🌀Milton and Milestones

Happy Friday Highest & Best. It’s been a week in Florida. Hurricane Milton — the second major hurricane in as many weeks — carved a deadly and destructive path across the state, cutting power to millions, and leaving behind a trail of damaged and destroyed property.

At the same time, this was a week of big Florida property deals, a sign that the state is still very much in favor with the investor set. Here’s the rundown:

😐 Milton insurer loss “only” $50 billion

💰Waterfront apartment cha-ching!

🫰Second-largest Florida office sale ever

Let’s get to it.

Moving on from Milton 

Hurricane Milton slammed into the west coast of Florida on Thursday morning as a Category 3 storm, carving a path of destruction that flooded neighborhoods, unleashed tornadoes, ripped the roof off a major sports venue, and toppled a crane — building the Gulf Coast’s tallest residences — into an office building, housing Tampa’s daily newspaper.

And yet, the state appears to have avoided the "worst-case scenario" outlined by meteorologists and financial analysts, who on Wednesday forecast as much as $175 billion in insured losses from Milton alone.

😳 $50 Billion Loss? Now Fitch analysts estimate that Milton will lead to between $30 billion and $50 billion in insured losses, according to a report published Thursday. That’s still the largest insured loss since Hurricane Ian in 2022, which caused $60 billion in losses.

What could this mean for Florida’s already shaky and very expensive home insurance market?

👋 Bye-bye rate decreases: Florida property insurance rates saw flat to 10% declines this year, due to the relatively mild impact of the 2023 hurricane season, Fitch estimates. So long to that.

Hurricane Milton will push losses for global insurers past the $100 billion mark in 2024 — the fifth consecutive year surpassing this threshold. That’s going to whittle any further appetite for rate deceases in Florida, Fitch said. And there’s more than a month of hurricane season left to go.

“The property market could see a hardening of premium rates, depending on the ultimate Milton losses and the amount of additional catastrophe losses for the remainder of 2024,” Fitch wrote.

😬 Last-Ditch Insurer is OK (for now). Citizens Property Insurance, Florida’s state-run insurer of last resort (with 1.26 million policies) — will be able to withstand the payouts stemming from Hurricane Milton, the Tampa Bay Times reported.

Though 20% of Citizen’s policies are in Sarasota, Manatee, Pinellas and Hillsborough Counties — amounting to about $88 billion in exposure within the storm’s cone — “the marketplace is poised to weather the impacts of these storms effectively,” Mike Yaworsky, the Office of Insurance Regulation’s commissioner, told the paper.

🤔 Let’s Talk About Fix: Hurricane issues will “dominate” Florida’s next legislative session, according state Senate President Kathleen Passidomo, who said the state should adopt a “a whole new philosophy” around how to rebuild after a storm.

“When Ian went through Naples, we had a lot of older condominiums that got destroyed,” said Passidomo, a real estate attorney whose home in Naples was also damaged. “I think that’s something that’s going to dominate the conversation — how we’re going to rebuild, how we’re going to insure these buildings.”

⏪ Catch up on recent Highest & Best issues:

• Go With the Flow?, Oct. 6, 2024

• Hangar Games, Sept 28, 2024

• Flip the Script!, Sept 20, 2024

• Rental Roller Coaster Ride, Sept. 14 2024

Miami Waterfront Cha-Ching!

Must be nice to have some prime Miami real estate to sell, at exactly the time investors clamoring to buy some.

That’s the deal for Aimco, a publicly-traded apartment landlord, which this week announced a blitz of deals for properties it’s looking to offload in Miami’s choicest locations.

Aimco has agreements to sell a waterfront apartment tower in the Edgewater neighborhood, plus a nearby development site for a combined $204 million, the company said this week.

The 28-story apartment tower, called The Hamilton, is under contract to be sold for $190 million, with a non-refundable deposit— so no backsies. Aimco bought that 40-year-old property in 2020 for $81 million, then embarked on a major renovation that required emptying it of tenants.

These days, the property, at 555 NE 34th St., with newly remodeled interiors, and outdoor lounges, commands two-bedroom rents that start at $4,400 and penthouses that lease for over $16,000 monthly, according to Apartments.com

Aimco is also seeking buyers for office and apartment properties it owns at 1001 and 1111 Brickell Bay Drive — In Miami’s financial district, the priciest office market and near where Ken Griffin’s hedge fund, Citadel, is planning a brand new skyscraper headquarters.

Second-Largest Office Sale in Florida History

Behold: the second-priciest office sale in South Florida history.

This 33-story office tower Miami’s financial district, Brickell, sold this week in an all-cash deal for $443 million — more than twice what the seller paid for it two decades ago.

The buyer of the property at 701 Brickell Ave, was Boca Raton-based Morning Calm Management, along with another unnamed partner, according to published reports.

The buyers paid cash for the office tower, Bisnow reported, citing Morning Calm’s CEO Mukang Cho. The waterfront building’s views, its recent renovations and its prominent tenants — which include financial giants BlackRock and Apollo Global Management— were all big motivators to pay up for the site, Cho told Bisnow.

“701 Brickell is a premier office asset that sits on an irreplaceable location in one of the most dynamic office corridors in the country,” Cho said. “We believe the premier office buildings on Brickell will continue to disproportionately benefit vis-a-vis other buildings in the broader market.”

The seller, by the way, is New York-based Nuveen Real Estate, a subsidiary of the Teachers Insurance and Annuity Association of America (TIAA), a firm that manages retirement funds for educators. TIAA bought the property in 2002 for $172 million. Hi teachers! 🥳

Buying 701 Brickell offers Morning Calm a chance to collect some of Miami’s highest office rents. The average asking rates for Class A offices in the Brickell neighborhood were $100.58 per square foot in the third quarter — a 5.6% jump from a year earlier, according to brokerage CBRE.

That’s it for today!

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