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Thanks for the post Lucas!
Lucas, what is the difference between fannie mae approved and FHA approved? which is better?
At $24/sf Miami office rents are stronger than Seattle, Chicago, Houston and Philly! How is that possible? wasn’t Miami supposed to be a useless place to do buisness as per many on this blog?
http://online.wsj.com/article/SB126291211587420679.html?mod=yahoo_free
slater,
Miami is nothing more than world-class financial center, one of this planet’s top tourism spots, arts, education and healthcare juggernaut and playground for the rich and famous.
How could it possibly compare to Philly? (sarcasm).
good news, just got a call from my friend. the owner of the 1800 club unit backed off from his demand to raise the rent. he agreed to keep the rent at last years level of $1350. So my friend is extremely happy. I guess the land lord decided that a $100 increase is not worth the hassle of losing a good tenant.
Slater, the landlord also new the chances of getting a new tenant at $1600 a month was probably low, and each month without a tenant will cost him $100 a month over a year long lease. my experience over the past couple of years in Miami is the landlords will act tough, but you can call their bluff because you own all the cards. your friend could have probably gotten another $50-$100 off the next year long lease if he wanted to take some risk. but my bet is he would not get a lease renewal after that year out of spite, if the market recovers by then.
http://curiouscapitalist.blogs.time.com/2010/04/07/quick-sign-a-new-lease-rents-are-poised-to-rise/
Please vote for Miami on the list so Google can spread fiber optics all over our city.
Google is picking 10 American cities for the project. That means cheap and higher speed Internet for everyone who lives in Miami. Spread the word to everyone you know, so they can vote too. Vote now!
http://www.reuters.com/article/idUSTRE63543U20100406
I am surprised we are doing loans with 3.5% down. Without a good chunk of change invested, people will be more willing to walk away if they come across hard times or the market drops a little bit putting them underwater.
I know 20% is a large amount of money to come up with for a lot of people, but requiring 20% would go a long way towards getting more stable owners in the market.
Lucas, you have two of your three links to articles discussing the same research report from a company who has an interest in real estate turmoil and uncertainty. The other link simply states SFH may have bottomed, but indicates condos have room to drop in South Florida. The story titles seem to imply something different, am i missing something?
gables,
How does Reis have “an interest in real estate turmoil and uncertainty.” Someone says rents in Miami are raising by only 1.6% and its some kind of conspiracy.
I agree about the other article. “It’s bottoming, maybe, possibly, but we don’t know what will happen after the tax credit, but it looks good, but we don’t know, maybe later this year.”
Gixxer, not saying conspiracy. But Reis business model is based on real estate. Just as Moody’s and S&P reported and rated on bonds for cash (you do understand what happend there i hope), Reis reports and rates on real estate investments. The past couple of years should indicate a serious possibility of conflict of interest. That cannot be overlooked. Just pointing it out.
gables,
You sure are one funny guy. Are you telling my you can’t tell the difference between data and the analysis of that data?
Reis provides quarterly reports for inventory, vacancy rates, rental prices, etc. for commercial real estate and also provides trends and analysis of that data. Anyone can take data an manipulate it to fit what they want to say, like most people here. The 1.6% rental rate increase is the data. Now you can argue that’s bad and means the market is headed lower and I can argue that’s good and means the market is stabilizing, but arguing that they specifically manipulated the information to get 1.6% is a conspiracy. Was there a problem with Reis last quarter when they were indicating that rent prices were decreasing?
Reis has no monetary gain one from reporting Miami rental price increases. There is no conflict of interest here.
The people at Moody’s and S&P stood to personally benefit from handing out Aaa ratings like candy.
Gixxer, you place the words conspiracy in my mouth. I did not say that. But you had better learn to assess the quality of the information you use to make decisions based on where the info comes from. Not saying Reis numbers are wrong, but I would not make monetary decisions just based on their report-dont be naive. Moody’s and S&P were paid by a business interests to rate bonds for future sales. Reis is paid by business interests to rate real estate for future sales. very few firms are truly “independent” and “impartial” in todays business world.
for example, Reis calculates a 1.6% increase based on the numbers they use. how accurate are those numbers? my current lease has dropped each year over the past three years, yet that number is reported nowhere in the data. am i a unique case? so now answer the question, how accurate are the numbers used in the report? they are precise, but i do question the accuracy (and suspect the 1.6% is probably well within the scatter of the data). all i’m doing is drawing caution to the point-no conspiracy at all.
Yes I’m placing conspiracy in your mouth because what your suggesting is a conspiracy. They provide information for 79 markets and not all of them are up. What incentive do they have to say that rental rates went up 1.6% in Miami if they didn’t?
“Reis is paid by business interests to rate real estate for future sales. very few firms are truly “independent” and “impartial” in todays business world.”
Reis is not paid to RATE real estate for future sales. They compile market information and then sell their quarterly reports based on that information. They get paid regardless of what they report. Out of the 79 markets they follow, 30 of them were down. This month Miami just happens to be one of the ones that was up. This is nothing different than Condo Vultures who simply compiles public record information into one report and sells it for $39.95 or Condo Reports. com that does the same thing.
