Developers are ramping up incentives for buyers—including high-end fixtures, prepaid HOA fees and even leasebacks.
Increasingly eager to sell out their luxury projects, South Florida developers are ramping up incentives to lure both brokers and buyers with a cherry on top of their condo offerings.
The sweeteners run the gamut and can include prepaid homeowners’ fees and taxes, lower deposits and high-end finishings at no additional cost. These enticements come as luxury towers across South Florida top off and developers scramble to sell out their projects in a sluggish market.
With a plethora of supply and the much reported drop in foreign buying activity, some discounting is happening, too — but incentives are the more heavily marketed option. Sales directors haven’t gone as far as offering the quirky freebies like free suits and iPads that rentals have offered in the past, but they are piling on the extras they believe will bring both buyers and brokers to their projects.
“When developers near the end of sales — the last 10 to 20 percent — you see more discounting and concessions,” said John Warsing, sales director for Aurora in Sunny Isles and Le Jardin and Pearl House in Bay Harbor Islands. By that point, developers have often paid back most of any borrowed capital.
“They are eager to sell the units and close out the buildings, and it has gotten more competitive. We are all looking for the same buyers, and the pool has dwindled.”
The competition for buyers — and the sweeteners to lure them — extend north to Broward County, where numerous luxury condominium projects are nearing completion and new ones are still breaking ground. There, too, the incentives come in the form of lower deposits, extra parking spaces and fully furnished units.
“Fort Lauderdale has always been a different market than Miami, but many of the brokers who are coming up are inquiring about incentives, and we realize we need to give them,” said Ivan Ramirez with ONE Sotheby’s, sales director for Gale Residences Fort Lauderdale Beach.
To lure buyers to Gale Residences, where 90 percent of the 123 units are sold or under contract, the developer has lowered deposits to 30 percent from 50 percent. “The project has been successful, and that provides for the financial stability to offer incentives on the last few units,” Ramirez said. The development is scheduled to be completed during the fourth quarter of 2017.
Nearby at the Riva, a 15-story riverfront tower that is scheduled for completion by year end, the same developer, Newgard Development Group, is selling the remaining 40 percent of its units complete with high-end finishings.
As the Ocean Resort Residences moves toward completion, the developer of the luxury lifestyle condominium hotel on Fort Lauderdale Beach is offering furniture packages in its residences (advertised as an $80,000 value). It is also offering a guaranteed income should buyers want to put their units into the pool of rooms for hotel use.
Not only are South Florida condo buyers getting deals; the brokers who represent them are as well, in the form of higher commissions. Instead of the standard 5 or 6 percent commission on a sale, some developers are offering from 7 to 10 percent for bringing a buyer to their project. “Right now, it’s a great time for a buyer to shop. But it’s a good time to be a broker, too,” Puig said.
Peter Zalewski of Condo Vultures explained the current South Florida condo market this way: “A developer does not want to cut pricing, so what they will do first is raise commissions for brokers; second, eliminate or offer free maintenance; third is provide an incentive or credit for build-out of units; and the final step is reduce prices,” Zalewski said. “We are about halfway through the process when you have too many units and not enough buyers.”