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New Mixed-Use Project Coming To Allapattah

Coral Gables-based Coral Rock Development Group unveiled plans for Dulce Vida, a transformative mixed-use, mixed-income development in Miami’s Allapattah neighborhood. The project will add to the area’s revitalization and enhance the community’s access to affordable housing options.

Situated on a 1.3-acre site at 1785 NW 35th Street, Dulce Vida is a prime example of Florida’s new SB 102 law aimed at promoting mixed-income developments and increasing access to affordable housing. The project will consist of 200 rental units, thoughtfully designed to cater to a diverse range of residents. Of these, 85 units will be designated as affordable housing at 60% of Area Median Income (AMI), another 85 units will be allocated for workforce housing at 100% AMI, and 30 units for workforce housing at 120% AMI, ensuring a variety of housing options for different income levels.

At the heart of the Dulce Vida project is a new state-of-the-art Miami-Dade Public Library System Allapattah Branch Library, located on the ground floor. This facility will replace the existing Allapattah Branch Library currently at the site and will provide access to a modernized library with the latest library resources, technology, and specialized areas for library users of all ages.

Coral Rock Development Group is proudly partnering with Miami Bethany Community Services, a local nonprofit church deeply rooted in the Allapattah neighborhood, which will play a pivotal role in providing community outreach and involvement initiatives. They will collaborate with residents, local organizations, and businesses to ensure that Dulce Vida positively impacts the community.

“We are thrilled to introduce Dulce Vida, a transformative development that combines the crucial elements of affordable housing, community amenities, and improved access to educational resources,” said Michael Wohl, principal of Coral Rock Development Group. “This project is a testament to our commitment to creating inclusive and sustainable communities that cater to the diverse needs of Miami residents. We look forward to collaborating with the Allapattah neighborhood and Miami-Dade County to make this vision a reality.”

Designed by Behar Font & Partners, Dulce Vida will offer an extensive array of amenities including a state-of-the-art fitness center, a community lounge with a kitchenette and club room for social gatherings, a private conference room, a BBQ area for outdoor cooking and entertainment, an outdoor lounge and games area, a children’s playground, a dedicated dog park, and a parcel package room with lockers for added convenience. The project will also feature electric car charging stations, encouraging sustainable transportation options, as well as bicycle storage and repair facilities to promote eco-friendly commuting alternatives.

“Coral Rock Development Group is not investing in buildings, they are investing in people,” said Commissioner Alex Díaz de la Portilla, City of Miami Commissioner for District 1. “Dulce Vida is a significant contribution to the City of Miami’s attainable housing efforts and will provide much needed housing for low-income residents, as well as law enforcement officers, firefighters, teachers, nurses, and city employees.”

Coral Rock Development Group has particular expertise in developing multifamily workforce housing projects along with mixed-use and affordable developments. Recent projects include Pura Vida Hialeah, Kayla at Library Place, and Card Sound Key Apartments, among numerous others.

Pricing for the rental apartments will begin at $1,084 for studios, $1,161 for one-bedroom units, and $1,393 for two-bedroom units with all prices inclusive of utilities.

Groundbreaking on the project will begin in the third quarter of 2024, with a scheduled completion date at the end of 2025.

During the construction phase, the existing Miami-Dade Public Library System Allapattah Branch Library will be temporarily relocated and continue to operate in a nearby location, ensuring uninterrupted access to its services and resources for the community.

 

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Multifamily Series: How Affordable Housing Is Changing

The shortage of affordable multifamily housing continues nationwide. The good news is that developers and architects are bringing solutions to the multifamily market.

It’s no secret that affordable housing is in short supply. Both the single-family and multifamily market struggle to meet the need. According to the National Low Income Housing Coalition, not a single one of the 50 states has an adequate supply of rental housing that’s affordable and available to extremely low-income households—those who earn 20% to 60% of their area medium income. The Coalition pegs the shortage at 7 million homes.

When buildings become available for lease or sale, they fill quickly, and long waitlists result.

Still, multifamily developers and champions face myriad issues: construction, labor, and land costs; lengthy planning and building review processes; restrictive zoning codes that favor single-family residences; and less available funding through tax credits, subsidies and grants, says architect Steven Lee, senior associate with Page & Turnbull(link is external), an architecture, design, planning and preservation firm. Neighborhood resistance to development also remains a deterrent as well.

Yet, for multiple reasons, many real estate experts express cautious optimism.

