Miami’s Rental Market Is In Decline, About To Be Flooded. What Does This Mean For You?
The rental market in the Downtown Miami area is in for a jolt, according to an inventory report from the Downtown Development Authority. Many people expected that rental prices would begin to decline in 2017 as the new luxury condo buildings begin to open. As of the third quarter of 2016, the prices were already beginning to decline after buildings such as The Bond at Brickell and SLS Brickell began to open, flooding the market with new options for prospective tenants.
What many people did not see was the influx of new rental buildings that are going to start being delivered in 2017. A few have already come to market, but 2017 promises a whole new array of choices for tenants. Landlords are fervently trying to keep their tenants if leases are coming up for renewal, but many of the options are too good to pass up. In 2016, we saw 3,748 new condo units come to the market and 1,038 additional units in rental-only buildings. 2017 will flip that number, with 2,774 new condo options and 3,575 new units in rental-only buildings.
What to do if you are a tenant?
Don’t be greedy. While the market is in decline, the condos for rent in Miami are not going to rent for fire-sale prices. Yes, you may have more leeway in negotiation than once before with condo units, rental-only buildings typically do not negotiate their prices. Rather, they are pre-set at the beginning of each day based upon an algorithm in their computer software.
A quick move-in is worth a lot. If you can offer to move-in as quickly as possible, you will have more negotiation power than if you are shopping several months in advance. I always say that the sweet spot between the contract date and the move-in date is 3 weeks. That gives everyone enough time to get their paperwork together and applications completed. Building applications commonly take 2 full weeks in condo developments. Rental-only developments are commonly quicker, so are a good option if you get in a pinch and need to move even more quickly.
Have ONE agent to represent you. Make sure that person is someone who is well-informed about the market and what is available. That will prevent you from drowning yourself in options and becoming frustrated. Be open with your agent about what features you like and what features you are disinterested in. Let your agent take you to rental developments as well. Many times, we know ahead of time what the availability and rough price ranges are at the rental developments.
What to do if you are a landlord?
If you currently have a good tenant, entice them to stay and treat them well.
Don’t panic, but understand the monetary value of each month of vacancy. Price your available rental on the market as quickly as possible and with a firm that will give you the most exposure.
When reviewing offers, consider reductions based upon the risk of a full month of vacancy rather than holding onto the idea that your condo will earn as much this year as it did in years past. It won’t. If you have a unit that was previously earning $3,000/month and you receive a quick-move in offer for $2,750/month, it would be a good business decision to accept. Otherwise, you could be stuck accepting far less in contract value on top of the $3,000 expense of having the unit vacant for a month.
Negotiate with people who lowball. Run your numbers and decide what is the lowest price you can accept based upon available options for the tenant and the amount of vacancy that you are already into. Not that you will always have to accept that lowest price, but you know how much room you really have for negotiation.
Remember that just like market storms that we have weathered in the past, this one will blow over. The condos will still be beautiful and in-demand afterward. If you need to sell, then sell. Otherwise just be patient until the inventory is absorbed.
2016 Year In Review: The 10 Most Popular Buildings In The Greater Downtown Area
As we close out 2016, here is a list of the most popular buildings on our website. I tallied the buildings first with the most individual visitors, but also thought the number of return visitors was interesting.
Some of the results were completely expected, but I was surprised to see that all of the top ten are resale buildings. Is this a testament to the state of the pre-construction market? Are there other buildings that you were expecting to be on the list but are not?
How Much Should The Owners Of Brickell Harbour Expect From Their Buyout?
Earlier this month, we reported that the owners of Brickell Harbour are being solicited for a buyout by a mystery developer. Well, the offers have come in and unfortunately (yet expected), we cannot talk about what has been offered because they are bound under a tight confidentiality clause. What we can talk about is how much the sale is likely to garner for the owners if a good deal is made.
It is common in condo buyout deals for the developer to hold the owners under a contingency stating that the sale will only take place if 90% of the residents agree to sell. Otherwise, it makes no sense for the developer to own the building since they would not be able to develop. There are always those last few owners who hold out for the most money and sometimes it works, but sometimes it just ends up throwing a wrench in the entire deal. So, how much is a realistic number for Brickell Harbour as a development site?
