Archives for May, 2016

Miami’s $100 Million Marina Expansion Is Under Fire

Mayor Tomás Regalado and his chief administrator are pushing forward a $100 million marina expansion and redevelopment on Virginia Key despite mounting pressure to change course.

A rendering of the Virginia Key marina project proposed by RCI Group’s development team Courtesy

A rendering of the Virginia Key marina project proposed by RCI Group’s development team

Last month, City Manager Daniel Alfonso picked a team led by Miami Beach Marina operator RCI Group to pursue a 75-year lease and contract to redesign two city marinas off the Rickenbacker Causeway. Alfonso hopes to take the project — which includes the construction of a robotic boat storage garage, a new restaurant complex and expanded wet slips — to Miami voters this fall.

But first, he must convince city commissioners Thursday to reject protests filed by two losing bidders who alleged a series of flaws and oversights in the city’s protracted solicitation and developer selection. The city’s real-estate director dismissed complaints by Tifón and Suntex in a memo dated Monday and recommended that commissioners allow administrators to negotiate a lease with RCI Group.

An aerial of the Rickenbacker Marina, which would be redesigned and expanded under a city solicitation led by winning bidder RCI Group Courtesy

An aerial of the Rickenbacker Marina, which would be redesigned and expanded under a city solicitation led by winning bidder RCI Group

But already, a new allegation has surfaced that RCI should have been disqualified due to its role in a sewage spill that in 2000 forced the closure of a large swath of Biscayne Bay and resulted in a $2.5 million settlement with the county. And on Tuesday evening, a new city board created to monitor all things Virginia Key recommended that the city commission reject a city-driven plan to expand the marina into the historic Marine Stadium Basin — a proposal that, if embraced by commissioners, would drastically alter the design and likely the financing of any expansion plan.

Members of the committee argued that placing a large grid of docks and slips in the basin would violate a community-vetted master plan for Virginia Key, although they were told that it is too late to change the proposers’ designs.

“You wouldn’t be able to change it at this point and time,” assistant city attorney Pablo Velez tried to explain.

Miami Rental Prices May Have Already Begun to Drop

The world laughed when Jimmy McMillan ran for New York City mayor with the slogan “The rent is too damn high!”

Yet how many of us now repeat that line verbatim whenever we cut our landlord a check or browse apartment listings in Miami? They are, indeed, categorically, undoubtedly too damn high.

In fact, they might be too damn high for the market to sustain. New data suggests Miami’s average rental rates have already begun to dip and may experience even further drops.

The first bit comes from real-estate website Abodo, which releases its monthly National Apartment Report. The latest report found that the average rent for a one-bedroom apartment in Miami fell 3 percent between April and May. It was the eighth-largest dip of any market in the nation.

Granted, that’s just a month-to-month snapshot, but Abodo spokesman Sam Radbil says the rent dip may be an indication of more adjustments to come.

“With construction at its highest level since the 1980s, we believe that a steady decline in rent prices in metro areas like Miami might be on the way,” Radbil says. “Developers delivered 250,000 new rentals in 2015, and the forecast is for 285,000 more units to be finished in 2016. As we’ve seen in the past, as the supply of rental units increases, prices should begin to decrease. “

“Miami, specifically, is following a trend that analysts and industry experts have seen in many U.S. cities. Young adults either can’t afford to buy a home or they don’t want to be bothered with the hassle of owning one. This has led to more demand for rentals and an increase in rent price. But as more developments are completed in 2016, renters may get relief from extremely high prices because of the abundance of rental options in large metro areas like Miami.”

abodo_national_apartment_report_may_2016

Another report, from Andrew Stearns of Stat Funding (via Curbed Miami), also points to the possibility of tumbling rents.

Miami’s condo sales market is slowing as demand lessens, yet developers are still pumping new units into the market at breakneck speed. Previous analysis already suggests condo prices in Miami should begin to fall by the end of the year. That means buyers who scooped up apartments for investment properties may have a difficult time flipping them for a profit, so they may put the units on the rental market instead.

“Rents will likely tumble as preconstruction buyers unwilling to take losses on their condos flood the rental market with new units,” the report reads.

But those owners may have a hard time finding anyone to pay top-market rents for those units, meaning that some who “choose to rent their units will have to rent for an operating loss… resulting in negative carry/negative cash flow.” So properties bought by foreigners as an investment or pied-à-terre may soon be put on the rental market at a bargain.

