Time magazine’s portrayal of Miami has changed substantially since the Time article entitled “Paradise Lost” was published in 1981. A city once described as being infested with crime and drugs has now been replaced with imagery of a paradise city. The recently published travel-oriented piece called “Miami: 10 Things to Do in 24 Hours” provides compelling reasons for why Miami has become one of the top travel destinations in the United States.
I learned late last week that Hyperion Onyx Partners, LLC, an affiliate of Hyperion Development Group purchased the note for Onyx on the Bay. The note was held by the now defunct Corus Bank and was acquired just days before the Chicago-based bank was taken over by the FDIC. Hyperion Development is the developer behind Marina Blue, one of the few recently constructed condo developments that have been able to close 100 percent of their units. This represents Hyperion Development Group’s first soiree into asset acquisition. Details of the transaction have yet to be disclosed.
Onyx on the Bay is a 118-unit bayfront condo development located in Edgewater Miami at 665 NE 25 Street. Condo closings began on July 31, 2007. It’ll be interesting to see at what price the unsold condos at Onyx on the Bay are priced at if Hyperion Development Group chooses to resell them immediately. There are currently 11 condos available for sale on the MLS at an average price per square foot of $368. 3 of the 11 condos are short sales. There are currently zero pending sales and a condo hasn’t closed at Onyx on the Bay in over a year. My guess is that pricing will need to be at around $175 per square foot in order for the unsold inventory to move.
I was told that the new Publix at Mary Brickell Village opened on June 6, 2009. Last week, I had a chance to walk its aisles. Overall, I was pleased. It’s the nicest Publix that I’ve visited in Miami but not quite as nice as the one in South Beach on West Avenue. The aisles of the Publix at Mary Brickell Village were wider than most of the Publixes in Miami. Now, they just need to add one in Downtown Miami or the Arts District. Better yet, maybe Whole Foods will change their mind again and decide to open at Met 2 when it’s completed after all.
This post is long overdue. It amazes me how many local and non-local people are still unfamiliar with Mary Brickell Village. The first restaurants at Mary Brickell Village opened towards the beginning of 2007. Since that time, fabulous restaurants, cafes and shops have opened in Brickell Miami, such as: The Oceanaire Seafood Room, Rosa Mexicano, P.F. Chang’s China Bistro, Starbucks, Grimpa Steakhouse, Balans Restaurant, Blue Martini, Abokado Sushi, Blu Pizza e Cucina and many more. The long-awaited 31,000 square foot Publix at Mary Brickell Village opened last weekend. ( I’ll have a picture tour of it published within the next couple of days.) L.A. Fitness is also scheduled to open later this year.
I think people from New York City, Chicago and Los Angeles will find the parking rates at Mary Brickell Village comical:
I’ve been on vacation for the past week but I have kept up with the comments that have been left about the Arts District and Park West. While both sides of the argument have valid points, I tend to side with AJ more than the others. I don’t consider the Arts District or Park West dangerous. It may have some shady characters at night but which neighborhood in a large city doesn’t? When I lived in Chicago, I lived in a neighborhood called the Gold Coast for a few years. It was, and still is, one of the best neighborhoods in Chicago. A mile away, however, was the housing project called Cabrini Green which had the reputation for being one of the worst neighborhoods in the NATION!
Cabrini Green has since been relocated to another area. My point is that large cities take time to transition. Park West and the Arts District of Miami are in their early stages of transitioning. There are several proposed city improvements for these two neighborhoods that will transform them. One of these proposed improvements is the Miami World Center. Take a look at their website to view various renderings of what the area behind 900 Biscayne Bay, Ten Museum Park and Marina Blue will look like once this plan is implemented. Again, it will take some time, however. The Miami World Center plan will probably not become a realization for another 5-7 years but when it does it will provide the infrastructure that is much needed in that area. My bet is that Edgewater and Park West will be among the best neighborhoods to live in about 10 years.
Update: The Mall at Miami Worldcenter is scheduled to break ground by the end of 2014. Reservations for condos at Paramount Miami Worldcenter will start on November 18, 2014.
