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As Condo Market Cools, CRE Heats Up In Miami’s Urban Core: Panel

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Miami’s urban core markets generated $1.2 billion in retail property sales last year, with more than half of the total occurring in Brickell, downtown and Wynwood, according to a recent commercial real estate report prepared for the Commercial Industrial Association of South Florida.

From left to right: Moderator and Downtown Development Authority Executive Director Alyce Robertson, Tony Cho, Raymond Fort, Andrew Frey and Jon Paul Perez

From left to right: Moderator and Downtown Development Authority Executive Director Alyce Robertson, Tony Cho, Raymond Fort, Andrew Frey and Jon Paul Perez

The findings were made public Friday during a panel discussion sponsored by the association that featured Tony Cho of Metro 1, Raymond Fort of Arquitectonica, Andrew Frey of Tecela, and Jon Paul Perez of the Related Group.

On the leasing side, the Biscayne Boulevard corridor, Brickell, downtown Miami, the Design District, Midtown, MiMo, Little River and Wynwood accounted for a combined 10 million square feet of leased space. Vacancy rates range from as low as less than 2 percent in Brickell to 12 percent in the Design District.

Miami’s urban centers will continue to experience rapid growth in the commercial retail sector in 2016 as the market for luxury condo sales slows down, the panelists told audience members huddled inside an unfinished office suite at Three Brickell City Centre.

“There is going to be a slowdown and a correction in ultra high luxury,” Metro 1 founder and CEO Cho said. “I think we will see a shift in type of projects [getting built]. I see more infill, mixed use projects catering to millennials.”

Frey, Tecela’s principal, echoed Cho. “With waterfront luxury high-rise condos, there is going to be an oversupply and there is going to be a decline in value,” Frey said. “I don’t think that is any real surprise to anyone. That is separate from the rest of the real estate industry, including multifamily, retail and office. I think [those sectors] seem to be doing pretty well.”

The panelists specifically singled out the ongoing transformation of Wynwood, which has morphed from an artist-driven warehouse community into a thriving, hip retail and office neighborhood over the last decade. With the new zoning overlay that was approved for Wynwood last year by the city commission, the neighborhood is poised for even more growth once developers in the area complete new residential buildings.

“I most recently fell in love with Wynwood,” said Perez, a Related vice president. “I didn’t understand it until about a year ago. You get this real sense of a new neighborhood that is truly transforming and changing.”

Frey said the new zoning overlay is good because Wynwood developers can now build projects with more density. “You will have actual residents, locals and repeat customers that live in the neighborhood,” he said. “With the new rezoning, you have opened a fantastic development opportunity there.”

According to the association’s market report, Wynwood experienced $165 million in retail property sales volume in 2015 and the vacancy rate is right at 6 percent. The average lease price for retail space is just above $80 per square foot.

 

Source: The Real Deal

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Miami CRE: Neighborhoods Emerging, Transforming

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When Avra Jain bought the Vagabond Hotel in Miami’s MiMo district two years ago, she couldn’t capture the interest of traditional real estate investors.

Comparable rates along Biscayne Boulevard were $60 a night — or $20 an hour, she quipped. Now, after redeveloping the property into a boutique hotel with financial backing from friends and family, off-season rates stand at $159 a night, and the coming season will command $229 to $259 per night.

Changes taking place in the commercial real estate market in neighborhoods like MiMo and Wynwood are spurring widespread revitalization in Miami and creating other newly emerging areas, panelists said Friday at the Miami Association of Realtors’ RCA Super Conference, held at the Biltmore Hotel in Coral Gables.

In MiMo, Jain realized that dilapidated motels were hurting the area, so she purchased seven motels along the Biscayne Boulevard strip and shut them down. “And that is when the neighborhood started to change,” she said during a panel, “Emerging Miami: Miami River, Lemon City & Little River.”

Much more change is on the horizon. In a year, the MiMo District “will be lit up with neon and restaurants and will surprise everybody,” she told more than 100 conference attendees. Retail rents are rising rapidly, and now stand at about $50 to $70 per square foot, and $45 for second floor office space, Jain said.

