Cityscape investigates how Florida’s popular seaside destination has rapidly developed into a flourishing real estate market, drawing significant international traffic.
Miami has an “intoxicating real estate market” – this is in the words of W. Allen Morris speaking in March at the annual real estate summit organised by the Greater Miami Chamber of Commerce. Morris is currently building his 80th project in Miami, the luxury condominium SLS Lux that he says is 78 percent pre-sold with buyers putting down 30 percent of the purchase price in non-refundable cash payments.
Although he has seen four major cycles in his career as a developer in Miami, today Morris finds a good foundation “for sustained positive growth” thanks to the cash deposits and the international clientele.
In the annual Knight Frank Wealth Report only two American cities are in the Top 10 as targets for the very wealthy: New York in second place, Miami in sixth place. Jay Parker, CEO Florida Brokerage at Douglas Elliman Real Estate, calls Miami “one of the finest residential markets in the world” due to the “increasing quality” and “much more highly curated product” available.
Florida leads all 50 states in residential sales to foreign buyers with 23 percent of apartments and houses; California is second with 14 percent and Texas third with 12 percent. Within Florida Miami attracts the most foreign homebuyers with 68 percent of them coming from South America. Venezuela, Argentina, Brazil, and Colombia precede Canada, France, and Mexico. For the first time in 2014, China appears on the list.
According to a recent report from the National Association of Realtors, 2014 was the fourth straight year of record-breaking real estate sales in South Florida. “The difference between Miami today and Miami of a year or two ago is the ultra-high net worth individual,” said Teresa King Kinney, CEO of the Miami Association of Realtors, who presented the report.
That individual is also a target for the hospitality industry. While Miami has seen business and resort hotels develop over the years, it is now also being used as a testing ground for luxury hotel concepts. Two major real estate brands came together three years ago in a joint venture to launch the 1 Hotel South Beach, described as an industry game-changer. In March Starwood Capital Group’s Barry Sternlicht and developer Richard LeFrak opened the first property for the new 1 Hotels brand.
After three years of construction at the site of the old Gansevoort Hotel at a cost of USD 150 million, the 426- room 1 Hotel “plans to truly upend the world of hospitality through a socially and environmentally conscious platform in celebration of the beauty and preservation of nature.” Speaking at the opening, Sternlicht said that more 1 Hotels were already on the drawing board for New York, Brooklyn, and China.
In the meantime, he said, the 1 Hotel is unique: “There’s nothing like it in Miami Beach.”
The development of commercial real estate is another factor behind the attraction of Miami. During her resentation, Kinney said that commercial projects follow residential projects by two to three years. Morris who has developed any commercial and mixed-use projects in Miami says the city holds 1 million square feet of office space and 11.6 percent vacancies.
In this environment developers are looking beyond Downtown and Brickell at the Wynwood area, formerly an industrial zone, now burgeoning with galleries, restaurants, and boutiques. According to The Real Deal, two investor groups from New York recently paid USD 3.5 million for a 14,5000 square-foot property with a 6,500 square foot building currently housing an art gallery. That property had sold for USD 120,000 in January 2000.
Dan Arev from Yellow Side Ventures said: “We’re going to reposition the building, and we’re in talks with a tenant that wants to brand the entire building as their flagship location for Miami.” Yellow Side Ventures is also involved with East End Capital of New York in an earlier Wynwood purchase for USD 11 million.
Art & culture
North of Wynwood is the Design District, growing with boutiques of luxury brands in clothes, accessories, and furniture along with trendy restaurants and galleries. The not-for-profit art gallery Locust Projects moved in recently “to provide contemporary visual artists the freedom to experiment with new ideas and methods without the limitations of conventional exhibition spaces.”
For three months Locust is featuring the installation Sky Breaker by New York artist Ruby Sky Stiler:
“The artist explores the tropical modernist architecture that is native to Miami” and creates “suspended laser-cut screens,” “a perforated surface that is both decorative and utilitarian,” and lets in light and air in a controlled fashion. This is Stiler’s first installation in Miami; she has exhibited around New York, Portland, Oregon, and Geneva, Switzerland.
Art has become identified with serious money as well as creativity in Miami since the beginning of Art Basel Miami in 2002. Following the parent exhibition that started in Basel, Switzerland, in 1970, the Miami version has expanded and created a local year-round market for art. It is another attraction for the ultrawealthy as well as many of the people who live in the area.
Looking back at Miami in the 1990s, former Mayor Manny Diaz notes the high unemployment, crime, no development projects, a city “without hope or opportunity.” That began to change with the new millennium, he says, and “we became a Top 10 jobs generator and the cleanest large city in America.” That’s not all due to the arts but “the arts generate thousands of jobs and billions of dollars,” Diaz explains, “and have a huge effect on children.” Miami has become “a laboratory of ideas and innovation,” “an incubator of new knowledge businesses,” and, says Diaz, “our brand has never been stronger.”
A few years ago, during the worst of the financial crisis, things looked quite different. Allen Morris points to 78 months of condominium inventory at that time compared to “a stable nine months of inventory in just a few years.” How did Miami come back so quickly and decisively?
For Morris it is, “our geographic location and accessibility from Latin America, Europe and now the far east and middle-east; our sub-tropical climate within what is now a true urban centre, which is unusual because so many urban centres are concrete jungles, and so many subtropical environments do not have our offerings; and the onfluence of art, culture, sports and lifestyle, which is now so much a part of our community, and crucial in attracting the international traveller.”
Accessibility for the foreign visitor begins at Miami International Airport. With four runways, MIA boasts 141 direct flights to foreign destinations. While many are in the Caribbean and South America, Amsterdam, Berlin, London, Frankfurt, Munich, Paris, and Zurich are among European cities one flight away from Miami. Last year when Qatar Airways inaugurated its nonstop flight from Doha, Miami became closer to the Middle East and South Asia. Direct flights to Australia, China, Singapore, South Korea, and Taiwan are still on the wish list for Miami’s business and hospitality leaders, but negotiations at city and state-levels are under way with some of these countries.
W. Allen Morris loves to travel for business and pleasure. “This week I have been in Milan, Alba and Lake Como, and Venice, Italy, and Lugano, Switzerland. They are absolutely beautiful parts of the world, but we have buyers of our new SLS LUX Brickell condominiums who have come to us from Italy and Switzerland,” he says, smiling.
“Everybody is discovering my favourite city and my hometown, Miami!”