you seeing? Send me a note at [email protected].
CLOSING TIME
Reside: Helgstrand Dressage sold the remaining 45 acres of its Wellington sales center for $23.6 million, just two years after selling about half of the original property to the same buyer. Good Friday LLC acquired the facilities at 13625 50th Street South.
Commercially: Moshe and Yaffa Popack’s YMP Real Estate paid $26 million for two office buildings at 3230 and 3250 West Commercial Boulevard in Oakland Park. Brookwood Financial Partners sold the 34-year-old, 170,000-square-foot complex for $142 per square foot.
NEW ON THE MARKET
The half-acre, waterfront property at 230 Harbor Drive in Key Biscayne hit the market for $31.9 million. The three-story home features seven bedrooms, seven and a half bathrooms, an office, commercial kitchen, dock and pool. Brigette Nachtigall of Great Properties International is the listing agent.
One thing we learned
According to the Washington Post, the number of home-schooled students in Florida grew nearly 70 times faster than the state’s public school enrollment between 2017 and 2022. Florida has one of the highest rates of home-schooled students in the U.S.
Elsewhere in Florida
- Gov. Ron DeSantis said the state will provide Miami-Dade County with $8 million for infrastructure improvements around the proposed Miami Freedom Park project, which will center on the stadium of Miami’s Major League Soccer team.
- Billionaire hedge fund manager Ken Griffin said he pledged $20 million to prevent the legalization of recreational marijuana in Florida, including campaign contributions to Florida politicians.
- A South Florida man who admitted to threatening to kill U.S. Rep. Eric Swalwell and his children has been sentenced to two years in prison, the Miami Herald reports. Michael Shapiro, 73, made the calls from his Palm Beach County home, prosecutors said.
- It’s that time of year again when hunters head to the Everglades to kill invasive Burmese pythons. The 10-day Florida Python Challenge began Friday. There is a $30,000 prize up for grabs, with $10,000 going to the person or team that kills the most pythons and the longest python, AP reports.