“my current lease has dropped each year over the past three years, yet that number is reported nowhere in the data.”
This just shows you don’t know what your talking about. This is about APARTMENT vacancy and rental rates. Apartments keep detailed records of vacancy and rental rates. I seriously doubt this information is wrong. And even if it is it doesn’t mean much. The point of the information is that vacancies are down and rents are no longer going down. Reis is not claiming Miami rents are sky rocketing. The only people doing that is in the headlines of the people reporting the story because it gets peoples attention. As usual most people can’t tell the difference between the data reported in the article and the opinions of people quoted in it to sell the article.
You could make the argument that this doesn’t apply to downtown considering 90% of the rentals are condos and not apartments, but you don’t take enough time to actually look at the information to realize that.
This is just like Joe who complained about employment data being wrong because he though it was self reported information when its actually data from employers payroll. You guys have no clue what you’re talking about.
Go to calculated risk and all the other places and everyone used Reis’ numbers when they were showing that vacancy rates were high and rents were down. And then all of a sudden now when the numbers go up for the first time in years these guys are being paid to report it that way. Give me a break.
I don’t blindly accept that these numbers are correct, but if you are going to argue they are wrong why not argue MLS numbers are wrong. You have no problem assuming Lucas’ information is right but this information is suspect. This information is just as verifiable.
If the report said that rents are still down and vacancies were rising you would have never brought this up.
Here is a link to Miami apartment market trend statistics from apartmentratings.com. Funny enough based on a sample over 2800 renters and 421 apratments the numbers look eerily close to Reis’ in depth report numbers with the average rent being just over $1000.
http://www.apartmentratings.com/rate/FL-Miami-Pricing.html
And if you recall I posted before from DIFFERENT sources that the national apartment vacancy rate was 8% and that Miami was below that at about 6.5% and poised for rental rate increases. I believe at the time that info was from a NAR/CBRE report.
From most of the comments posted by people I can tell you that I check the validity of reported data more than most people here. I look at the sources and methodology of the information regardless of whether is supports my view or not.
gixxer #15, very accurate.
gables, again goes to show that you thinkthe whole world is notjust brickell but the whole world is just you. If your landlord gave you rent break every year, maybe because of a million reasons including that he might have liked your face. what isthat got anything to do with reis numbers. saying that your rent dropped and it did not reflect in reis data is so laughable and so delusional. If you can actually set market numbers, then you are god. dont feel so important.
But otherwise, i like your bearish attitude. If one landlord reads your post and offers me a rent concession, that should help me ingetting a place for cheap. in reality, the situation is so drastically different , i am not able to secure a cheap enough rent for a decent place in downtown.
gables,
you are quickly catching up with carlos in terms of cuteness. Twins separated at birth, maybe?
Anyway, it’s so sweet that you think that the data is inaccurate because the agregators forgot to include you in it.
BTW, how do you know that they didn’t include your alleged rent decline into their results? Checked every name?
slater
aside from the fact that the article makes no distinction between different types of spaces, avg. asking price doesn’t tell the story. class a space defines a city from a white collar space. ask any office leasing agent down here what his take on the rental market is for class a…they certainly won’t say things are optimistic for the foreseeable future. the fact is, when GT moves to met 3, there is no similar class a tenant to replace it in its current digs. same follows for bilzin and its move out of wachovia. and stanford’s former space at 201 s. biscayne is still on the market (minus some sublets). this town simply doesn’t generate white collar jobs in a large enough amount to cover all the class a space coming online or already online. you can expect in the next few years for class a space to take a beating down here, probably larger on a pct. basis when compared to similar class a space in chicago or seattle.
f-35…i can only imagine that when you said “sarcasm” that was to be applied to your comments about miami being a world class financial center and educational juggernaut.
Re. Enzo #7, that googlefiber site is not legit, and not affiliated with Google. It’s some sort of scam to generate ad revenue. Please don’t bother voting there.
F-35, i know my rent was not included because it was not reported to the mls board. my landlord is a realtor and just bypassed that info for a variety of reasons (commissions, etc). but i must be a special case because i am sure no other realtors own rental property in miami.
slater, i actually watched the rentals in my building drop over the past three years. it was just a trend. Three years ago you could get $1800+ for a 1B, and in the past year they have been as low as $1250.
gixxer, again no conspiracy. 5 years ago everybody believed in Moody’s, including Buffet. your arguement today would very much sum up Moody’s position 5 years ago. But my how things change. And i dont consider the Moody’s and S&P situation a conspiracy. But there were underlying conflicts of interest that did not reveal themselves until well after the fact. Can you guarantee a similar situation wont play out with Reis 5 years from now? But i waste too much time on you over a 1.6% change in data which is nothing more than scatter.
so Gix, tell me, if 90% of downtown Miami area is condo rentals, and not then included in the reports that strictly detail stats from professional apartment complexes (such as Reis), what good are they for the Miami market? And in seriousness, are the condos being rented by developers in the Miami area included in these “apartment” reports? makes a big difference in the validity of reports we see on the miami condo market.
jcrimes,
no, the word “sarcasm” is applied to any dimwit who chooses to bulid his own house, when brand new condos are selling just a short distance away below the cost of construction. Then the dimwit complains that “construction is killing him”.