Developer Jeff Klotz, whose firm, The Klotz Group of Companies, operates in the South and Southeast, is one of them.

“We’re getting people into new housing that’s more energy-efficient and constructed with more durable materials to meet tougher building codes,” he says.

When it comes to design, more widespread efficiencies in layouts pare wasted space and permit more units, while better choices about which common spaces are needed benefit residents—and often the community.

Architect Matt Duggan, with TA , an architecture, master planning, and interior design firm, sees more reason to err on the positive.

“The affordable market is embracing more cutting-edge, sustainable, aggressive goals than the market-rate is, in part because local authorities that offer low-income tax credits and other funding mandate or incentivize doing so, often through competitive requests for proposals,” he says.

Additionally, partnerships between developers, government agencies and nonprofits are on the rise, and more municipalities require new market-rate buildings to include a percentage of affordable units.

In short, dire need in the marketplace means increased calls for creativity and collaboration, and developers are using their industry knowledge, influence, innovations in the spaces and partnerships to make them happen.

Garnering Community Support

Progress on a multifamily project takes community buy-in. Experts agree that involving the larger community—through meetings or calls, for example—makes a difference. When community members have a change to offer feedback and then feel heard, they’re more likely to have an open mind about the project.

Good design that actively reflects the concerns and needs of the community leads to exceptional projects a community can be proud of, Duggan says. Architect Eugene Flotteron, principal and director of architecture at CetraRuddy, an architecture, planning and interior design firm, says another plus is to incorporate common spaces within the building.

Faster, Simpler Approval Processes

Project approval has long been arduous and time-consuming. Experts recommend simplifying the process to gain inventory. Florida’s State Housing Incentive Program requires local governments to establish an expedited permitting process for affordable housing. In St. Petersburg, certified projects qualify for a program that ensures a 10-day response time for initial plan review.

Carol Stricklin, director of Pinellas County Housing & Community Development, encourages developers to ensure they understand local policy priorities for affordable housing and have entitlements in place for a project before applying for funding.

Results are promising when this work is done up-front. In Pinellas County, six affordable developments opened last year, providing 227 new homes. An additional six projects, which will add 970 units, have been approved or are currently under construction. Once buildings are completed, inventory is listed online at Florida Housing Search.

Buildings That Meet Code and Look Good

More buildings are wrapped in layers of insulation and have highly efficient systems to meet stricter codes that save energy costs and improve lives, says architect Carmi Bee, president of RKTB Architects, which designed the 100% affordable development 683 Thwaites Place in New York’s Bronx borough. The project includes insulation for energy efficiency and sound mitigation due to proximity to a subway line. Windows were minimized on the side facing the train and made prominent on the building’s other sides. Their arrangement can enhance a building’s aesthetics. That was the case at builder Structured Development‘s mixed-income Schiller Place Apartments. “Each of the 48 units has an attractive bank of windows,” says Principal Michael Drew.

Maximizing energy efficiency has been a driver for many buildings. Duggan’s firm was hired to design a 59-unit, income-restricted net-zero building in Tiverton, R.I., with the state and a utility partnering to see if the building might generate as much energy on site as it uses. The building, called Bourne Mill Phase 3, is all electric, with solar roof panels and thicker wall insulation.

Affordability shouldn’t come at the sacrifice of style, though. “Challenges such as affordability can make architecture better, something Frank Lloyd Wright expressed,” says architect Victor Body-Lawson of Body Lawson Associates.

Located in a historic mill complex, Bourne Mill Phase 3 has exterior cement fiber panels with lap siding that mimic the mill’s granite palette. TAT’s design for Station 25, an affordable 51-unit building under construction on a downtown Albany site, relates to an adjacent historic brick building in its choice of some materials and detailing. Both buildings incorporate brick stacked vertically rather than horizontally.

The new building also pays homage to horizontal stone bands in the historic building with a playful projecting ribbon that wraps its way around the new building and transforms from a canopy at the main entry to a cornice at the roofline, says Duggan. A courtyard lies between the two structures to create an outdoor “room” that connects the two, Duggan adds.

The Benefits of Combining Affordable and Market Rate

In Chicago, a 2022 change in the tax law provided a tax freeze on a building’s assessed valuation if a percentage of affordable units was included, says Drew. In Fremont, Calif., architecture firm KTGY designed two affordable-housing buildings within a larger master plan led by market-rate clients. The number of affordable units satisfied the city’s requirement for projects to be approved, says architect Jessica Musick, principal. “The buildings anchor the corner of the Metro Crossing master plan community and are designed so they look and feel market-rate,” she says.

