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Big Changes In Little Haiti: Redevelopment Rises In Emerging Neighborhood

Neil Fairman, founder and chairman of Plaza Equity Partners, was once skeptical about building anything in Miami’s Little Haiti or Little River. Most of his company’s projects were luxury waterfront high-rises in places such as Miami’s Edgewater, South Beach, North Miami Beach and Hollywood.

But Fairman’s friend, Cirque du Soleil founder Guy Laliberté, wanted him to see some properties being assembled near 61st Street and Northeast Second Avenue in Little Haiti.

After touring the area, Fairman began to view it as ripe for opportunity – and he wanted in.

Since 2017, Fairman’s Plaza Equity Partners has been the managing developer of the Magic City Innovation District, an 18-acre territory that includes a former trailer park and dozens of warehouses. In the next few years, there will likely be 8.2 million square feet of apartments, hotels, offices, retail and exhibition space built there.

The warehouses have been converted into over 200,000 square feet of retail and office space that is now 90% leased, Fairman said.

Other investors and developers have followed suit, investing millions of dollars into the Little Haiti-Little River area, two overlapping neighborhoods bounded by Interstate 95, 54th Street, Northeast Fourth Court and the Little River canal.

Industry insiders say there are plenty of opportunities for more stakeholders to build projects there.

 

Source:  SFBJ

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Real Estate Primed for Further Growth in Greater Miami’s Evolving Neighborhoods

The state of real estate development today in Miami-Dade is fueled by expectations of strong returns. One need only look at the number of cranes dotting our regional high-rise commercial and residential zones of Miami, Miami Beach, Coral Gables and elsewhere to recognize the intensity. Currently, metropolitan Miami has the third tallest skyline in the country, and nearly every commercial neighborhood has construction of some kind occurring.

The great challenge and opportunity for developers and investors has been twofold since most are seeking near-term returns that satisfy their investors. Generally, there are two considerations on their minds: when is the right time to purchase and develop property, and what barriers to entry are manageable. Although some local developers have the cash and strategy to be more patient and wait for two to 10 years to move forward with projects on land they own, that is not commonplace.

The key success metrics for many developers is tied to the highest and best use of their capital for mixed-use, residential, office, etc. Here are some market conditions and signals that may tip the prospect of successful development in one direction or another:

First, the macro conditions of the market, including inflation and monetary policies affecting access to capital, tax incentives, and the cost and availability of construction labor and materials, are key success factors for any developer.

Second, sea-level rise and climate change are ground zero in Miami-Dade. Our proximity to the bay and ocean, and the prospect of lifestyle disruption from rising tides, hurricane storm surge, and in some neighborhoods the very existential issue of structures within flood zones, create an urgency and massive investment of federal, state, and local government resources in the billions. We are already witnessing both institutional and noninstitutional lenders refusing long-term financing for certain locations, and that prospect will continue and become more prevalent this decade and beyond. Upland neighborhoods and districts, ones that will not witness flooding in the next two decades, are thus naturally more attractive.

Lastly, the story of Miami, over the past 125 years, has been one of three steps forward and one step back when it comes to development. We have witnessed growth cycles greater than most American cities, but we also tend to be on the frontline of overdevelopment and vacancy when recessions occur. Yet, the sophisticated real estate investor and developers, like those who may have battle scars from the crash and burn of 2008-2010, or who have the wisdom to know that markets ebb and flow, recognize that Miami leads with its entrepreneurial opportunity.

So, based on predictors, trending and conditions, beyond neighborhoods we would call currently “hot” where developers are executing on major projects, what are the next group of neighborhoods ripe for major development in the next decade?

Certainly, areas like Little River are enticing because of their historic position in the marketplace. Assemblages around the immediate commercial corridor along 79th Street are a good play because there is precedent for taller buildings, some of which are targets for repositioning.

We could witness more infill projects in East Little Havana, but the challenge there is tied to limited densities and parking requirements on properties that can make development cost prohibitive. Investors must buy right to make the numbers work. If commercial use is on their mind, they have to work with neighborhood residents in advance to quell concerns over noise at eateries, bars and clubs. That can be costly and time consuming, but if done right could yield great results.

There was an innovation in parking requirements, which shifted it to the street in Little Havana, but that applied to small residential buildings, which fit the small-scale profile of existing residences. Another play might be to buy a handful of these small building complexes or a portfolio of the same, which can be held as prices rise or flipped in three to five years for a nice return.

The key to development in places in the city of Miami north of the central business district is the rezoning of some properties with outdated or limited infrastructure to prepare the land to be flipped or developed. There are opportunities for four-parcel assemblages for small residential development that can produce acceptable returns with low beta.

A good partner in Miami may be its community redevelopment agency, which is looking to bid properties they own and provide tax incentives to developers and investors interested in building housing in these communities.