First, let’s look at the most recent comparable sale. The development site at 25 NE 25th Road is just over 1 acre of waterfront land with 155 linear feet of bay frontage. It is around 300 feet deep. Once you break down the final purchase price of $48 million, that works out to just over $1,000/ft of land. The units combined are comprised of 76,291 square feet of livable space or $629/square foot ($800,000 per unit for the 61 units).
25 Bay Tower Development Site
Now let’s look at Brickell Harbour. In comparison to 25 Bay Tower, Brickell Harbour is a far superior development site. Its location at the south end of Brickell Bay drive is closer to the hustle and bustle of Brickell’s city vibe, yet secluded enough to offer peace and quiet along the bay. The site offers 275 feet of linear bay frontage and half an acre more of developable space. Both sites are in the same zone for height restrictions, allowing up to 600 feet of building height. Variances can be given, but this is where we are today.
Another feature of the site at Brickell Harbour that sticks out as a big upside is the marina. Building new marinas is extremely tedious from a permitting standpoint due to the environmental impact they cause, making them nearly impossible to add. Given all of these factors, I estimate that a final sales price of Brickell Harbour would be far north of the $1,000/square foot of land that 25 Bay Tower received.
Now that we’ve looked at the comparable and determined why Brickell Harbour is worth more, let’s get down to the numbers. Using the same price per square foot of developable land as OKO Group’s purchase would amount to a $70 million purchase for Brickell Harbour. That breaks down to an average of $380,000 per unit at Brickell Harbour, or an average of $512/square foot of livable space. Add in the increased desirability of the lot size, location and added marina, we could see a purchase of $80 million!
How much do you think the owners will end up garnering at the end of the negotiation? Do you think it will go through?
SLS Brickell Gains Fannie Mae Conditional Approval, Pays Off $157 Million Construction Loan
After opening in October, SLS Brickell has already paid off the $157 Million construction loan they obtained in 2014. The closings are steaming ahead, passing an average of 40 new keys to unit owners per week.
According to Sonia Figueroa, the Senior Vice President of Development with The Related Group, most of the transactions have been all-cash, with a handful of mortgages being issued. Now that the project is over halfway closed out, they were able to obtain their Fannie Mae conditional approval with the final approval expected soon.
Initially there was a fear that the building would not garner the approval, Figueroa said. The underwriters from Fannie Mae believed that the project was a condo/hotel, which does not fit Fannie Mae guidelines. After a personal tour of the property, they were able to see that the building is the SLS Residences with a hotel on property, but the two are separate entities in the same building. The approval was issued and now we will have a much easier time finding mortgages for buyers in the project.
SLS Brickell has been a wild success for Related Group. They have sold all but two of the 450 units, with the two units remaining being penthouses. The resale market has been extremely active, with 22 units on the market priced between $415,000 for a 26th floor 1 bedroom up to $1.7 million for the penthouse. The rental market has taken off as well with 57 units coming to market as of today. Nine of those have already found tenants and four have moved-in. The 48 remaining rentals range from $1,900/month for a 21st floor 1 bedroom up to $10,000/month for a designer-furnished 3 bedroom on the 35th floor.
If you are thinking to move to the building, feel free to contact us for a tour.
You Can Now Live At The East Hotel
For folks who would like to live at Brickell City Centre, but prefer something furnished and with more services than the condos offer, you’re in luck. It is now possible to lease hotel suites at the East Hotel by the month.
The units range in size from 750 square feet up to 1,745 square feet. Prices range from $7,500/month – $9,000/month for 1 bedroom options, $10,500/month – $12,000/month for 2 bedroom options and $15,000/month for the 1,745 square foot 3 bedroom. Tenants will enjoy fully furnished hotel suites with equipped kitchens, in-room laundry, daily housekeeping, concierge services, complimentary wifi and valet as well as access to all hotel amenities. Small pets are welcome with an additional deposit. Not a bad deal for people who are visiting for longer than a few days but are not able to commit to a full year lease!
Is Vladislav Doronin About To Buy Brickell Harbour? Someone Is…
It appears that Brickell Harbour has been pegged as the next condo to be bought out and redeveloped. A letter has gone out to all 185 residents of the waterfront building at the end of Brickell Bay Drive from two brokers at Colliers International, declaring intent to purchase all units of the 1973-built development.
The letter states that the firm has successfully facilitated sales of this magnitude and we know that Mr. Doronin has been on a buying streak for waterfront parcels. His development firm, OKO Group’s latest purchase was the bayfront church on N 27th Street in Edgewater, where he will construct a 57 story building, branded by Missoni. The apartments at Missoni Baia will start at $2.25 million and break ground early in 2017. He has also purchased a development site within Brickell just east of SLS Lux, as well as one on 25th Street in South Brickell.