The Marcus Garvey Village building in New York’s West Harlem neighborhood represents a similar approach. “It’s the second phase of a development from Carthage Advisors where a 161-unit, market-rate building was completed first,” says Body-Lawson. “The goal was not to have a ‘rich door, poor door’ look, so we made the affordable building as nice and gave it its own character and place,” he says. “Colors are different, but some similar materials such as stucco were used. Cities have to be sustainable to survive, and that includes having a diverse mix of people.”

Straightforward Design

A common mantra today encourages simpler design that translates to lowered expenses. Musick, for example, advocates limiting design decisions to help focus project costs. “Maybe, instead of choosing from 10 window sizes, there are three to consider,” she says. Other options are to limit the number of unit plan configurations for each plan type. This simplifies the list of both construction techniques and materials and should lead to better execution, she says.

In south St. Petersburg, The Shores, a 50-unit affordable complex funded by the city of St. Petersburg and Pinellas County, used quality but affordable touches such as wood vinyl plank flooring, ceiling fans and grab bars in apartments and common spaces.

Smart Locations

Affordability is about more than the building itself. Location is key to help residents get to jobs and services. Transit-oriented developments in particular eliminate or reduce the need for cars and parking. Station 25 in Albany, on an infill site with a bus stop, is within walking distance of an employment center and near Albany Medical Center.

Both the Schiller Apartments and another Structured Development building, The Seng, an affordable-condominium project, are near mass transit. Schiller Apartments is also adjacent to a public park. Klotz’s company likes locations near mixed-use options, so residents feel amenities are almost on their property. His company also scouts for sites where governments have determined a need for affordable housing. That way, he can approach those governments to help sponsor the development in those areas.

Function Over Trend

Affordable buildings might have fewer amenities than market-rate buildings due to their available square footage and budget. Therefore, functionality is prioritized.

“A café, mailroom and lounge may be combined, which encourages socializing,” Duggan says.

An apartment building at 535 W. 43rd Street in New York City developed by Flotteron’s CetraRuddy includes seating in the mailroom.

Another goal is to provide health and wellness benefits for residents and neighbors, he says. Features such as outdoor space are critical and must be protected and secure in an urban environment, Musick adds. At Marcus Garvey Village, residents and the community will have access to green space, a community facility, retail outlets, an LGBTQ center, below-grade parking, and bicycle storage.

Creating Units for Long-Term Use

Unit sizes depend on the project and site, the number of units that make a project work financially, and the municipal requirements for securing financing. But a common goal is to make them look larger and wear better, since that helps to retain residents, Musick says. Design tricks help.

For more space in units, hallways might be eliminated in favor of open layouts or, instead of in-unit laundries, there may be common laundry rooms, Duggan says. For durability, luxury vinyl tile is easier to clean than carpet in units and public hallways. Good lighting expands space visually. Integrated lighting such as recessed cans help residents avoid having the expense of buying lamps, Flotteron says.

 

Source:  Realtor Magazine

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To Ease Rent Crisis, Miami City Commission May Change Zoning Code To Allow For Communal Living Developments In Wynwood

After gaining notoriety as the center of the housing crisis in the US, Miami is looking to co-living developments to calm soaring rent prices.

Today (3/23), the Miami City Commission is considering changes to the zoning code to establish regulations regarding co-living. If adopted, the amendment will allow for communal living developments to rise in Miami’s bustling central business district, health district and Wynwood.

Last year, Miami surpassed New York City and Los Angeles as the most expensive housing market in the nation. In June 2022, the Biden administration called Miami the ‘epicenter of the housing crisis.’

Government agencies like the Department of Housing and Urban Development (HUD) see co-living as a solution to provide working-class individuals with affordable shelter.

Communal living has roots dating back to the 19th century, when tenements and boarding houses became popular. Modern co-living spaces feature private bedrooms designed around a shared living room and kitchen.

21st-century co-living communities have emerged as an amenity-laden, roommate-sharing concept to facilitate an environment where working professionals can thrive at a fair price.

The proposed legislation limits co-living developments to the civic center and health district, central business district downtown and neighborhood revitalization districts in Wynwood. These are Miami’s busiest urban areas and have rapidly grown in the post-pandemic era as people from across the nation flocked to South Florida.

