💸 Flock of Floridians

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Happy Friday Highest & Best! Here’s a rundown of news from the Florida real estate week that was:

💸 The New York to Florida migration is still happening. Just slower.

😎 Billionaire Stephen Ross goes all in on West Palm Beach

⚖ A courthouse for sale

🚨 A foreclosure stalled

Let’s get to it!

New Yorkers Still Pouring into Florida — at a Slower Pour

The wave of migration into South Florida has mellowed since its 2022 peak. But there’s still more people moving in than before the pandemic.

In the first half of this year, 36,096 people in Southeast Florida exchanged their out-of-state driver’s license for a Florida license (a sign of establishing residency), according to a report by the Miami Association of Realtors. That’s 19% fewer move-ins than there were in the first half of 2022, at the height of Florida’s in-migration frenzy. (<— I was one of those 😎 ).

🌴 BUT: the re-locators are still coming in greater numbers than they did before Covid. In the first half of 2019, there were 33,986 driver’s license exchanges in South Florida — which is 6.2 % fewer than there were in the first six months of this year.

Some interesting stats about who’s coming:

😁 New Yorkers, by far, made up the majority of newcomers. And they’re arriving a faster clip than they did pre-Covid. In Miami-Dade County, there were 35% more New Yorkers who moved in this year than in the first half of 2019. Broward County, which includes Fort Lauderdale, saw 8.6% more New Yorkers this year, while Palm Beach County had 8.7% more.

😎 Californians are streaming in too. In Miami-Dade County, there were 1,222 driver’s license exchanges this year by people from California— or 57% percent more than in the first half of 2019. In Palm Beach County, Californians exchanged 30% more licenses this year than in pre-pandemic 2019.

🤗 St. Lucie County, where the median home price is $400,000, saw 35% more New Yorkers trade in driver’s licenses than in 2019. The lower cost of housing there is likely attracting retirees, according to the Miami Realtors’ report.

The Miami Realtors’ complete report, with county and state migration figures, is here.

And the chart below shows Florida driver’s license exchanges for the first half of each year since 2019:

Who Swapped their Driver’s License for a Florida One?

⏪ Catch up on recent Highest & Best issues:

• Ruthless Rental Reality, June 29, 2024

• Going Full Floridian, June 22, 2024

• Miami Mega-Loan Mania, June 14, 2024

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Billionaire Stephen Ross Goes All-in on West Palm Beach

“I really believe this is the best place in the United States,” Stephen Ross, the billionaire mega-developer said in April about the city of West Palm Beach.

This week, Ross, 84, amplified that sentiment with a dramatic announcement: he’s stepping down as chairman of Related Cos., the New York development firm he founded more than 50 years ago, and is spinning off its Florida division— based in West Palm Beach— into a new company in his name.

The new venture, named Related Ross, will take over the staff and assets from Related Southeast, making it the largest owner of downtown commercial space in West Palm Beach, with nearly 3 million square feet owned or under construction, the Wall Street Journal reported.

Ross, who also owns the Miami Dolphins, has had a home in Palm Beach for about 20 years and, like many other well-heeled New Yorkers, moved to Florida permanently during the pandemic.

His original firm, Related, has been capitalizing on the migration of others to the area from New York and elsewhere, buying up office properties and building new ones in West Palm Beach, while signing blue-chip tenants like JPMorgan Chase and Goldman Sachs.

Related is also getting into the luxury condo business there, with waterfront projects like the Shorecrest (starting price $1.3 million) and the 108-unit South Flagler House, where $5.9 million is the floor.

Oh, and he’s working to lure Vanderbilt University to the city as well. Ross hosted a fundraiser at his home earlier this year, where he procured at least $100 million toward the development of a West Palm Beach campus for the Nashville-based Vanderbilt.

Ross will still own a stake in Related Cos. and will continue in the role of nonexecutive chairman, the Journal reported. He said it’s possible that Related Ross and Related Cos. could work together on future development deals.

“On something big, I [may] bring them in,” Ross told the Journal. “We will still talk.”

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A Courthouse to Call One’s Own

Justice may be blind, but this Miami courthouse is for sale to the highest bidder.

Miami-Dade County is seeking a buyer for its nearly 100-year old courthouse, and is planning to auction the property, according to documents inviting the public to bid.

The minimum bid for the 27-story historic tower is $52.3 million. And it’s being sold “as-is.” So let the mind run wild on how you’d re-decorate the courtrooms.

The property, at 73 West Flagler Street in Miami, is still in use as a courthouse and also holds administrative offices for county officials. In 2021, a safety inspection raised concerns about the building’s structural integrity, and recommended that floors 16 and above be evacuated until repairs were complete. A new court complex is being built nearby, which means the for-sale courthouse will eventually be vacant.

The courthouse was built between 1925 and 1928, according to documents from the county’s Office of Historic Preservation. It was designated a local historic site in 1985 and four years later, it was added to the National Register of Historic Places.

Miami-Dade County will host a “pre-bid conference” on Zoom on July 15 for those interested in buying it.

Bankruptcy! Cyberattacks! And a Stalled Foreclosure

A July 2 foreclosure auction for this newly built Miami office building was cancelled after the owner of the property filed for bankruptcy.

Legal entities affiliated with R&B Realty Group — the Manhattan developer that owns the Gateway at Wynwood — filed for bankruptcy in New York on July 1, averting the imminent sale of the office property at auction in Miami.

R&B Realty Group, stopped making mortgage payments on a $113 million loan in December. Last month, a judge ordered the sale of the building to satisfy the debt, which stands at $111.9 million (including default interest and late fees).

It would have been the largest Miami foreclosure, based on loan amount, since at least 2022, when property intel site Vizzda began tracking such data.

Meanwhile, the Chapter 11 bankruptcy filing in New York gives a window into what might have happened to make a new building in one of the country’s hottest office markets go sour:

Cyberattack!!!

In 2020, while the Gateway at Wynwood was under construction, a payment of $3 million to the general contractor was diverted and stolen by internet thieves, in a “completely unanticipated cyberattack,” (is there any other kind?), according to bankruptcy filings. The building owners lost “valuable liquidity” and R&B’s investors had to “contribute capital to make up for deficiencies,” the Real Deal reported.

Two years later, the construction loans on the building came due— bad timing given commercial property lending was getting more restrictive and refinancing more expensive. R&B tried selling the building, but couldn’t find takers.

So it took out a short-term $113 million loan just to get by. The borrower made partial payments of $400,000 a month on that debt through April, it said in court filings. But despite those “good faith efforts” the lender still sought to foreclose, the Real Deal reported, citing R&B’s court filings.

The Gateway at Wynwood, has about 195,000 square feet of office space and 25,000 square feet of retail space and is 70 percent leased, according to the bankruptcy filing.

The building has a potential value of $120 million if it could become “stabilized” with more tenants, the owner said in the filing.

That’s it for today!

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