Property Markets Group’s Kevin Maloney (Photos by Alive Coverage)
The pandemic’s effects on South Florida’s real estate industry are well documented. Prices for homes and land skyrocketed, as did apartment, retail, office and industrial rents. Dozens of cranes filled the skyline. Billionaires moved to or expanded their holdings in the region.
This “flight to Florida” will continue, experts said at The Real Deal’s South Florida Real Estate Forum last week. Despite the overall slowdown and cost and inventory challenges, Miami is still an outlier compared to other major U.S. metros.
The event, held at Mana Wynwood on Nov. 6 and 7, attracted more than 6,000 attendees, including brokers, developers, lenders and attorneys, with more than 50 speakers and 80 exhibitors. Celebrity broker Ryan Serhant and Corcoran Group CEO Pam Liebman hosted VIP breakfasts; keynote speakers on the main stage included billionaire WeWork founder Adam Neumann, South Florida developer David Martin, and Douglas Elliman’s new CEO Michael Liebowitz.
TRD’s Editor-in-Chief and CEO Stuart Elliott moderated the wide-ranging conversation with Martin, CEO of Terra, about his projects, effectively working with the government, and Martin’s perspective on life growing up with an awareness of death.
Liebowitz took the stage for his first major public appearance since filling Howard Lorber’s role, speaking to TRD founder and Publisher Amir Korangy about his plans to expand Elliman’s business lines. He didn’t address specific allegations surrounding the investigation into the “sexually charged work culture” that led to Lorber’s sudden resignation, but he did say he has a “good” relationship with Lorber.
Here are some of the takeaways from the two-day event, which began the morning after the presidential election:
Multifamily market
Neumann, who has shifted his attention to rental apartments, described his new venture, Flow, in a one-on-one with Korangy. Neumann said net operating income is rising at Flow properties more than at the competition. Still, at Miami Worldcenter, Flow converted one of its planned apartment buildings into a condo due to stronger demand.
Miami Worldcenter master developer Nitin Motwani is predicting that apartment rents will continue to boom in South Florida. But generally, multifamily developers spoke candidly about the slowdown since the pandemic boom. Rent growth has flatlined due to thousands of newly completed units. Building costs have increased faster than inflation, and elevated interest rates have made construction financing more expensive, developer Inigo Ardid said.
Developers’ perspectives
On various panels, developers touched on the boom in Brickell, Greater Downtown Miami and downtown Fort Lauderdale.
Issues facing developers today include finding subcontractors that can deliver high quality buildings in South Florida, as well as the rising cost of insurance and land, they said. While the majority of speakers expressed optimism about president-elect’s Donald Trump’s economic policies, PMG founder Kevin Maloney called Trump’s proposed tariffs a “ridiculous thing,” as they will be passed down to developers. “As a builder, we are certainly deeply concerned about moving into an administration that believes in tariffs,” Maloney said.
On the single-family front, developer Todd Michael Glaser said he’s spending more time renovating existing homes than building billionaire bunkers from the ground up. The prices, he said, “don’t make sense” for ground-up construction.
When it comes to apartment buildings, parking is expensive. The cost to build a parking spot in a garage can be up to $25,000 and reach $35,000 at a high-rise, more than the roughly $10,000 per spot in a surface parking lot, Asi Cymbal said on a panel covering the Live Local Act, Florida’s workforce housing legislation.
Residential
Though the luxury market is experiencing a slowdown in sales, deals are still setting records, and billionaires are still moving to South Florida. The residential agents to the 1 percent of buyers agreed that buyers all want new homes, close to great schools. Inventory is a big issue.
Branded condo projects have boomed, with many of these developments concentrated in Miami and Miami Beach. Related Group’s Nick Pérez said the “more luxurious, more expensive the product, the better it sells.” Alicia Cervera Lamadrid, managing partner of Cervera Real Estate, said “not all brands are created equal.” The need for developers and brokers to differentiate from the competition is greater than ever.
The Citadel effect, a result of billionaire hedge fund manager Ken Griffin moving his companies to Brickell, along with other financial services and law firms relocating or expanding, has created a steady stream of new condo buyers. Developer Camilo Miguel Jr. said his firm is selling units at Cipriani Residences in Brickell for more than $3,000 a square foot.
Residential brokerage leaders discussed the gamut of changes and challenges facing the industry. Jason Haber, who launched the American Real Estate Association with the Agency’s Mauricio Umansky this year, insisted the industry should pursue change beyond brokers’ commission structure. Mike Pappas, CEO of the Keyes Family of Companies, compared Aug. 18, the day that the National Association of Realtors changes went into effect, to Y2K.
Beth Butler, Compass’ senior regional director of operations and marketing, spoke out against NAR’s Clear Cooperation Policy, which requires agents to list homes on the Multiple Listing Service.
“I think it’s high time we let our sellers have a seat at the table,” Butler said. “Allow us to be more strategic.”
Butler, Pappas and Haber spoke about the need to grow the business. “If you don’t grow, you’ll die,” Pappas said.
Office market
Though the migration of companies has slowed, office brokers were optimistic that they’re just missing the inventory. About 3 million square feet of office space is in the development pipeline in the tri-county region, according to Juan Arias, South Florida director of market analytics for CoStar.
Tere Blanca, founder, chairman and CEO of Blanca Commercial Real Estate, said she is “convinced that the flight to Florida and the flight to quality will continue.”
Still Miami has not become “Silicon Beach,” said Jeremy Larkin of NAI Miami | Fort Lauderdale,
“The market is over-exuberant,” he said.
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