International Investors Like Miami Multifamily
The county seat of Miami-Dade county is an attractive market for apartment hunters — and for apartment building hunters. The sun and culture of Miami has always attracted its share of real estate investment, but lately the multifamily property sector is alive with extra development and international investment capital.
Marcus & Millichap’s 4th quarter report Apartment Market Research cited by Globe St. claims a hike in demand for the Miami multifamily market including an absorption of 1,700 units after all was said and done in the quarter.
The job market, the traditional driver of multifamily demand, did not report a leading increase.
“Retail employment has been a bright spot locally, as it has been across the country,” M&M reports. “However, expansions in degreed positions in the professional and business services, and financial services sectors have been lackluster.”
Still, the firm predicts solid demand for multifamily rental housing will generate a 10-basis point drop in vacancy this year to 3%. That’s the lowest rate in the South Florida region. Net absorption of nearly 2,100 units sliced 70 basis points from vacancy last year. Meanwhile, demand for higher-priced new multifamily rentals will underpin a gain in average rents of 4.9% this year to reach $1,191 per month. By way of comparison, average rents grew 2.3% last year.
“Investors are monitoring multifamily construction, which is projected to climb this year and persist into 2014,” M&M reports. “Thus far in the development cycle, the increase in construction has been met by higher demand for rental housing. Despite the inflow of new rentals, transaction velocity and dollar volume continue to rise, fueled by confidence in the country’s long-term prospects for sustained rental housing demand and expanded access to acquisition debt.”
Foreign Capital Flowing Again After Housing Crash
Cash-rich Latin American investors are gravitating to the Miami multifamily scene looking to create returns through rentals and by spreading their attention afield of traditional property strongholds such as South Beach. A recent Reuters report claimed developers from Brazil, Venezuela, Mexico have heightened presence in the city.
Also potentially driving the rush to the center of Miami metro from points south: currency volatility in home countries. Brazil’s currency has undergone gyrations in the past year and Venezuela’s petro-economy is facing increased production from North America.
The international flavor of the development culture in Miami is unmistakeable, according to Reuters’ Kevin Gray:
Several of the new Latin American projects rank among Miami’s most ambitious.
Argentine developer and hotelier Alan Faena is leading a $550 million project in Miami Beach to build what is being billed as the Faena District.
Faena helped transform the Puerto Madero riverfront neighborhood in his native Buenos Aires, converting a series of rundown buildings, including an old mill, into a luxury enclave of fine dining anchored by a five-star hotel, an arts center and apartment buildings.
Backed by Russian-born billionaire investor Len Blavatnik, Faena’s Miami beachfront development involves renovating an iconic Miami Beach hotel, the Saxony, and building a cultural center and theater.