South Florida real estate market has international appeal, developers and investors say
BY EVAN S. BENN
South Florida’s commercial and residential real estate markets remain hot for international investors as well as for homeowners moving from suburbs to downtown cores, panels of industry leaders said Thursday at the Perez Art Museum Miami.
About 200 people attended the third annual University of Miami Real Estate Impact Conference, which included a keynote session from Starwood Capital Group CEO Barry Sternlicht and was moderated by UM President Donna E. Shalala.
When Shalala asked him about the Miami market, Sternlicht cited hotel-room rates and occupancies that lead the country as well as big-draw events like this week’s Miami International Boat Show and next week’s South Beach Wine and Food Festival as reasons he’s “extremely bullish” on the city’s long-term prospects.
He also said Florida’s lack of income tax is attractive to companies and high-net-worth individuals.
“Everyone wants to come here,” he said. “Also, you have really low taxes. We’ve noticed. My generation, which is the tail end of baby boomers, we’re coming. We’re changing our addresses and we’re coming to low-tax states.”
Outside investments are good, but Related Group CEO Jorge Perez said one thing Miami needs is more local buyers. Calling it “the hottest city in the world,” Miami has no problem attracting international money, he said.
“South Florida has become, as opposed to just being fun in the sun, a serious city, a great city,” Perez said. “In terms of problems in South Florida, we still don’t have the local buyers for our private properties we’re building.”
Rising construction costs also have had an impact on residential markets, Perez said, adding that contractor prices, not raw-material costs, have seen the most dramatic increases since the recession.
South Florida’s rental market also remains strong, Camden Property Trust President Keith Oden said, sharing the stage with Perez, Lennar Corp. CEO Stuart Miller, Witkoff Group CEO Steven Witkoff, and Vector Group CEO Howard Lorber.
Oden’s trust owns 70,000 apartment units in 15 U.S. markets, and he said South Florida is its fifth-best-performing market (behind Atlanta and three markets in white-hot Texas). Camden is adding new units to Boca Raton and Plantation this year, and Oden projected about a 5 percent growth rate in the trust’s South Florida portfolio this year.
“We love this market,” Oden said. “We think there is a lot of underlying strength here, and 2014 looks to be another strong year.”
Oden and Miller noted a trend in homeowners moving from suburban neighborhoods to downtown cores. Miller called it a “change in appetite” of people wanting to live in urban areas.
“Today’s younger generations have been more inclined to postpone marriage and having children,” Miller said. “Instead, there is a desire to live inside the city, have less dependence on an automobile, be more able to walk and shop and attend the central events that they want.”
A mix of high-rent, downtown high-rises and affordable single-family suburban homes will continue to drive the market in the foreseeable future, Sternlicht said in his closing thoughts.
“Look what’s happening here. It’s vibrant, and I don’t see any reason it shouldn’t accelerate now. Not flatten or plateau, but actually accelerate,” he said. “Miami is still a little bit of a secret … but word is getting out.”
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