Lastly, there are ever greater opportunities that should be considered near Metrorail stations and along the US-1 corridor, which are zoned for higher density, with the city of Miami and Miami-Dade County incentivizing opportunities for builders. Noise is a challenge, but that is the point–managing challenges can yield good pricing on land and nice margins upon development.

Going forward, more developers will look to commercial with barriers to entry they can remove to stake their real estate project.

 

Source:  GlobeSt.

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Don’t Count Out Commercial Real Estate, Especially Near The Urban Core

Commercial real estate investors should look no further than the urban cores of Little Havana, The Roads, Little River and Coconut Grove. It’s the right time to invest, says Bill Kerdyk Jr., despite the pandemic causing some retailers and restaurants to close.

Kerdyk leads the Coral Gables-based, family-owned Kerdyk Real Estate, which first opened in 1926. Kerdyk bought the real estate investment and property management firm in 1991 from his uncle. The company leases and manages commercial real estate and sells residential real estate across Miami. While managing the family business, Kerdyk. served as a commissioner for the City of Coral Gables for 20 years, following in the footsteps of his father and uncle.

RE|source Miami checked in to get his view of the current commercial market.

Q: How is the pandemic changing how commercial real estate investors reevaluate their portfolio?

Kerdyk: Rent collection is the new metric for real estate during the pandemic and real estate investors are keenly aware of the impact on their net operating income. Declining collections and leasing spreads, characterized by lower leasing rates and additional landlord concessions, are forcing investors to re-evaluate their options and make tough decisions moving forward. Much of the retail, shopping centers, hospitality and entertainment venues are under pressure — forcing investors to make decisions whether to re-purpose and re-lease their properties, refinance, sell, or in some cases, return the properties to lenders.

Q: You sold your property 147 Alhambra Circle for $5.275 million in late September after acquiring it for $1.2 million in 2002. Where are you reinvesting that capital?

Kerdyk: The Alhambra building was sold based primarily on the premium offered for the property and because of reinvestment opportunities that will arise in the South Florida market to better deploy the capital. As an investor, I am in the process of identifying suitable properties that meet my investment criteria. I seek value-added properties that have upside income generation potential, upon releasing or repositioning of the asset. I look for assets in a stable and improving market that will provide for long- term appreciation that meet or exceed my minimum Return on Investment criteria.

Many other investors are certainly seeking to sell and reinvest the proceeds in more stable sectors but demand for real estate in the South Florida commercial market remains strong, and there are challenges to reinvesting the proceeds in this competitive environment.

Q: What type of real estate do you expect to go under foreclosure? Retail? Office? Hospitality spaces? Which of these assets are expected to get scooped up by investors and why?

Kerdyk: The pandemic has expedited the existing division already underway between essential and non-essential real estate sectors in our economy. While single-family housing remains a leader of the economic recovery here in South Florida, the best- performing commercial sectors include industrial, multifamily and healthcare, which remain very attractive in the current environment — and more so in this low interest rate environment which is expected to continue for some time.

Struggling sectors include retail, hospitality and entertainment venues, and to a lesser extent office product. These are some sectors where opportunities may exist for savvy investors with a plan to purchase and re-purpose the property. Demand for South Florida real estate remains high, despite the uncertainty related to the pandemic.

Q: What South Florida neighborhoods offer the best opportunity for commercial real estate?

Kerdyk: There are opportunities throughout South Florida in the commercial and housing segments. For commercial investing, in general, those submarkets in close proximity to the urban cores of Little Havana, The Roads, Little River and Coconut Grove remain in high demand. This demand is expected to continue post pandemic, despite the recent trend to flee these dense residential areas for more open space during the pandemic.

It is no coincidence that some of the best commercial corridors for investment are located close in to an affluent residential base or in close proximity to areas experiencing rapid growth of multifamily units. For example, mixed-use, walkable and sustainable urban developments, with significant growth in multifamily units, are currently transforming the Coral Gables Merrick Park area. The same thing is happening in Coconut Grove, along the U.S. 1 corridor and throughout Miami.

The best deals in real estate are those that meet the investor’s investment parameters for risk, investment timeline, capital available to invest, and a variety of other considerations. That’s really how you define what’s appropriate for each investor. Some investors seek income, others capital appreciation or a combination thereof, while another investor may seek capital preservation.

Q: What type of real estate in South Florida will likely have the best return for investors in the next 10 years and why?

Kerdyk: I expect trends related to sector bifurcation to continue after the pandemic and believe that housing, industrial, multifamily and healthcare will continue to provide some of the best opportunities, in part due to continuing product demand for these types of assets. I see high-end prime retail and entertainment venues stabilizing and making a comeback as early as next year. I expect lesser retail venues to continue to be under pressure until the retail space is repurposed to a variety of service retail uses.

Overall, I believe impressive demographics, especially net inflows to the South Florida region, to have a continuing favorable impact on valuations. The fact that Florida has no state income tax, and a scarcity of available land for building, also provide a solid base for real estate investment growth in South Florida.

 

Source:  Miami Herald

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