For generations, condominiums have been an indelible feature on South Florida’s skyline. Now, from Miami to the Palm Beaches, developers are considering “what’s next” in the condo — and buyer — lifecycle.

A recent South Florida Business Journal roundtable discussion brought together executives from the development, construction, architecture and investment sectors. They gathered in the downtown Miami offices of Suffolk to discuss the current and future state of the region’s condominium market.

What they agreed on is that the towers and designs that dot the skyline up and down the coast are coalescing to create an iconic silhouette — one globally known and placing the region on the world stage.

To be sure, the market is thriving. Thousands of new units have come online in recent years, with more in the works. Listen to those on the front lines of development and they’ll tell you, both opportunities and challenges exist. Buyers still are flooding into the market, yet the prices of land, material and labor present risks.

Riding the current boom market only strengthened by the pandemic, developers today find themselves in an enviable situation, with the pandemic steering almost 900 people a day to Florida and developers and construction crews working feverishly to deliver, said Peggy Olin, CEO of One World Properties and the discussion moderator.

With Miami’s place as a financial, business and lifestyle crossroads, it’s considered by some the “Hong Kong of the west,” Olin said.

“We’ve all been preaching about Miami and the perfect storm came and positioned Miami in an ideal light,” she said.

From early arrivals and families who visited generations ago, Miami’s metamorphosis is an ongoing evolution, said Justin Oates, vice president of real estate investment firm Cain International. What drew Oates to Miami almost two years ago was the density and condo offerings that are creating lifestyle communities for those working in downtown and surrounding areas, he said. We’ve been focused on gateway city, city centers, building best in class assets, whether that’s office or residential.

Where it once was the beachfront that drew the buyers, today the mainland is getting equal attention.

“Everything that’s happening on this side of the bay is making Miami a hub for business,” he said. “We take a long view on the market. You have enough critical mass of restaurants, apartments and retail to appeal to young people who want to grow their careers. The pandemic has accelerated everything.”

Elevating luxury living

To be sure, among luxury living, condos grab the headlines. The Auberge Beach Residences & Spa from Fairwinds Group, Fortune International Group and the Related Group brought 57 luxury residences to a five-acre parcel overlooking Fort Lauderdale beach. Residences ranged from 1,627 square feet to more than 5,000 square feet with prices hitting $9 million.

The Trump Group’s recent sale of a $27 million condo at The Estates at Acqualina in Sunny Isles – the third-highest price paid for a condo in Miami-Dade County – capped some 70 sales in the last 90 days. Previously, that would have been a year’s worth of transactions, said Mike Goldstein, president of sales with The Trump Group.

Mirroring Oates’ comments, he said 90% of recent buyers have been from the U.S., many of them being consumers who never before might have considered Miami. Many are families, in the 40- to 48-year-old demographic. Families are coming, so the units are getting bigger, he said. The firm has sold 18 units at 9,000 square feet or more – with six or seven bedrooms. In fact, smaller units are a harder sell, Goldstein said.

“We’re condo builders but we’re basically building custom homes,” said Goldstein, whose recent amenity package for one development included an $850,000 interior budget – and a gold toothbrush upon move-in.

New designs include great rooms, flexible kitchen designs, and a continual demand to divide and redesign the space, said Bernardo Fort-Brescia, founding principal with Architectonica. When creating unit models, a single unit may have five possible combinations.

“We have to design it assuming somebody may want to combine three units,” he said. “This is like a Rubik’s cube. We used to think about the perfect unit. Now it’s the perfect combination.”

The Palm Beaches have seen similar interest in various condo types, said Jose Padua, Jr., director with developer Group P6. The executive attended with his father, veteran Venezuelan developer and firm principal Jose Padua, Sr.

Group P6’s projects in Boca Raton have seen strong traction; the firm in December closed on a $68.5 million construction loan for its Royal Palm Residences there.

Looking northward, the hope is downtown West Palm Beach will continue to evolve to attract a wider demographic, he said.

Diversity among condo classes

If a single word defines condominium development across South Florida, it could be “diversity.” From ultra-luxury, oceanfront properties, to towers rising from Brickell Avenue to Boca Raton, to those in more emerging neighborhoods like Edgewater and North Beach, the diverse assortment in offerings – and communities – are serving widely diverse needs.

Different living needs are demanding various development styles. With the work-from-home phenomenon, many people are hoping to continue remote work – or at least be closer to their offices. Oates’s company is developing the 55-floor office tower 830 Brickell with partner OKO Group. Already, private equity firm Thoma Bravo has signed for 36,500 square feet at 830 Brickell. Oates believes work-from-home could be an aberration. However, the ability to work remotely or walk to the office makes these neighborhoods – with their grocery stores, restaurants and retail shops – highly desirable, said Fort-Brescia.

Resilience & sustainability built in

Resilient and sustainable development have grown in importance. Architects and developers, therefore, are building green concepts and South Florida living into the designs. For example, Trump Group is reducing some of the space formerly designated for interior common space and creating more outdoor features. At The Estates at Acqualina, Trump Group turned what would have been common, first-floor space into four single-family villas that sold for $60 million, Goldstein said, and rethought the amenities to better align with tropical living.

