Surfside tower collapse could reshape Miami real estate, experts say

The city of Surfside in Florida has, not surprisingly, seen plummeting interest in older condo buildings from buyers and renters in the wake of the tragic collapse of the 12-story Champlain Towers South condominium last month.

Real estate agents say they have received far fewer inquiries about older buildings constructed prior to 2000, and those who still get them say they get a lot of questions about the recertification process of those buildings. Recertification is a process in which a building undergoes a safety assessment to ensure that it remains structurally sound.

Some consumers have also requested engineering reports on the condos they inquire about, which are more difficult for agents to access.

“That’s going to be more common, at least for a while,” Sepehr Niakan, a real estate broker with Condo Black Book in Miami, told NBC News. “The fear of going into an older building is going to be greater, and buyers are going to be much more careful and sensitive to the history of repairs and maintenance of a building, which wasn’t really an issue before.”

The Champlain Towers South building collapsed in the early hours of June 24, and while the search and rescue operation remains ongoing, 96 deaths have been confirmed so far. Latest reports say that 14 people are still unaccounted for, and hopes of finding anyone alive in the wreckage are slim. The only people known to have survived the disaster were pulled from the rubble in the immediate hours after the disaster.

The condo was constructed in 1982 and was in the process of completing its 40-year recertifcation when it collapsed during the middle of the night. Engineers who were reviewing the building had already indicated that it was suffering from “major structural damage” to the concrete slabs that supported its pool deck and entrance drive. Those repairs would likely have cost “millions of dollars”, NBC News said.

In the wake of the tragedy, sales of older residential towers in Surfside have collapsed and prices and rents have fallen fast, especially for buildings that lack an engineering report that can verify its condition.

Real estate experts say that in order to support the local condo market, building operators will need to ensure engineering reports are more widely available in order to convince potential renters and buyers that they’re safe to live in.

Mike Clarkson, who is president of Florida insurance firm Hilb Group, told NBC News that the demand for engineering reports and safety certifications has shot up all over Miami and the rest of the state.

“It’s all over the place,” Clarkson said. “The amount of emails and phone calls I’ve been getting, and we’ve got 750 to 800 associations that we ensure throughout Florida, it’s crazy. I’m getting calls from buildings that are just three stories high.”

The demand for more engineering reports could well have some big ramifications for Florida’s condo market. Adam Mopsick, chief executive of Amicon, a construction firm that works with condo associations, said he believes owners of older buildings that need significant renovation work will likely choose to dump them rather than invest millions of dollars into their upkeep.

In turn, that will lead to a “feeding frenzy” among developers looking to snap up what they see as prime real estate on Florida’s coasts. Many buildings will likely be knocked down to make way for new and safer developments.

Compass Florida real estate agent Paul Sasseville told NBC News that he has already been in touch with an investor who wanted to know how big a real estate buying opportunity this could lead to. According to him, the client likened the situation to what happened along the East Coast in 2012, when damage from Hurricane Sandy caused thousands of property owners to sell up rather than invest in repairs.

“All of the best properties were built in the ‘70s, ‘80s and ‘90s,” Sasseville said, noting that much of the prime land in Florida has already been built upon. “Now you’re going to see a lot more of what we call condo terminations, where developers buy out old buildings, tear them down and put up new ones.”