Background information states the city “recognizes the growing demand for accessible housing options, including co-living concepts, incorporated in urban center and urban core areas where there is significantly less reliance on automobiles and enhanced utilization of bicycle and transit facilities that connect to places of employment and other services.”

The ordinance defines a co-living unit as communal living quarters consisting of private bedrooms and bathrooms with a shared space that includes a full kitchen with direct access to the outside or a common hall.

Each unit would be allowed a maximum of six co-living rooms. A co-living room is defined as a single bedroom within the unit. Under the proposed requirements, a co-living room must be at least 180 square feet and could not exceed 400 square feet.

The operational plan required under the new ordinance stipulates all co-living units within a building must be managed by one centralized operator and at least one dedicated employee must be available 24 hours a day to respond to residents’ needs.

On Feb. 15, the Planning, Zoning and Appeals Board recommended approval of the zoning text change in a vote of 8-1.

What attracts most residents to co-living communities is a home in a well-run building in a good area at a reasonable price. The developments offer fully-furnished units, including everything from sheets to silverware and weekly cleaning services. All utilities and various tech services like WiFi and Netflix are included in the monthly rent.

Another positive of co-living is that it eliminates the financial liability of roommates by offering individual room leases rather than group leases.

Co-living is popular in major urban areas like New York City. Zoning ordinances, however, restrict communal housing in many areas. Changes on the regulatory front, like the amendment before the Miami City Commission, are needed to address barriers to opening co-living communities.

In 2022, Florida topped the Census Bureau’s list of fastest-growing states as the population grew by nearly 2%. Attractive lifestyle and job opportunities put Miami on the map of most popular US migration destinations.

During that time, the cost of rent in Miami increased over 30% from 2021 to 2022 and the county was ranked the most competitive rental market in a year-end survey by RentCafe.

In April 2022, Miami-Dade Mayor Daniella Levine Cava declared an affordable housing crisis and allocated an additional $13 million in rental assistance through the Emergency Rental Assistance Program.

Two months later, HUD Secretary Marcia Fudge met with local leaders to tour affordable housing projects in Miami.

“I decided today to come down to the epicenter of the housing crisis in this country,” said Ms. Fudge. “It is a shame that people who work hard every day cannot afford to live in the communities in which they work.”

After her visit, Ms. Fudge said more affordable housing projects must be created to lower housing costs and called for support from federal, state and local governments to make it happen.

A study from Florida International University regarding affordable housing revealed Miami has the highest proportion of cost-burdened renters in the nation, with 53% of renters spending 35% or more of their household income on rent.

HUD defines cost-burdened people as those who pay more than 30% of their income for housing and may have difficulty affording necessities such as food, clothing, transportation and medical care.

Creating co-living developments will provide renters with more affordable housing options and relief from record-breaking rent prices.

Market reports forecast co-living developments to increase in coming years as the communities could be a solution to the affordable housing crisis.

In January, the largest co-living operators in US and Europe and Asia, Common and Habyt, merged to form Habyt Group. The move created the largest co-living brand in the world with locations in more than 40 cities and 14 countries and over 30,000 communal units.

While the co-living sector represents a small corner of the housing market, the desire for communal living, like rental prices, is rising.

 

Source:  Miami Today

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Florida Bill Turns To Developers To Tackle Affordable Housing

Florida Senate President Kathleen Passidomo (R-Naples) introduced on Thursday an $800 million affordable-housing bill designed to tackle soaring rents by providing incentives to the private sector, the Orlando Sentinel reported.

The sweeping, 93-page bill — called the Live Local Act of 2023 — would ease local regulatory laws by requiring municipalities and counties to approve multifamily and mixed-housing units in commercial areas, provided 40 percent of the housing is set aside for families whose incomes are up to 120 percent of the area’s median income, the outlet reported.

The bill also provides multiple tax incentives to developers who designate units as affordable. For example, owners of properties with at least 70 units that were built or remodeled within the previous five years would receive a tax incentive if they set aside apartments for low- to mid-income residents, according to the outlet.

Another provision allows counties and municipalities to offer a local tax exemption to developments with at least 50 apartments with 20 percent of the units dedicated to affordable housing, the Commercial Observer reported.

The bill would also prohibit local governments from instituting rent control, according to multiple outlets.

Florida rents have increased over 20 percent from 2020 to 2021, and rose even more through most of last year, according to the Sentinel.

