A record $16 billion in Florida apartment units were converted into condominiums during the past two years, flooding the market with roughly 120,000 new units. Although only 5,000 of these units were sold during that two-year period, 34-year-old developer Christina Noelle has high hopes for the Florida condo market. As principal and urban lifestyle specialist at Chicago-based MCZ Development Corp., the developer oversees 2,692 apartment units under conversion and 1,985 ground-up condos in the works. All of those units are scattered across central and southern Florida.
MCZ Development's largest new project is now underway: The 1,688-unit Flamingo South Beach project in Miami stands as the largest condo conversion of an apartment building in the U.S. Two-bedroom condos in the project cost as much as $1.1 million. Noelle says that Flamingo South condo units, which are scheduled to be completed by late 2008, are already attracting interest from buyers. NREI recently spoke to Noelle about the risks and rewards of such large-scale condo conversions in Florida.
NREI: Is South Florida's condo market overbuilt and ripe for vulture investors?
Noelle: Anytime a market experiences the exceptional growth spurt that south Florida has in the last five years, there's a point where supply and demand get out of balance. It's the natural fluctuation of this type of market condition, and it will ultimately swing in the other direction.
NREI: You're now completing the largest condo conversion in the nation. Tell us about the preliminary demand at the $600 million Flamingo South project, and why MCZ initiated this project while so much new product remains to be sold.
Noelle: Initial demand has been fantastic. The Flamingo South Beach is an exceptional property. You will be able to drop off your dry cleaning, have your dog walked, go for a cup of coffee and grab a bite and never leave the complex. It was not a hard decision to commit to this project. We are selling units here every day. Its location is unparalleled, the grounds are beautiful, and the bay views are dynamite.
NREI: So MCZ is big on offering its condo residents posh amenities like coffee bars and libraries. But these are also expensive features to build into a project. Does the return on investment justify the upfront cost?
Noelle: Always. As part of the development process, we are asking ourselves the question: Why does someone want to live at one of our projects instead of somewhere else? We see the return on velocity of sales alone.
NREI: How are the market dynamics different in central versus South Florida?
Noelle: South Florida is extremely international. We have buyers from all over the world, and they are all looking for the pied de terre of South Beach. Central Florida is more of a local market.
NREI: You've bought failed condo projects that other developers have relinquished. Tell us how MCZ can alter the fate of these projects.
Noelle: There are always better ways to spend money. We've been developing buildings for ourselves for more than 20 years. We know how to install more cost-effective systems without compromising the integrity of the project. Add to that a fantastic amenities package and our standard “livability audit” in which we scrutinize the floor plans and common elements for opportunities to tweak and make changes that maximize living space.