Archives for January, 2016

Gas Station On Alton Road To Be Redeveloped As Retail Building

A former gas station on Alton Road in Miami Beach will be redeveloped as a commercial building with Michaels Craft Stores and other restaurant and retail tenants.

The Miami Beach Planning Board on Tuesday issued a conditional use permit to Saber 1800, LLC for the construction of a new four-story commercial building at 1824 Alton Road.  The site on the corner of Alton Road and 18th Street was purchased by an affiliate of Saber Real Estate Advisors last year for $7.3 million. A Chevron gas station built in 1963 had occupied the half-acre lot and has since been torn down.

Saber plans to build a Kobi Karp-designed commercial building with a 160-seat restaurant, 11,561 square feet of ground floor retail space, 15,450 square feet of second floor retail space and 130 parking spaces on two upper levels.

The Miami Beach Planning Board unanimously approved a conditional use permit for the project, sending it on to the Design Review Board. The developers have already found a major tenant for the new building, Michaels Craft Stores, which is expected to occupy the entire second floor and a portion of the ground floor as well.

While they approved the project, members of the planning board inserted a provision that calls for future planning board approval for any use of the retail portion of the building that exceeds current traffic projections for the area, or any use of the retail portion of the building greater than 23,000 square feet.

Traffic concerns were a major focus of the approval process. A traffic study commissioned by the developer indicated that “traffic stops” will more than triple at peak hours from what is current at the site. Lawyers presenting the project to the planning board noted that the garage entrance to the building will be on 18th Street and there will be no vehicular access to the building from traffic-clogged Alton Road.

They also said pedestrian access along the sidewalk will be widened from six feet to 16 feet and a landscaped berm will separate pedestrians from traffic. Karp told The Real Deal that a seven-foot landscaped berm between the street and the sidewalk “pulls the building back,” and will enhance the pedestrian experience at the busy corner. “At this location where the gas station currently exists it’s a tight sidewalk, it’s a tight pedestrian experience so we are hoping to make it a bit more friendly, and a bit more comfortable,” he said.

Developers also agreed to carry out a new traffic study 90 days after the building is operational and to place 24-hour security cameras throughout the site with emergency call boxes located in the garage area. Lawyers representing the developers also said that since the site has been occupied for more than 50 years by a gas station, extensive environmental mitigation work will take place, but the developer hopes to begin construction within six months.

 

Source:  The Real Deal

Facing A Teetering Economy At Home, Wealthy Brazilians Pouring Money Into Safe Place To Invest: South Florida Real Estate

Facing a teetering economy at home, wealthy Brazilians have been pouring money into what they increasingly see as the safest place to invest: South Florida real estate.

So are Argentinians, Colombians, Mexicans, Venezuelans, French and Turks — almost anyone with money to shelter, a direct flight to Miami and a shaky economy to flee.

Their cash has helped drive the latest twist in Miami’s ever-evolving transformation — from a 19th century rail stop to a tourist-and-retiree hub to a haven for Cuban refugees to now a harbor for global investors. No American skyline has undergone a more drastic face-lift from foreign cash in the past decade: Luxury condo towers and swanky retailers crowd a downtown once marred by empty lots.

And almost no developer expects the demand to stop.

Yet Miamians as a whole have scarcely benefited from the glitz. By catering to wealthy foreigners able to jet around the world, the area boasts a showcase of highly visible investments but not the broad income gains that would serve the bulk of its residents.

Wages have actually dropped for Miami workers in the past year. Area unemployment tops the national average. Miami contains the largest share of renters in the country who devote over 30 percent of their pay to housing — the level the government deems burdensome. Census Bureau data show that high rents burden 66 percent of Miami tenants, compared with 52 percent nationwide.

Workers have few affordable housing options in neighborhoods sandwiched between luxe coastal development and the marshy Everglades.

“We’re not seeing the benefits of that income being disposed of in the local economy,” said Ned Murray, associate director of Florida International University’s Metropolitan Center. “That impacts local businesses, and we’re losing opportunities to create year-round housing for our workers. They’re moving out.”

With its glamorous locale and easy access, Miami real estate offers an asset that’s appreciating at a time when other investments have shrunk or turned frighteningly volatile. It’s a testament to investor concern about stocks, bonds, commodities and economic growth that a stretch of land prone to natural disasters and the ravages of climate change can be coveted for its real estate potential — less than a decade after the bursting of a U.S. housing bubble.

“All of the insecurity around the rest of the world only reminds people how important it is to have assets in the United States,” said Alicia Cervera Lamadrid, a developer who is leading sales efforts for the planned 57-story Elysee, with condo units starting at $1.65 million and personal wine storage available for residents.

No fewer than 126 residential towers are planned for construction in South Florida. One sign of the scale of wealth from abroad is that the majority of foreign purchases are being funded with cash, not debt.

