Why Residents Now Trump Absentee Buyers In South Florida Real Estate

May 20, 2016   |   Forbes

The international media has characterized South Florida’s real estate market as being dominated by luxury condos owned by absentee buyers. In fact, a deeper look reveals that the region’s housing landscape is becoming increasingly diverse as developers meet demand among actual residents, so-called ‘end-users.’

While the perception is that our market is one-dimensional due to the sheer number of high-rise condos that have been built over the past decade, today there are thriving single family home and apartment communities underway in neighborhoods like Doral, Weston, Pembroke Pines and even in and around downtown Miami.

Though we have seen an uptick in condo development in the past three years, the majority of units being built this cycle are selling to owners who will spend all or part of their time here. This marks a shift from the boom-turned-bust of 2008, which was driven by condo developers, their buyers and banks over-leveraging themselves in the name of speculation.

Case in point: In downtown Miami, the epicenter of overbuilding last cycle, 85 percent of the 3,438 condos delivering this year are pre-sold, according to the Miami Downtown Development Authority’s latest market report. The same study found 94% of downtown’s existing units are occupied by full-time residents.

South Florida’s real estate sector has learned from its past mistakes, and today’s housing market is proving resilient despite economic volatility overseas.

Several factors are fueling this stability.

Enhanced lifestyle offerings are appealing to end-users from across the U.S., Latin America, Europe, the Middle East and Asia who want to own a home here, preserve their wealth, start a business, or upgrade their family’s quality of life. Our architecture has been elevated. World-class cultural and retail destinations are boosting our standing as a year-round destination. New museums are rising, our public and private schools are improving, and neighborhoods from Wynwood to Coconut Grove are being reimagined as urban and walkable.

Second, our market is on sound financial footing by comparison with past cycles. Because the vast majority of today’s home sales are all-cash, developers are insulated from the risks associated with insurmountable debt. Even when lenders finance purchases, buyers are contributing 30-40% equity, a high threshold favoring residents over speculators. The days of easy-to-access loans are gone, resulting in one of the country’s most under-leveraged markets.

At the same time, we are making important investments in our infrastructure, from creating new parks and public transit options, to expanding Miami International Airport and adding high-speed rail service.

Developers are doing their part to lure end-user residents by building low-density projects, prioritizing neighborhoods that foster a sense of community, and offering amenities that make people feel at home.

At Grove at Grand Bay in Coconut Grove, set for completion this summer, buyers include local accountants, attorneys and doctors. More than half of the building’s owners are from the U.S., including many empty-nesters relocating from across South Florida.

Nearby, at Park Grove, we’ve sold units to New England transplants and seasonal snowbirds. One of our buyers is a middle-aged couple relocating from Connecticut after years of vacationing on a sailboat in Coconut Grove. Now they’re putting down roots in South Florida and will split their time between Miami and Maine.

At Glass in Miami Beach, each of the tower’s 10 units has been purchased by an end-user. Residents include a banking executive, a tech mogul, members of a powerful steel family, an Icelandic couple that divides their time between Miami Beach and New York, and a couple from London which rented in Miami Beach for years before buying.

Likewise, the majority of our single family homes at Modern and NeoVita in Doral and at Botaniko in Weston are selling to existing South Florida families in search of new construction, contemporary home designs, more private space, and a suburban community offering a strong quality of life.

 

After years of enduring criticism as a one-dimensional market overrun by absentee buyers, South Florida’s diverse housing options are increasingly appealing to end users. That’s good news for our real estate market, our economy, and our City’s newest crop of residential developments.

Why Private Investment In Public Spaces Is The New Normal

March 31, 2017   |   Forbes

By: David Martin

Read on: Forbes.com

The trend toward urban living may be here to stay, but as residential towers rise higher and the amenities in buildings become more elaborate, people moving into cities are putting increased emphasis on connecting with the environment outside their doors. As developers, we understand how to integrate a building within nearby shops and restaurants. Now, we're asking ourselves: what else can we do to help people live balanced lives? How do we balance living with our residents' desires to integrate to integrate within their community? To what extent can development serve as a common denominator in a diverse community?

The answer lies in creating parks and great public spaces.

The world’s most livable urban centers have long offered what residents crave – a seamless environment between home, neighborhood, and public space. But all cities are not created equal, and the truth is that some metro areas haven't kept up with growth.

Fortunately, private developers are catching on and making meaningful investments in improving public parks, cultural amenities and outdoor gathering places in close proximity to their properties.  This concentration on contextual living is real estate’s new best practice. 

Examples are everywhere -- from New York's High Line and the BeltLine in Atlanta, to Houston’s Discovery Green.

One of the best case studies for this public-private model is Millennium Park. The project was spearheaded by the City of Chicago but relied heavily on funding from major corporations with a vested interest in improving quality of life in downtown. Opened in 2004, the 24.5 acre park cost $490 million, with $270 million coming from the City and the rest from sourced from the corporations such as BP and Chase. By 2011, a study by Texas A&M and DePaul Universities showed nearly $2.45 billion in new condominium, office and hotel construction had come to life since the park’s debut.

Now Miami and Miami Beach, home to one of the country’s most active real estate markets, is enjoying the benefits of private investment in public spaces. Projects like the proposed 10-mile linear park The Underline, the planned overhaul of Miami Beach’s North Shore Open Space Park, and the recent completion of Regatta Park in Coconut Grove have all been made possible through funding from private sources.

 

There are smaller-scale examples as well. In Miami's Coconut Grove neighborhood, funds generated through development impact fees made possible the creation of Regatta Park along Biscayne Bay. This park opened as new high-rise towers were underway nearby, serving as a key selling point for people looking to move into the neighborhood.

Residents and users of developments adjacent to these public spaces aren't the only ones experiencing benefits. Proximity to public amenities creates increased property values, yielding additional tax revenue that can fund infrastructure improvements throughout a community.

We have seen this along the High Line, which transformed one of New York's most undervalued neighborhoods into one of the city's hottest districts. And we're seeing it in Miami, with new investment pouring into North Beach in anticipation of a fully re-imagined 35-acre oceanfront park to be designed by West 8 over the coming years.

Beyond creating immediate lifestyle benefits, investments in parks can also promote future sustainability, as evidenced by The Big U project in lower Manhattan. Designed by Bjarke Ingels' BIG studio and funded in part by the City of New York and the federal government, The Big U will create new waterfront green space while simultaneously increasing the height of the city's shoreline to protect against rising seas.