At both national and local level, the general economic and real estate recovery is in full effect. These are dynamic times of very quick movement. The historic Little Havana neighborhood, uniquely positioned centric to all the city’s major employment centers, and adjacent to some of its most promising development projects, poses an alluring proposition for investors.
Multi-Family
- Demographics are shifting, and people are migrating away from stale suburbs back into the vibrant urban cores of cities. In Little Havana, where vacancies are already sub 3%, this migration from suburbs, as well as incoming of rented priced out of Brickell, means rents are being pushed ever higher
- The market has reached full confidence in the recovery, and given the mediocre performance of competing investment options, real estate continues to prove a superior and relatively safe investment. Consequently, more money is being channeled there.
- There is a general understanding of Miami’s special position in the world, and that it is quickly transitioning into a first tier global metropolis. This places much positive emphasis on buyer’s forecasting, thus lowering the need of short-term returns in favor of strong future appreciation
- The intense competition for deals means that buyers are becoming less discerning, and properties once considered much less desirable, are also being seriously looked at. Cap rate spreads across different quality buildings are beginning to narrow.
Retail
- The major commercial corridor of 8th street has seen the most intense demand. This is easily explained, as it’s the major entry route into Brickell, as well as having many historic, cultural and economic amenities.
- Demographics are shifting, and people are migrating away from stale suburbs back into the vibrant urban cores of cities. In response, retailers are following their customers, and re-adapting their space needs to more constrained urban proportions, in order to serve these customers.
- Growing urban populations, with diverging tastes, permit for the economic support of new, creative, locally unique spaces. Interesting and authentic business are gaining an increasingly important role over national brands.
- Secondary corridors such as Flagler, 12 ave, 17av and others have not received proportionately the same level of interest, and may still be undervalued by the market.
Land
- As the recovery, or boom as some would already label it, progresses, land is becoming increasingly coveted.
- Land in Brickell has run out, with all vacant parcels traded and in some phase of planning. No land left in these markets, coupled with the stratospherically rising costs of land there, has motivated developers to start looking at secondary markets. Little Havana, which lies only a few blocks away from Brickell and is centric to most of the city’s employment centers, is a clear target for the next wave of development. Local zoning would not permit for the skyscrapers of further east, but will be ripe for medium density development.
- Development projects have focused on housing and retailing for upper middle to luxury markets. As the business cycle evolves, there are suggestions that development activity is trickling down to the middle economic strata. Rising construction costs risk derailing this, but currently the first pioneering projects are beginning to break ground.
- Large pieces of T-6 zoned land along the major corridors remains the most desired. But, given its scarcity, the intense demand and rising prices has already compelled many to start considering T-5 sites.
-Carlos Fausto Miranda
April 1, 2015