Thousands of apartments are under construction across Broward County, virtually all of them for rent. Condo development persists, though – mainly in mid-rise buildings, not skyscrapers. These include an eight-story riverfront condo project in the downtown area, called Sixth & Rio, and two 11-story condominiums that will be part of a major makeover of Pier Sixty-Six. The latest midsize contender in the market is The Terraces, a 10-story boutique condo designed to live up to its name, with large terraces. Don’t call them balconies – some cover more square feet than a small house.
The Terraces condo project is planned at 527 Orton Ave. in the north beach area on the eastern side of Fort Lauderdale’s barrier island. The half-acre site is about a mile south of Hugh Taylor Birch State Park, about a mile north of the Las Olas Marina, and within easy walking distance of the beach – as well as the W Hotel’s mind-altering spa. “We have owned the land since October 2020,” said Carlos Lopez of Latitude Group, a Key Biscayne-based real estate development company he co-founded with his business partner Luis Estrada.
When Latitude Group acquired the site three years ago, the property had the city’s approval for the development of a six-story building with 18 residential units. Latitude Group’s co-founders successfully proposed to amend the city-approved site plan by stretching the height of the building to 10 stories and increasing the number of units to 22.
In advance of groundbreaking, Latitude Group is conducting a preconstruction sales program and pricing most units at The Terraces between $1.8 million and $3 million, which Lopez called the proper price range for “attainable” luxury homes. “We have two units under contract, and we have three reserved and pending,” Lopez said in an August 24 interview. “The most [sales] leads we are receiving are from New York and Canada. We have one contract from a person in Chicago.”
Construction of The Terraces is expected to start in the first quarter of 2024 and take 14 to 16 months to complete, Lopez said. Fort Lauderdale-based Grycon would serve as the general contractor. Latitude Group also has lined up a construction loan from Miami-based BayBridge Real Estate Capital. Closing the loan is contingent upon selling seven of the 22 planned condos at The Terraces during the preconstruction phase of the development, Lopez said. “We are working on the sales so we can hit our minimum presales that our lenders require,” he said.
Lopez and Estrada have faced headwinds, largely from the Federal Reserve, which has dramatically raised the cost of borrowing to buy or build condos. The Fed rapidly raised the interest rate on overnight loans between banks by five percentage points over 17 months, from the range of 0.25 to 0.50 percent in March 2022 to the range of 5.25 to 5.50 percent as of July 26. “The markets started going a little bit crazy,” Lopez said.
Lopez and Estrada also have their hands full. In addition to The Terraces, Latitude Group also is developing a two-story mixed-use building on Key Biscayne’s Crandon Boulevard that will span about 25,000 square feet, with space for retail stores on the first floor, offices on the second floor, and four paddleball courts on the rooftop.
Holding down the cost of constructing The Terraces may prove challenging as well. “The cost to build has started to border on prohibitive in some markets,” Calum Weaver, an executive managing director of brokerage Cushman & Wakefield, reported in a 2023 forecast of the multifamily housing market in South Florida.
Despite elevated labor and material costs, plus higher borrowing costs, apartment construction in South Florida is roaring ahead. “There are 44,780 units under construction in South Florida. This represents 13.1 percent of the current apartment inventory,” Calum said in his report on South Florida’s multifamily housing market.
But nearly all the apartments under construction are for rent, not for sale. As a result, sparse competition in the market is a supportive tailwind for Latitude Group and its boutique condo project near Fort Lauderdale’s beach.
With unit preconstruction prices starting at $1.8 million during summer, The Terraces condominium development in the north beach area was priced well below other competitors.
Owners of units at The Terraces also will pay a lower homeowners association (HOA) fee for common area upkeep than condo owners will pay at Sixth & Rio. “We are below $1 per square foot,” Lopez said. To keep the property from operating like an Airbnb-friendly hotel, condo owners at The Terraces will be able to rent their units six times a year for a minimum term of 30 days per rental. But the biggest competitive advantage of The Terraces may be its distinctiveness, much smaller in scale than 100-unit Sixth & Rio, and sequestered in a more residential location, just a short walk from the beach. Says Lopez: “It’s a completely different thing.”