But maybe sarcasm is not applicable here. Incredulity is more like it.
f-35
you are part of the reason i moved to this city – so much easier to get ahead when folks such as yourself are still straining to find a way to remove their head from their ass.
regardless, you’re welcome to sing all the praises of the condo buildings that went up over the past few years. i’ll take my house in miami beach over your crap condo even with all the headaches that a renovation brings. sorry, but trying to compare the two is beyond doltish.
moreover, whenever you want to qualify your miami is a world class financial center and education juggernaut statement, feel free to do so. i didn’t mean to offend you and your prized two year degree from miami dade or your teller job at a distinguished institution such as transatlantic bank sweetheart.
jcrimes,
thanks for a bit of a comic relief.
I’m glad you’ll take your delapidated shack which obviously is in a dire need of back-breaking “renovation” (read complete rebuilding) over my beautiful 40th floor condo (which I bought at give-away price), but I guess some people never allow common sense to stand in the way of their own financial immolation – and who am I to object?
I hope that for you the ability to watch online porn with full sound and worship your own wilted banana tree outweighs all of the hussles of termite abatement, hands-on maintenance, sucky security, sky-high insurance rates and car exhaust that passes for air in your dungeon. For me it doesn’t. Not even to mention the fact that the only way for you to ever enjoy my breathtaking view is very briefly after your propane tank accidentally blows up.
In the end it’s all about priorities, so I can only wish you the best of luck in your moronic endeavor.
Maybe you’ll even tell us about all of the nasty surprises and miscalculations that you encountered while erecting your bunker. Don’t hold back. That’d be a lot of fun to read.
the name calling is actually quite boring.
Come now, Gables, I think the F-35/jcrimes exchange (“crap condo” v. “wilted banana tree”) is great; it’s certainly a lot more fun reading – as I’m sure you’ll agree – than some of the super dull statistical (and less than compelling) reports about the local real estate market we’ve been served up recently.
Cue Gixxer to provide a tedious 5000-word statistical analysis of F-35/jcrimes witty insults re SFH v. Condo.
As an aside, I find it remarkable that so many people on this blog happen to live in majestic 40th+ floor penthouse units on Miami Beach/Brickell. Lucas you’ve successfully targeted this market: Internet-addicted, independently wealthy penthouse-living jackasses. Congrats.
Yeah, I’m really enjoying the exchange myself.
“financial immolation “? I have to admit looking up that one.
pardon the interruption, carry on now!
“Re. Enzo #7, that googlefiber site is not legit, and not affiliated with Google. It’s some sort of scam to generate ad revenue. Please don’t bother voting there.”
Am I the only one on this blog not surprised that Enzo would be duped by something so obvious? Definitely not the sharpest knife in the drawer! Some people should have their Internet privilege revoked.
Miami heading for bunkruptcy
Gixxer 1000 — Does your employer know you spend 2-3 hours per day posting on this site (and who knows how much time on other sites)?
You’ll fit right into the Miami workforce.
Joe,
Yes, my employer also knows that I’m leaving to attend grad school this fall. Honestly I wouldn’t mind being laid off and getting a severance package for the next couple of months but its cheaper to keep me around to handle odds and ends.
You go through a lot of spurts when your on here a lot as well.
Pot, meet kettle.
Once again the focus of your discussion is on me and not my actual arguments.
The funny thing is that I have a lot of downtime at work so instead of wasting it on facebook I use it to get a better understanding of the Miami market (and others) in case I decide to attend UM. But you spend so much time here for what……….
People getting excited that some REITs are catching bid in the backdrop of unprecedented bond buying by FED (a criminal act of daylight robbery ) however moving toxic asset from buyer A to govt doesnot really address the main problem..The fed will be forced to sell MBS soon as subprimification of US debt would ratchet up treasury rates and as soon as that happens, you will witness the negative loop in work again..as FED is forced to get rid of toxic asset to manage govt debt (or citis/states/counties will face even bleaker picture)// once FED start dumping MBSs, and banks start liquidiating RE portfolio in earnest, bottom would remain elusive…
Once liquidation is over by next 1-2 yrs, construction industry will be rejuvenated and economy will begin to really grow…Now tell that to Obama……
Worldwide asset bubble is yet to burst. But it is around the corner…
Gixxer 1000 — “Pot, kettle” my rear end. I visit this site no more than once per day and spend no more than 5 minutes per visit. You, on the other hand, seem to hit “refresh” every 30 seconds to see if anyone has had the audacity to challenge anything you’ve said.