Many residents who are employed in the hospitality industry — on which Florida relies heavily — were priced out of their local markets due to the significant rent increases, the Commercial Observer reported.

“We have great respect for the dignity of work. We know that a lower commute means a higher quality of life,” bill sponsor Sen. Alexis Calatayud, a Republican representing southern Miami, said, according to the outlet.

While Republican Gov. Ron DeSantis provided tentative support for the bill, some Florida Democrats and housing advocates decried the proposal as a giveaway to developers and landlords.

“Senate Republicans’ solution to the housing crisis is a state mandate banning local rent stabilization measures and too many developer handouts to count,” Ida Eskamani, a Central Florida affordable housing advocate, posted on Twitter, the Sentinel reported. “I’m not seeing any pro-consumer policies like tenant protections and stopping private equity monopolies.”

 

Source:  The Real Deal

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Miami Beach Looks To Expand Perks To Lure Developers To Build Cheaper Homes

Miami Beach officials want more homes priced below market levels for local workers, and they’re willing to dangle financial incentives that could save developers hundreds of thousands of dollars to build them. However, a few area developers doubted the inducements would be a silver bullet to stimulate construction and make homes in one of the most expensive cities in Miami-Dade County much more affordable.

The Miami Beach commission voted unanimously this week to waive a slew of fees that developers wouldn’t have to pay, if they build lower priced homes for local workers. City officials are expected to give final approval by the end of the month.

“Housing affordability is key to quality of life. With the rising cost of land and construction and high interest rates, all of these driving factors are causing housing to be less and less affordable,” said Rickelle Williams, the city’s economic development director. “We’d like to encourage residents to live and work in the city of Miami Beach.”

Miami-Dade’s housing costs skyrocketed during the ongoing pandemic. Miami Beach saw one of the highest apartment rent increases in the county — a whopping 72% — over the past two years. Landlords have hiked rents to astronomical levels as scores of newcomers, many of them digital nomads earning high salaries in technology and finance, have arrived. In Miami Beach, builders typically pay fees to the city whenever they build a project. The menu of fees are meant to offset the impact their developments will have on community resources and the environment. Under the proposal that passed this week, Beach officials no longer would levy the fees on developers building housing priced for local workers.

 

Source:  Miami Herald

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New Downtown Miami High-Rise Project Seeks To Bring More Affordable Urban Living

A proposed new high-rise project in Downtown Miami will aim to to bring workforce housing — and potentially affordable housing — to the Miami Dade College Wolfson Campus to fill a need for more attainable living in the urban core. Three residential towers are expected to replace the seven-story College Station Garage at 190 NE Third St. After issuing a request for proposals late last year, the Miami Parking Authority selected a proposal on Tuesday from developers Related and Rovr over a proposal from Terra.

Three towers, between 39 stories and 48 stories, would sit on top of a new public parking garage with 1,350 spaces and retail on the ground floor.

The high-rise buildings will deliver a total of 1,200 units, including 180 workforce housing units and 780 market-rate units, according to the proposal. The component of 240 affordable housing units in the proposal may change or be eliminated based on further negotiations. The asking rents of the affordable housing units would be up to 50% of the area median income and the workforce housing units would be up to 140% of the area median income. The median household income is about $79,000 in the Central Business District, according to the last Miami Downtown Development Authority Demographics report published in 2018.

Related and Rovr’s proposal exceeded the Parking Authority’s minimum requirement of 8% workforce housing. Units range in layout from a 500-square-foot studio to an 1,100-square-foot unit with two bedrooms, two bathrooms and a den. Rents continue to rise across South Florida. But Downtown Miami has one of the highest year-over-year increases given the influx of firms relocating from across the Northeast to the urban core. The ZIP code 33132 has a median rent of $4,000, up nearly 74% from December 2020, according to year-over-year data from the rental housing site RentHub.

Thousands of affordable and workforce housing units are needed to ease the long-running affordability crisis in Miami, said Annie Lord, executive director of Miami Homes For All.

“You’re talking about the center of a community where you have the concentration of education, jobs, mass transit, that is where we absolutely need to focus mixed-income development,” Lord said. “The public has a right to demand a contribution for affordable housing to meet the needs of the people that live in the city. It is the number one need and we are in a state of emergency. If it was a crisis a year ago, we’re in a state of emergency today.”

