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Happy Saturday Highest & Best! Today we’re talking soaring… and sinking:

🚨Why is Miami’s rental market still competitive?

🏙 A sinking skyline

🛥 Dock your boat at the office

💰The Billionaire Bunker has an opening

Let’s get to it!

Priced Out, Renting In

South Florida is overflowing with new apartments, yet analysts just crowned it the tightest rental market in the country. It may seem surprising—until you consider how tough it’s become to buy a home here.

A story by the numbers:

📈 2024: A record number of new rental units — nearly 24,000 — are expected to have reached the market in Miami-Dade, Broward and Palm Beach Counties, according to commercial real estate firm Berkadia.

🏗️ 2025: Another 16,000 apartments are on the way—equal to 4.2% of the housing stock, among the biggest jumps in the U.S., according to Yardi Matrix.

🤔 Yet the Miami metro region was just declared (again) to be the “hottest” U.S. rental market, in terms of how competitive is to find an apartment and how many tenants re-sign their leases (answers: very, and a lot):

• Eighteen prospective renters compete for every one vacant apartment in Miami, the highest anywhere in the U.S., according to the study by RentCafe.

• It takes an average of 33 days for a vacant unit in the Miami region to find a tenant (the shortest time frame in the country).

• 72% of Miami area tenants choose to renew their leases instead of finding another place.

🤷‍♀️ What gives? Turns out homeownership in South Florida is wildly out of reach for many — and getting more so, forcing people to rent for longer.

Consider these wild stats:

💸 Buying a starter home in Miami costs 28% more than renting one, according to a report by John Burns Research & Consulting.

🏡 The income needed to afford a monthly mortgage in Southeast Florida? A staggering $126,900, nearly double what was required in 2021, according to the Miami Association of Realtors.

🚪 Only 17% of renters in Southeast Florida can afford a mortgage today—down from 42% in 2020. And by 2025, that’s expected to drop to 16%, Miami Realtors said.

Basically: the homebuying math isn’t adding up for many, even as the region’s rental supply is.

⏪ Catch up on recent Highest & Best issues:

• Cash In, Cash Out, December 14, 2024

• Snaps of Luxury, December 7, 2024

• Big Deals Appeal, Nov. 23, 2024

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A Sinking Feeling for 35 Florida High-Rises

Here’s some some truly ground-shifting news about South Florida’s luxury skyline:

A new study from the University of Miami reveals that 35 buildings from Miami Beach to Sunny Isles are sinking — with some of the cases linked to the impact of nearby construction.

📡 Using satellite radar, researchers tracked ground movement beneath the coastline’s hotels and condo towers between 2016 to 2023. They discovered that some of these high-rises— including newer ones like Porsche Design Tower, Faena House and Mansions at Acqualina — have sunk from between 0.8 inches to over 3 inches, a phenomenon they’re calling “subsidence.”

"The extent of subsidence hot spots along the South Florida coastline was unexpected," Farzaneh Aziz Zanjani, the lead author of the study, said in a University of Miami press statement.

😲 While some settling is typical during and shortly after construction, the scientists were surprised to observe changes occurring several years later.

💁‍♀️ So why is this happening? Blame it on Florida’s unique geology. The limestone foundation under South Florida’s beaches, mixed with layers of sand, can shift under the weight of high-rises and from vibrations of nearby foundation work, the study found. Add to that: daily tidal flows PLUS the pumping of groundwater at other construction sites and you’ve got a fair number of stressors.

❗❗Construction projects up to 1,050 feet away were found to contribute to the settling, the study said. And similar sinking issues may be be happening further north in Broward and Palm Beach counties.

The survey’s focus area included Surfside, the site of the tragic Champlain Towers South collapse in June 2021, which killed 98 people. Researchers concluded that ground shifting did not play a role in the collapse. That disaster was attributed more to deteriorating concrete, poor maintenance and flawed design of the building’s pool deck.

What’s next? A key research priority for the scientists is determining whether ‘differential settlement’—where different parts of a structure sink at varying rates—is occurring and potentially causing long-term damage.

Full study can be found here.

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Take Your Boat to Work

Why sit in traffic when you could sail to the office?

It’s a question for potential tenants at One Kane Concourse, the proposed new office building in Bay Harbor Islands that, this week, secured a $74 million construction loan.

With the money in hand, developers Taubco and Landau Properties will begin work on the 7-story waterfront building any day now, and expect to have it done by late 2026, they said in a statement.

The future Class A property, at 9551 E Bay Harbor Drive, will offer 75,000 square feet of “ultra-luxury” office space, a “high-end” waterfront restaurant (that delivers to your desk), and something developers say is unique to the region: designated space to dock boats for tenants who arrive to the office James Bond-style.

“This will be the only Class A office building in Miami to offer boat dockage for your water commute to work,” Brian Gale, vice chair at brokerage Cushman & Wakefield, said in a statement. Gale and his colleagues have been put in charge of finding tenants for the space.

The Miami region’s office market is still defying national trends, with office properties selling at 36% above their 10-year average price-per-square foot, according to data from MSCI. (Cities like Manhattan and San Francisco, by comparison, are seeing office properties sell at values well below ten-year average prices, MSCI said).

The construction lender to One Kane Concourse is 3650 Capital, whose co-founder Jonathan Roth, said in a statement that “demand for ultra-luxury office continues to be healthy.”

Oh, and Another Mega Loan for the Lux Mall Next Door…

Weren’t we just talking about Kane Concourse? (see above). Well, the other end of it also got a hefty investment this week.

The luxury mall Bal Harbour Shops scored a $740 million loan, courtesy of Blackstone, one of the world’s largest investment firms.

The loan refinances the mall’s $550 million debt from 2019 — and will fund the construction of its 250,000-square-foot expansion, which is set to wrap up next year, the Real Deal reported.

The luxe shopping haven, owned by Whitman Family Development, currently has 110 tenants, including Gucci, Chanel, and Prada, with Saks Fifth Avenue and Neiman Marcus as anchors.

And it’s pretty much full: at 98 percent occupancy, the 500,000-square-foot retail center is expanding so it can add ever more retail and dining tenants.

The Billionaire Bunker has an Opening

🚨 New listing alert: A 1.8-acre lot on Miami’s Indian Creek Island — the so-called ‘billionaire bunker’ where Jeff Bezos and Ivanka Trump own homes — has been listed for sale at $200 million.

Yes, that’s $200 million for land without much on it — except the potential to build a mansion near some wealthy and famous folks.

“Private guarded Island with restricted access 24 hours and its own police force by land and marine patrol,” reads the listing via Zillow.

Buyers of the lot — cash only, please! — get the design, budget and planning expertise of a "billionaire builder” for a future 25,000-square-foot home (extra cost), per the listing. Plus: 200 feet of private waterfront and some distant views of the Miami skyline.

Tom Brady and Carl Icahn will also be neighbors on the 300-acre island. Jeff Bezos happens to own three homes there. He bought that last one to live in while he tears the first two down.

(H/T Taylor Jones)

That’s it for today!

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