We also know that Mr. Doronin is not shy with his money. He paid $54 million for his Missoni Baia development site, as well as $48 million for Brickell’s 25 Bay Tower at 175 SE 25th Road. 25 Bay Tower has only 60 apartments, so his price tag amounted to an average of $800,000 per unit for apartments built in 1971. I don’t know about you, but I’m eager to hear what will be offered to the owners of Brickell Harbour. In my professional opinion, Brickell Harbour is in a far superior location than either of the development sites that OKO Group previously purchased.
Another interesting tidbit is that just before these letters of intent were delivered, the condo association of Brickell Harbour announced a special assessment that will last five years. That is an astronomical amount of time for a special assessment! Could it be that they’re already leaning toward the sale? It leaves me to wonder, after seeing previous special assessments in other buildings for 40 year re-certifications (which Brickell Harbour has already undergone) and full-blown overhauls of amenity decks that are settled up within 2 years. See below for a breakdown of the special assessment as well as the detail of what will be renovated.
According to the solicitation letter, the brokers will be delivering offers to unit owners in proper Miami form. They will be foregoing their conference room and instead handing out offers this week at Sega. Salud!
Related Group’s One Brickell On Hold For 5+ Years
One Brickell, Related Group’s riverfront mega-project in Brickell, appears to be on hold until at least 2022. The 1,400 unit waterfront project was slated to be developed in 3 towers at 444 Brickell Avenue, where Capital Grille currently stands along with a 10 story office tower. Previously, it was scheduled to break ground in 2016.
Since the news broke in late 2014 that the towers were on their way, the developer had stopped pushing for new tenants in the office building. They were still signing new leases, yet requiring a 6-month kick out clause, allowing Related to have a vacant building when it came time to begin construction. Since the kick out clause isn’t an ideal situation for tenants, not many offices complied.
As of today, Related is heavily marketing the office tower to tenants. They are pushing for the property to be leased up within 6 months, offering incentives for deals up to 10 years. The lease terms offered are between 2-10 years, with higher incentives for longer leases. New leases signed with a term of up to 5 years also do not have the kick out clause, meaning that Related cannot develop the land until those leases expire.
There has not yet been an official announcement made, but this isn’t the first tower to be put on hold. Auberge in the arts district has also been effectively placed on hold. They are still offering units for sale but have stopped marketing the project. In September, Jorge Perez said at the “State of the Market Conference” in Wynwood that he expects a market slowdown and that his company will not bring a project out of the ground if it is not at least 70% pre-sold with 50% deposits. Since One Brickell had not yet released pre-sales, it seems we have a confirmation after all.
Preview the SLS Brickell Penthouse Views Via Drone
The hotel component of SLS Brickell has been open for about a month now, Fi’lia has begun serving hungry Brickellians and closings of the residences are underway. The developer still has 3 penthouse units available for sale with amazing views. Here is a preview from our latest drone video:
You can see that there is in fact a rooftop swimming pool for the residents, and the upper penthouses also have their own private pools. The three penthouses remaining are:
PH5203: 2,274 square feet interior with 3 bedrooms, a den and 3.5 bathrooms. $1,762,900.
PH5003: This one is the same floor plan 2 floors lower for $1,698,900.
PH5005: This apartment has direct southeast views with 4 bedrooms, 3.5 baths and 2,336 square feet. It is listed for $1,906,900.
If you’re interested in a smaller apartment, there are already resales available as well as options for yearly lease. I think that the building turned out beautifully, it is architecturally interesting during the day and the night and I am very excited to visit the restaurants and amenities. A win from Related Group! What do you think?
Panorama Tower Offers Their Retail Space For Lease
The tower is still rising into our skyline, but Tibor Hollo’s retail space in Panorama Tower is now available for lease. The spaces are located on Brickell Bay Drive, not quite a main thoroughfare through Brickell, but a popular workaround for people who are looking to avoid the traffic on Brickell Avenue and South Miami Avenue.
There are currently four spaces available, asking $65/square foot with a $17/square foot common charge. Here is the breakdown of each space:
Ground Floor – 9,520 square feet. This space will be made available in late 2017 and works out to $51,500/month at asking price. Since it is such a huge space, I see a restaurant as being the best fit.
