The experts gathered for the Greater Miami Chamber of Commerce’s South Florida Real Estate Summit stressed that the market is not headed for a downturn, even though growth has slowed. About 450 people gathered at Miami's Jungle Island on Thursday for the event, which featured two panels and various speakers. Miami Commissioner Francis Suarez told attendees that 2015 saw the highest volume ever for the city’s building department, with 174 permits issued and $2.4 billion in ongoing construction.
“That is why you are waiting so long in the building department,” he said.
Here are five highlights from the panels:
Retail carries great potential, at a moderate pace
South Florida has about 6 million square feet of retail proposed or under construction, with a handful of new malls planned and four malls set to expand, said Beth Azor, principal of Azor Advisory Services.
“That is a little crazy,” she said. “I am not sure how much will be built. SoLe Mia and American Dream Miami will probably happen, but four or five other projects we hope are not built because limited supply keeps our market healthier.” Azor is looking to sign tenants at a new retail center at Northwest 79th Street and Northwest 32nd Avenue.
Retail leasing is going well at SoLe Mia in North Miami, and rents there are better than on nearby Biscayne Boulevard, said Aly-khan Merali, CFO and chief investment officer of Turnberry Associates, the co-developer of the project. It’s focused on signing tenants that will be relevant in three or five years, he said.
Chris Weilminster, executive VP of Federal Realty Investment Trust (NYSE: FRT), said the hardest thing to do is deliver a large retail space all at once, so his company prefers to do projects in phases. Working with local partners Comras Co. and Grass River Partners, Federal Realty acquired CocoWalk and Shops of Sunset Place in 2015, and plans to redevelop them. Weilminster said his focus is to provide a retail experience and public space that serves the community.
“In CocoWalk, we see it as being organic to the community,” Weilminster said. “If we can draw locals, tourists will follow. We aren't satisfied by the tenant mix there. Sunset has great demographics around it, and we want to create a tenant mix that is different from Dadeland.”
Azor said the new retail is coming because many tenants want to be in Miami. Restaurants are taking up a greater proportion of shopping centers than in the past, especially with chef-driven restaurants and fast-casual chains, she said. Health and personal fitness tenants are also expanding. Lucky's Supermarkets, which has two planned locations in Broward County, is looking in Miami-Dade County, as is the new 365 by Whole Foods, Azor said.
Attract displaced tenants to new areas
Avra Jain, who redeveloped the Vagabond Hotel in the MiMo neighborhood, is looking to breathe new life into the Little River neighborhood by attracting tenants priced out of other places.
She quietly acquired a number of properties a few years ago to assemble about 230,000 square feet of warehouse space on 14 acres. Jain is leasing them to artists and creative companies, many of which left Wynwood after rents were hiked to $60 a square foot. Some tenants have come from out of market, she added.
“We decided to buy property for a niche market that can afford leases of $18 to $25 per square foot,” Jain said.
Middle market sells quickly for residential
Luxury properties make headlines and bring in huge commissions, but it’s actually the middle of the market that’s the sweet spot for residential sales.
Miami Association of Realtors CEO Teresa King Kinney highlighted how sales of single-family homes priced $250,000 to $400,000 increased 18.3 percent in January, while sales of condos priced $150,000 to $300,000 grew 25.1 percent. Meanwhile, sales of both single-family homes and condos were down overall.
EWM President Ron Shuffield said brokers should jump on homes listed for less than $500,000, no matter where in Miami they are located, because they’ll surely sell. He said the drop in sales volume in the second half of 2015 and into January isn’t something to be concerned about. Has has seen more domestic buyers enter the market as international buyers have seen their buying power diminish due to the strong U.S. dollar.
King Kinney noted that Miami-Dade's current median single-family home price of $270,000 is about equal to 2004, and far below the peak of $380,000 in 2008.
“Yes, our price increases are sustainable,” King Kinney said.
Condo buyers are more selective
Since there aren’t many bargain-basements deals on the market like there were coming out of the recession, condo buyers have become more selective with the quality of the building and pricing, said Jay Parker, CEO of Douglas Elliman’s Florida brokerage. Many international investors were looking to buy a simple condo at a good value, and rent it out for steady income. Yet, increasing new construction prices have made that more difficult.
The challenge in luring domestic residents into the new condo market is they can still buy a single-family home in a good neighborhood for significantly less than a condo, said Anthony Graziano, senior managing director with research firm Integra Realty Resources. Those higher prices have discouraged investors from purchasing condos with plans to rent them out, he said.
That means condo developers need to build a higher level of project.
“There’s been a redefinition of condo living from a cookie-cutter box to delivering a lifestyle the market has not had before Apogee [South Beach],” Parker said. “We are not relying as much as we used to on investment buyers. We are catering to end-users today or second-home buyers. Projects today have amenities you would never dream of.”
All Aboard Florida will change the landscape
The All Aboard Florida/Brightline passenger train under development could change the way many people live and work.
The line will connect the downtowns of Miami, Fort Lauderdale and West Palm Beach in 2017, eventually reaching Orlando. Lissette Calderon, president of international and strategic projects for Related Group, said the biggest impact could be in West Palm Beach. The city would be a hourlong train ride away from the employment center of downtown Miami.
Related Group and its New York partner, Related Cos., are preparing a plan to expand CityPlace in West Palm Beach with a variety of uses.
“Transportation has been the game-changer,” Calderon said. “You can work in downtown Miami, but have the option to live in West Palm Beach. And Uber has changed the way people move within cities …. We can’t build for the way people live today. We have to build for how they will live in the future."
By Brian Bandell
Read more at bizjournals.com/southflorida.