As South Florida’s real estate market has matured, it faces a challenge similar to other mature markets: the increasing scarcity of developable land. Already faced with limited availability of vacant land due to geographic constraints, the rapid and dynamic growth of Miami-Dade, Broward, and Palm Beach Counties over the past several years has left developers with fewer greenfield development options, particularly along the coast.
Early signs of re-purposing property for redevelopment appeared in the acquisition of golf courses for redevelopment. However, these represented a limited supply and came with potential environmental issues. In addition, this product could not supply premium locations along the coastline. Since waterfront development was some of the earliest development in South Florida, a vast array of aging product was potentially available for redevelopment, and most of these sites were occupied by condominiums.
Florida recently enacted legislation to address safety concerns for condominiums and cooperative buildings by imposing a slew of stringent obligations on associations that will ultimately substantially raise condominium maintenance costs or require substantial out-of-pocket expenses for special assessments. The high cost of performing retrofitting work on aging condominiums, exacerbated by new legal requirements and the soaring costs of property insurance, has created a unique incentive for existing unit owners to sell out to redevelopers and often receive a substantial premium over fair market value of their units.
The cumulative effect of these developments has been a significant rise in the appetite of developers to seek redevelopment of aging condominiums, many times effectuated through the condo termination process. Bilzin Sumberg counsels developers and investors on all facets of condominium redevelopment, including:
- Land use and zoning, including all aspects of the government regulatory approval and permitting process, as well as due diligence evaluations and entitlements
- Joint venture structuring
- Real estate acquisition, development, and financing
- Litigation and dispute resolution, including partition actions and construction litigation
- Termination of an existing condominium
- Negotiation and drafting of construction-related documents and agreements
