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September 2, 2010 |
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| June 01, 2007 |
By: Oscar Pedro Musibay |
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Rendering of Loft 4
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elated Group is launching sales for a fourth Loft condo tower in downtown Miami this summer, utilizing a cost-saving design without a parking garage and seeking no public subsidies.
Prices will start at $130,000 in the planned 35-floor, 404-unit tower on a narrow vacant lot south of the Gusman Center for the Performing Arts.
“If not for this type of concept, you wouldn’t be able to build because you can’t build parking” cost effectively, said Oscar Rodriguez, who heads Related’s affordable division. “That lends itself to more competitive pricing.”
The lack of parking is a factor in the unit pricing, along with the low cost of the land and the economies of scale achieved by a company like Related, Florida’s largest condo developer with 2006 revenue of $1.4 billion.
Removing the cost of building parking makes projects cheaper to develop and a smaller footprint workable. The site next to the Gusman Center wouldn’t accommodate the turning radius of some vehicles.
But eliminating the garage doesn’t help the strained parking situation for everyone else looking for downtown spots.
The first Loft tower was heralded by the developer and city officials as the first major affordable housing project in downtown Miami, and the developer pitched units to public employees by e-mail.
But a draft report by Miami’s auditor general in March revealed some buyers, including Al Lorenzo, Mayor Manny Diaz’s campaign manager, made tens of thousands of dollars in profit by quickly reselling units in a building subsidized with a total of $2 million in city and county funds.
Despite the public contributions, units were sold without income restrictions. Without tying buyer eligibility to household income, the federal government balked at a grant request, and Miami-Dade County scrambled to come up with general funds to fill the gap, the Daily Business Review reported last July.
Related got its start building affordable housing before branching into luxury condos during the five-year housing boom.
Loft 4 will target buyers in the public sector earning $40,000 to $80,000, which Rodriguez calls a “deep” and “untapped” market. Ground breaking is expected in about a year.
Rodriguez said the model has been so successful that Related is exporting it and has properties under contract and similar affordable projects with no on-site parking planned in other cities, including Fresno, Calif.
“We are actively taking this blueprint to Tampa, Charlotte and Nashville,” Rodriguez said. “We also have letters of interest from the mayors of Buffalo and Toledo, Ohio.”
Related signed a contract in the last month to buy the half-acre parcel for Loft 4 on the northwest corner of Southeast Second Avenue and First Street for an undisclosed price.
The neighborhood is already primed for affordable housing.
Half a block to the west, the seven-story Royalton Hotel at 131 SE First St. is being renovated to create 100 units of transitional housing, including 80 units for formerly homeless people. The rest will go to tenants earning less than $22,740 a year, or 60 percent of the area median income.
Rents will be $120 to $130 a month. That’s in sharp contrast to other downtown rentals and condo prices reaching up to $3 million two blocks away at Metropolitan Miami, a residential, office, hotel and retail complex under construction.
The vacant lot Related has under contract is owned by a group that includes the Lindenfeld family, owner of the historic Alfred I.DuPont office building a block north.
Gary Ressler, who spoke on behalf of the ownership group, confirmed Related’s contract but would not provide details on the terms, citing a confidentiality agreement.
Rodriguez said the purchase is contingent on environmental and title searches and development plan approval by the city.
The parcel is the site of the former Urmey Hotel and had retail and office space until the building was demolished and fenced off after the structure was deemed unsafe.
Industry experts see a future in affordable units, which was Related’s original line of business before it moved upscale to the luxury market.
Units sold for $99,000 to $300,000 at Loft 1, $108,000 to $320,000 at Loft 2 and $149,000 to $400,000 at Loft 3. The three buildings will face each other on Northeast Second Street.
The fourth tower would offer entry-level prices of $130,000 when sales start in July or August, but unit sizes are still being worked out. About three-quarters of the units will be sold for less than $300,000, Rodriguez said.
By comparison, the median price of an existing condo unit in Miami-Dade County was $268,000 in April, according to the Florida Association of Realtors.
Related will seek off-site parking as it did with the other Loft towers. One possible location is the city-owned garage at Bank of America Tower at International Place at block southwest of the Related site.
“We are working out a parking agreement, which could be with public sector or a private entity,” Rodriguez said.
Lori Billberry, Miami’s director of public facilities, said Related approached the city about leasing parking at the Bank of America building.
The City Commission gave city officials permission this month to seek proposals from potential buyers for the tower’s garage and retail segment. Billberry expects to have the request for proposals ready for commissioners by July.
The city is reviewing agreements Related signed with the Miami Parking Authority for its other Loft projects to help the city with its sales proposal.
MPA executive director Art Noriega said Related and the agency have not negotiated parking for Loft 4.
Related could eliminate the building’s parking issue by buying the Bank of America garage and retail site outright, Billberry said.
But the property carries $43 million in debt tied to the city-owned James L. Knight Center, which is being marketed for sale separately. Retail and parking leases are in place through 2070.
Related would be interested in reviewing the city’s proposal once it was made public, Rodriguez said.
Oscar Pedro Musibay can be reached at omusibay@alm.com or at (305) 347-6651.
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