I come here because I still intend to buy a condo in Miami if/when the time is right. I certainly don’t come here and pretend to be an all-knowing expert on a city in which I’ve spent about 15 minutes, unlike, ahem, some people around here.
I saw a unit at gallery art. simply beautiful and the views are amazing even though the building is on the biscayne blvd. very nice and chic.
Dear Joe,
This is not a question. It is a quote. “All good things come for those who wait!”
What Do You Think — I believe that quote is *still* 100% right when it comes to the Miami r.e. market. I have no idea if downtown has bottomed or not, but a 5-second glance at Miami Beach’s sales numbers tells me that market/area has a *long* way to go before the bottom is hit. There are buildings on the Beach that haven’t had a sale in 90 days or more, including buildings that have 25-50% of their units for sale.
(Any feedback, Renter Tom? It seemed like you were following the Beach fairly closely.)
since we have some number crunchers on this board, wondered what your thoughts are on a particular scenario. Assume housing prices stay basically stagnate over the next 7 years (don’t argue this point it is just a scenario). Interest rates rise to around 6.75% for a 30 year mortgage (again just a scenario). I am a cash buyer. My scenario assumes one is not going to make money off appreciation of the property in the next 7 to 10 years. If I buy a 2B unit around 1100 sq ft, does anybody have a maximum purchase price for the unit assuming it can be rented for $1800 and $2500? I assume HOA at around $800 a month and property taxes around 2.5%. Can I make a reasonable ROI with real estate without appreciation compared to dropping the money in some fixed return of 5.5% (again just a scenario)? This is my realistic bear scenario over the next decade. Have a bullish scenario as well, however.
I am very surprised why no one talks about Gallery Art or City 24 on this blog. I saw them yesterday and both buildings and the units are simply outstanding. Even Lucas has not featured them in his Arts District lineup of buildings. Is there anything I should know?
gables,
Your #39, what about inflation ?
visionary, since i really don’t know what will be the going rate for inflation, its left out for the time being. low inflation is implied with little asset appreciation, along with a mortgage rate which is historically below average. if we do get inflation and appreciation, then the numbers from the scenario should be conservative as an investor. but my guess is when inflation does kick in (i think it will), it will probably be in a few more years, thus minimizing its impact on a 7 year investment view.
Slater, I also would like to hear about art gallery and City 24. I think the prices are too high. for these buldings since they are not on the water. am I correct?
lara, these are 2 blocks from water. the unit i saw in gallery art was on 14 floor (low) and north facing. but the views were incredible. I could not believe it.
The bathroom finishes were top class. It looks as good or better than Everglades bathrooms and Everglades has a big name recognition.
regadrding the prices, i dont know as i am not here to buy but to rent. I will give 2 thumbs up for gallery art. I love the building and also the people who are living there. It is ultra modern and very contemporary. Also I can walk to my work in midtown and also walk to Pace park (3 blocks). I hope i can get to live there.
those condos get very little press probably due to location and size? i assume they are not large nor centrally located? please enlighten us on the neighborhood.
by the way, you say you have trouble finding affordable housing? what size unit are you looking for and at what prices?
gables, location is top notch. 2 blocks from water and all major stores, restaurants and conveniences on the doorstep.Size wise,they are not 500 unit monsters but they are not small either, with each having 200+ units. that is definitely not small. neighborhood is nice if not excellent. I personally love it. Just go to midtown on a weekend and it is busier than Lincoln rd at the sugarcane and mercadito. the biscayne blvd construction is annoying but it should pass in a few months and it is all for good. safe, safe and safe. in fact so many cops cars everywhere and all the time, it is annoying. I had to drive in my best behavior. street thugs stand no chance at all if they ever dare to venture to midtown and edgewater. i walk to starbucks on 30th and midtown and the new mexican restaurant across from starbucks that seems to be rocking all the time. Come, take a look at gallery art. you will love it. if anyone is planning to buy, do it now before the biscayne reconstruction is over and the neighborhood looks really snazzy.
my budget was $1250 for a 1bed in a brand new building. willing to up it to $1300. still looking. had to find something by july 1st.
slater, you should be able to get something of interest for $1300. Anything below that can be had, but you must be at the right place at the right time. have you made any offers? if you are looking for july 1, you may find landlords to be reluctant to hold a place empty so your offers may not be taken too seriously. but my guess is anybody advertising for $1500 will probably take $1350 for a year long lease. make sure you negotiate the rate down-its part of the culture here in Miami 🙂
gables, thanks for the tip. july 1st is only my deadline. i can move in much before that.
yes made an offer in quantum for $1275 for a unit asking $1350 and got rejected!!
slater, from the listings and past action in quantum i would imagine $1300 could be had. if one place rejects an offer, check on another. arguing over $50 a month and thus losing one month rent is really not good business practice-but again remember many of these folks are amateur landlords. good luck but i imagine you will get what you want-you are in the right ballpark with expectations.