The project is the first mixed-income development so far in Downtown Miami. The closest completed project, Lord said, is Brickell View Terrace in Miami’s financial district. Miami Dade College faculty and students will have priority for the affordable and workforce housing, said Oscar Rodriguez, principal of Rovr Development. His firm and Related will also focus on providing housing to “our middle class, who we believe need the most options, including nurses, teachers, emergency workers, municipal workers,” he said.

“We are at an inflection point in Miami,” said Rodriguez. “If we don’t start to work together to provide this type of opportunity to the people who have worked and are the backbone to our society, we are wasting an opportunity. We believe that the best project takes all the needs into account.” Negotiations start in two weeks regarding the final project plans, said Alejandra Argudin, CEO of the Miami Parking Authority.

Some project details might change, she said, over the next few weeks. Final details, she said, are still being ironed out.

“How can the authority make a decision that is so transformational? You don’t get those chances all the time,” said Argudin. “This was our one chance. We wanted to make sure we got it right. We thought it was important.”

Rodriguez said negotiations usually take about five months. Afterwards, the developers will focus on finalizing the design. The goal would be to start construction during the first quarter of 2023 and complete the first phase by the first quarter of 2024. Related and Rovr will land a 99-year lease agreement, said Argudin, and the Miami Parking Authority will earn all of the parking revenue and a portion of the commercial leases. In the first 30 years, she said, the Miami Parking Authority anticipates earning $116 million.

 

Source:  Miami Herald

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Miami Beach May Create Incentives For Affordable Housing Developers

Miami Beach’s success in attracting luxury developments means there’s little to no room for affordable housing developers to build projects. But the city commission’s land use committee is hoping to solve that problem.

Committee members Mark Samuelian, Michael Gongora and Ricky Arriola, who are also commissioners, directed Miami Beach planning director Thomas Mooney to draft ordinances that would entice affordable housing developers to build in the city.

“As we know, the city is not building any significant affordable housing and hasn’t in quite some time,” Gongora said at the committee meeting. “The price of our land is very expensive and it is hard to get people interested in building new affordable housing.”

The most recent affordable housing project completed in Miami Beach was in 2018, when the 21-unit Leonard Turkel Residences at 234 Jefferson Avenue opened. The apartment building is among five affordable housing projects owned and operated by the Housing Authority of Miami Beach. The Miami Beach Community Development Corp. manages another 323 units scattered among 12 historic buildings in the city.

Still, that’s not enough affordable housing stock in a city where the typical home value is $364,074, according to Zillow. The average rent in Miami Beach is $2,018, and the average apartment size is 917 square feet, according to RentCafe. Roughly 55 percent of Miami beach households are renter occupied. Every year, the city opens its waiting list for affordable housing that often attracts thousands of applicants, whose household incomes must be no less than $8,868 and no more than $47,450. New renters are chosen through a lottery system.

Gongora proposed the city pass legislation that would fast track affordable housing projects through the building permit process and waive land use and other fees associated with new developments, which drew praise from his colleague, Samuelian.

“We have talked a lot about affordable housing and how to make sure it happens,” Samuelian said. “This is a movement in the right direction.”

But Arriola cautioned his colleagues that affordable housing usually requires developers to build high density projects, which are often met with stiff opposition from local residents. “If we want affordable housing, we will have to allow more,” Arriola said. “Otherwise we are kidding ourselves and the public. We have to be comfortable building more.”

The committee voted to direct Mooney to draft proposed ordinances and present them at the land use meeting in January.

 

Source:  The Real Deal

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Miami’s Biggest Condo Developer Is Focusing On Apartment Rentals Now. Here’s Why

The pivot quietly began five years ago.

Back then, construction cranes dotted the downtown Miami skyline like the towering alien invaders in Steven Spielberg’s “War of the Worlds.” The real estate industry had recovered from the 2009 recession and was bouncing back hard. Thousands of condos — many of them priced way beyond the reach of local residents — were being delivered or built, completing Brickell’s transformation from office district to dense residential neighborhood.

But Steve Patterson, president and CEO of Related Development, the multifamily rental arm of the Related Group, saw a different picture altogether and started buying up land outside of Miami-Dade.

“I was hired by Jorge Pérez [chairman and CEO of the Related Group] right at the trough of the recession to reactivate the company’s market-rate rental division,” he said. “We like to put the pedal to the metal during a downturn, because costs are lower and the quality of our product is better. There is some softness in the condo market now, and we feel it’s the perfect time right now.”

