How Long Will Big Money Love Miami?
Capital, particularly foreign investment, continues to rain buckets in Miami (do they make a poncho for that?) and put a squeeze on cap rates. The big question: Will it last? That's why we're excited to hold our annual Miami State of the Market event on Sept. 24 at the Intercontinental Miami, where expert panelists will give their forecasts.
Hunt Mortgage Group SVP Marc Suarez, who's speaking, tells us that the investment environment will hold strong as long as there’s foreign “flight capital”—money looking for a more hospitable home in the US. These days, flight capital is chasing yield, as opposed to capital preservation, and so South Florida multifamily will continue to see cap rate compression. In particular, these investors are aggressively snapping up existing garden-style, suburban multifamily, he says. That’s good for existing owners, who are also taking advantage of low interest rates and aggressive lending parameters that allow cash out or return of equity.
As far as development goes, Marc says it’ll be tough to see more rental multifamily development beyond the current permit-phase pipeline. There will be some affordable housing and tax credit deals, mostly urban infill, but that’s about it. The reason is simple enough: condo developers are offering land sellers sweeter deals than apartment developers generally can. “For the most part, South Florida has been and will be a condo market in the core markets,” he says. Pictured: one of the area's recent condo projects, Residences by Armani/Casa.
Whether condo or apartment, the buildings are going to be built. Plaza Construction Group FL president Brad Meltzer, who's also speaking, tells us that construction volume will continue to grow in South Florida in the next 12 to 24 months. (He's pictured above, left, donating $100k to the Intrepid Fallen Heroes Fund in April.) Projects in both design and pre-construction phases appear to be moving forward as scheduled, and there's certainly no concern for overbuilding as long as the wave of investors—including both international flight capital and domestic buyers, particularly from the Northeast—keep coming. Plaza's been working on a number of local projects, including 1 Hotel & Homes South Beach and NINE at Mary Brickell Village. To hear even more, join us for our event. Great networking too! Register here.
