Beachfront Condo

Time period: 1960s to present
Location: Florida, as well as other coastal cities and resort towns

Up until the industrial era, beachfront property was not desirable. Unless someone's work required them to live near the ocean, people avoided beaches. There were good reasons: storms, pirates, and other invasions. Most large cities in Europe - even some major ports - are located inland.

This changed with the Industrial Revolution. In England, the rich started going to the beach to get away from pollution in the city, and the beach gained a new image as a healthy place to exercise or recover from disease. By the 1800s beachgoing had spread to the upper class in the US as well, with cities such as Cape May in New Jersey attracting tourists, many of who arrived by boat - Cape May is the closest spot on the shore to Philadelphia by boat. A growing middle class and the construction of railroads led to further development of East Coast beach towns. Most of these beach towns remained seasonal, busy in the summer but quiet in the winter, when the weather was cold and stormy.

The next chapter of beachfront development took place in Florida, where warm weather meant the beach could be enjoyed year-round. The property boom really took off with the importing of the legal framework for the condominium in the early 1960s.

Cross Section of a mid-20th century beachfront condo tower. If no ocean was nearby, a lake or river would also do. The penthouse is an extra-large luxury home with private roof deck, perfect for holding parties.

What is a Condo?

A condo is property that consists of part of a building, as opposed to a piece of land and all structures on it. While residential condos are the most common type, there are also commercial condos, where a business can own a storefront or floor of a larger building. Laws enabling condos were first created in Europe, and from there, the idea spread to the Caribbean, then to the US territory of Puerto Rico, and from there to Florida and the rest of the US mainland.

Before condo law, a multiunit building could not have individual homes inside it sold off as separate pieces of property. If you wanted to live in a multiunit building, you had to rent. In New York City and a few other places, a workaround was invented, known as the cooperative. In a co-op, homeowners owned a share of stock in a corporation that owned the building. In California today, this model is known as Tenancy in Common.

Compared to condos or houses, cooperatives are hard to finance. Since there is only one mortgage on the whole building, if one homeowner stops paying their share of the mortgage, the rest have to pitch in to cover it, or the bank can foreclose on the entire building. Homes in a co-op couldn't be easily sold to anyone - the rest of the owners had to approve the buyer. After all, buying into a co-op isn't just becoming a neighbor, legally it's running a business with your neighbors.

Condominiums addressed this issue. Each home is legally a separate piece of property, with its own mortgage. If a homeowner fails to pay their mortgage, the bank can seize their home, but the rest of the building is unaffected. This made condos an easily tradable commodity, with many uses, such as:

- A second home for vacations. Rising incomes in the 1960s meant more people could afford a summer vacation home. The amount of beachfront land is limited, which created the need to build up.

- A lower cost option for homeownership. Despite the luxury image, condos are cheaper than comparably sized houses, since the land cost is divided over many homes. This is especially true for units on lower floors.

- A retirement home with no yard work required. Florida and other Sunbelt states also offered lower taxes compared to the Northeast. The rise of remote work has allowed some people to move even during their working years.

- An investment: either to be rented out for income, or held as a speculative investment in hopes that prices would go up as a neighborhood became more desirable. Online platforms have made it easier for owners of vacation homes to rent them out when not using it themselves.

- Further subdivision into timeshares, where the same condo can be sold to dozens of different owners, each who have the right to use it for a different week of the year. This brings in more money than selling it as a regular condo, in part due to high pressure sales tactics, as well as ongoing income from charging timeshare owners high maintenance fees.

- A way to privately store wealth. Compared to most places, the US makes it easy to buy property with shell corporations to hide the name of the true owner. Starting with the Cuban revolution of 1959, Miami has been a destination for wealthy immigrants fleeing unfavorable political changes.

Like any commodity, condos were most profitable when taking advantage of economy of scale. A condo tower can have hundreds of similar homes. Easy to build, easy to blend in with the crowd.

Site Plan / typical floor. Positioning the tower with the short end facing the beach means that condos on both sides of the hallway can see the water, while also minimizing the amount of expensive beach frontage that a developer needs to buy. Condos are located on both sides of a double loaded corridor.

