South Florida Multifamily, Luxury Homebuilding Headed For Slowdown In 2025: CCIM Panel

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South Florida is likely to see a slowdown in both multifamily and luxury home development in the upcoming year, according to a panel of builders.

At the 2025 CCIM Miami Commercial Real Estate Outlook Conference held last week, prominent developers shared their insights on the region’s real estate landscape. The panel, featuring Gaetano Caltagirone, President of The Calta Group; Ellen Buckley, CEO of Prospera Real Estate Collective; and Jeffrey Adrizon, principal of The Estate Companies, discussed the current and future state of residential development in the tri-county area. The session took place at Florida International University’s Tamiami campus in Sweetwater and was moderated by Albert Arisso of Miami-based lender Vertix Group.

The developers offered a candid assessment of the challenges facing the market. Buckley, for example, shared that her firm, which was founded in late 2023, recently walked away from a potential multifamily development deal due to an overpriced land parcel and the seller’s refusal to negotiate. After factoring in rising costs, such as higher interest rates and insurance, as well as anticipated rental prices, Buckley explained that the numbers didn’t align with the firm’s expectations for the project.

“Needless to say, that deal didn’t go forward because the fundamentals just didn’t work,” she said. “Keeping construction costs under control and making sure the deals make sense is crucial.”

Currently, Prospera is focused on a townhouse project in North Miami, where the firm is collaborating with Faith Community Baptist Church to develop 37 townhomes on part of the church’s 3.2-acre property at 10401 NW Eighth Avenue.

Adrizon added that multifamily developers are under increasing pressure from potential equity investors who are demanding more concrete financial details. For example, his firm recently secured a $78 million construction loan for a 347-unit apartment building in Davie, but he noted that in the past, institutional investors would have been satisfied with economic models predicting future rent growth. Today, those investors want to see hard data and solid projections. He also observed that the market in Palm Beach County is currently seeing slower absorption of new units.

“There’s been a bit of oversupply,” Adrizon said. “Right now, it’s slow, especially in Palm Beach County.”

On the luxury home development side, 2024 has proven to be a challenging year, according to Caltagirone. He cited rising construction costs, higher interest rates, and insurance premiums as significant obstacles for luxury developers trying to make speculative projects financially viable. Despite these challenges, Calta Group recently secured a $30 million construction loan for a 10-townhome project in Coral Gables.

Nevertheless, some submarkets are still seeing strong demand. Caltagirone mentioned that one of their recently completed homes in Pinecrest, listed at $10.5 million, sold almost immediately, even before receiving the certificate of occupancy.

Looking ahead, Caltagirone suggested that luxury builders may shift their focus toward developing homes on smaller lots—around 7,500 square feet or less—to cater to young professionals who are relocating to South Florida in search of more affordable homes. He pointed out that these professionals, many of whom are renters, often face difficulty finding homes within their price range.

“I think we’re overlooking them,” Caltagirone said. “There’s definitely a need for homes that are more affordable, especially for young people coming from other parts of the country.”

Source:  The Real Deal