Second Floor – 9,561 square feet. This one is currently available according to the marketing material. It includes a lobby-level entrance, so would likely be a good fit for some sort of exclusive club. Remember the Miami City Club from a few years back? This space won’t offer the same views that the Miami City Club once boasted from the top of the Wachovia Tower, but whoever the ultimate tenant is could do something interesting with the buildout to make it enticing. The asking price here is $51,750/month.
Second Floor – 1,048 square feet. For $5,675/month, I see this as being a good fit for a salon or boutique of sorts. We represented a client a few years back who took a similar amount of space for a boutique and has made a very nice name for themselves since. Perfect size for a boutique. It could also be a smaller cigar bar that is a nice place for businessmen who work in the nearby buildings to talk shop over a glass of scotch before heading home for the day.
Second Floor – 2,767 square feet. At $15,000/month, this will likely end up as a restaurant, real estate office or a new gym concept.
We have seen leases in similar locations over the recent months in the range of $45/square foot. It will be interesting to see how Brickell City Centre’s opening affects the retail prices over the coming months. While Brickell City Centre was under construction, we experienced very few available spaces for retail clients that were not restaurants or lounges. Now that the buildings are opening up, we’re seeing many new signs go up, which is refreshing. What do you think would be a good fit for this space? Do you think the prices are on point, or do they need to be negotiated a bit?
5 Most Expensive Rentals In The Downtown Miami Area
MLS Photo 900 Biscayne 6301
Lots of us are suckers for browsing fancy properties online and Miami is known for our flashy pads. Here is a list of the top 5 most expensive rental properties in the Downtown Miami area.
Four Seasons 48E – $22,500/month
Throughout the last building booms in Brickell, the Four Seasons has retained its stature as one of the best ultra-luxury properties in the neighborhood. People are familiar with the name and the level of service. For $22,500 per month, you can call this 3,357 square foot residence home. It has 4 bedrooms, 4 baths and tremendous east-facing bay views that include South Beach, Fisher Island, the Port of Miami and Key Biscayne. The listing photos don’t do this apartment justice, so here is a photo of the view.
MLS Photo Four Seasons Brickell 48E
Paramount Bay 4502 – $19,900/month
You can actually be the first to live in this full-floor residence at Paramount Bay. It has 4,437 square feet of walls of glass and 360 degree views. There are 4 bedrooms and 4 bathrooms, multiple balconies, a view from your bathtub, a hidden kitchen and all top-of-the-line fixtures that are detailed out in the listing photos.
MLS Photo Paramount Bay 4502
Four Seasons 56CD – $19,850/month
Skipping back over to Brickell, we have another option at the Four Seasons. Just like apartment 48E, this apartment comes fully furnished and designer decorated. This one is a combination of two west-facing apartments, so offers view of all of Brickell and westward into the Everglades. At night, the twinkling lights are amazing. The apartment is 3,253 square feet and has 3 bedrooms and 3 bathrooms. You can check out the photos here.
MLS Photo Four Seasons Brickell 56CD
900 Biscayne Bay 6301 – $16,000/month
Now we’ll head back over to Park West and visit THE apartment to have if you’re into backlit onyx. Probably the most photogenic of the bunch, 900 Biscayne Bay 6301 offers 3,199 square feet indoors and a 1,500 square foot terrace. The custom backlit onyx stretches throughout the apartment, giving it a completely different feel at night versus the daytime look. You have to check the listing photos to see for yourself. It may not be everybody’s taste, but you can’t deny that it is fun to look at. It’s like a family home that transforms into a private nightclub when the sun goes down. Interesting. Very Miami.
MLS Photo 900 Biscayne 6301
Santa Maria 1202 – $15,000/month
Back in Brickell again, we will round out the list at Ugo Colombo’s 1996 stunner, Santa Maria. Possibly the most secure of all of the buildings, there are very few clues that this property is 20 years old. Unit 1202 has 3,170 square feet and 3 bedrooms, 4.5 bathrooms with wraparound terraces and views of both the Biscayne Bay and Brickell. This unit is furnished by Artefacto and I would say the most tasteful of the bunch. Because the building is as secure as a fortress, you will have a treat in the listing photos. There are some shots of the amenities that are not typically seen.
MLS Photo Santa Maria 1202
What do you think of the list? Were there any buildings that you were surprised to not see? Do you like the apartments? Let us know, we love hearing feedback!
