🌇 Skyline Gold Rush

Miami rental boom. A $150 million condo. And a billionaire exits.

Happy Friday H&B readers! Lots of news to share about the South Florida real estate week:

🏢 Miami is sprouting rentals

🏝️ Miami Beach is blooming a $150 million penthouse

💸 A billionaire bids farewell

📈 Insurance is too darn high

Let’s go!

Miami’s Apartment Construction Boom 

2900 Terrace (Photo: Arquitectonica)

Call it the Multifamily Metro or the Renters’ Region. The greater Miami area is projected to be one of the top U.S. locales for completed new apartments in 2023, according to a report by RentCafe.

This year, 20,906 newly built rentals will be added to the Miami metro market — making it fourth place in the U.S. for apartment deliveries this year.

The city of Miami alone is expected to add 9,362 apartments, one of the highest tallies of any city in the country.

Developers are not only betting that the surge of population coming into South Florida will continue, but that the income profile of people who seek to rent will be higher than it ever was.

So far, it’s looking like a reasonable wager:

💰 Across all of Florida: 1.82 million jobs have been added since April 2020, and 58% of them are in high-income industries such as finance and technology, according to a September report by Institutional Property Advisors.

💰 Of Florida’s big city dwellers who moved into professionally-managed apartments this year: the average household annual income was roughly $123,400—or 27 percent above the U.S. mean of $97,400.

💰 Miami developers will open 30% more rentals this year than last— and yet demand is still there, with an average of 24 would-be tenants competing for each apartment, RentCafe said.

So naturally, the proposals for skyscraping rental towers with luxury amenities to rival condos are still coming. Here’s one that was approved last month at Miami’s Urban Development Review Board:

Rendering of 2900 Terrace (Photo: Arquitectonica)

The tower, called 2900 Terrace, promises 324 “oversize” apartments for “design-conscious renters” with round-the-clock concierge services in Miami’s Edgewater neighborhood.

That’s how the developers, Oak Row Equities and LNDMRK Development, put it in a press statement.

Seeking to appeal to both “families and executives,” the to-be tower will also include: co-working spaces with podcast studios, a pet spa, a golf simulator, a theater, two padel courts and a “content creator studio.”

Move-ins are anticipated in 2026.

Record Setter? Developer Plans $150 Million Condo

Rendering of Rosewood Residences (Photo: SHVO)

Is Miami ready for a $150 Million condo?

New York developer Michael Shvo thinks so.

The 17-story glass condo tower he’s planning on Miami Beach will have a 13,000-square-foot penthouse for sale at that nine-figure price, Shvo said this week in an interview with Bloomberg News.

If sold for $150 million — or even for half that— it would be the priciest condo deal in Miami-Dade County history.

The apartment will occupy the top floor and rooftop of Rosewood Residences, a planned building directly on the beach near the historic Raleigh Hotel, which Shvo is also redeveloping.

When completed in 2026, the penthouse will include a rooftop pool, a rooftop garden, and an al fresco kitchen for a total of 16,750 square feet of outdoor space.

The $150 million price tag to live on Miami Beach makes sense because…….condos facing New York’s Central Park are fetching $13,000 per square foot?

That’s what Shvo told Bloomberg:

“There’s no reason that people will pay less to be 100 feet from the ocean than they do to be 100 feet from Central Park,” he said.

The record sale price for a condo in Miami-Dade County stands at $60 million. And it was set way back in 2015, when hedge fund billionaire Ken Griffin purchased a pair of penthouses in one Miami Beach deal.

There are two condo listings on the Miami market —or coming soon — that are trying to match or surpass that high watermark, as reported by Highest & Best last month.

A Billionaire is Leaving Miami

6440 North Bay Road (Photo: MLS/Coldwell Banker Realty)

Sure, Amazon founder Jeff Bezos is moving to Miami. But Dan Loeb is moving out.

Loeb, the billionaire founder of hedge fund Third Point, says he no longer spends much time in the Miami Beach vacation home he bought in 2020 as a haven during the Covid pandemic.

So he listed it for sale Thursday at more than double what he paid, the Miami Herald reported.

Loeb is seeking $45 million for his seven-bedroom, 13,386-square foot home along the Biscayne Bay waterfront. He bought it in December 2020 for $20 million.

The home, at 6440 North Bay Rd, comes with the basics expected at such a lofty price point: a boat slip, a mosaic-tiled pool, a home theater and a wine cellar.

“Miami is such an exciting place right now,” Loeb, who lives in New York, told the Herald. “And this property is a perfect base to experience everything the city offers.”

Loeb’s home listing comes as his hedge fund endures financial losses and a wave of clients seeking to withdraw their money. Third Point, with $11.7 billion under management, saw assets fall about 1.6% this year through August, following a 22% plunge last year, the Wall Street Journal reported in September.

Insurance Ate My Income

 Share of commercial property income used to pay insurance, by state

Source: MSCI U.S. Quarterly Property Index

It’s not just Florida homeowners who are seeing their bills for property insurance surge. If you own an apartment building, an office or a hotel in the state, the costs of insuring it is taking a bigger bite of your income.

In September, 4.4% of rents received from commercial property in Florida went toward paying annual insurance premiums, according to data from MSCI Real Assets. The share was 3.3% just a year earlier, in September 2022.

💸 Owners of income-producing property in Florida fork over the highest share of their received rents toward insurance premiums, MSCI said.

💸 Nationally, insurance costs ate 2.3% of commercial property income in September— more than doubling since September 2018, when the share was just 1%.

💸 Rising insurance costs in Florida — land of hurricanes, floods and sinkholes — could put a damper on commercial real estate investment in the state, as developers weigh whether those expenses make sense, in addition to the already high costs of borrowing money.

“The consequences of higher insurance costs may not be as dramatic as the impact that tighter monetary policy has had on commercial real estate,” Bryan Reid, executive director of MSCI Research, said in a blog post, “But are nevertheless reshaping the calculus for investors.“

Home Prices Ate My Income Too

2023 has been the least affordable year to buy a home in the U.S. — and even more so in South Florida.

According to a new affordability report by brokerage Redfin:

💵 A person making the median income of $75,000 in Miami would have to spend 54% of their earnings on monthly housing costs, if they purchased a median-priced home this year at $504,990.

💵 In West Palm Beach, a buyer with that same $75,000 median income would spend 49% of it on housing costs if they purchased a home at the median price of $458,807.

💵 Fort Lauderdale homebuyers earning the median income fare only a bit better: only 44% of it would go towards housing costs, if they purchased a home this year priced at the area median of $411,700.

💵 In the U.S. overall: Someone making the $78,642 median income in 2023 would’ve had to spend 41.4% of their earnings on monthly housing costs. That’s the highest national share on record and is up from 38.7% in 2022.

That’s it for today!

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