Miami condo prices jump 46 percent, but sales slow

Miami residential prices posted strong positive gains for the fourth month in a row in March, with the median condominium sales price rising 46 percent compared to the same period in 2011. According to a report from the Miami Association of Realtors, the median sales price also rose, increasing 13 percent. “The fact that Miami home prices have significantly increased for four consecutive months indicates prices have bottomed and have caught up with sales levels,” said Martha Pomares, 2012 Chairman of the Board of the Miami Association of Realtors. “We expect this trend to continue, as Miami increasingly attracts international buyers and investors, second and vacation home buyers and migrating U.S. residents.” Along with the drastic price increase came a drop in transactions, however. Sales of existing single-family homes in Miami-Dade County dropped 12 percent in March, and sales of condos fell 10.1 percent in the same period.

U.S. home prices continue to get beaten down, but Miami is spared:


Case- Shiller index changes since 1988

Home prices dipped nationwide for the fifth consecutive month in January, according to today’s Standard & Poor’s Case-Shiller Home Price Index, providing another blow to the housing market following last week’s disappointing new home sales data.

The 20-city composite index was down 3.8 percent compared to January 2011 and fell 0.8 percent on a month-over-month basis. U.S. home prices are now roughly equal to those in early 2003.

“Despite some positive economic signs, home prices continued to drop. The 10- and 20- city Composites and eight cities – Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa – made new lows,” said David Blitzer, Chairman of the Index Committee at S&P Indices.

However, Miami was spared some of the bad news as it was one of three cities, including Phoenix and Washington D.C., to post a positive month-over-month change in housing prices. Miami’s index gained 0.6 percent since December 2011. And while housing prices in Miami did stumble 1.9 percent in the last 12 months, that was the seventh best performance among the 20 cities tracked by Case-Shiller and is significantly better than the composite’s 3.8 percent drop.

Appearing on Fox Business, Chandan Economics founder Sam Chandan said the Case-Shiller results are not surprising considering the types of buyers that are active in the current market (see video below). Though sales activity is improving, those deals are being driven by foreclosed properties and all-cash investors looking for discounts, which combine to put more downward pressure on home prices. When the job market improves further and the credit standards relax, home prices will begin to rebound, Chandan said.

South Florida construction rises 50 percent


New projects like BrickellHouse are driving growth

The total volume of contracts for future construction in South Florida reached $326.1 million in February, a 50 percent increase compared to the same period in 2011, according to a report from McGraw-Hill construction. There were $218 million in contracts for future construction in February 2011. The totals include residential and nonresidential buildings. Since the beginning of 2012, contracts for future construction are up 22 percent compared to the same period in 2011. The report was compiled by the research and analytics unit of McGraw-Hill Construction. —

Old Grand Bay hotel to become new residential tower

COCONUT GROVE | GRAND BAY HOTEL

The Grand Bay hotel, once an icon of luxury, will be razed to make way for a residential tower designed by a prominent Danish architect.

Grand Bay Hotel, 2669 South Bayshore Drive in Coconut Grove with Alexander Liberman’s “Windward” marking its driveway on Thursday, March 22, 2012. The Grand Bay, once a five-star hotel, fell into disrepair and now sits infested with mold and awaiting a wrecking ball.

In its prime, the Grand Bay hotel in Coconut Grove was the place to be, whether you were a businessman meeting for breakfast, a celebrity seeking publicity or a bride celebrating her perfect day.

But the hotel’s heyday was a long time ago. And soon, it will just be a memory.

The only hotel south of Palm Beach to have ever earned the coveted Mobil five-star rating will be demolished to make way for a residential tower designed by an up-and-coming Danish architect, the developer confirmed Thursday.

“Our plans are to do something that’s very one-of-a-kind,” said David Martin, chief operating officer of Terra Group, which bought the property last summer for $24 million. “We wanted to really build something that people felt they could be proud of.”

For the first time since the purchase, Martin provided details on the company’s plans for the site. After a gradual decline, the Grand Bay has been shuttered for nearly four years, collecting mold, graffiti and pigeon droppings.

While full details of the new project are still to come, here’s what is known:

The building will be 20 stories high with about 96 units, all residential.

Lead design is by Bjarke Ingels Group, or BIG, which has made waves for high-profile projects near Copenhagen and in China, New York City and Utah. Ingels, a 30-something “starchitect” in-the-making, was named Innovator of the Year in Architecture by the Wall Street Journal’s magazine.

