South Florida's Luxury Condo Boom Has Finally Reached Broward County

New condos catering to the wealthiest people in the U.S. and beyond abound in Miami, and Palm Beach has a burgeoning pipeline of luxury projects looking to attract financiers arriving from the North.

But Broward County, wedged between its two South Florida neighbors, was lagging behind in the luxury development race. That’s starting to change.

A wave of projects is underway in coastal towns from Pompano Beach to Hollywood, and proposals are popping up from Fort Lauderdale’s downtown to its riverfront. One of them is The Ritz-Carlton Residences, Pompano Beach, a 205-unit project that was nearly sold out even before Bank OZK provided a $259M loan for its construction in January. 

“I tried to get Ritz-Carlton for Solemar, and they laughed at me,” Related Group President Nick Pérez said of the developer’s luxury Pompano Beach project that broke ground in 2021. “It just goes to show the progression of what’s happened in the last four years.”

The burst of luxury development taking shape in Broward County is as much a product of demand as it is market realities. Luxury units have continued to attract a stable of buyers, but high-end condos are also one of the only types of residential developments that are economically viable, developers said at Bisnow’s Broward County State of the Market event last week.

Even as they plow ahead on high-priced properties, developers, lenders and local officials have stressed the need to find ways to get cheaper housing out of the ground to address the affordability crisis.

“At the end of the day, it’s all about cost,” Doron Broman, founder of Moderno Development Group, said from the stage at the Fort Lauderdale Marriott Harbor Beach Resort & Spa. “It costs the same to build a high-end project near the beach than a workforce housing-focused project on the west side.” 

Luxury condo development is in many ways the path of least resistance for a developer in South Florida. Projects typically break ground after buyers have signed purchase agreements for a large percentage of the units, giving confidence to lenders financing the construction. 

“It’s a little bit easier for developers to get going with buyer deposits, and a lot of the buyers are bringing cash to the table,” said Mike MacDonald, senior vice president of West Palm Beach-based Kast Construction. “So with that high-end price, those projects are ready to go.”

The pandemic-era explosion in home prices has offset the rising cost of construction and labor. Plus, condo sales offer an immediate return, as opposed to the years of rent collection it takes to turn a profit on apartments for a long-term holder. 

With the economics of development today favoring high-priced projects, developers are reevaluating Broward County after it was largely ignored during the pandemic-era luxury construction boom in South Florida. 

Fortune International Group and Oak Capital are building The Ritz-Carlton Residences, Pompano Beach, less than half a mile away from where Related Group, Merrimac Ventures and Hilton have partnered to build the 28-story Waldorf Astoria Residences, the hotel brand’s first purely residential property.

In the nearby beach town of Hollywood, Related has partnered with BH Group on plans for a 350-unit condo project across from the Diplomat Beach Resort. 

In Fort Lauderdale, Related has plans for the luxury Andare Residences by Pininfarina on the city’s main street, Las Olas Boulevard. Just last week, Property Markets Group announced plans for its first luxury condo project in Fort Lauderdale, the 18-story riverfront Sage Intracoastal Residences. 

Related was an early mover in the space, launching sales for Solemar in September 2020. The project, with its 105 units priced around $800 per SF and starting at $1.3M, was the first beachside luxury project in town. Related was aware it was moving into uncharted territory, Pérez said. 

“When we launched Solemar two days before the pandemic out of a trailer, we shut down, and we thought we weren't going to have a project,” he said. “Then we sold out in seven months.”

“That progression of $800 a foot to now $1,500 a foot in just three years is pretty incredible,” he added.

As the price for a luxury condo has climbed, so has the cost of renting an apartment.

Miami for the last two years has topped RentCafe’s annual report on the most competitive apartment markets in the country, but Broward County climbed from 14th place in 2022 to seventh last year. While rent growth has recently flattened, the $2,900 median rent for an apartment in Fort Lauderdale is 47% higher than the median rent nationally, according to Zumper. 

“The three biggest headwinds we all face are the high cost of construction, high financing costs and the cost of insurance,” said Jimmy Tate, CEO of North Miami-based Tate Capital. “One of the real trickle-down negative effects is the lack of affordable housing.” 

Developers and local officials at the event stressed the need to find solutions, which they said will have to come from a combination of government incentives and more public-private partnerships. 

Timothy Wheat, partner at Miami-based developer Pinnacle, pointed to Pinnacle 441 in Hollywood as an example of success. The project’s first phase is expected to finish construction in the next two months, adding 113 apartments to the city, and Wheat said they will be priced around 60% lower than the market-rate average.

High demand led Pinnacle to open up a lottery system to lease the property and it has already received 18,000 inquiries, with the application deadline set for March 25, CBS News Miami reported. 

Pinnacle 441’s second phase broke ground in September. Its 100 units are being built with $48M in funding utilizing tax credit equity from Bank America, tax-exempt bonds from the Broward County Housing Authority, $10M from the county, $6.6M from the Florida Housing Authority and $1M in from the city of Hollywood.

Hollywood Assistant City Manager Raelin Storey said the project was an example of the city’s push to create more affordable housing. It is working with Affiliated Development on another project on city-owned land that secured a $46M construction loan this week, on top of the $9.5M in public financing approved by the city in 2021.

The focus is on developing buildings that integrate into Hollywood’s neighborhoods and improve the city’s business base, she said. 

The city is “making that affordable housing so attractive that people driving by think it's market-rate housing,” Storey said.

“In fact, a lot of them think it's luxury housing. This is really high-quality affordable housing, and it's actually improving our commercial corridors and helping market-rate and luxury projects because it's creating that vibrancy across the spectrum.”

In Pompano Beach, Mayor Rex Hardin is also eyeing an expansion of public-private partnerships to increase the supply of affordable housing. His administration has focused on identifying and procuring parcels in the city’s northwest, which has historically been dominated by industrial properties. It is developing a request for proposals process that he hopes will attract as much as $1.5B in private capital. 

“We accumulated a bunch of property because we knew that to change the look of that area, we really had to have investment,” Hardin said. “But the only way to attract investment to an area that really is run down is to accumulate some property. No developer is going to come and spend 30 years trying to gather property to really do a major investment.”

At the state level, Florida is working to encourage affordable and workforce housing construction through the Live Local Act, which provides a mix of tax abatements and density bonuses to projects with at least 40% of units set aside for residents making no more than 120% of the area median income, or $80,640 for a single person in Broward County. 

The law was expected to spur development when it passed last year, but many municipalities across South Florida have pushed back against its requirement to provide administrative approval to qualified developments, which they see as restraining their ability to control development in their neighborhoods. 

The Live Local Act has the potential to get projects off the ground, developers at the event said, but only if local governments stop fighting its provisions. 

If cities embrace the law, “they can really help instead of hurt the affordable housing crisis,” said Noah Bachow, CEO of Miami Beach-based developer Bachow Ventures.

“That will trickle up because [tenants] won't be paying for market-rate rent, and then market-rate rents won't get pushed as high.”

While density bonuses and tax breaks can help make a project more economically feasible, most affordable developments still aren't viable today, Tate said. 

“The problem with the Live Local Act is that it doesn’t solve the issue of the high cost of construction, the high cost of money, the high cost of insurance,” he said. “All of our developments are high-end, luxury products, but that doesn't solve the issue for the everyday, working-class person.”