W South Beach construction drama arises from speculators noting substantial loss of value from inflated frenzy on a solid product. W South Beach IS one of a kind but with asking values averaging $1,968 per square foot for the month, the final product is now showing signs of distress from the speculator community (from 2006). The South Florida Business Journal published an article today on alleged deception in W Hotel South Beach (2201 Collins Avenue) with several unit owners suing for their deposits to be returned in their entireties. The alleged suit claims the developer promised 520+ units, larger sized units and a second pool at the stylish 420 unit condo hotel.
“The biggest problem at the W right now is the values have declined so substantially, and nobody will lend on that,” said Dennis Freeman, a Miami Beach attorney handling one of the cases.– S. Florida Business Journal
Whether or not he’s referring to the resale values or the hotel room rates (or both) was undetermined but these speculators are asking for the full 20% deposit returned which is unlikely to occur in my opinion. The biggest issue seems to be fewer number rooms than promised as the total ownership is based on the total number of condo hotel units and that percentage of space is used to determine the amount of monthly maintenance costs. In this case and in my opinion, today’s maintenance fees are relatively consistent with other condo hotels of South Beach or approximately $1.50 psf. Other complaints are the smaller than promised “rooms,” a door connecting rooms not disclosed, the elimination of the second pool to the number of trees planted outside.
As of March 2010, 53 deeds were recorded through Miami Dade County out of 420 total W SoBe condo hotel units. W South Beach still a very desirable property and a known celebrity hangout. The newest & latest is typically the hottest in South Beach as was The Setai in 2007. I expect it to do just fine over the next 3 years as values catch up with the market or the market catches up with values.