Right Time for PMG’s Move
Two years ago, PMG decided to convert its planned rental tower, Society Biscayne, into The Elser Hotel & Residences in downtown Miami, driven by high condo demand. Ryan Shear, PMG’s managing partner, noted the scarcity of available condos then, which spurred their decision.
Trend of Converting Rentals to Condos
PMG led the way in 2022, and now other developers are following suit due to challenges in the multifamily market. These projects often offer short-term rental flexibility, which is increasingly popular in Miami. Holland & Knight attorney Shawn Amuial cited financing difficulties, rising interest rates, and increased insurance and construction costs as key factors pushing developers toward condo conversions.
Case Study: Circ Residences
In early 2023, Hollywood developer Chip Abele converted the Circ Residences apartment tower into condos. GCF Development, Abele’s firm, completed the 25-story, 386-unit tower in 2019. ISG World, led by Craig Studnicky, is handling the sales and marketing. Since February, the developer secured state approval and converted some tenants into buyers. Prices range from $400,000 to $1.2 million. Studnicky noted that pre-2020 buildings are better positioned for conversion due to lower construction costs before inflation and supply chain issues surged.
High Demand for Newer Condos
The demand for these units is also driven by a shortage of condos under 10 years old in South Florida. Older buildings face higher maintenance costs, insurance difficulties, and upcoming safety law compliance deadlines.
Other Developers’ Shift
Developers Henry Pino and Raimundo Onetto have also shifted from rental to condo projects. Pino launched sales for the 283-unit River District 14 in Miami, initially planned as rentals. Prices range from $490,000 to $780,000. Pino attributed the switch to the current high interest rates making multifamily developments financially unviable.
Onetto’s project, Cassia in Coral Gables, followed a similar path. Initially planned as rentals, the high rates and costs led to a switch to condos, which have been selling steadily. Prices start in the $700,000s, with units delivered furnished by RH (Restoration Hardware) and flexible rental options.
Complexities and Market Realities
Converting planned projects is easier than altering those under construction. PMG’s Shear mentioned the complexities of converting Society Biscayne into The Elser, especially for daily rentals due to code compliance. Despite the challenges, The Elser is now about 95 percent sold. However, Shear noted that the condo market now faces more competition than two years ago.
