Miami is a magnet for investment money, but that wasn’t always the case. I can remember the days when our town was redlined by institutional development capital for one reason or another.
These days, however, Miami has turned into an international hot spot for institutional capital deployment, and apartments are a favorite vehicle.
I had two experts on the show recently to tell me more about this phenomenon in the Miami apartment market.
“They can’t get enough,” said Callum Parrott, Executive Managing Director of Mill Creek Residential. “All of our capital partners are very interested in finding the right opportunities in these locations. Everyone has a different interest level in different locations, but on net it’s still a great place to be.
“We have the benefit of actually operating these properties, so we have good intel on just how good these markets are, and they’re still great. So, until that changes, I think we’ll keep the red pens away and we won’t redline this market for quite some time.”
The same is true for high net-worth investors, said Jay Jacobson, President of Stiles Residential Group.
“The private capital guys that we’ve invested alongside of for the last 40 years are really bullish. All of those guys think that Miami, and South Florida in general, has really come into its own. It’s become an international gateway city. It’s not only attracting the tourist dollars. It’s attracting the corporate investment dollars. It’s still attracting flight capital.”
But Miami – all of South Florida, really – is crowded. So the question becomes where these capital-driven developments will be built.
Jacobson said the main issue is that you can’t go west, so we’ll start seeing more suburban and urban infill in places like Plantation, the Fort Lauderdale CBD, Sunrise and more.
Old retail, he said, will be razed to make way for new apartments here, and established markets like Raleigh, Nashville and Charlotte will merit a second look.
Parrott said Mill Creek will search out urban infill locations. Some zones in greater Miami and Fort Lauderdale have been transformed since the last economic cycle, he said. West Palm holds potential, but it remains to be seen how deep that market is.
“We will continue to engineer sites, create sites, create opportunity within the urban core market – east of 95 and close to walkable amenities,” he said.
The bottom line, these two experts said, is that South Florida has all of the ingredients for successful apartment development.
“It’s a strong business. It’s incredibly robust. It’s a segment of housing that has come of age,” said Jacobson.
“Some 35 to 40 percent of the population in Dade County and Broward County are renters. There’s an incredibly large cohort of Millennials and the leading edge of the Baby Boomers all moving into apartments. It’s a good time to be in business.”
Added Parrott: “The net takeaway on the marketplace is – given the right sponsor, the right location – we are in a very healthy situation in South Florida. I think we’re in the mid-innings here, and I think this market’s got legs.”
Infrastructure
The key to Miami’s apartment market, believe it or not, is infrastructure. That’s been the case ever since Henry Flagler brought the railroad to these parts to enhance trade to Cuba and other destinations.
With trade comes prosperity, and with prosperity comes the vibrant economy that makes living in Miami possible.
Industrial expert John Dohm, a partner at Infinity Commercial Real Estate, told me that the channels to our deep water seaports are being widened and deepened to accommodate the new class of cargo ships that will traverse a greatly expanded Panama Canal.
“It really is Miami’s time,” Dohm said, and as evidence he cited:
– An exploding population.
– Two international airports being completely rebuilt.
– The ability to trans-ship between sea and air.
– A serious rebuilding of the major roadways serving the area.
“I like to tell people we’re rebuilding the entrance to America through Miami,” Dohm said. “It used to be through New York, but now we have a cultural similarity to the entire hemisphere south of us. We are the closest point of entry for ships coming through the Panama Canal from China, and we’re the logical city in which to do business – almost like a Zurich or a Singapore – with other cities in South America.”
Click here to listen to the full interview with Callum Parrott of Mill Creek Residential and Jay Jacobson of Stiles Residential Group.
Click here to listen to the full interview with John Dohm of Infinity Commercial Real Estate.