Here is something interesting I noticed this weekend. A sign just went up at Marquis advertising developer units starting at 375k. This is for their smallest 1400 sq ft obe bedroom unit. With that bieng said prices at 900 are hovering around 400k for a 1000 sq ft one bedroom. It will be interesting to see what happens to prices at 900 since the fit and finish at Marquis appear to be of superior quality.
In addition, Miami, where the median price reduction was $33,000, had the largest price reduction percentage of 14.16 percent.
http://www.dsnews.com/articles/home-price-reductions-surge-in-hard-hit-markets-2010-04-09
record foreclosures
http://finance.yahoo.com/news/Mortgage-Defaults-May-Be-cnbc-1964280202.html?x=0&sec=topStories&pos=2&asset=&ccode=
jcrimes,
“the fact is, when GT moves to met 3, there is no similar class a tenant to replace it in its current digs.”
GT is moving to Met 2, Met 3 is residential. While a few of the Law firms who were fortunate enough to have their lease expire during this time they definitely are in a great position, many of them aren’t. For example while Blizin was able to move but White and Case’s lease ended two years ago and with fewer options stayed at Wachovia signing a 15 year lease for 90,000 sf on 4 floors. And Carlton Fields resigned at BOA Tower two years ago (two years early) for rates similar to current market prices.
“this town simply doesn’t generate white collar jobs in a large enough amount to cover all the class a space coming online or already online.”
While I agree Miami is currently over built and new space coming online will only make things worse in the short term you seem to over exaggerate a bit. Miami currently has the 4th highest class a office space at the end of ’09.
Class A Office Space (from Grubb & Ellis)
NY $65.47
DC $39.63
LA $36.23
MIA$36.07
And funny enough class a office space rent in Miami INCREASED during the first quarter of 2010:
“But rents in Class A buildings actually increased to $37.33 in the first three months of the year from $35.92 per square foot in fourth-quarter 2009.”
I’m curious as to how Miami got the the 4th highest class a office space rental price (and possibly just moved to 3rd) without a decent amount of class a (white collar) tenants. There is over 24 MILLION sf of class a office space in Miami with about 8 Million located downtown. That doesn’t include what is about to come online this year. Who has been occupying this space at rates that are higher than every other city other than NY, DC and LA??? Just because people here don’t work for these law firms, banks, etc. doesn’t mean they don’t exist.
“you can expect in the next few years for class a space to take a beating down here, probably larger on a pct. basis when compared to similar class a space in chicago or seattle.”
Currents rental rates are HIGHER than Seattle ($31.31) and Chicago ($30.24) and when you look at central business districts vacancies are lower in Miami (14.8%) than Chicago (16.7%) and Seattle (18.9%).
Also, here is an excerpt from a recent Grubb & Ellis market report for Miami:
“In light of all the new Class A construction, expect significant reductions in both asking and effective rents on top of concessions already being offered at existing Class A buildings in 2010. However, since the new buildings will likely come online with well above market rents, the average 2010 Class A asking may stay the same.”
This is what I see a lot of people overlooking with condos as well. They look and see the average or median price going down and they assume this discount can be applied evenly to all markets. In the case of class A office while the average price will likely stay the same or decrease slightly the NEW offices will lease above market price while the old will lease below.
Miami Lakes has 36% vacancy rate, Biscayne Corridor has a 36% vacancy rate and Hialeah has a 27% vacancy rate. Areas like these will continue to lag while downtown remains steady. Often times new development simply cannibalizes another area. In this cases the downtown market seems to be cannibalizing the residential/retail/office space of the suburbs. In the long run Miami will be healthier because of this. Downtown rents are in the $40’s while non downtown rents are in the $30’s. As rents of the older buildings downtown get closer to non downtown prices that only encourage more companies to move downtown. More business downtown means more people looking to live downtown. Once this is said and done downtown is not going to be the loser.
With respect to condos people quoting how the average price is decreasing but when you look specifically at downtown you see that the average price is increasing. Who cares if condos in Kendall, Hialeah or Miami Lakes are a dropping if you want to live downtown? If someone has some hard information that downtown prices are dropping I’d love to see it, the only information I have is from the DDA saying downtown prices are increasing and condo vultures saying prices east of I95 are increasing while prices west of I95 are decreasing.
http://www.miamidowntownlife.com/profiles/blogs/downtown-miami-experiences
More numbers showing the strength of downtown amidst this current climate:
“Continued growth in Downtown Miami’s residential and commercial sectors is driving new retail business openings throughout the area, despite widespread volatility in retail markets across the U.S. Recent research conducted by the Miami Downtown Development Authority (DDA) found that 42 new net retail businesses opened in Downtown Miami in 2009, marking the third straight year that the district has seen 40 or more new net retail outlets open. In total, 152 new retailers have established a Downtown Miami presence since 2005.”
“The news of Downtown Miami’s retail growth comes as other markets across America continue to struggle: a recent Integra Realty Resources survey of the 50-largest markets in the U.S. found that Downtown Miami’s retail vacancy rate of 5.06% is among the five lowest in the nation. These numbers mark a dramatic spike in retail demand over the past 18 months; Downtown Miami’s overall vacancy rate climbed as high as 12.5% in mid-2008, according to CoStar Group.”
