Extreme Condo Flipping in West Palm Beach!

And more data shows: everything is expensive.

Related Cos. Buys Chance to Build West Palm’s Priciest Condos

Talk about the ultimate condo flip. 

Houston-based Hines and its partner, Frisbie Group, were gearing up to build a luxury condo project in West Palm Beach in all the usual ways: they acquired a prime site, hired a famous architect, and saw the plan get tied up in court. The lawsuit (by a rival bidder for the land) was settled last month. And even before that, a sales effort had been underway for the future development’s 89 residences, where prices had started at $10 million.

This week, comes even bigger news: Hines and Frisbie sold the project, South Flagler House, to Related Cos. for nearly $195 million, more than four times what they paid to acquire the site.

It’s a surprising move for Hines, a global firm that’s tripled its South Florida investment team in the past year, and declared plans to invest heavily in the state and its southern region. A Hines managing director said in an interview last month that the area’s changing demographics and wealth migration creates “a true transformation of the marketplace.”

South Flagler House rendering (Photo: Related Companies)

The South Flagler House project will be built on land that once housed dormitories for Palm Beach Atlantic University, which Frisbie and Hines agreed to acquire in 2019 for $41.5 million. The sale was completed last year.

The partnership hired famed architect Robert A.M. Stern to do with the site what he’s done with many patches of land in Manhattan: design it into a trophy asset, in which the world’s wealthiest homebuyers might clamor to invest.

For Related, this is another piece in its growing portfolio in West Palm Beach, which includes luxury rental towers and seven office buildings under ownership, construction or in the planning phase.

South Flagler House will feature twin 28-story buildings along the waterfront, just south of downtown with “permanent unobstructed views of the Intracoastal and Atlantic Ocean,” according to a press release by Related. The sales effort started under Hines and Frisbie, had units priced as high as $75 million, making it one of the most expensive developments in the country.

Construction on the site will begin next year, Related said.

Miami Home Prices Rise — for 140th Consecutive Month

It’s hard to imagine doing anything for 140 consecutive months. (That’s more than 11 years). But it seems that Miami single-family home prices won’t quit climbing. 

A report this week from the Miami Association of Realtors says that home prices in Miami-Dade County jumped 10.8% in July from the same month year ago. The median sale price now stands at a record $631,670, the realtors group said.

More market tidbits:

  • Home sales dropped 8.9% to just 910 for the month of July.

  • And that’s because there’s very little to buy: single-family home listings dropped 23% from a year ago.

  • There were 59% fewer homes and condos for sale last month than there were in July 2019— before the pandemic buying spree.

  • This is where Miami is like everywhere else in the U.S.: so long as owners are locked into homes with with 3% mortgages (or even less!) they’re not likely to sell into a market where buying something new will require a 7% (or higher) loan.

We’re Number 1….. in spending paychecks on rent.

At least rentals are getting more affordable, right?  Nationally, a little. Not in South Florida.  

In July, the median rent for a studio-to-2-bedroom apartment in the greater Miami-Fort Lauderdale area was $2,455, according to a report by Realtor.com. That means a typical household in the region spends 44.2% of its median income on rent payments.

Which makes Miami’s metro the country’s least affordable rental market. It’s also one of the few where the share of income that goes towards rent climbed from last July.

Here’s Realtor.com’s affordability analysis:

Realtor.com Rental Burden Analysis

Where Are They Coming From?

In its report this week, Miami Realtors included this neat graphic showing the top ten U.S. counties where South Florida’s newcomers migrated from.

Three boroughs of New York City make the top-five list of feeder counties. Los Angeles and Chicago account for spots 2 and 4, respectively:

Migration Map by Miami Association of Realtors

Did You Know? Interesting reads from the week:

  • Miami is the new hub for sports investments: Since soccer superstar Lionel Messi’s arrival to Inter Miami, ticket prices are up 550% and Ares Management made a second investment in the soccer team at $75 million. (Benziga)

  • Harrah’s Pompano Beach casino in is getting a major development around it. 4,200 apartments, a 16-acre crystal lagoon, a Topgolf driving range, a hotel and a live entertainment venue are on tap for the 230-acre site with the casino at its core, according to an interview with Cordish Companies CEO David Cordish in the South Florida Business Journal. “Half the country is moving to South Florida,” he said.

  • Tenants in some Miami rental buildings may soon be able to sublease their units on Airbnb, according to Axios. The home-sharing platform just added Miami to its “Airbnb-friendly apartments” program which encourages renters to lease out their space part-time as a way of earning income.

  • Tesla is looking to open a third service center in Miami-Dade County. If its proposal is approved, Tesla would redevelop an existing 78,026-square-foot warehouse that was built in 1984. (South Florida Business Journal)

  • New Inter Miami star Sergio Busquets closed on a waterfront home in Broward County last week, according to the Real Deal. Busquets, who joined the team last month, paid about $8.7 million for a seven-bedroom home in Sea Ranch Lakes (The Real Deal)

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