Raymond Jungles, the landscape architect who designed the grounds at 1111 Lincoln Road and the New World Symphony’s rooftop garden, will handle the outdoor space. And rounding out what Martin called a “design dream team” is Coral Gables architecture firm Nichols Brosch Wurst Wolfe and Associates, which has worked on Miami-area residential projects and hotels for years — including the original Grand Bay.

Developed by the late Sherwood “Woody” Weiser and Donald Lefton of The Continental Companies for $30 million, the hotel opened in 1983 in an area transitioning from artsy-hippie enclave and cocaine-cowboy hangout to major tourist destination. The 200-roomGrand Bay, at 2669 S. Bayshore Dr., was immediately hailed for its pyramid-shaped structure, its pristine service and its draw for jetsetters, especially Regine’s nightclub, which sat atop the hotel. The eponymous nightclub queen operated party spots around the world but chose the Grand Bay as only her second U.S. location.“I called it Fantasyland,” said Terry Zarikian, who worked there for 10 years in jobs including public relations director for Regine’s.“It was filled with celebrities. It was very, very classy, very chic.”

Local power brokers talked business over breakfast. Often.

“I’d go there for breakfast a couple or three times a week to meet people,” said Monty Trainer, a longtime Coconut Grove businessman. “The public areas, the banquet rooms and the downstairs and upstairs, the pool area, everything was absolutely gorgeous, well appointed, well furnished. You felt like you were in New York.”

Michael Jackson stayed there. So did Luciano Pavarotti, Prince and Sophia Loren — and just about everybody who was anybody.

“I remember when Elizabeth Taylor asked for a toothbrush,” Zarikian said. “We sent her stone crabs the night she arrived. Crab meat got stuck in her diamond ring and she needed to brush it out.”

 

Florida among strongest markets of improving U.S. hotel sector


South Beach’s Sense Hotel

The national hospitality sector is heading to its third year of recovery, according to a report from Marcus & Millichap. Hotel occupancy nationwide is expected to reach nearly 61 percent this year, with ADR slated to increase by 4 percent on a year-over-year basis. The three strongest hotel markets are North Dakota, Nevada and Texas at present. The average daily room rate in the U.S. is projected to rise to $105.70 this year, up from $101.60, with revenue slated to grow by 5.9 percent. Florida has the nation’s fifth-strongest hotel market, according to the report, with an index value of 106.7, tied with Michigan. The statewide occupancy rate in 2011 was 62.9 percent in Florida. —

Israeli buyers continue Miami residential push, mostly targeting investment properties


Downtown Miami, Dean Bloch and Adriana Faerman

Largely overshadowed in the recent Miami condominium boom driven by Latin American buyers, Israelis have been a quiet mainstay of the area’s residential market.

Israeli interest in Miami came relatively early on, mostly in the form of bulk purchases.

That trend was highlighted by a 26-unit purchase by Gamla-Cedron’s Shaoul Mishal in 2009 — one of the first bulk buys after the bust.

And the trend of Israeli interest has continued in the years since, although large bulk deals have made way for smaller purchases, brokers say.

“Probably 90 percent of my clients are Israelis that do not live [in Miami],” said Dean Bloch, a Realtor at Douglas Elliman Florida in Miami Beach.

A significant portion of these are buyers looking to for condominium properties as investments, particularly in downtown Miami, he told The Real Deal.

“Everyone has their own vision,” he said.

Some have themselves moved from bulk buys to smaller deals. Bloch said one of his clients had started out with a bulk purchase in Hollywood, and had made his way to downtown Miami’s condo market.

“Now he likes that and he’s only looking at that,” he said.

The firm of Hezy Solomon, an Israeli developer/investor, bought the note on the mixed-use residential and commercial building last year at 1607 Ponce de Leon Boulevard in Coral Gables on behalf of a group of Israeli investors.

He said that Israelis’ interest in the Miami area has only gotten stronger.

“Because of the comparative[ly] [high] prices in Israel to the prices in Miami, they are very interested,” he said. “It’s very active. There is a feeling that prices are not as low as they used to be anymore, so they don’t want to miss the train. Second, the opportunity over there is very limited, so they’re really coming to the U.S.”

And most are, as Bloch said, looking for investments.

“Most of them are not living here,” Solomon said. “Most of them are buying as investment properties.”

Not every Israeli is looking for an investment property, however, according to One Sotheby’s agent Adriana Faerman, who said she had seen increased Israeli activity in recent months, particularly from those with longer-term ambitions.

“You have Israeli families who are looking for a place to raise their kids [in Miami],” she said. “I see a little bit more activity there, looking for single-family homes in areas close to good public schools.”

These buyers tend to look a bit further than downtown, in areas like South Beach and Aventura, she said.