From 12.5% to 5.06% in 18 months during an economic crisis where unemployment is above 10%.
“While retail activity in Downtown Miami is bucking the national trend, the growth comes as no surprise to real estate professionals familiar with the market. “Anytime a condensed core of urban development attracts new residents, a retail boom is soon to follow,” said Greg Masin, commercial retail broker at Cushman & Wakefield of Florida. “The influx of people moving into Downtown Miami is fueling this market and there’s no reason to think the activity will subside anytime soon, as retail business owners look to capitalize on population growth by offering new goods, services and entertainment options.””
“This year alone, in one of the most challenging economic conditions in recent history, Downtown Miami attracted a record-breaking number of key businesses that are enhancing the quality of life for residents and visitors and transforming the district into a 24-7 dining and entertainment destination,” said Alyce Robertson, executive director of the Miami Downtown Development Authority.”
If downtown is attracting a record number of business in this climate what happens as things slowly get better?
“New Downtown Miami retail openings in 2009 include Publix, Sushi Siam, Café Sci Sci, Piola, and Brickell Irish Pub in Brickell; MIA, Ecco Pizzateca, Area 31, Tre, and Puntino in the Central Business District (CBD); Prelude by Barton G, Urbanite Bistro, and the Democratic Republic of Beer in the Media & Entertainment District; and Botequim Brazilian Bar & Grill in the Park West neighborhood. According to Robertson, these newcomers to the area, as well as many pre-existing establishments, are choosing to stay open later and on weekends to capitalize on the after-hours market now in place.”
“The DDA is currently tracking 20 businesses scheduled to open during the first part of 2010 that will continue to enhance the variety of offerings within the district. Notably, LA Fitness and Fado Irish Pub at Mary Brickell Village and Puerto Madero at 1450 Brickell will strengthen the retail mix in the Brickell and South Miami gateway neighborhoods; in the CBD, Zuma will be a landmark addition to the Epic Hotel; and Taste Bakery and Miss Yip’s are slated to become the newest additions to Park West.”
The fact that downtown is extremely over built at the moment is the only reason rents aren’t rising as we speak. Imagine where would we be at right now if they would have simply built 5000 less condos.
Gixxer, going into the latest RE bull run, there were somewhere in the neighborhood of 10k condos in the downtown area. we built another 20k to 30k condos in this past decade. one would expect more retail to open up in that area, the numbers require this to occur. cant say its due to a recovery for the area, but a very unique circumstance of new residences that need resources. the overbuild is great because it will allow more full time working stiffs to buy into the neighborhood rather than wealthier part time residents. this is necessary for the retail to thrive. wealthier part time resident are nice, but they really put a strain on local retailers throughout the year when we are in the off season.
gixxer, yes . But your conclusions are incorrect. Brickell has replaced other areas of interests like coconut grove hence some new bars/eateries openeing up here and there..while the assumption that downtown will hurt susburban condos to some extent is correct..the suburban has already corrected massively…Pembrokepines,kendal 2/2 condos can be snapped up for less than 75k…Downtown , apple to apple, can hardly afford to have a huge premium over that….
gables,
I’m fully aware that there were 22,079 condos built between 2003 and now with another 876 more to finish construction this year. I am under no illusion that the growth in downtown is because of the recovery of the economy. I agree that with all the new residents you’re pretty much guaranteed new business, that’s the whole point.
“cant say its due to a recovery for the area, but a very unique circumstance of new residences that need resources.”
So you mean every single neighborhood in America isn’t going to act the same??? People here seem to go crazy about foreclosures, unemployment, etc. none of which really applies to downtown. Downtown average about 160 foreclosure fillings a month last year and when you look at unemployment among people who make higher yearly salaries its much lower. You can call it a “very unique circumstance” or whatever else you want but downtown is flourishing.
There is not a lot of places for lower income housing downtown right now. There is a disproportionate amount of higher income people downtown, therefore the negative effects of the economy that focus on lower income people are less there.
If a one bedroom rents are around $1300 in an areas with few business, few grocery stores and a 26% vacancy rate what do you think is going to happen in a year when the vacancy rate is half that and there are more grocery stores and 40 new businesses? Or the year after that when the vacancy rate is 5% and there are now 80 new businesses?
Downtown sales are up, the average price per sq ft is up, and leasing are up. I seriously doubt this is because of the tax credit. I don’t see many people running out to buy a condo in this market simply because they can get a tax credit that’s worth 2.5% of the average unit’s sale price. Your best case scenario at this point is that you wait until next year and you can get the same unit for the same price as this year. What factors would make prices downtown lower next year?
