Miami: Developers Race to the Finish

August 24, 2015   |   Real Estate Forum

In 2010, Miami condo developers were filing bankruptcy and over one million square feet of newly-delivered office space was mostly empty. Fast-forward to 2015 and the volume of developments underway makes the last construction boom look mild.

Here’s a quick review of what’s in the pipeline: There are 4,8—multifamily units slated to come on line in 2015 after about 3,100 hit the market last year, according to Marcus & Millichap. The firm reports developers will complete 1.4 million square feet of retail space this year, the highest total since 2008 as construction activity accelerates. In 2014, builders finished 700,000 square feet.

Developers will bring a meager 400,000 square feet of office space on line in 2015, after the market saw nearly two million square feet delivered between 2008 and 2011. Nearly two million square feet of industrial hit the market in 2014 and several major hotels are opening this year, with even more coming down the pike. Miami has the fourth-highest number of hotel rooms under construction, according to the STR hotel occupancy report.

Vanessa Grout, president of Miami-based CMC Real Estate, which focuses on luxury residential, commercial and retail properties, says the Miami market is normalizing and developers and investors are far less leveraged now than during the last cycle.

“There’s been speculation about Latin American activity winding down, but those markets have historically acted like musical chairs—when one country slows down, another picks up and that’s what’s happening now as Brazil softens,” Grout says. “Interest among domestic buyers—and even Chinese buyers—is growing and sales at our Brickell Flatiron development have been consistently strong. Miami is an increasingly global market, and our residential product appeals to both international and US buyers.”

Nitin Motwani, managing principal pf Miami Worldcenter, has an especially unique perspective on the retail front. The $2-billion project will bring to market a million square feet of retail space, 600,000 square feet of convention space, and a 1,800-room Marriot Marquis hotel. As he sees it, Downtown Miami has been one of the fastest growing urban centers in the US over the past decade, and now we’re seeing the rise of new mixed-use projects that will attract residents, retailers and visitors to the area.

“Construction of Miami Worldcenter is beginning this quarter, and everything we’re seeing and hearing from residential buyers, international retailers and members of our community points to pent-up demand for what we’re delivering,” Motwani says. “This is the natural next step in Miami’s evolution as an urban city.”

David Martin, president of Miami-based developer Terra Group, says the world looks at Miami and sees high-rises, but Terra is seeing rising demand for residential and commercial product in low-density neighborhoods like Coconut Grove, North Beach, Doral, Weston and Pembroke Pines. “Sales volume is steady at our urban residential developments—Park Grove and 87 Park—and we’re sold-out at Grove at Grand Bay and Glass in Miami Beach,” Martin says. “We are experiencing similar activity in suburban communities like Botaniko in Weston, and Modern and Neovita in Doral.”