Interest is strong enough that one Israeli client who bought in Aventura became so enthused about the market he was spurred to seek his own real estate license to sell Miami properties, according to Bloch.

“I convinced him to move here, and he was so enthused by the activity that he’s getting his own license right now.”

Lenny Kravitz talks Miami design


Lenny Kravitz and the Paramount Bay

Rocker-turned-designer Lenny Kravitz’s latest work has him designing at a number of Miami projects, several units at the upcoming SLS South Beach and the Paramount Bay in downtown Miami. “What I like about the Paramount Bay is that it’s on the bay; it’s not in South Beach,” Kravitz told the New York Times. “A lot of people tend to think that if you’re not in South Beach, it’s not happening. But in the downtown area, you’ve got this whole world happening in Miami proper now.”

Are rising rents in the U.S. cause for concern?


Rent prices increased 3 percent nationally year-over-year in January, CNBC reported based on a not-yet-released rental index from Zillow.com, suggesting a possible rental bubble.

CNBC noted that increased rents have yielded a decrease in home prices for buyers: a 4.6 percent year-over-year decline, but with no set reason for why this is. According to CNBC, when rents increase, renters generally turn to home purchases.

In Chicago, rents rose 9 percent year-over-year and home values decreased slightly over 10 percent annually. Both San Francisco and Detroit saw rent climbs of 5 percent and home value decreases of almost the same percentage between January 2011 and January 2012.

CNBC asked if there is a tipping point, given the current state of mortgages, employment, and consumer confidence.

According to Stan Humphires, chief economist at Zillow, “While it would seem that rents are rising at the expense of home values, the opposite is true,” he told CNBC. “A thriving rental market will stimulate home sales, as investors snap up low-priced inventory to convert to rentals. That, in turn, will lower the number of homes on the market, which will eventually help put a floor under the value of all homes.”

Genting Group

DOWNTOWN MIAMI

Genting Group downsizes plans for Miami resort site

 

With gambling approval denied in Tallahassee, Genting Group scales back its design to initially use just a fraction of the bayside resort site.

Even without casino gambling, Genting Group said Tuesday it is moving ahead with a dramatically scaled down mixed-use plan for Resorts World Miami.

The five acres where The Miami Herald currently sits would become the site for a five-star luxury hotel, luxury condominiums, waterfront restaurants, some limited retail and an 800-foot long promenade along Biscayne Bay.

It’s still too early to tell exactly what it would look like because the project is being designed by Miami’s Arquitectonica. There are no renderings available, no specifics about the size of any of the elements or any idea what would happen to the rest of the 13.9 acres on the Herald site.

“With more and more people traveling to downtown Miami and a growing number of residents calling the area home, we are going to seize the opportunity to convert this prime piece of bayfront land into the centerpiece of a thriving neighborhood.” Bernardo Fort-Brescia, co-founder and principal of Miami-based Arquitectonica, said in a statement released by Resorts World Miami.

Early indications are that this version of Resorts World Miami will be a far cry from the original $3.8 billion project with 5,200 hotel rooms, the world’s largest casino, more than 50 restaurants and bars and a retail shopping mall. That plan drew the ire of many community leaders for the being out of scale with the neighborhood surrounding the Adrienne Arsht Center for the Performing Arts and having the potential to create a traffic nightmare.

“It sounds more modest and more reasonable; somebody is listening,” said Jack Lowell, a Miami commercial broker who was a Genting advocate in the business community. “I think it is also reflective of the current market and seems to make some sense.”

The first inkling of Genting’s latest plan comes about six weeks after the Florida Legislature shut down efforts to approve destination resorts in South Florida. A proposal can be revived next year.

Miami City Commissioner Marc Sarnoff, whose district includes the site, said he has been told renderings will be available in 30 to 60 days. During meetings with Genting, Sarnoff was told the project would include a pedestal with two or three towers on top. But the design would not include the futuristic look of the original project with irregular shapes designed to resemble a coral reef.

“I’m expecting to see a lot of rectangles with some architectural nuance to it,” Sarnoff said. “You could build the fish with casino gambling, because gambling allows you to do anything. It covers up all your mistakes. I like to see people build efficient buildings. These buildings will work across the board. They’re coming back with a footprint that is more germane for the way things get built in Miami.”

The new vision is also good news to Arsht Center leaders, who had been among the biggest critics of the original Genting plan because of the potential impact it would have on their facility.

“I think the Arsht Center and the neighborhood would benefit from that kind of development,” said Armando Codina, chairman of the Town Square Neighborhood Development Corp, the nonprofit created to protect the interests of the Arsht Center and the surrounding area. “It would be a very welcome addition. I just hope that the addition to the tax base will be used by the CRA to meaningfully improve the rest of the neighborhood.”