INFINITY AT BRICKELL SALES FOR MARCH 2010
there was a total of 15 units sold for march, most of them were 100% cash deals, a few were financed with 20% down. feb also had 15 units sold
funny thing is that most of them sold in march sold for around $250 per foot, while in jan and feb most of them sold for $200 per foot – i was told by a few different sources that starwood captial group rasied there prices in march, however that is strange since the building has so much unsold units still.
i noticed that in march, 4 of the same excat units as mine, but on lower floors, sold to an investor for $30,000 more then i paid when i brought my unit back 4 – 5 months ago . this makes me happy, cause i was worried about buying when i did cause i thought the prices would drop more in my building – but so far so good
gixxer
1. you’re right – met 2
2. i appreciate the quantitative analysis, and the figures are interesting. the comment re: new buildings and what effect they may have on overall class a rates is perhaps the best hypothesis i’ve seen to date.
3. i don’t think i’m over exaggerating the white collar situation down here and the effect on the class a market. from the legal side, you’re not seeing the ny firms migrate down here anytime soon (most are retrenching in their own home markets and reconsidering the number of satellite offics they have); the accounting firms aren’t bagging large new clients here since f500 isn’t attracted to miami and the i-banks are going directly to s.america rather than set up a large operation in miami to act as a gateway.
4. i’ve seen w&c’s office. considering what they spent on it , i wouldn’t expect them to be moving any time soon. moreover, i’m not sure they could find a superior space in miami than what they already have. that said, i think the 15 year lease, (for a law firm) down here is the exception. most firms are small and either own their building or sign on for 5 year leases with renewals in place.
f-35
you’re right, it is all about priorities. i don’t feel the need to share a pool filled with piss (dis)courteously left by my neighbors…or for that matter, pay for a mediocre, onsite gym that will fall apart within two years (who stole the remote to the tv?). and of course, i don’t really want to cover the mnt fees for my neighbors when they decide that the intro level 5 series payment is more important than the monthly hoa. but, that is the path you’ve chosen, and for that…i give you a well deserved kick in the ass, doll.
regardless, i’m pretty certain my “shack” is larger than your 40th floor cookie cutter condo (congrats on finally having italian cabinetry…i’m sure it enhances the flavor of you spaghetti-o’s) and in a superior neighborhood to your ghetto (i’d take the time to read exactly where you bought your dump but i’d rather watch my internet porn). but you still have the serene view…good for you. too bad you’re such a putz that no one will be sharing it with you in this lifetime.
as for my trials and tribulations re: construction (i don’t think i ever said i was doing a full build out, but assume away if it makes you feel better), i will agree with you on this – it would make an interesting read.
gixxer, i like your bullish attitude. i very well will buy in the next 6 months, and when that happens i certainly hope more with your view are around. although i would quite hesitate to say downtown is “flourishing” at this point. its digging its way our of despair, but in my view still a long way from flourishing. but new business is good if sustained in the long term.
agree i don think the tax credit had much affect on downtown sales, although personally i almost pulled the trigger on a 1B unit due to the break. the lower price unit offers almost an 8% price break with the tax credit, so there was some incentive. but it would have become an investment property before long as i desire a 2B, and the credit was not worth rushing the buy on a $250k+ unit. i’ll just keep looking.
as for drivers of lower prices in the future, there is a very big elephant in the room that could affect this. look at any of the newer buildings in the downtown area. it’s very hard to buy anything straight away at a reasonable price. a few reo units are listed at lower prices, and straight owner listed units are much higher in value. the majority of units i come across are short sales. these are the wild cards for future prices, and very well could push prices down again in the next year. once banks make the process more fluid, will be interesting to see how that affects sales. short sales, my friend, are the elephant in the room.
“More numbers showing the strength of downtown amidst this current climate…” gixxer
DUDE! You’re drinking the Cool-aid again. (wink)
Best regards.
scriv
jcrimes,
Shutts & Bowen’s lease at The Miami Center was up five years ago. They did the same thing as W&C and updated their offices and their lease isn’t up in the next few years so their lease is longer than 5 years. Blizin signed a 1o year lease and GT’s lease is for 15 years. H&W’s lease expires in a couple of months and they are deciding where they are going to sign a lease at for 10 years. If anything longer than 5 years is the exception then there are a lot of exceptions.
As a side not K&L Gates set up temporary offices for 8 months when their lease was up 18 months ago just so they could move in Southeast Banks former executive offices at Wachovia center last year. When tenants are moving to temporary offices for 8 months only to wait for particular space to open up at Wachovia center, I think that building will be fine.
“you’re not seeing the ny firms migrate down here anytime soon (most are retrenching in their own home markets and reconsidering the number of satellite offics they have);”
Law firms from all over have migrated to Miami over the last decade and have become the largest tenants in downtown Miami. Akerman Senterfitt, Greenberg Trau-rig and Holland and Knight each lease in excess of 100,000 sf. Recent additions include Orlando-based GrayRobinson, Chicago-based Arnstein Lehr, Ohio-based Roetzel Andress, and Alabama-based The Cochran Firm. Who cares if they’re not from NY.