Last year, foreigners spent $6.1 billion on Miami-area real estate — 36 percent of all such investment, according to the Miami Association of Realtors. Nationally, foreigners account for just 8 percent of sales. Brazilians are the predominant searchers for Miami homes online, trailed by Venezuelans and Argentinians, according to the association.

The influx has been sudden enough that the federal government has announced plans to monitor home purchases exceeding $3 million in Miami and New York City. Starting in March, the government will temporarily require title companies to identify buyers of property. Authorities have grown concerned that money launderers may be using anonymous holding companies to stash money in high-end real estate.

Purchases by Brazilians paused briefly last year, when the nation’s currency, the real, tumbled against the dollar. But as Brazil’s economy has worsened, developers say sales have picked up again even though the weaker currency means Miami homes cost them nearly 50 percent more in dollars than in late 2014.

The average luxury condo price in Miami Beach has surged 35 percent from a year ago to $3.7 million, according to the real estate brokerage Douglas Elliman.

Anthony Graziano, executive director at Integra Realty Resources, who has analyzed the Miami market, expects sales to remain strong for properties worth more than $1 million, outpacing those in the $400,000-to-$800,000 range. Graziano describes a wave of wealthy buyers who seem intent on investing in properties that can protect their money from volatile markets.

“There really is no other place to put your money,” he said. “Stocks are getting hammered. Bonds are getting high. What is your equity play if you’re an ultra-high-net-worth investor? Buy one-of-a-kind luxury real estate.”

Downtown Miami is “beginning to shift, but the question is, to whose benefit?” said Arden Shank, executive director of Neighborhood Housing Services of South Florida. “It doesn’t benefit the people who have been there for a long time.”

The metro area’s unemployment rate is 5.5 percent, compared with 5 percent nationally. Average hourly earnings have dipped 0.4 percent to $22.57 from a year ago. By contrast, the national average wage has risen more than 2 percent in that time.

The influx of wealthy real estate investors does mean some benefits for the area, notably a miniboom in the city’s creative community. Murray’s research shows a growth of 21,568 jobs in the design, film, media, performing arts and museum sectors from 2010 to 2012.

Government figures show that the number of Miami-area jobs in the leisure and hospitality sector has jumped 28 percent since the recession began in late 2007. Even so, seven of the top 12 occupations in Miami-Dade’s tourism-driven economy produce less than half the median family income, Murray said. For many families, 65 cents of every dollar earned gets spent on housing and transportation costs — a crushing burden.

“Once you exceed the 50 percent threshold, you begin to lose working families and working households,” Murray said. “We already see it: A decline in working families, a decline in Miami-Dade in owner households in certain income categories.”

Regardless of income or wealth, everyone with a stake in South Florida faces the potentially dire consequences of climate change. Locals have grown accustomed to the flooding that submerges low-lying intersections and sidewalks on sunny days. Experts warn that as the seas rise further, flooding may become permanent, turning streets into canals, endangering access to drinking water and eroding the man-made beaches that have long drawn people to Miami.

“There is a disconnect — there’s a real estate bubble, and then there’s where we see sea level rise going,” said Henry Briceno, who studies the effects of rising sea levels through the Southeast Environmental Research Center at Florida International University. “That’s what really worries me: The rush to make money right away without thinking of the future and who is going to pay.”

Yet to many wealthy international buyers, the opportunities appear to outweigh those risks.

Because so many of her clients now own Miami property, Sao Paulo-based interior designer Brunete Fraccaroli recently bought a condo at One Paraiso, a 53-story tower with a beach club slated to be finished next year. She expects her Florida clientele to grow as Brazil’s plight intensifies.

Analysts say the South American country may be headed for its longest downturn in more than a century. Operating losses and labor strikes have battered the state oil company, Petrobras. Government spending cuts have failed to curb the deficit. Political corruption has left the country in chaos.

The influx of rich foreigners has led to changes in sales at foreign-owned businesses with Miami outposts. One is Artefacto, a high-end furniture maker with multiple outlets in Brazil and Miami. CEO Paulo Bacchi said he sees his customers buying furniture for larger homes compared with prior years, which suggests to him that they plan to stay in Florida longer. It’s a point echoed by other business people who say tourists are now staying for months instead of weeks.

For some transplants from South America, there’s also a welcome lifestyle change. They can flash their wealth in Miami instead of hiding it for fear of criminals, expatriates say. Women can wear their diamonds instead of burying them in their purses. Bulletproof cars are no longer necessary.

“Every single city in South America — there is a basic problem of safety on the streets,” Bacchi said. “Here in Miami, you can drive convertibles.”

