Some three years after igniting the current vertical residential development boom in South Florida, the seemingly instinctive Melo Group is preparing to launch sales for its third new condo tower in Greater Downtown Miami since the recovery began from the last real estate crash.
Next month, Melo Group plans to begin presales for the proposed 53-story, 647-unit Aria on the Bay condo tower designed by acclaimed architectural firm Arquitectonica on a North Bayshore Drive site across from Margaret Pace Park in the Edgewater neighborhood.
The project will mark the largest South Florida residential project to date for the family-owned company that delivered its first Miami tower in August 2003. All told, Melo Group is currently constructing – or has already developed – more than 3,000 rental and condo units in the city.
(For disclosure purposes, my firm leases space in a Melo Group property and has provided general consulting services about the overall South Florida condo market, but not specifically for Aria on the Bay.)
The anticipated presale marketing campaign for Aria on the Bay comes just three years after Melo Group held a preconstruction launch party for the 23 Biscayne Bay condo tower at the Village of Merrick Park shopping center in Coral Gables. At the time of Melo Group’s 23 Biscayne launch, many buyers and sellers of condos still thought South Florida was in the midst of a falling real estate market.
Ultimately, Melo Group took a significant step to disprove that market perception by assembling a construction crane in August 2011 to develop the first new condo tower in South Florida since the real estate crash of 2007.
Months after construction of 23 Biscayne finished, the 18-story, 96-unit condo tower sold out for more than $25 million, according to Miami-Dade County records. Even more surprisingly, Melo Group developed 23 Biscayne without taking the normal path of obtaining bank financing to perform the construction.
Instead, Melo Group instituted a 50 percent deposit schedule from presale buyers and then used that cash to build the new condo tower. This deposit strategy would become the norm in South Florida for this preconstruction condo cycle.
Prior to Melo Group’s 23 Biscayne, developers in South Florida asked presale buyers for 20 percent deposits.
Some industry watchers contend the low deposit requirements ultimately attracted the speculators that led to the last boom-and-bust cycle in South Florida.
Based on the success of 23 Biscayne, Melo Group launched sales for a second post-crash condo tower called Bay House in early 2013. Construction of this 36-story, 160-unit tower began in November 2013 and is scheduled to be completed in April 2015.
Sensing Greater Downtown Miami’s preconstruction condo market still has room to grow, Melo Group is launching sales now for Aria on the Bay with hopes of beginning construction in the first half of 2015. The current schedule calls for the construction to be completed in the second half of 2017.
Unlike the conditions when 23 Biscayne was developed, Aria on the Bay comes to market at a time when developers have announced 59 new condo towers with nearly 17,400 units in Greater Downtown Miami, according to the preconstruction website CraneSpotters.com.
(For disclosure purposes, my firm operates the website.)
As of Tuesday, about 25 percent – 15 towers totaling 4,400 units – of the announced new condos in Greater Downtown Miami are completed or under construction. An additional 25 percent – 12 towers totaling 4,300 units – of the announced new condos for Greater Downtown Miami have obtained approvals to begin construction.
The remaining 50 percent of Greater Downtown Miami’s proposed new units, comprised of 32 towers with nearly 8,700 units, are seeking approval to build.
The unanswered question going forward is whether the intuitive Melo Group will attempt during this real estate cycle to develop another new condo tower after Aria on the Bay, given the amount of units that have been announced for Greater Downtown Miami.
Peter Zalewski is real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.