“Law firms from all over have migrated to Miami over the last decade…”
Ummmm, GT was started in Miami 40+ yrs ago. Akerman is an Orlando firm that has been in Miami almost 30 yrs. Holland & Knight is a Tampa firm that has been in Miami about 30 yrs.
Looks like your law firm stats book is not as accurate as your census data, Mr. Gixxer.
Drew,
You need better reading comprehension skills. I made two points. First was that Law firms are the biggest tenants downtown and used GT, Akerman and Knight as an example which is why stated that they each lease in excess of 100,000 sf.
The second point was that many firms in the last decade have migrated to Miami. You would think it would be obvious which firms I was talking about when I said:
“Recent additions include ORLANDO-BASED GrayRobinson, Chicago-BASED Arnstein Lehr, OHIO-BASED Roetzel Andress, and ALABAMA-BASED The Cochran Firm.”
It seems pretty obvious which firms I thought were not BASED in Miami when I specifically put where they were the non local firms were BASED from.
What a cute argument to cover up your oversight. I don’t need better reading comprehension skills. You need to learn how to structure a paragraph.
Gixxer,
It was never in doubt that downtown would fill out with people and business. What is and always was in doubt is where RE prices would equilibrate.
You seem to take it as a given that as the city core grows, prices have to go up. Well, the truth is that the people and business inflows occurred when prices were going down.
Prices went down, people moved in and businesses followed. You are making a guess that now Businesses and services will lead, People will follow and prices will go up.
The horse has been leading the cart. Your take is that the cart will start leading the horse. Maybe; maybe not. It’s still a guess at this point. You can argue that decreasing vacancies will force higher prices or that lower prices will be needed to decrease vacancies. Who’s leading this dance?
JL,
You only need lower prices to lure people to certain point. After that natural law will take care. Th e tipping point has been reached. Once you lure young professionals from outlying areas with comparable rents, they have seen the goodlife and the conveniences. They are not going back. Even if rents rise. personal experience. It is like the initial teaser offer to try out a product. after that the real price/rate kicks in. But then it is too late, you cant live with out it.
I think downtown has reached that point of no return. Even if cheap accomodation ceases to exist in a year or two, no one will be leaving.
Slater, i agree with you for the most part. one problem with downtown area is they will still need to introduce retail that is economical and desirable to keep the people in the area. i know plans are in place, but people will become impatient if the plans remain unfilled. there are still limits to what you can do in the area besides eating at fancy restaurants and bars-they now have a few. the area desperately needs a couple of nice coffee shops, bookstore and movie theater. then you have a reason to stay in the area on a saturday afternoon or a tuesday evening. you can only have so many $50 meals in a week as an up and coming white collar worker.
slater-
“Once you lure young professionals from outlying areas with comparable rents, they have seen the goodlife and the conveniences. They are not going back.”
Those are bold assumptions. Many would argue that a traffic-clogged Brickell Ave, elavator waits, parking nightmares and tight spaces is not necessarily the “good life” and “convenient.” Plus many do “go back” once they get married and have kids. Most people would rather live in a non-urban area once their lifestyles and family situations change.
Drew, the problems you refer to seem to be specific to Brickell (Ave). From the Downtown, Park West, Pace Park and Midtown perspective, that does not seem to be an issue. Of Course, young people grow up, get married and move out (or may not as condo living is the only sustainable form of living with out taxing the earth unduly, is environmentally friendly and the only way to go in future). But if they do move out to suburbs, there will be enough young people (read 2 to 1) to replace them. That is the cycle of life.
gables, you said,
Slater, i agree with you for the most part. one problem with downtown area is they will still need to introduce retail that is economical and desirable to keep the people in the area. i know plans are in place, but people will become impatient if the plans remain unfilled. there are still limits to what you can do in the area besides eating at fancy restaurants and bars-they now have a few. the area desperately needs a couple of nice coffee shops, bookstore and movie theater. then you have a reason to stay in the area on a saturday afternoon or a tuesday evening. you can only have so many $50 meals in a week as an up and coming white collar worker.
—> i 100% agree with what you said here – being a end user, it will be much better to live in brickell, or in downtown once they add economical and desirable things to do in the area other then eating out and going to bars. it will take some time for this to happen, but i hope they build these types of places in thoses empty lots 0n s miami area instead of building more condo towers on thoses empty lots,
owneratinfinity, this is why i stated previously that coral gables is really a superior location at this point in time. not that brickell is bad, but coral gables is established and provides many different opportunities for local residents to enjoy the culture, food, etc without large expenses. dont interpret this as saying coral gables is a cheap place to live-it is not. but they have street festivals, bookstores, cafes, etc that are great for residents. once brickell can obtain these items the downtown area will become a great place to live. mary brickell village is a nice start-but more will be needed.
I have $5 lunches and when i am feeling especially rich, i have a $20 dinner sometimes. I do not and cannot patronize the $50 meal places.
There are enough $5 lunch places in Downtown that I do not have to repeat eat in the same place for upto 1.5 months.