At South Florida real estate events, it’s quite common to encounter brokers who will gnaw at your ears about #longmiami. In addition to being a hashtag on Florida has entered the world stage.
They will signal the arrival of the founder of the Citadel Ken Griffin and his plans to build a 1 billion dollars1,000-plus-foot headquarters on waterfront land in Miami’s Brickell financial district, which it purchased for $363 million in 2022. They’ll notice that down the street, Swire Properties has partnered with Steve Ross, the billionaire chairman of the New York-based company. Related Companies and the new office king of downtown West Palm Beach, to build another sky-high office tower, called A Downtown Brickell.
And they will boast that New York developers such as Witkoff, Kushner Companies and Naftali Group are behind an unprecedented construction boom of condominiums, apartment buildings and mixed-use projects on along the south coast of Florida. Don’t start by talking about Amazon founder Jeff Bezos, the world’s third-richest man, returning home to Miami, where he grew up.
Meanwhile, South Florida-based developers are looking to keep pace with their out-of-town counterparts. For example, International key — a Miami-based developer led by brothers Inigo and Diego Ardid — is competing with Griffin, Swire and Ross at Brickell. Key partners with Chicago-based Sterling Bay to develop 848 Brickella planned 51-story office tower.
Edgardo Defortuna, who runs based in Miami Fortune International Groupremains at the forefront of luxury condominium development with a range of oceanfront condominiums in Brickell, Sunny Isles Beach and Pompano Beach.
Its next slate of projects includes a Casa Tua-branded tower in Brickell, the St. Regis Residences in Sunny Isles Beach and the Ritz-Carlton Residences in Pompano Beach. On the brokerage front, his company partnered with Christie’s International last year and is working to expand into the luxury resale sector.
Broker Fredrik Eklund, subject of this month’s closing interview, moved to South Florida last year to help sell the boom with Jay Parker, CEO of Douglas Elliman Florida. They have acquired exclusive sales and marketing for the ramp-up of new developments.
But holes appear in the #longmiami story.
Last year, an analysis of data by CompStak showed that office leasing activity had slowed significantly and the average price per square foot of office space had fallen by $30. Another CompStak report deflated claims that Miami was a magnet for tech companies looking to relocate from California. Instead, technology leasing has been declining since 2021, according to CompStak data.
The residential market is also showing signs of correction. Prices for single-family homes and condos continue to rise, marking record sales prices in neighborhoods across the tri-county area. Yet by the third quarter of last year, apartment rent growth in South Florida had slowed and multifamily landlords were facing a higher number of vacancies due to increased competition, a Lee & Associates Report watch. In the first nine months of 2023, developers completed 13,388 apartments in South Florida, compared to more than 13,210 units completed in all of 2022.
Since December, development sites in South Florida come to market for sale are on the rise, as some builders are unable to find financial partners or obtain construction financing on favorable terms, or face a diminished return on investment due to rising construction costs.
South Florida also faces a dual existential threat. While Palm Beach has more “trophy” more residential (defined as homes priced above $50 million) than any other city in the United States, the region is in dire need of more affordable housing. It also faces the impacts of climate change, such as severe flooding in dense urban neighborhoods and skyrocketing home insurance premiums due to the threat of new hurricanes.
In December, the University of Florida released a study showing that most families in Miami-Dade County with incomes below $75,000 struggle to meet housing costs and spend more than 30 percent of their housing income. In Broward County, 62 percent of renters face high costs, paying more than 30 percent of their income in rent, according to a separate assessment from Florida International University.
Flooding and property insurance could further drive South Florida residents away, according to a December study in the journal Nature Communications, perhaps erasing the #long part of the hashtag. The report predicts that dozens of flood-prone neighborhoods in Miami-Dade and Broward will experience a mass exodus starting this decade. Miami-Dade and Broward could see their residents flee as soon as 2028 and 2032 respectively, according to the study.
