Miami Beach is undergoing a dramatic transformation as new condos are being built at a rate that is outpacing the city’s growth.
Miami Beach has gone from being the epicenter of the condo boom to a hotbed of affordability as developers and developers scramble to make more homes available for the coming decades.
And while Miami Beach’s condo market has not yet matched the boom in neighboring Miami and Atlantic City, new projects are rapidly adding up to more than 3,000 condos per year.
It’s a remarkable change, says David Darnell, an economist at the University of South Florida who tracks condo growth in the United States.
“The way that condo development has grown, the way that it’s been built and the way it’s built, it’s extraordinary,” Darnill says.
“It’s not something that has been seen before.”
The new condo trend began a few years ago, when the city and county of Miami began a major effort to attract developers and make them more affordable.
The goal was to keep the population growth under control and create more housing options for older people and the less affluent.
“This is about creating more housing for our city and our region and for all of the people in the community,” Miami Beach Mayor Tomas Regalado said in February.
“That is not going to happen overnight.”
For a time, the city allowed developers to build condos for $250,000 and build on private lots with no environmental impact.
Now, the new rules require developers to spend $1.8 million for a permit, and a condo project must have an affordable housing component, which is capped at $100,000.
That caps developers’ ability to spend hundreds of millions of dollars on projects that don’t meet those criteria.
Miami is also pushing developers to include more affordable units, a policy that will cost the city $50 million per year to maintain.
But developers say the policies are unnecessary, since they already have enough affordable housing units in the city.
As of mid-2018, Miami Beach had more than 6,000 units of housing that meet all the criteria for a condo, according to data compiled by RealNetworks.
It has about 2,500 more units than that, including those that are built with public money.
The city has already approved more than 1,000 projects for affordable housing, and it expects to build more than 2,000 more by the end of the year, according.
But the city has also seen new construction that hasn’t met its own minimum requirements.
A new condo development in Miami Beach.
(Photo: Getty Images/iStockphoto) In some cases, Miami has approved more affordable condo projects than it has affordable housing.
In November 2018, the Miami-Dade County Board of Supervisors approved a plan that would create a “marketing incentive program” that would pay developers up to $500,000 to build on public lands in the Miami area.
The program is supposed to be paid for with a 10-year tax-exempt bond that would be paid by developers and investors.
But according to RealNetwork, Miami-area developers have not used the incentive program, instead making money from selling condos to the highest-priced buyers who can pay a premium to buy condos in the neighborhood.
In March 2019, the state Department of Developmental Services awarded $1 million in tax-increment financing grants to developers to construct a project at the intersection of NW 19th Street and NW 29th Street, just west of the Miami Marlins Park, that would include a condo tower and retail.
But a developer who has used the program says it hasn’t been used to build affordable housing for nearly a year.
“We’ve never had to pay the developer anything,” says David Miller, the developer who is overseeing the project.
“So the developer, who’s been building the development for years, doesn’t have to pay us any more.
He’s not even paying us any of the costs of the project.”
He says the developer’s income is tied to the condo’s market value, and he isn’t even getting paid for the cost of his land.
Miller says the developers’ incentive program is an attempt to create incentives for developers to make their projects affordable.
“What we’re trying to do is create an incentive program that incentivizes developers to do what we’re doing,” Miller says.
Miller said the developer has not seen any of his project’s developer fees increase because of the incentives.
“There’s nothing we’re actually doing that we can see as an incentive that’s actually going to benefit us,” Miller said.
But Miami-based developer John Schaffer says he has not been penalized for using the incentives program.
He said he is working on his project with an insurance company, and that the developer is not getting paid to build a condominium.
“I’m not even aware of the incentive programs being used for that purpose,” Schaffer said. “If it