Sign of the times: Related cancels Auberge Miami as condo market fizzles
The Related Group has shut down its Auberge Residences & Spa Miami project and returned buyers’ deposits amid a sluggish condo market, sources told The Real Deal.
Related launched the development in February 2016, just as sales were slowing in Miami’s preconstruction condo market. In August, TRD reported that construction of the 290-unit, 60-story tower was on hold until at least year-end 2018.
The sales center, at 1440 Biscayne Boulevard, has been closed since December, sources said. The phone number is disconnected and sales agents reached by phone this week said the project had been canceled. Carlos Rosso, president of Related’s condo development division, could not be reached for comment, nor could other executives at the firm, despite repeated requests for comment.
As of April 2016, Auberge had reserved 20 percent of its units, Related vice president Jon Paul Perez said a year ago. But according to a second-quarter 2016 report from ISG, sales for the project stood at 15 percent. Prices ranged from $350,000 to $3.9 million. Deposits were returned at the end of the year, sources said.
Overall, Auberge was planned as a three-tower project with a total of 1,400 units on 2.8 acres along Biscayne Boulevard. The developer unveiled its $2 million sales center in April of last year with a blowout launch party. Botero’s “Woman on a Horse” sculpture was still in the outdoor garden area this week.
Auberge is among the South Florida projects that have gone kaput due to failing presales. Peter Zalewski, principal of Cranespotters, said five projects have been revised, canceled or put on hold so far this year. That includes H3 Hollywood, which will go to foreclosure auction later this month, and One Bayfront Plaza, which will be built as rentals.
“At the end of the day, the Auberge could be a good, successful project, just not for this cycle,” Zalewski said. “I would think that the Related Group would be well-positioned for the next go-around.”
Miami’s most prolific condo developer has more than a dozen buildings underway this cycle in South Florida, including Auberge Beach Residences and Spa in Fort Lauderdale, Hyde Beach House in Hollywood, SLS Lux in Brickell, and the Paraiso complex in Edgewater, and is co-developing Park Grove in Coconut Grove along with the Terra Group.
Zalewski expects that Related will be the first developer to rush the market again about four years from now. “Related is a gunslinger and that’s why they lead the pack,” he said, later adding that “not getting the project off the ground isn’t a black eye.”
Months of supply is considered one of the most important metrics in residential real estate. In Miami-Dade, there are about 14 months of condo supply east of I-95, and Palm Beach and Broward counties have less than seven months, according to Cranespotters. Six months is ideal, Zalewski said.
The sluggish and sometimes stagnant market has led some developers to provide incentives to brokers in their efforts to sell out a building. Marina Palms in North Miami Beach is the latest project to do so, offering a year free of taxes and homeowners’ association fees for those who sign contracts in April, as South Florida’s selling season wanes.
Last month, Related unleashed a slew of incentives for its Paraiso condo towers, including free maintenance for a year on new contracts signed by March 31, and offered 30 percent deposits, rather than the standard 50 percent. Commissions at Paraiso were already raised to 8 percent to 10 percent, depending on the tower, far above the original 5 percent. “None of them want to cut prices,” Zalewski said. “Once you start the price reduction, it’s like a downward spiral.”
Source: The Real Deal