Miami's First Large-Scale Opportunity Zone Project Begins Leasing
Miami-based multifamily developer The Estate Cos. and PTM Partners, a real estate investment and development firm with a focus on qualified opportunity zones, announced Monday that they have launched leasing at Soleste Grand Central in Overtown, which they described as Downtown Miami’s first large-scale opportunity zone project.
Scott Meyer, chief investment officer at PTM, said 100% of the project's equity came from OZ funding. He said that in 2018, "This site was just a vacant piece of land that the Community Redevelopment Agency had been trying to get developed for a while. The opportunity zone gave an extra incentive for developers like us to come in and build there."
The 360-unit, 18-story project is located at 218 Northwest Eighth Street in Miami’s Overtown neighborhood, a primarily Black area that was once thriving and considered the "Harlem of the South" but slid into disrepair and crime problems with misguided urban renewal efforts and highway-building programs in the 1960s.
In the past decade, developers have bought up property there, and community redevelopment agencies began investing millions, activating the economy but also sparking fears of gentrification and displacement. Critics have worried that the opportunity zone program would only exacerbate income disparities.
Soleste's units run from 400 SF studios to 1,085 SF three-bedroom units. Rent for a market-rate studio will start at $1,500. Meyer said that 80 of the units are designated as affordable, including some two-bedroom apartments that will rent for about $1,200 a month.
A 2018 Assessment of Need Study by the city of Miami Southeast Overtown/Park West Community Redevelopment Agency found that half of Overtown's approximately 8,000 residents lived below the poverty level, and the median household income was $17,363.
PTM Partners CEO Michael Tillman said during a Bisnow webinar in September that the Soleste project had been conceived as a market-rate project for the middle class, which has been priced out of many areas in Miami.
Meyer said the pricing shows "we're not looking to displace anybody but enhance that community that's already growing."
Over the past couple of years, hotels and restaurants have opened in Overtown, including some Black-owned establishments supported by celebrities like Oprah Winfrey and a trendy outpost of Red Rooster, celebrity chef Marcus Samuelsson's restaurant that was founded in Harlem. A private developer is planning a mixed-use project with a Target and an Aldi.
Overtown's geography makes it a prime target for redevelopment. It is adjacent to Downtown Miami, where luxury towers have been rising and the multibillion-dollar mixed-use Miami Worldcenter is under construction. Soleste is steps away from the MiamiCentral Brightline Station, which includes shopping and a food hall. An $818M bridge project that is underway will raise the roads and open up parts of Overtown that had been cut off from downtown.
Even though the frenzy over opportunity zones has died down since the program was first announced in 2017, and investors would have had to put in funds by the end of 2019 to receive maximum benefits, Meyer said the appetite for OZ funds is still healthy, since people who invest this year can still benefit from a 10% step-up in basis and a deferral of taxes on capital gains. His firm is actively raising money in a second vehicle through the end of the year and has another OZ project in the works in Miami.
If an OZ investment is held for at least 10 years, investors pay no taxes on associated capital gains. Meyer said his fund will hold the investment in Soleste Grand Central for at least 10 years and possibly longer, depending on the market at that time.