Gentrification, which helped tame Miami’s gritty arts and design districts, has been followed by luxury shops including Hermes, Cartier and Christian Louboutin. The storefronts have brought a glossy finish and valet parking to once-empty showrooms — and forced some independent art fairs and pop-up events to relocate during this year’s annual Art Basel Miami Beach revelries.

“We’re more of a luxury destination than we used to be.” said William Talbert, president and CEO of the Greater Miami Convention and Visitors Bureau. “Why they’re being built is because of the international customers — this is what they want.”

The good times have sparked questions about how long money from abroad can support the area real estate and its economy. In a survey of 42 real estate experts, 69 percent identified Miami as facing risks of a bubble within five years, according to the real estate data firm Zillow.

Developers downplay the risk, noting that cash, rather than debt, is driving most of the purchases. And Miami has one advantage that should help it continue to draw wealthy buyers: No state income taxes. It helps give Miami an affordability edge over California and New York City where international buyers also cluster.

Someone who earns $1 million in Florida pays about $100,000 less in taxes than in New York City, noted Carlos Rosso, an executive with the Related Group, a developer. Those tax savings add up to nearly the equivalent of a yearly mortgage payment on a multimillion dollar home.

“That’s why people are moving here — they can get a $3 million house for free,” Rosso said.

 

Source: Daily Journal

Miami Real Estate At Or Nearing Peak: Economist

Most of Miami’s real estate sectors are at or near their peak, according to a national economist who spoke at CREW-Miami’s Economic Outlook luncheon held at the Four Seasons Hotel Miami on Tuesday.

Hugh Kelly, a clinical professor at New York University’s Schack Institute of Real Estate and a member of the Counselors of Real Estate, said that while most real estate sectors across the country are poised for expansion, there are local markets that have already seen explosive growth, such as Miami, and “it’s time to play defense.”

Current data suggests that there’s still room for the office market to grow in Miami, he said. But the data also claims that the hotel and apartment sectors in Miami are at their peak, Kelly said. Miami’s industrial and retail sectors, meanwhile, are coming close to the peak.

“It’s time to start thinking about how to preserve those gains and how to monetize those gains. Is it a sell strategy or a hold strategy? Is it a chance, if you are going to acquire, to make sure you buy based on existing cash flow rather than on future appreciation?” Kelly said. “Those are ways to think defensively about where you stand in the cycle and make the cycle run in your favor rather than react to the cycle as it turns.”

Most trends, on the other hand, appear to favor Miami in the long haul, Kelly added. For one thing, Miami is what Kelly calls a “24-hour city”— places that tend to be very beneficial for long-term real estate investors. The financial markets are also going through a period of volatility, which will likely increase the flow of cash toward real estate as a “safe haven.”

“In a lot of ways that is why gateway cities do so well in terms of foreign capital,” Kelly said.

However, rising interest rates, capital rates, and increases in regulations have contributed to the overall deceleration of international capital flows, Kelly added. This will cause some “marginal deals” to fall apart nationally, he said. Incidentally, Kelly doesn’t blame the rise of capital rates on the Federal Reserve finally increasing interest rates.

“It’s because the pool of capital is very deep but not limitless,” Kelly said.

Overall, a knowledgeable investor who “stays awake” and knows when to play offensively or defensively will do fine in the national real estate market, Kelly said. He also doesn’t foresee a major correction in most hot real estate markets, except for places that are really saturated and overpriced like Manhattan.

“If you are building 5,000 apartment units that need to have buyers at $10 million and up, even in New York the market is a little thinner,” Kelly said.

But is Miami overbuilt and overpriced? And will it be hit by the devaluation of foreign currency against the U.S. dollar? After all, it was foreign currency that helped fuel Miami’s rebound that followed the great recession. When asked that question by Britt Rosen of Appraisal Services, Inc., Kelly, whose speech mainly focused on national trends, admitted he wasn’t sure. “You don’t come into a city pretending to know more than the people who live there,” Kelly said. He then quoted from his old high school history teacher, a marine captain: “Remember what an expert is: a loud mouth far from home.”

Rosen believes that Miami is heading for a price correction. With foreign currencies continuing to drop, it’s only a matter of time before some South American investors sell their units for below market price, he reasoned. Plus, there’s a lot of new residential units being built. “I think we’re going into an oversupply market residentially,” he said.

But Cristina Arana Lumpkin, an attorney with Bilzin Sumberg and president of CREW-Miami, is more optimistic.

“There are two ways of looking at it. You could look at the devaluation of Latin American currencies as being negative, but you can also look at people living in those countries where their currency is being devalued and they still need a safe haven,” Lumpkin said.

“And Miami has operated as a safe haven for Latin America for a long time now and will probably continue to do so in the near future,” she said. “In difficult times… safe havens are more about the preservation of capital than the return of capital.”

 

Source:  The Real Deal