Buildable lands are becoming scarce but builders are becoming smarter.
Prime development locations are running out in many parts of the country, even more so in coastal areas, including Florida. Builders found a solution by targeting existing condominiums and cooperative buildings on great locations, intending to tear them apart to be able to build new ones.
The Wall Street Journal (WSJ) reports that such bulk purchases, what builders do is negotiate with individual unit owners and then buy the units all at once. The problem is that the price tags may sky rocket, experts said.
"Developers are incurring additional time and expense to acquire parcels with multiple owners and existing structures," said Jack McCabe, a housing industry analyst in Deerfield Beach, Fla.
For instance, WSJ continues, OKO Group LLC, purchased 25 Bay Tower, located in Biscayne Bay an 11-story condo in Miami, for $48 million via Miami Waterfront Ventures, LLC. The company plans to demolish the 44-year-old building to replace it with a 48-story, 143-unit luxury condominium. Prior to purchase, OKO had to sit down with each owners, in a span of 5 months, to make negotiations individually. It was noted by the builders that one way to entice a unit owner is to provide an offer that cannot be refused.
OKO Group Chairman, Vladislav Doronin, said, "The property is on one of the best streets in Miami, and it's probably the last 150 feet of waterfront property, so it's an amazing location. In Miami you cannot buy waterfront right now because so many people are investing, and it's not easy to find a good location. So you have to deal with complicated transactions to get a good site."
In addition to this, Diener Properties posted on its website that condo sales in Miami have been common for developers not only American investors but also for foreign investors.
