(MIAMI, FL) -- After two years without a sale, a Miami condo developer is taking 62 units in a new tower to auction at an average starting price of $63 per square foot, which is about 71 percent below replacement cost, according to Condo Vultures, LLC.
Units in the 10-story San Lorenzo condominium in Miami's Little Havana neighborhood - located some three blocks east of the Florida Marlins new ballpark - go to auction on April 10 with an average minimum asking price of $50,500 per unit.
To date, 22 units, or 24 percent of the project's inventory, have closed in the San Lorenzo at an average price of $224,300 per condo, or $329 per square foot, according to the CondoVultures.com report based on Miami-Dade County records.
"Developers and lenders are going to be watching with great interest to see how this auction goes," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures. "This is one of the first times since September 2007 that a Miami condo developer has attempted to sell off individual new units at auction rather than cutting prices dramatically to move product to individual or bulk buyers. In that first attempt, the auction generated a lot of buzz and publicity but only about 25 percent of the units were actually sold.
"The number of sales would have probably been even less if certain units were not offered for sale regardless of the winning bid price, which is called absolute in the industry."
All of the San Lorenzo units being offered for auction have an undisclosed minimum reserve price that must be reached for a transaction to occur. If a high bidder does not reach the minimum required price, the developer can reject the offer, according to auction literature obtained by CondoVultures.com
Built in 2007, the San Lorezno condominium is comprised of three one-bedroom and 59 two-bedroom residential units with nearly 70,000 square feet of saleable space and five commercial condo units with about 6,700 square feet of space, according to the report.
The developer, Beta Credit Management with principals Carlos Rodriguez and Oscar Rodriguez of Miami, constructed the tower using a $16.5 million construction loan, or about $216 per square foot of saleable space, from Citibank N.A. in New York. Construction began in August 2005 at the peak of the real estate market.
The developer has successfully sold to date 22 residential units for $4.9 million and the six commercial units for $2.6 million. All of the units - residential and commercial - were transacted between and August 2007 and February 2008, according to the report.
Not going to auction will be six residential units with more than 4,710 square feet of saleable space that the developer has opted to withhold, according to CondoVultures.com.
Depending upon the success of the auction, another option that developers are pursuing is bulk transactions.
More than 40 deals for more than 3,200 new condo units with nearly four million square feet of saleable space have closed at an average price of $242 per square foot in the tricounty South Florida area since July 2008, according to the Condo Vultures.
About one-third of the bulk deals have transacted in Greater Downtown Miami where developer constructed nearly 23,000 new units between 2003 and 2010, according to the Condo Vultures.