SURFSIDE, Fla. – The deadly collapse of the apartment building in Surfside, Florida, has spurred many in the region to ensure that their buildings are structurally sound. In the long run, these assessments – as well as buyer fears and rising costs – could lead to a transformation of the South Florida real estate market as a whole.
Market observers said they have already begun to see declining demand for units in older buildings in the area, typically occupied by lower-income tenants and retirees, similar to the fallen condominium, Champlain Towers South in Surfside. And those built since 2000, typically inhabited by wealthier Florida people, are getting more attention from buyers.
The Surfside building, built in 1982, underwent its 40-year certification. This process requires an engineer to ensure the structural and electrical safety of the building, and it can often reveal the need for expensive repairs. The engineering report given to Champlain Towers showed the apartment needed millions of dollars in repairs to repair “major structural damage” to the concrete slabs under the building’s pool deck and driveway, documents showed.
Niakan and other real estate agents said they have pushed to get information about a building’s recertification process for their customers because it provides a reasonable warning of a looming assessment – a decision on how a major building cost, such as roofing or elevator repairs, will be shared of tenants.
But they said buyers now want engineering reports for safety reasons, and those reports are not always easy to acquire. Such concerns also mean that sales of older apartments are declining, which several real estate agents have so far said was “a red hot market”.
Market experts in South Florida expect that the lagging interest in the older apartments will cause prices to fall, while the pressure on more technical reports is likely to put lower-income owners in unsustainable positions, forcing many to take on assessments they do not can afford or sell as soon as possible.
This could lead to significant changes in condominiums and even the Miami skyline.
“If the results of these technical reports in older buildings require significant repairs or tens of thousands of dollars, and the condominiums cannot afford the assessments, you will see units being dumped,” said Adam Mopsick, CEO of Amicon. , an owner’s representative and a construction company that has worked with hundreds of owners’ associations in the region.
Mopsick and others warned that this would be a slow process, but they said it could lead to feeding turmoil for developers who see valuable land off the coast of Florida.
Paul Sasseville, a real estate agent for Compass Florida, said he had already received a call from a client in New York asking if this would be an option for buying real estate. The client compared it to the market in communities along the east coast after Hurricane Sandy in 2012 caused excessive damage and forced many to sell.
“All the best properties were built in the ’70s,’ 80s, and ’90s on this great waterfront land,” Sasseville said of Miami Beach. “Now you need to see what we call condo terminations, where developers buy out old buildings, demolish them, and set up new ones.”
Sasseville said the demand for technical reports about his end has also risen high, and Mopsick said he has had to hire more staff in recent weeks just to try to keep up with the number of calls he has received from owners’ associations.
“We get a lot of hysterical calls from old customers and new customers who just want to get an engineering report,” said Mopsick, noting that demand is causing service prices to rise because there are not enough engineers to meet the number of requests .
But it’s not just new assessments, shedding condo values or technical reports that lower-income residents need to worry about.
Mike Clarkson, president of Hilb Group in Florida, a state-owned insurance brokerage firm, said he expected buildings across the state to receive 40-year certifications after the Surfside collapse and that they would likely be redone every 10 years thereafter.
That’s the warning, as Clarkson said he brings to the series of condo board association meetings he will attend across the state in response to the request for clarity from clients.
“Demand is not just in Surfside. It’s not just in Miami. It’s everywhere, ”Clarkson said. “The amount of emails and phone calls I’ve received – and we have 750 to 800 associations we insure in the state of Florida – is insane. I receive calls from buildings that are three stories high. ”
Another concern is that insurance premiums may suddenly rise, Clarkson said. He recalled that many major insurance companies after Hurricane Andrew in 1992 left Florida because of the number of injuries and because “premiums rose 400 percent, 500 percent overnight” due to lack of competition.
“It’s going to be a party,” he said. “And that’s what will happen again, or they will issue policies with so many exclusions that it’s almost not worth having.”