South Florida can expect a slowdown in multifamily and luxury home development in the year ahead, according to a panel of builders.
Last week, The Calta Group President Gaetano Caltagirone, Prospera Real Estate Collective CEO Ellen Buckley and The Estate Companies principal Jeffrey Ardizon participated in the main discussion at the 2025 CCIM Miami Commercial Real Estate Outlook Conference.
Held at Florida International University’s Tamiami campus in Sweetwater, the panel was moderated by Albert Arisso of Miami-based lender Vertix Group.
The panelists offered a sobering reality check about the state of residential development in the tri-county region. Buckley noted her firm, formed in early 2023, recently backed out of a potential purchase of a multifamily development site due to the seller’s unwillingness to negotiate on a property that she felt was overvalued. After penciling in expenses that included higher interest and insurance, and then calculating rents Prospera could charge to remain competitive with neighboring apartment buildings, the price for the land didn’t make sense, Buckley explained.
“Needless to say that deal didn’t go forward because the fundamentals just didn’t work,” Buckley said. “So keeping those construction costs tight and making the deals pencil [out] is critical.”
Prospera is currently focused on a townhouse development near North Miami. The firm is partnering with Faith Community Baptist Church to develop 37 townhomes on a portion of the congregation’s 3.2-acre property at 10401 North West Eighth Avenue.
Multifamily developers are also facing more scrutiny from potential equity investors, said Ardizon, whose firm recently landed a $78 million construction loan for a 347-unit apartment building in Davie. Three years ago, “institutional guys” would be satisfied with economic models forecasting potential rent growth of a project, Ardizon said.
“Today, those guys want to see hard numbers,” he added. “There has been a temporary oversupply in certain submarkets, especially Palm Beach County; however, the units are being absorbed. We believe by the end of 2025 going into 2026, concessions will subside as demand outpaces supply.”
On the luxury home development front, 2024 was a “challenging year for everybody,” Calta Group’s Caltagirone said. He also cited rising construction costs, including higher interest rates and insurance, making it harder for luxury home developers to make spec projects financially feasible.
Calta Group recently scored a $30 million construction loan for a 10-townhome project in Coral Gables.
Yet some submarkets are still experiencing fast sales, Caltagirone said. “We just completed a house [that was listed] for $10.5 million in Pinecrest,” he said. “That sold immediately before we even had the certificate of occupancy.”
In the next few years, luxury homebuilders will likely turn their focus to developing on 7,500-square-foot or smaller lots that can be marketed to individuals who can afford homes in the low six figures, Caltagirone said.
“I think there are a lot of young professionals living and renting who have moved here from different parts of the country trying to find homes that are not as expensive,” he said. “I think we are overlooking them.”