The Related Group is best-known for its luxury and market-rate condo towers, with an estimated 80,000 condos built, the bulk of them in Miami-Dade. But with a glut of unsold condos dragging down that market, the company is shifting gears and invested $2.3 billion for a wave of apartment rental buildings — both affordable and market-rate — in Miami-Dade and cities such as Tampa, Orlando, and Fort Myers.

This year alone, the company has delivered 3,053 market-rate and 719 affordable/mixed-income rentals in Lantana, Palm Beach and Orlando, including another 204 units in the ongoing $300 million Liberty Square renovation project, which unveiled the completion of its second phase on Friday. Phase I, which opened in July 2019, brought another 204 affordable and workforce units online.

In the pipeline are another 6,772 market rate units in cities including Fort Lauderdale, Phoenix, Atlanta and Jacksonville, all due to break ground between now and the summer of 2021. Another 3,576 affordable and workforce units in mixed-income developments built with the support of local government and federal subsidies are under construction, most of them in Miami-Dade. They include the 120-unit Brisas del Este in Allapattah and the 150-unit Gallery at River Parc in Little Havana.

Related still has more than 1,500 condos under construction or in development in cities such as Fort Lauderdale, Tampa, Sanibel and Jacksonville, but none in Miami-Dade

According to Patterson, all major banks are continuing to provide real estate funding, including Related’s projects. But lenders are being more conservative than in years past, and backing for condominiums is much tougher to secure than that for apartments — another motivator for the company’s pivot to rentals.

Because of the glut of apartment rentals built over the last couple of years in the downtown urban core — nearly 6,000 units since 2014, according to the Downtown Development Authority — Related is steering clear of that area except for one project: The first of three planned towers at 444 Brickell, a four-acre site the company bought in 2013 for $104 million, will be a 40-45 story tower with 500 apartment rentals. Groundbreaking is scheduled for first quarter of 2021 and will take 30 months to complete. In total, the company has 1,500 condo units in the pipeline in Florida, Brazil and Cancun, Mexico.

A NATIONAL TREND

Related’s switch to apartment rentals is a continuation of a national trend that’s been happening for the last few years.

“The biggest driver of apartment construction is the home ownership rate,” said Gerard Yetming, executive managing director of the Urban Core Division of Colliers International. “Home ownership peaked in 2005 at 69% and it’s been trending down every year. So it makes sense there would be a growing demand for rentals and that Related is pushing into that area. The question is will it be a long-term trend. What you’re seeing right now is really just a result of big economic trends that are cyclical.”

Over the last 20 years, home ownership in the U.S. peaked in 2005 at 69%, according to Statistica, and hit a low of 62% in 2015. The percentage inched back up to 65% in 2019. But the U.S. population also grew during that time, from 296 million people to 328 million in 2019.

“The government created the notion that owning a home was the American dream,” Patterson said. “It proved to be beneficial to most people who bought homes until we saw the spike in prices in the last cycle. A lot of millennials saw their parents lose a lot of money.”

The housing bubble burst in 2008, when the bottom fell out of the real estate market, resulting in 2.3 million foreclosures and a loss of $2 trillion in home values in that year alone.

 

Source:  Miami Herald

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Multifamily Investors See This As ‘The Biggest Risk To Our Industry’

Local governments from New York to California have moved forward with new rent control laws this year in an attempt to address the housing affordability crisis. But multifamily investors say the laws are pushing them away from those markets, and they fear the trend could spread to other cities.

New York in June passed a law expanding rent regulations that affect nearly 1 million apartments in New York City, which was widely condemned in the commercial real estate industry. Oregon in February passed the nation’s first statewide rent control bill and California followed suit last month with passage of its own statewide rent control law.

TruAmerica Multifamily co-Chief Investment Officer Matt Ferrari, whose firm has over 40,000 units under management across 11 U.S. states, including California and Oregon, said the new laws are hurting those markets. He said they disincentivize owners from renovating properties, depress property values and decrease investment. He said he already sees capital fleeing those markets, and he is worried about more markets expanding rent control.

“It’s probably the biggest risk to our industry is this having a contagion effect from these deep blue states, New York and California, and eventually spreading across the country,” Ferrari said Thursday at Bisnow’s Multifamily Annual Conference East in D.C. “It could really impact our business long term.”