Meanwhile, as Miami’s once gritty Wynwood transforms and rents there rise as well, art galleries, local businesses and creative types are being priced out, and are moving to more affordable and newly emerging — yet historic — areas like Little River and Lemon City, the panelists said. That’s where Thomas Conway’s MADE, a new co-working space for creative entrepreneurs, has recently opened. Creating a sense of place is key, the panelists said.

“We’re basically being the stewards of revitalizing these neighborhoods,” said Tony Cho, founder and CEO of Metro 1.

With investors redeveloping property, Wynwood has quickly become a thriving neighborhood, with a curated collection of new shops, restaurants, bars and breweries that attract a pedestrian crowd at all hours of the night. “It’s remarkable,” Cho said of the transformation. “It has exceeded my original expectations.”

Along with that, commercial rents are now as high as $80 per square foot on Northwest Second Avenue in Wynwood — compared to $10 per square foot 10 years ago, Cho said. In fact, Starbucks and other national retailers are starting to look into the area. That poses a challenge to retaining the neighborhood feel, the panelists said.

“People are fearful that Wynwood will turn into Lincoln Road,” Cho said.

The speed of transformation is accelerating, and with so much commercial activity in Miami, Jain said she does not worry about a downturn similar to what South Florida experienced in the last cycle.

“I don’t think Miami necessarily has to be roller coaster any more,” Jain said, citing commercial markets in Miami that are still underserved and the continuing demand for boutique hotels. “I’m starting to see it differently.”

 

Source: The Real Deal

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Art Basel Adds To The Skyline — And The Bottom Line

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Since its launch in Miami in 2002, Art Basel has been attracting people from all over the world who appreciate innovation and creativity.

Today, satellite events have spread to Wynwood, Midtown, downtown, Mid-Beach and North Beach, and last year about 75,000 people attended the main fair. The first Basel fair featured 160 galleries from 23 countries, attracted 30,000 visitors and has grown and grown and grown — much like our skyline and real-estate industry. The growth and popularity of the event have bolstered the tourism industry and made us one of the fastest emerging cultural epicenters of the world.

For one week in December, all eyes started looking to Miami, including those of some of the world’s greatest architects and developers. Today, they are creating a skyline that is second to none, while Basel brings buyers appreciative of artistic creations. The burgeoning love affair between Miami and art can be evidenced by two recently announced museums: the Institute of Contemporary Art, Miami, the brainchild of Norman and Irma Braman, and the Latin American Art Museum by Gary Nader. Miami was largely a blank canvas in 2002, and so many have seized the opportunity to fill the space with remarkable buildings that are works of art themselves.

In downtown Miami, Zaha Hadid paired with developers Louis Birdman and Gregg Covin for the grandiose 1000 Museum. What was once the famous Bal Harbour Club will become the spectacular, all-new Oceana Bal Harbour, thanks to Italian architect and interior designer Piero Lissoni and developer Consultatio USA. And then there is Herzog & de Meuron, Richard Meier, Norman Foster and Rem Koolhaas, among the many other great names, with others soon to be announced.

Art Basel is certainly a time for businesses to shine. It provides an instant injection of funds into the economy, and the effects of the fair linger long after it leaves town. This is certainly the case for the real-estate industry, which has benefitted greatly from the influx of discerning art lovers. Amid the week of amazing art and all the accompanying events, the glitterati look up and see Miami as a wonderful place to purchase property. And they have many to choose from, for a relatively affordable budget. All are designed by local and international architectural greats who provide a perfect place to display a new piece or two.

Daniel De La Vega, President of One Sotheby's International Realty

Daniel De La Vega, President of One Sotheby’s International Realty

The past week has seen traffic gridlock, long lines and a shortage of restaurant reservations. But as an enthusiastic collector of Latin American art and a member of the Photography Committee at the Solomon R. Guggenheim Museum, Daniel De La Vega, President of One Sotheby’s International Realty, will be sad to see the sun set on the event so soon. Art Basel will continue to play an important role in the growth of South Florida’s real-estate industry and the development of greater Miami as a whole. As a native Miamian, Mr. De La Vega is grateful for how this fair has moved the city forward in so many ways. As the tents come down and the works are carefully packed away, Miamians can still admire innovative and creative pieces all year-round.

All you have to do is look up to the skyline and thank the increased business to the bottom lines.

 

Source: Miami Herald

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