Miami Highrise Condo Owners Contribute Less To Reserves Than Tampa, LA, Toronto Peers
A new report from the property management firm FirstService Residential provides a "benchmark" for reserves in highrise condo towers in five major markets.
Miami-Dade County highrise condo owners are contributing a smaller percentage of their monthly association maintenance fees to capital reserves than unit owners in the markets of Tampa-St. Petersburg, Los Angeles-San Diego-San Francisco and Toronto.
Only the condo owners in New York City contribute less to reserves than Miami-Dade County.
In Miami-Dade County, highrise condo owners are allocating about 12 percent of their monthly maintenance fees on reserves in buildings with at least 300 units that are considered “big.” In “small” projects that have less than 300 units, Miami-Dade County condo owners are earmarking about 11 percent of their budgets to reserves.
This means that about $11.50 of every $100 in monthly maintenance fees goes towards contributing to capital reserves in Miami-Dade County highrise condo towers that have at least seven floors.
The statistic comes from a newly released 40-page report entitled “Benchmark: The Guide To Residential Association Operating Costs And Budgets” from the property management firm FirstService Residential, which runs 9,000 associations with about 1.7 million units in 15 markets in North America.
Given rising maintenance fees at condo projects in Florida and throughout the country, FirstService Residential crunched its internal numbers from 750 highrise projects that it manages to create the “2024 High-Rise Edition” of this report to track expenses.
“The data presented contains averages from a sample of properties managed by FirstService Residential and does not represent industry standards or ideal ratios,” according to the report. “Every community association is unique, and this guide is not exhaustive but may be used as a tool to assist boards in their community evaluations and in communication with their residents.”
The analysis provides “benchmark” rates for insurance, operations, reserves, administration and utilities.
It is worth noting, the density of condo projects varies significantly in the FirstService Residential footprint. As a result, the report breaks down the statistics for “small” and “big” projects based on the local nuances related to density.
For example, a “small” project in Miami-Dade County has less than 300 units compared to a market such as Tampa-St. Petersburg where a “small” association that has less than 100 units.
Generally, the bigger the pool of condo owners, the smaller amount each resident pays thanks to the efficiency that comes with economies of scale.
As a result, the statistics are not a perfect comparison but do provide valuable insight for condo owners, investors and board members, alike, who are hungry for information to better evaluate their respective operating budgets.
Maintenance fees are increasingly an issue for Miami condo owners with Florida’s looming 2025 Condo Association Financial Cliff, according to a recent report.
In less than five months, condo associations in the Florida are required to start collecting money from increasingly cash-strapped unit owners to place into reserve accounts that will be used exclusively to fix, maintain and improve the structural integrity of residential buildings that are at least three-stories tall.
The reserve funds - and all accrued interest - that will begin to be collected in 2025 must be used by the association boards to address specific issues with their respective condo buildings.
This is expected to lead to a surge in overall monthly expenses - both maintenance fees and special assessments - for condo owners.
These new reserve account requirements are part of an ongoing effort by the Florida legislature in the aftermath of the Champlain Towers South condo collapse in the barrier island town of Surfside on June 24, 2021, to bring more transparency to condo associations, which have a reputation for being shrouded in secrecy, intimidation and corruption.
Nearly 100 people died and a $1 billion settlement was reached with the families of the victims.
A federal investigation is currently underway but the preliminary reports suggest a flawed design coupled with a lack of upkeep by the condominium’s association contributed to the disaster.
The Florida legislature has taken a number of steps - prompted by insurance companies threatening to withdraw coverage in the state - to ensure that nothing like this ever happens again.
Up until now, the state’s measures were being implemented slowly but that all changes in 2025.
An analysis with charts comparing capital reserve contributions in all five markets from the “Benchmark” report is available behind this paywall for members of the Miami Condo Market Investing Club™.