MIAMI-Onyx on the Bay, a condo project on downtown Miami’s Biscayne Bay, will see its 40 remaining developer-owned units sold at a bulk auction. The U.S. Bankruptcy Court will auction the downtown Miami waterfront condos on Oct. 5 to recover some of the $22.3 million the developer owes, according to the U.S. Bankruptcy Court Southern District of Florida records.
The court has set the opening auction bid at $7 million, or about $116 a foot, which is the current market value for the block of units, according to the Miami-Dade County Property Appraiser. But the winning bidder will be also be burdened with the cost of completing the building and paying overdue property taxes.
“Problem projects like Onyx are finally coming to a closure,” Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures, tells GlobeSt.com. “This project came to market about a year too late, but a bulk buyer should do well with this block of new units—if they purchase it at the right price.”
The Onyx was built in 2007. The entire project offers 118 units. The developer, Biscayne Bay Lofts LLC, sold 78 units at an average of $389 square feet between August 2007 and February 2009, according to Condo Vultures. Onyx on the Bay is currently owned by Hyperion Onyx Partners LLC, an affiliate of Miami-based Hyperion Group. Hyperion Group was not immediately available for comment.
“Onyx on the Bay is on the waterfront but the consensus among most real estate professionals is that the units aren’t that great,” Jack McCabe, principal of McCabe Research and Consulting in Deerfield, tells GlobeSt.com. “A lot of condo projects in downtown Miami were built with a commodity mentality because the buyers were investor-speculator-flippers. Onyx fits into that category.”
Bulk buyers have transacted more than 60 condo deals in South Florida since July 2008, according to CondoVultures. That accounts for more than 6,000 units with 7.1 million square feet for a combined $1.6 billion.
The most recent bulk buy was at ICON Brickell. A private equity group purchased 15 units at less than $337 per foot, Zalewski says. Miami Icon Hotel Room LLC paid $5.1 million for about 15,200 square feet of space in the north and south towers earlier this month, according to Miami-Dade County records. Zalewski says the deal marks the second-highest price paid by a bulk buyer for a block of units in downtown Miami since July 2008.
“ICON Brickell is a great building and buyers who hold on to their units for five to seven years are going to see some pretty good profit margins,” McCabe says. “The big question for investors is whether or not they are going to be able to rent them out at a rate that’s going to give them a positive cash flow or if they will have to continue to pull money out of their pocket because the rental market is cut throat in the Brickell corridor.”
The Related Group, the developer of ICON Brickell, referred GlobeSt.com to ICON Brickell for comment. Desmond Roberts, a contract administrator at ICON Brickell, declined to comment.
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