Coconut Grove residential market comes down to earth

As the pace of development seems destined to decrease over the next 12 months, realtors are seeing a normalization in the Coconut Grove residential market, holding high prices and low inventory.

Increased demand and low inventory caused by the heightened migration of people from other states and companies opening businesses or making Miami its headquarters caused a boom in pricing, but “the truth is that when you look at the top markets – New York, San Francisco, Los Angeles – we’re still below in terms of home prices and prices per square foot,” said Christine Martinez de Castro, director of sales and marketing at real estate developer CMC Group.

“We obviously had this anomaly in terms of the super increased demand and low inventory,” she said. “I think we’re starting to see that normalize into a more normal cycle, so that does translate to a little bit of a slowdown compared to what we’ve seen. However, prices seem to be holding pretty steady.”

Listing median prices for single-family homes in Coconut Grove have increased year-over-year. According to Rocket Homes, the median sold price for homes is $1.4 million, about $701 per square foot, as of November. The price has increased 25% since November 2021. Coconut Grove also has 25.2% more sold homes than it did a year ago.

A one-bedroom home or apartment’s price has risen 40.4% since 2021, from $275,000 to $386,000. A two-bedroom unit’s price has increased 40.6%, rising from $675,000 to $949,000. A three-bedroom apartment, which in November 2021 was above $1 million, in November 2022 was priced at $1.6 million, a 39.1% increase.

Nonetheless, compared to other nearby luxury residential markets, Coconut Grove home prices have increased the least. For example, Grove Isle has increased 45.5% over the past year. Sunrise Harbor has increased 52.9%, according to Rocket Homes.

“We are seeing now, with this stabilization or slowdown in some places, that markets for prices may be dropping, but again, South Florida seems to be an anomaly in terms of demand,” Ms. Castro said. “Miami always ranks in the top three places where people are choosing to make their homes. So that very much is a factor in how our real estate market is reacting, and that’s without even touching the international market.”

With the pace of development expected to slow in the next year, experienced developers will probably focus on starting fewer projects, which represent an opportunity since less construction means the cost of building could improve next year, and projects that move forward will be strongly positioned once the economy improves, said Arnaud Karsenti, managing principal of real estate investment and development firm 13th Floor Investments in an email.

CMC Group’s new residential development in Coconut Grove, Vita at Grove Isle, at the contours of Grove Isle’s Biscayne Bay shoreline, will have 65 luxury condominium residences that, according to its website, start at $5.1 million for three- to four-bedroom apartments.

“We’re starting construction and getting ready break ground in the next couple of months,” Ms. Castro said. “There really isn’t a lot of space left for development in the Grove, which is one of the things that makes it interesting. Vita is one of the last sites with completely unobstructed water views.”

The restricted supply of residences in Coconut Grove is creating a growing price-setting ability, making it one of the strongest rental unit markets, said David Martin, CEO of Miami-based development firm Terra Group. “Rents are probably one of the highest in the county,” he said. “It has to do with the fact that there is high interest to that market, and very little anew supply.”

Terra Group is delivering Grove Central with developer GRP Grove Metro Station, LLC a 23-story residential tower with 402 multi-family apartments, 170,000 square feet of retail and 1,295 commercial and residential parking spaces, next to the Metrorail station in Coconut Grove.

“But, aside from it, there are not many other deliveries,” said Mr. Martin. “Given the lack of supply, I think we’re going to continue to see a huge demand and stable high pricing.”