The Miami preconstruction condo market is heating up once again and preconstruction condominium properties are always a strong indication for market direction. The limited land availability and demand for income producing multifamily properties is pushing prices up. The gap for replacement cost is narrowing quickly as new high end developments are starting to come to fruition.
According to the NAR, inventory declined to 2.03 million in November down from 2.11 million in October. This is the lowest level of inventory since December 2001. Inventory is not seasonally adjusted, and usually inventory decreases from the seasonal high in mid-summer to the seasonal lows in December and January as sellers take their homes off the market for the holidays.
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A lackluster job market poses little resistance for apartment operators in Miami-Dade, where vacancy remains tight and rent growth is accelerating. Despite the economic results posted so far this year, the seeds of the apartment market’s strength were initially sown three years ago. Approximately 30,000 jobs have been added since the end of the recession, sparking rental demand and reducing vacancy near the level at the start of the downturn. Many residents who found jobs since the recession ended kept them and continue to renew leases and extend their tenures in rentals. In fact, many apartment properties across the county are full, with lists of prospective residents waiting for vacancies to arise. While hiring by local employers will fall short of expectations set forth early this year and moderate new demand, the prospect of significant job growth lurks as soon as 2013. A new cycle of condo building will expand construction employment as projects move from the drawing board to presales and on to groundbreaking.Investment activity in Miami-Dade is gaining momentum, as evidenced by a rise in transaction velocity and improvements in property prices. Despite middling growth in the local economy, expanding access to acquisition debt at low interest rates and rising rents are sustaining investor demand, while a lack of product for sale maintains pressure on prices. Cap rates vary widely by location in the county. Properties in high-density, supply-constrained Miami Beach, for example, often change hands at first-year returns of less than 5 percent, while assets in Coral Gables trade in the low-6 percent range. Properties in secondary areas farther from the urban core sell at cap rates closer to 7 percent. Miami-Dade also continues to cement its stature as a safe haven for Latin American and European capital, and many foreign buyers are stepping up multifamily acquisitions, frequently in all-cash deals. Some European buyers, specifically, are targeting assets in South Beach for eventual conversion to condominiums to fulfill growing international demand.
South Florida consistently ranks at the top of the housing market when it comes to rising home prices. But current trends show there’s a lull in rental construction.
The limited land availability and demand for income producing multifamily properties is pushing prices up. The gap for replacement cost is narrowing quickly as new, high-end developments are starting to come to fruition on both South Beach and in neighborhoods near downtown Miami, such as Edgewater and along Brickell Avenue.
North Beach is the last stretch of Miami Beach relatively underdeveloped and available for investment., North Beach rents fall well below those on South Beach. This Gap will close in the future with city sanctioned Master Planer and Massing studies focusing on redevelopment opportunities in this neighborhood.
KP’s goal is to make North Beach an example of resiliency. We understand the neighborhood, the risk involved in this asset class. Issues with an antiquated code, code compliance , planning & Zoning and management. Navigating the multi layers of Government, Preservation and Administration is what makes Miami Beach building process unique and complex. This is where we excel.
KP is doing its part to change the future of North Beach and surrounding communities. We are not only investing in North Beach properties; we are active in the community. Our principals are leaders committed to community with active leadership positions with the Miami Beach Chamber of Commerce, Government Alliance Committee and have been instrumental in the formation of the neighborhood’s property owners association. Local community outreach and charities.
KP is committed to the fight against rising insurance premiums due to rising sea level; we are dedicated to creating a resilient community that will stand the test of time.