A recent settlement regarding a malfunctioning robotic car parking at Miami’s posh Brickell House may provide an unprecedented opportunity for investors to purchase a condo at one of Miami’s most extravagant condo towers for an unbeatable price. The dark cloud of parking problems over the condo building which has deflated prices is soon to be removed, plus the financial tailwind from the settlement will likely unlock more value from the condo building.
Robotic self-driving car elevators are becoming all the rage in contemporary condo developments. In Boston, a newly inaugurated luxury condo tower known as The Boulevard boasts an automated parking system that self-parks cars in an underground garage. In Sunny Isles, the sleek new Porsche Design Tower also provides residents with the convenience of a robot car elevator called the “Dezervator” that self-drives cars directly to the door of each residential unit. And Elysee in Edgewater will be delivered next year also with robotic parking.
The car lift system of the Porsche Design Tower Miami - Photo credit: Porsche.com
Similarly, Miami’s Brickell House, a 46-story luxury condo tower that opened in 2014 at 1300 Brickell Bay Drive, promised condo owners the bonus of a convenient robotic car elevator that would deliver their cars to them in 10 minutes. This proved to be a powerful marketing lure, and the tower’s arresting residential units with breathtaking panoramic views went like hotcakes, with developer Newgard Development Group selling 98% of the tower’s 374 units within the first three months of opening the building.
Unfortunately for those condo owners, however, the robotic self-parking car elevator didn’t quite deliver the goods as promised. Almost immediately after the building’s inauguration, once owners began moving in, problems began to crop up with the tower’s automated parking system.
The automated car elevator relied on technology developed by a company called Boomerang Systems. But shortly after the car elevator at Brickell House began to malfunction, Boomerang filed for bankruptcy, and condo owners at Brickell House were forced to park their cars at a neighboring garage. This inconvenience led to an insurance claim on the part of the Brickell House Condo Association asserting that the failure of the parking system had cost condo owners an average of $70,000 per unit.
Fast forward to October of 2018, and the Brickell House Condominium Association has reached a confidential $32 million settlement with the Hartford Steam Boiler Inspection and Insurance Company, who underwrote the insurance policy for the elevator’s technology at Brickell House. The settlement, rumored to be among the largest of its kind, amounts to more than half of the $61 million insurance policy that the Condo Association purchased to insure the technology of the car elevator.
Elysee in Edgewater
But litigation continues. The Condo Association alleges that Newgard was aware of the elevator’s malfunction and seeks to collect additional funds from the developer, while Newgard’s attorneys have denied the allegations. Meanwhile, Newgard claims that they have offered to repair or replace the faulty technology in an affidavit presented by Harvey Hernandez, owner of Newgard Development Group, and claims that the Association has declined those offers.
Today, the situation at Brickell House presents a great opportunity for investors interested in purchasing a luxurious residential condo at an unbelievable price. Not only do we expect to see the automated parking problem finally resolved at Brickell House within the next few months, but the settlement also likely leaves a fair amount of money left over (we can’t be certain but it seems that way), which may be used to fund other improvements to the property.
Peaches are ripe for the picking at Brickell House as prices for these luxurious residential units will naturally begin to adjust upward once the car elevator repairs are completed within the coming few months. Additionally, condo association fees have been elevated at Brickell House, partially due to the lease for the neighboring garage. Our best guess is that those fees will come down considerably over the next year as well, making this a truly winning opportunity for investors. The building also allows for 30-day rentals, which is appealing to second-homers and investors. Current homeowners at Brickell House will also benefit from property value increases as this automated parking problem is finally cleared up at one of Miami’s most beckoning luxury condo towers.