Fort-Brescia agreed. Fewer of those moving to Florida for the tropical weather want indoor amenities. By reducing interior space and rethinking the floorplate, costs of air conditioning, for example, drops. Outdoor areas are cooled by the tradewinds, and terraces shade glass walls and windows, also lowering cooling costs.

Brickell City Center, for example, has no air conditioned public space, he said. Some of these advancements meet or exceed LEED certification, he said.

“Outdoor amenities are more sustainable than indoor air conditioning,” he said “You can harness nature to create a better, more efficient building. Let’s remember that in Florida, there are certain advantages of lifestyle that create a more sustainable building.”

Land – deal maker, and breaker

What does tomorrow hold? It could be a conflicted future. The market has qualified buyers eager to move. Boca Raton is seeing people downsize, as empty-nesters leaving the suburbs for the hassle-free lifestyle of the urban scene, Padua said, bidding wars are common for the same luxury condos. Just as with single family homes, he said, “There’s no inventory.”

Investors are bullish on the market; Trump Group recently landed a $578 million construction loan for an upcoming project, Goldstein said. Lenders are calling on Padua frequently asking about projects where they can invest. Oates believes capital is available for high quality projects with high quality sponsors. Lenders and equity partners like Cain are trying to figure out ways to be part of this next phase of growth in Miami.

The executives were clear on what it doesn’t hold: An abundance of developable land available at a reasonable price. Prices have soared as available parcels have grown scarce.

“The problem is not the equity. The problem is not the lender,” Padua said. “The problem is the land. That’s where we have the issue.”

This isn’t something architects and engineers can help design around. Taller buildings won’t work; zoning and height restrictions and neighbors fearful of the shade of towers next door are preventing that in many areas.

“We’re looking for land.” That’s not easy. Parcels in land-locked South Florida are scarce, and developers are “all looking at the same pieces, outbidding each other,” he said. It could drive joint venture partnerships.”

Parcels are skyrocketing, Goldstein said. He’s seen acres go from $4 million each to $25 million to $50 million an acre. One property owner was asking $100 million an acre. “They don’t make oceanfront property any more,” he mused.

Olin wondered how developers are finding land and making deals work. Padua spoke of two files that sit on his computer – one with new deals, the other with discarded deals. Those discarded typically are because land was priced beyond reason.

The calculus includes finding available land and getting a reasonable price.

“The amount of deals that you discard is amazing,” he said. “The list just grows and grows. And nowadays I think it’s actually more difficult to make it work. You make the deal when you buy the land. If you don’t buy at the right number, you’re going to run into trouble later on. If we don’t feel comfortable, even if the land is the most precious piece of property, you can find the numbers don’t work.”

Score the land at the right price, and another risk is looming: commodity prices. Lumber, concrete, steel and other raw material prices have soared. So much so that Trump Group read the tea leaves and decided to lock in commodity prices to hedge against future hikes, Goldstein said.

While some commodities have stabilized, another threat looms on the horizon: labor costs. Calling this the “next big factor,” how labor impacts project pricing could be “even more significant going forward,” said Scott Desharnais, Suffolk’s general manager of Florida’s east coast. Timing could be key.

“There is more activity out there right now than I’ve ever seen in my entire career. With that comes unavoidable labor challenges and the potential for escalation,” he said. “Developments that are able to get out of the ground sooner could benefit and avoid the uncertainties of the future market.”

The ‘long view’ of South Florida’s condos

With its long view on the market, Oates and Cain see critical mass being achieved, with offices, restaurants, retail, entertainment and other elements all within walking distance of area condominiums.

This will be especially appealing to young people starting their careers with any of the countless companies already in or planting their flags downtown or urban markets, he said. Symbiosis will spur more traffic.

“That’s going to attract companies and businesses,” he said.

As Olin commented, “Roofs bring retail.”

Even if there is no “cycle,” the market feels different this time, Desharnais said. Suffolk’s condo construction still leads its list of high-end projects. Previous buyers were looking for second or vacation homes, he said. Goldstein joked how in the previous cycle, even his barber owned a half-dozen condos.

Now, lenders have reeled in formerly generous lending practices. More importantly, many of those 900 new residents arriving each day are taking up permanent residence.

Another indicator: commercial and office space are seeing a swing in traffic, with companies relocating to the region. “All those are great indicators for this being different this time and lasting somewhat longer,” Desharnais said.

The executives agreed that the current fervor of South Florida’s condo market is beyond some up-and-down “cycle.” At some point, however, balance will have to return. With scarcity of available homes and condos for sale and apartments for rent, executives wonder how their workforce will afford to live here in the future.

If Miami is a brand, its cachet must be protected, Fort-Brescia warned. The current buyer euphoria cannot lull developers into delivering ever more units at lessening quality, especially as cost of land, goods and labor might open the door to cost cutting.

What does tomorrow hold? Given Miami’s relative youth, many believe its future as an iconic city lies ahead of it. What’s more, the growth of distinct, unique neighborhoods – “different personality districts” – that expand beyond city centers make an area like Greater Miami and South Florida thrive, Fort-Brescia said.

“These are like cities within the cities, like Coconut Grove, Wynwood, the Design District, South Beach. Each one of them is fantastic. This kind of choice of neighborhood where you want to live or work or dine means we offer a more complete city. That’s an indicator that we are maturing into equal standing with global cities.”