…at least for the time being. The “Miami Today News” reported last week that the Villa Magna project is still pushing forward. I guess we can all scrap the inkling of a dream that the land would become a public park. I don’t think any of us actually thought it would be turned into a park but rather just wishful thinking that the city wanted a nice green space for the residents of Brickell. The Villa Magna project will reside on the last bayfront lot in Brickell. Now, we can all move on to hoping that the Brickell CitiCentre land will become a public park.
The same issue of the “Miami Today News ” also discussed the relocation of the Camillus House. For those not local to Miami, the Camillus House is a homeless shelter located in the neighborhood of Park West, a few blocks west of new luxury condo high-rise buildings such as Ten Museum Park, 900 Biscayne Bay, Marquis and Marina Blue. The good news is that the relocation of the homeless shelter is still going to happen. The bad news is that the move won’t happen until 2010. I think residents of these condo buildings are highly anticipating that day to arrive. The neighborhood will see a dramatic improvement and, as the article mentions, commercial developers will be more prone to open retail space in the neighborhood. 2010 will be a great year! The Super Bowl will be returning to Miami and Camillus House will be heading west!
Update: I do plan to update this blog on a more frequent basis like you had enjoyed in the past. I took some time off but now I’m back in full blogging mode. The new “Condo Deals” page is coming along nicely and should be rolled out by the end of next week. I’m looking forward to that as well as a few other changes that I think you’ll all enjoy.
A friend of mine passed along the following statistics that were disclosed by Miami-Dade County. I found the statistics to be quite compelling and felt that my readers might find these numbers to be of interest as well. It is worthy to note that these numbers indicate that we are on pace to surpass the highs in foreclosure filings in 2002. That isn’t a bit surprising given the state of the real estate market.
These numbers only represent a mid-half report for 2007. As a sizable amount of adjustable-rate mortgages are scheduled to reset in the following three months, I’m sure that we’ll surpass previous year foreclosure filings. Foreclosures usually take about 6 months, so I’m expecting that foreclosure filings will peak in 2008.
| 2002 | 14,567 | |
| 2003 | 11,605 | |
| 2004 | 9,606 | |
| 2005 | 7,829 | |
| 2006 | 9,826 | |
| 2007 | January: | 1,404 |
| February: | 1,563 | |
| March: | 1,759 | |
| April: | 1,749 | |
| May: | 1,984 | |
| June: | 2,060 | |
| Year-to-date: | 10,519 | |
Many of you have probably already heard about what happened on Wall Street on Friday. For those of you who didn’t, the Dow Jones Industrial Average posted its third-biggest drop of 2007. Much of the drop occurred in the final two hours of trading. The Blue Chip index dropped 281.42 points. Much of the sell-off was attributed to the credit squeeze that Wall Street is feeling as a direct result of lousy lending practices in the housing market that occurred in recent years.
There were 3 major stories that unraveled throughout the day on Wall Street. The primary story in the morning was that of Bear Stearns. The S&P downgraded Bear Stearns’ rating from stable to negative. That sent shares of Bear Stearns plummeting. It recovered by mid-afternoon but once again sold off as a Bear Stearns conference call began. The CFO of Bear Stearns, Sam Molinaro, was quoted as saying “It’s (speaking of the recent credit crunch) been as bad as I’ve seen it in 22 years. The fixed-income market environment we’ve seen in the last eight weeks has been pretty extreme”. Shares of BSC once again sold off.
The second story to emerge was the reduction of Alt-A loans by major lenders. For those of you who don’t know what Alt-A is, it is a category of lending that resides between prime and subprime lending. Wells Fargo announced on Friday that they would curtail Alt-A lending. Other large banks followed suit. Wachovia announced that it would discontinue Alt-A loans altogether.
A large portion of mortgage loans are categorized as Alt-A. The suspension of Alt-A loans by major lenders means that a bulk of the demand for housing could become nonexistent. A hedge fund representative in New York told me on Friday that subprime and Alt-A represented 40% of the loans in 2006. A local, reputable mortgage broker feels that this number could be as high as 60% in South Florida. The following chart from Credit Suisse illustrates the growth in Alt-A and subprime lending from 2002 to 2006. In 2002, Alt-A represented 5% of loan originations while sub-prime represented 6%. By 2006, Alt-A and subprime loans each represented 20% of the overall loan originations.