This time around Genting seems to be taking a go-slow approach. The company has been quietly discussing its new plans with select city leaders and distributing only a three-paragraph press release with limited specifics.

Last time around, Genting unveiled its ambitious proposal with a slick video and cocktail party for community leaders at the Four Seasons Hotel.

The new proposal would take up only a fraction of Genting’s 30 acres in the Omni neighborhood. Since purchasing the Herald land last May, Genting has invested about $500 million in real estate, including the Omni Center and other parcels. Genting is expected to continue operating the existing hotel at the Omni Center and leasing the remainder of the vacant office space on the site.

Genting Chairman K.T. Lim had always said that if gambling didn’t get approved, development of the Herald site could take up to 20 years.

“They said from Day One they would bring a project to market that meets market demand, and that’s what they’re doing,” said Tadd Schwartz, Genting’s South Florida spokesman. “They want to let the public know they are committed to Miami. This project will be within the scale of what currently exists in downtown Miami’s luxury hotel and condo market.”

The Herald, which has an agreement to remain on the property rent free for two years, is scheduled to move to a Doral site by May 2013.

Genting’s development plans, as they exist now, call for demolishing the Herald building and removing what has for decades been a barrier to public access of the waterfront. The idea is to create a gathering place where people can stroll or dine overlooking Biscayne Bay. Plans call for a waterfront promenade 50 feet wide that spans 800 feet. The design will also maintain 100-foot corridors on either side of the development with landscaped green space to allow a view of Biscayne Bay.

“The new design for Resorts World Miami will bring to life one of Miami’s most underutilized pieces of waterfront land after decades of inactivity,” Fort-Brescia said.

The Genting project also seeks to capitalize on what is quickly becoming a limited supply of luxury condominiums downtown. A recent study by the Downtown Development Authority found 93 percent of the nearly 23,000 condominiums built after 2002 are occupied. Of that, only about a third are occupied full-time by owners, with the majority serving as rental apartments.

“If we’re going to keep up with our growth, we have to get some projects in place,” said Alicia Cervera Lamadrid, managing partner of Cervera Real Estate. “There are not that many sites left. I don’t think there’s anything else being planned directly on the waterfront.”

Miami residential market stays strong, with help from foreigners at Art Basel



Canyon Ranch Miami Beach

The Miami residential market is riding a high into 2012, led by continued demand from foreign buyers and helped in part by an Art Basel bounce.

Sales of single-family homes in the Miami metro area rose 11 percent in November, with a 2 percent rise for condominiums, according to a report from the Miami Association of Realtors.

Now, prices are also beginning to show signs of life, particularly in the condominium market, which saw its median sales price jump 18 percent last month.

In fact, November was the fourth month in a row in which Miami saw a price increase.

“I think we’re going into the season in a very nice place,” said Alicia Cervera Lamadrid, chairman of Cervera Real Estate. “We’ve send tremendous absorption of existing inventory — so much so that we’ve even seen a couple of new projects launch.”

Those new projects, like BrickellHouse, which Cervera is marketing, and Related’s My Brickell, have been spurred by Miami’s residential rebound, which has largely been the result of Latin American and other foreign buyers.

It’s also come from the drastic inventory decline, which Cervera noted, to the tune of a 40 percent drop in residential inventory since 2010, according to MAR.

It was the foreign demographic that was out in full force at this year’s Art Basel festival, from Dec. 1 to Dec. 3, the unofficial kickoff for the winter real estate season.

“We were crazy here. The whole office was pretty busy,” said Diane Lieberman broker and founder of South Beach Investment Realty. “People come down for Art Basel, they feel the energy, the excitement, and they say, ‘why not just have a place here?’”

Lieberman said she signed five contracts on properties in the area during Basel, including a property at Williams Island’s Residence Du Cap. and Canyon Ranch Miami Beach.

“We got some great leads,” said One Sotheby’s broker Daniel de La Vega, whose firm sponsored an event at Art Miami in Midtown. “We also had a lot of agents from other companies come by. [Basel] is a great place to network.”

De La Vega said he saw particular interest from European buyers, who accounted for a number of his potential clients during Basel.
While 2011 has been the year of the foreign buyer in Miami, their dominance is not likely to change, according to Related ISG’s Philip Spiegelman — with one large exception.

“Latin America will continue to play a very significant role in all real estate development and activity in South Florida,” he said. “But the new wrinkle to that is we have an anticipation that we’ll start to see renewed activity from New York, the Northeast and Canada as we go through the winter season.”