Designed and sold as a luxury, beachfront condos had large units: this example of a 2-bedroom has 1,200 square feet and 2 full baths.

Beachfront condo construction took place not just on the Atlantic coast, but also on the Gulf Coast, in Hawaii, in Chicago along the lake, and briefly in California before the California Coastal Act of 1972 made it hard to get permits to build near the beach, especially for tall buildings that could block views.

In places where land is cheaper, condo towers are positioned parallel to the beach, with all the condos facing the water and the back being hallways, stairs, and elevators. This floor plan layout is known as a single loaded corridor, which has the advantage of having cross ventilation.

In a single loaded corridor building, the main bedroom and living room face the water, while the smaller bedrooms and kitchen have windows facing the open air hallway that leads to the stairs and elevator.

Challenges in the Sunshine State

By the 21st century, many early condos were showing signs of age, having racked up decades of deferred maintenance. Retirees on fixed income and absentee investors renting out their unit did not want to raise the monthly maintenance assessments that each owner had to pay. As a result, many buildings lacked the cash reserves for major repairs.

The problem became impossible to ignore in 2021 when a 12-story condo tower collapsed in Surfside, Florida, killing dozens of residents. One factor leading to the collapse was corrosion of the structure by leaks. Afterwards, cities stepped up inspections, with some buildings found to be unsafe and evacuation orders issued. Florida updated its state law, requiring more frequent inspections and recertifications of condos.

This led to a new problem: condo associations faced with mandatory repairs had to raise the monthly assessments, to a point where some owners could not afford to pay. In places where the land was still valuable, one way out was to sell to a developer, who would then demolish the building and build a newer, larger building.

Meanwhile, climate change is making storms worse and sea level rise raises the concern of whether entire neighborhoods will even be around by the end of a 30-year mortgage. In Florida, insurance rates have gone up, and as of 2023 had reached an average of $6,000 a year - which given the average home value, assumes that every home will meet a violent end well before the end of the century. That said, concrete highrises are sturdier than wood framed houses, and since 1992, windows in Miami-Dade county are required to be able to handle high winds as well as debris impacts. Approved windows need to survive tests such as shooting a 2x4 piece of lumber at the window.

For now, coastal condo construction continues. For many buyers, Florida doesn't have to last forever - it only has to beat the clock of old age or regime change.

Data
- Density: 100-300+ homes per acre
- Typical Lot Size: 100-200' wide x 200-400' deep
- Typical Zoning: High Density Residential
- Construction Type: Type I (Concrete)
- Resident Type: Homeowner / Rental / Vacation Rental

Where to build
- Locations close to beaches, shopping, and other amenities

Further Reading

Origins of the beach as a recreational space https://www.smithsonianmag.com/history/inventing-beach-unnatural-history-natural-place-180959538/

History of Cape May, New Jersey https://www.capemaycity.com/history-of-cape-may

History of Miami Beach https://www.miaminewtimes.com/news/100-years-the-dark-and-dirty-history-of-miami-beach-7552169

Origins of condos in the US https://web.archive.org/web/20130909234758/https://www.planning.org/pas/at60/pdf/report159.pdf

How Miami became Latin America's financial center https://www.ft.com/content/b1cbca56-cad3-4ec1-88a5-2fa3f27b47e6

United States as a tax haven https://www.theguardian.com/us-news/2016/apr/06/panama-papers-us-tax-havens-delaware

California Coastal Act https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=PRC&division=20.&title=&part=&chapter=3.&article=6

Warning signs before 2021 condo collapse in Florida https://www.cnn.com/2021/06/29/us/florida-building-collapse-letter/index.html

Saltwater intrusion problems at collapsed condo https://www.newsweek.com/ex-maintenance-manager-surfside-condo-that-collapsed-recalls-saltwater-intrusion-1604508

Concerns about condo homeowner associations with insufficient money in reserves for major repair work https://www.tampabay.com/news/2021/07/09/law-that-allows-condos-to-delay-repairs-under-scrutiny/