Add to this the fact, as the Miami Herald reported earlier this week, that Miami developers are now turning away from the ultra-luxury market to rental properties, and the market will soon be flooded with reasonably priced rentals.

 

Source: Miami New Times

Miami Emerges From ‘Gloom’ Into Residential And Commercial ‘Sunlight’

It was always Miami Beach, a barrier island on the sun-dappled Atlantic, that attracted the attention, the glamorous notices, the billions of dollars in real estate speculation.

Just four miles away on the mainland, the sprawling metropolis of Miami suffered for years in the comparison, its scruffy downtown largely devoid of life after offices closed for the day and commuters fled to the suburbs. Inner-city neighborhoods, mired in poverty, were far from investors’ radars.

“It was a ghost town, with vacant parcels, no residential areas, no museums,” said Alan R. Kleber, managing director of the local office of JLL, an investment management company that specializes in commercial real estate. “It was a wasteland with an amazing view.”

Billions of dollars in commercial and residential development are changing downtown Miami’s skyline. (Photo Credit Oscar Hidalgo for The New York Times)

Billions of dollars in commercial and residential development are changing downtown Miami’s skyline. (Photo Credit Oscar Hidalgo for The New York Times)

Miami long struggled to achieve the patina of prosperity, even though glimmers appeared in the Brickell neighborhood, where condominium towers and office buildings proliferated, and more recently in the Design District, with its elegant boutiques.

Now, a wave of commercial and residential development in downtown Miami and its periphery is altering the city’s skyline. And in providing options for those less affluent than the condo dwellers by the water, it is challenging the long-held perception that Miami is not a place where a middle-class person can live well and raise a family.

“It’s become dynamic and vibrant, even for the naysayers,” Mr. Kleber said of the last few years. “What you’re seeing is the densification of a city, right before your eyes. We’re watching another Manhattan being built.”

While such comparisons may be hyperbolic, data show a significant increase in downtown residential properties — many of them rental apartments — in tandem with construction of multipurpose developments, retail stores, restaurants, supermarkets, a mass transit hub and cultural institutions.

A worker on the site of the Miami Worldcenter. (Photo Credit Oscar Hidalgo for The New York Times)

A worker on the site of the Miami Worldcenter. (Photo Credit Oscar Hidalgo for The New York Times)

In a report published in February, the city’s Downtown Development Authority said rental construction was “very active,” with around 13,000 units proposed or under construction. Rents downtown have risen 5 percent annually on average for the last three years.

The building rush seeks to capitalize on a growing number of jobs in the city’s business and financial sector, which serves hundreds of banks, private equity firms and hedge funds. With its economy now on decidedly firm footing, the Miami area — with a balmy climate, exotic surroundings and international flair — is an appealing place for companies from elsewhere, especially Latin America.

Over the next five years, businesses in the city are expected to add almost 20,000 office jobs, the agency said, estimating that some 385,000 square feet of new office space are under development.

Much of that work force will shun living outside Miami, in large part because of the horrendous rush-hour traffic. The decidedly untrendy suburbs are often not even considered by new arrivals, who want to be close to the barrier island’s South Beach neighborhood, even if they cannot afford to live there.

“People want to be able to walk to work, to restaurants or to the park,” said Nitin Motwani, a developer of Miami Worldcenter, a $2 billion, 27-acre development that broke ground in March.

The project, being built on land assembled from some 50 parcels that Mr. Motwani and his associates began buying at auction 12 years ago, will include pedestrian-only streets with stores and restaurants, a hotel, a 500-unit condominium tower and, in other structures, more than 1,200 rental apartments aimed at moderate-income professionals and families.

Alejandro Sanchez, a flower seller, on Flagler Street, once Miami’s pre-eminent thoroughfare. A $13 million restoration is planned for a half-mile section, inspired by the Ramblas in Barcelona, Spain (Photo Credit: Oscar Hidalgo for The New York Times)

Alejandro Sanchez, a flower seller, on Flagler Street, once Miami’s pre-eminent thoroughfare. A $13 million restoration is planned for a half-mile section, inspired by the Ramblas in Barcelona, Spain (Photo Credit: Oscar Hidalgo for The New York Times)

The resident population of downtown has doubled since 2000, according to census figures compiled in 2010 and assessments since then by the development authority, and an additional 40 percent or so of growth is predicted through 2019. The changes make Miami fertile ground for the retail and services market.

