It was the perfect moment for PMG when they decided to pivot their under-construction multifamily tower into condos in downtown Miami two years ago. The burgeoning demand for condos spurred PMG’s decision to transform the planned Society Biscayne rental tower into The Elser Hotel & Residences.
“The biggest amenity of what is now called the Elser was that there was very little standing inventory [at the time],” explained Ryan Shear, managing partner at PMG. Buyers were eager for immediate ownership, not willing to wait for years. This urgency drove the conversion decision.
PMG was ahead of the curve, pioneering a trend in 2022 that saw many developers across South Florida shifting from rental buildings to condos due to multifamily market challenges. Notably, these converted projects often provide short-term rental flexibility, a popular feature in Miami.
“Financing multifamily deals is increasingly difficult,” said Shawn Amuial, a partner at Holland & Knight, citing slowed rent growth and rising interest rates. Coupled with escalating insurance and construction costs, many apartment projects have become financially unviable.
Earlier this year, Hollywood developer Chip Abele announced plans to convert Circ Residences into condos. GCF Development, which completed the 25-story, 386-unit tower in 2019, is now marketing these units through ISG World, with prices ranging from $400,000 to $1.2 million. Circ’s pre-2020 construction gives it an edge, avoiding the inflation and supply chain issues plaguing newer projects.
“Now that rents have plateaued, other multifamily developers are considering similar conversions,” noted Craig Studnicky of ISG World. South Florida’s shortage of newer condos, combined with the higher maintenance and insurance costs of older buildings, further fuels this trend.
Developers like Henry Pino from Alta Development and Raimundo Onetto from Alta Developers have followed suit, converting planned apartment buildings into condos. Pino’s River District 14 and Onetto’s Cassia in Coral Gables are prime examples, offering units geared toward both investors and local workers, with prices starting from the $700,000s.
Converting a planned project is simpler than one already under construction, especially for condo-hotels, which require extensive code compliance and modifications. “If you haven’t put a shovel in the ground, changing the design is less difficult,” said Amuial.
PMG’s conversion of Society Biscayne into The Elser was particularly challenging but ultimately rewarding, with the building now about 95% sold. “The best thing we had going for us was there was not a lot of standing inventory,” Shear said, though he acknowledges the market is more competitive now.
By seizing the right moment and recognizing shifting market dynamics, PMG and other developers are successfully navigating the evolving real estate landscape in South Florida.
