A development team has secured $98 million in financing to acquire and demolish a condo building and replace it with a new residential tower in Miami Beach, Florida.
The team led by Coconut Grove, Florida-based developer Terra said it acquired more than 95% of the 238 units at 1250 W. Avenue, allowing it to dissolve the condominium association and tear down the 61-year-old building.
The developers plan a 100-unit condo up to 330 feet tall.
"This project will be part of a transformation of an area in Miami Beach yearning for a resilient neighborhood grounded by its residents and upgrades in services, and our team will deliver with that exact approach," Terra CEO David Martin said in a statement.
Housing analysts said they expect this to be one of many condo redevelopments across Miami-Dade County and the Sunshine State in the coming years as a result of a new safety law enacted following the collapse of the 12-story Champlain Towers South in Surfside, Florida, in 2021.
The new condo safety law requires associations in older buildings to complete inspections and finance reserves for repairs.
Repair costs concern residents
Some residents fear they won't be able to afford their share of potentially hundreds of thousands of dollars in repair costs. Rising homeowner association dues are also straining owners' budgets.
They'll look to sell their units at steep discounts or hope a developer comes in and buys the building, according to Peter Zalewski, founder of the Miami Condo Investment Club.
Older buildings will be candidates for condo terminations, with developers buying up the bulk of the units and replacing the aging, obsolete structures with new towers, he said.
"It's inevitable," Zalewski told Homes.com. "The old stock of buildings built in the heyday of the '60s, '70s and even '80s will simply get replaced. Condos are recyclable."
The new buildings will be hurricane-proof and bring more tax revenue to cities, and they will also usher in neighborhood gentrification, he noted.
"We're in the very early stages of the transformation," Zalewski said. "The changes will be dramatic and longstanding."
Terra is partnering with JDS Development Group, Rafi Gibly and Gianluca Vacchi. The New York-based Northwind Group provided the financing.
