Filling Station Lofts, which planned to convert its apartments to condos, has bagged that idea and is back to rentals amid the market slowdown.
In June, developer Ron Gottesmann, co-founder and principal of NR Investments, told The Real Deal that the 10-story, 81-unit apartment building in Miami’s Arts & Entertainment District was converting to condos. Even though condo sales had already stalled in the South Florida market, Gottesmann said the switch was being spurred by demand from existing tenants and local buyers who are drawn to the area.
Yet his partner, co-founder and principal Nir Shoshani, told TRD on Monday that the plan fell through after sales failed to reach their target.
“As everything else in life, we didn’t really see this eye-to-eye, and we tried to pilot it, and we put a hurdle on sales,” Shoshani told TRD. “We wanted to see if we could sell a certain amount, and after I believe 45 days — where we saw that we couldn’t because the end-user market simply wasn’t there — we decided to continue with the rentals.”
The target the partners had set was 20 units a month, he said. Shoshani acknowledged that timing, amid the condo sales slowdown, was an issue. “The market just wasn’t ready,” he said.
Gottesmann had said in June that 12 tenants had verbally agreed to purchase units and another six domestic buyers had expressed interest in units. Shoshani said contracts were signed, but deposits were never taken.
Filling Station Lofts, at 1657 North Miami Avenue, is now 87 percent occupied, with 10 of 81 apartments available, he said. Built in 2014, the units have 34 different layouts, all with 20-foot tall ceilings. Rents range from $2,400 to $5,700, or an average of $2.80 per square foot. Amenities include a renovated pool deck, barbecue area and gym membership.
As condos, units launched at $400,000 to $1.2 million, or an average of $565 per square foot, Gottesman said previously. Fortune International Realty was handling sales and marketing, and the developers held a launch party in July. City National Bank was offering financing with Fannie Mae approval. Shoshani said the developers have solid relationships with both Fortune and City National, so there was no fallout from returning to rentals.
The developers may revisit the condo conversion concept in the future, he said. “I have no idea what Mr. Trump holds, but I’m optimistic, because I think products not from the luxury market that are intended for end users, at the end of the day, will be the ones to thrive in the coming years,” Shoshani said.
Meanwhile, two new restaurants, a market and a studio cycling facility are opening in the ground level retail space at Filling Station Lofts. Amelia, with Latin American cuisine, owned by restauranteur Javier Ramirez of Alter and Cake Thai, has leased 1,979 square; Taula, by Jose De Leon and Ignacio Garcia, offering Mediterranean cuisine, will open with 1,426 square feet; Namira Food Market & Deli will have 1,439 square feet; and Energy Lab, a studio cycling facility has leased 1,398 square feet. The tenants, which are expected to open next year, will join Vice City Bean on the ground floor of Filling Station Lofts. One other space remains available and is in negotiations, Shoshani said.
NR Investments is also developing Canvas Miami a block away, which has Fannie Mae approval. Canvas, a 513-unit tower that is currently under construction.
The developers are the latest to switch plans amid a slowdown in the condo market this cycle, as the strong U.S. dollar and foreign economic turmoil continue to dampen sales. In October, the Trump Group put sales and construction of its second planned tower for Estates at Acqualina on hold. Alan Faena also placed his Versailles planned condo project on hold and is considering building another hotel instead. H3 Hollywood, a planned condo tower, halted construction while its developer seeks financing; and Boulevard 57, a planned mixed-use project on Biscayne Boulevard in Miami, called off condo sales during the summer and is marketing the entire site for sale. And Auberge Miami, a planned condo tower just north of downtown Miami is delaying construction until at least late 2017.