The third major story to hit PR newswires was that Wells Fargo would increase their prime 30-year Jumbo rate to 8 percent. Other major lenders followed suit. Last week, a 30-year Jumbo rate could be acquired for 6.875%. That’s a huge increase. Potential home buyers could be priced out of the market.
So why am I reporting this you may wonder. The impact on the Miami condo market is inevitable. Many of the speculators who acquired preconstruction condos 2-3 years ago fall into the Alt-A category. Even if these speculators plan to close on their preconstruction condo units, they may not be afforded that opportunity. Major banks have begun to shut off the valve to extend credit to even the most credit-worthy. If this happens then the fall-out on Miami condos could be grim at best. These practices, however, will return full circle to the banks who loaned money to developers. If banks shut off Alt-A loans then investors will be unable to close on condo units which will mean that developers will get back a larger percentage of the total units in the building. Developers will then be unable to make payments on the loan and they’ll eventually go bust. Banks who shut off the valves will push the pain onto the banks who made these loans. I know that Corus Bank, a publicly traded company, was a major lender to condo developers in Miami. (You’re welcome for that information).
The good news is that smaller banks will fill in the gap to lend money to Alt-A borrowers. The bad news is that interest rates quoted to home buyers will be higher. The higher rates will price out potential condo contracts holders who plan to close or will lead to higher foreclosure rates down the road. If I were closing on a condo within the next 60 days then I would definitely contact a reputable mortgage broker ASAP to have them lock you in at a good rate. Who knows where rates will be in upcoming weeks. I can definitely point you in the right direction if anyone needs guidance in this matter.
Many feel that a rate cut by the Fed is inevitable. We should see one very soon.
Follow-up: A late story emerged on Friday, after the markets closed, that Option One Mortgage Corporation is ceasing all loans “secured by condos in Florida”. Option One is a top-10 non-prime lender and subsidiary of H&R Block. I don’t even want to think about what will happen to the Miami condo market if other major lenders follow their lead. I’ll leave it at that.
I finally got a chance to watch the movie “Cocaine Cowboys” last night. I’ve been trying to rent it at Blockbuster for months but it was always checked out. I stumbled upon it on the Internet last night and watched every minute of it. For those of you unfamiliar with the movie, “Cocaine Cowboys”, it is a documentary that tells of the rise of Miami in the 1970s and 1980s. Much of the city’s growth during this time period was attributed to the heavy inflow of drug money, particularly through the distribution of cocaine.
The reason why I’m posting about this movie is because it has great footage of how the Miami and Miami Beach skylines have changed. I found it interesting to see how various neighborhoods looked and definitely learned a lot about Miami during those decades. In one shot, towards the end of the movie, found below, it shows an aerial view of Brickell Key with only one building on the entire island. That building was Brickell Key I which was built in 1982. The rest of the island was completely empty. With the future completion of Asia, the island of Brickell Key will be fully complete. There are rumors, however, that the Mandarin Oriental Hotel will build residences on the small plot of land just east of the hotel. If those rumors prove to be true, with the backing of the Mandarin Oriental Hotel’s name attached, that development will be one hot commodity.
The cranes at the foreground in the still below look to be from the development of the Wachovia Financial Center building which was completed in 1984. The building to the left is the Intercontinental Hotel. Until the rise of the Four Seasons Hotel and Residences in 2004, the Wachovia Financial Center building, standing at 55 stories, was the tallest building in Miami. For those of you not local to Miami, Brickell Key is the triangular-shaped island found in the background of the picture below.
Brickell Key then:
Brickell Key now:
If you’re a fan of the movie “Scarface” then you’ll definitely love “Cocaine Cowboys”. After viewing the Internet copy, I ordered the DVD on Amazon.com last night. It is the true-to-life representation of the events that inspired the making of “Scarface”. View it for yourself. The following is hosted on Google and was uploaded by someone unbeknownst to me.
Warning: The following movie is Rated-R due to pervasive drug content, language and violence. Watch it at your own risk!