The city’s retail sector, which generated almost $4.5 billion in revenue in 2014, “will usher in 1.4 million square feet of new leasable space over the next three years,” the development agency said.

That increase in downtown retail space will largely be driven by several mixed-use projects under construction, the report said. Besides Worldcenter, there is Brickell City Centre, which will contain a half-million-square-foot shopping mall, condominium towers, hotel rooms and office space; and Miami Central Station, a train, light-rail and bus hub with stores and apartments.

“A big portion of the population wasn’t being served,” said Brian Pearl, a founder of Global City Development, referring to everyday workers for whom low housing costs are a crucial consideration.

This summer, Mr. Pearl’s company plans to begin construction on a five-story building with more than 200 apartments, from studios to two-bedroom apartments. Rents will be in the range of $1,000 to $2,000 a month.

“If you earn $60,000, $70,000 a year, you can afford to live there,” Mr. Pearl said in an interview.

Mr. Pearl’s firm plans to close next month on another property, where it expects to build about 260 rental apartments and 20,000 square feet of retail space. Both sites are near parks.

“We want to create areas where people can have a community experience,” Mr. Pearl said. “They can use the park, the local retailers, walk their dog.”

James W. Shindell, who heads the real estate group at the law firm Bilzin Sumberg, said that Miami was becoming “one of those gateway cities, like San Francisco, New York or Washington, that attract human capital.” And while rents have been going up, many professionals prefer to rent to stay flexible for their careers and enjoy features at new developments.

A view of South Pointe, Miami Beach, and Fisher Island, with the downtown Miami skyline on the horizon. (Photo Credit: Oscar Hidalgo for The New York Times)

A view of South Pointe, Miami Beach, and Fisher Island, with the downtown Miami skyline on the horizon. (Photo Credit: Oscar Hidalgo for The New York Times)

While there is evidence of saturation in the market for high-end condominiums, developers see profit in redirecting their sights toward buyers in lower income brackets. Nir Shoshani hopes to attract professionals aged 30 to 45 to a 500-unit condominium tower called Canvas, for which he broke ground in February. The average unit will cost about $400,000, he said, and be just 860 square feet.

For years, there was little to attract outsiders to downtown except the American Airlines Arena, the Miami Heat’s home court, which opened in 1999, and the Adrienne Arsht Center for the Performing Arts, now a decade old. In the last few years, the Pérez Art Museum Miami arrived, and the Patricia & Philip Frost Museum of Science is under construction. And the Wynwood arts district is now commanding such high prices that some artists and gallery owners are looking further afield to set up shop.

Adding to the renewal of downtown is a $13 million project to restore a half-mile section of Flagler Street, which long ago was the city’s pre-eminent urban thoroughfare but fell into decay in recent decades. The plan, inspired by the pedestrian-only Ramblas in Barcelona, Spain, is to transform the street with outdoor cafes, wider sidewalks and valet parking. The developer Moishe Mana has already invested more than $200 million in properties on and near Flagler Street.

“Every year it’s becoming more like a city,” said Michael A. Comras, a developer whose optimism about Miami’s financial health led him last year to form a partnership that bought the CocoWalk shopping complex in Coconut Grove for $87.5 million and the Shops at Sunset Place, a mall in South Miami, for $110 million, both of which he plans to renovate. “Today the pie is getting bigger, so when one area gets hot it doesn’t suck the life out of the other ones,” Mr. Comras said. “There’s enough for everyone.”

Not everyone here is as optimistic. Ezra Katz, the chief executive of Aztec Group, a real estate investment banking firm, said it would take several years to absorb the apartments and condominiums that have already been built or are in the pipeline. He was concerned also that infrastructure improvements have not kept pace with development in the city’s core.

“We have doubled the number of people living in the urban area, but new roads, transportation, parking, sidewalks and bridges haven’t appeared,” Mr. Katz said. “We have set ourselves up for several years of congestion and traffic nightmares in and around downtown. Developers and government agencies saw the writing on the wall years ago and had the wherewithal to act, but didn’t. Now it’s too late.”

 

Source: The New York Times