D.C. is currently considering expanding its rent regulations. The District has a law in place that passed in the 1980s and regulates rent for about 80,000 apartments built before 1975. But that is down significantly from a peak of 130,000 rent-controlled units, and the remaining 80,000 could become market-rate units next year if the D.C. Council doesn’t extend the law.

Council Member Anita Bonds, who chairs the D.C. Council’s housing committee, introduced a bill to extend the rent regulations to 2030 and is scheduled to hold a hearing on it Wednesday. In addition to expanding the program, activists are calling for the D.C. Council to adopt more aggressive rent control measures that would lower the rent increase cap, cover all buildings constructed before 2005 and make all new units subject to rent control after 15 years.

The D.C. Building Industry Association has come out against these proposals, arguing it would make it harder for the city to reach Mayor Muriel Bowser’s goal of building 36,000 new housing units by 2025.

“Rent control exacerbates the housing shortage because it does not do anything to address why rents are rising,” DCBIA CEO Lisa Maria Mallory wrote in a Washington Business Journal op-ed last week. “The one issue that nearly every economist agrees is that rent control just makes housing worse.”

Some investors are already shying away from the D.C. area for fear of new rent control laws, Melnick Real Estate Advisors founder Scott Melnick said. He said he recently had a buyer seeking to invest $110M as part of a 1031 exchange deal, and they limited their search to less-regulated states like Georgia, Texas and Florida.

“We’re seeing people want to skip over this region because they know it’s coming,” Melnick said of rent control. “Investors now are not just looking at the House and the Senate, they’re looking at the county council and how it’s made up to see what’s coming.” Harbor Group International Director of Acquisitions Matt Jones, whose firm has a nationwide portfolio of 33,000 multifamily units, also said he expects stronger rent control laws to be enacted in the D.C. area.

 

“We’re definitely seeing capital that used to be New York City multifamily-focused fleeing that regulatory environment,” Jones said. “My view is that regulatory environment is following them down I-95, and we’re not a decade away from those concerns in many of the markets down here.”

FCP principal Jason Bonderenko said several of his recent deals have involved buyers fleeing the New York City market, likely because of rent control.

“I can tell you we recently sold properties in Philadelphia, [D.C.], Atlanta, the Carolinas, and it was all New York buyers on all those deals,” Bonderenko said. “That trend is happening in a very big way.”

The Donaldson Group CEO Carlton Einsel, whose portfolio is largely concentrated in the D.C. area, said politicians support rent control because they want to appear to be tackling the affordable housing issue, even if most economists agree it is not an effective solution. He said it is up to commercial real estate leaders to come up with better solutions to the problem before more governments enact rent control.

“There is an affordable housing issue, and as an industry we have to do something to help solve it, because if we can’t, it will be solved for us by politicians that are going to do rent control,” Einsel said.

Jefferson Apartment Group CEO Jim Butz said he sees housing affordability and rising rents in major cities as an important issue, but he said cities trying to address it with rent control laws are only creating new problems. He is worried about the increased regulations spreading across the East Coast.

“One of the bigger trends we have to be careful about in Washington, in Philly, obviously in New York, and a little bit in Boston, is rent control,” Butz said. “That would potentially shut down the market and really put a chill on institutional investment.”

Morgan Properties President Jonathan Morgan, one of the region’s most active multifamily buyers in recent years, said rent control measures are forcing investment firms like his to expand to less-regulated markets.

“We’re concerned about rent control as well,” Morgan said, after hearing several other investors express their concerns. “The affordability issue in this country is not going away any time soon, but rent control I think is the wrong solution … it’s making a lot of the owners like us and others invest in new markets.”

The criticism of rent control at Thursday’s event was not limited to investors that own apartments — a federal government official also referred to the local laws as having harmful consequences.

Department of Housing and Urban Development Deputy Chief of Staff Alfonso Costa Jr. cited reports from the National Multifamily Housing Council and Stanford University that detail the negative impacts of rent control.

“Although rent control in the short-term might reduce displacement, it can have a very deleterious impact on housing supply and prices,” Costa said. “You have landlords that are going to be less likely to address capital repair needs, that will defer maintenance and will turn their rental units into owner-occupied units and sell them. Ultimately it can have a very adverse impact and unintended consequences.”

Costa joined NHMC CEO Doug Bibby and U.S. Sens. Chris Van Hollen (D-MD) and Todd Young (R-IN) on the event’s keynote panel. The senators did not discuss rent control, but stay tuned for more coverage on the ideas they raised to address housing affordability.

Source:  Bisnow

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