Wednesday July 19, 2006
Let's build offices
Some interesting developments (ha!) in the last couple of days. Over at Transit Miami a guest writer points out that downtown needs more office buildings. And the Herald suggests that more office buildings we shall have:
Currently 1.5 million square feet of office space is under construction—including the University of Miami’s 350,000-square-foot Clinical Research Institute in Miami’s newly named Health District. Another 6.4 million square feet have been proposed, according to the city’s Planning Department.
In some ways this is a perfect compliment to the glut of condos springing up. But keep in mind that part of the reason for the cool off are worldwide skyrocketing prices for construction materials. They may put a damper on some of those proposed projects.
Particularly foreboding is that the developer of Midtown Miami wants to sell. Midtown is that huge development in Wynwood in what used to be a shipping yard: probably the biggest construction project in Miami right now. The owner is claiming that he wants to sell “for tax reasons,” and that he’ll make about the same amount of money selling now as if he held on until construction was finished and sold the finished units. Which idea the article pretty well refutes, suggesting the obviousness of the assumption that he’s trying to sell now because of low and dropping demand for residences. Maybe someone else can “buy the risk” and get hosed down the line.
Or maybe not. Over at Blueprint:Miami, we get Gary Hennes’ 10 reasons why Miami will keep booming. Not uninteresting, and quite plausible:
4. New luxury hotels and restaurants bring new visitors each day, many who explore possibilities of owning something here.
5. Continued low crime rates, expansion of cultural institutions and sports venues make the quality of life better each year.
Go read the rest. What to do with all these contradictory messages? Maybe just to hang on for a bumpy ride.
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“4. New luxury hotels and restaurants bring new visitors each day, many who explore possibilities of owning something here.”
But the reality is, how many of these tourists on vacation can afford 500k on a 700 square foot 1-bedroom apartment?
From my experience, most of the people who vacation here are on a limited budget.
As far as building new offices in Downtown “glut” is the perfect word. Have you seen the number of completely vacant office building in Miami Beach? I can think of 7 vacant buildings off the top of my head.
The Midtown Developer is no dummy.
The writing’s on the wall.
You know, that’s so funny, because yesterday at dinner I was discussing the Midtown development news with some people connected in real estate in the area, and apparently one of the plans is to scuttle the condominiums idea and convert the whole thing to an office/retail park. I would never thought so, but it seems the demand for office space north of downtown is very real.
I’m with Gus on this one – spot on!
Too bad you guys are wrong. There is going to be an enormous demand for office space in downtown in the coming years. Canceling residential towers and developing them into Office buildings is a bright idea for any developer. More office space means that we can continue to be a competitive place for big industry rather than a city of second vacation homes for the rich. Office buildings in our densest areas is good urban planning and is necessary to improve the infrastructure of our city. Why does everyone have such a negative view on positive growth, its inevitable, we might as well grow intelligently. Office park is in suburbia just aren’t going to cut it any longer, we need to centralize ourselves. The so called real estate bubble has been on the verge of bursting for years now, yet prices have continued to rise steadily. I read a NY times article dated back in 2000 that spoke of the imminent collapse of the Miami Beach market, glad we didn’t pay attention to that speculator because prices continued to rise for the next 5 years.
Point is, we need to stop being so anti-development and pro smart growth. Expanding the UDB or continuing to build developments which are only accessible by vehicle is the wrong thing for this city and county and must be stopped immediately.
The so called real estate bubble has been on the verge of bursting for years now, yet prices have continued to rise steadily.
Would be nice if it was true, but it’s not. Prices are are falling; the only thing increasing is inventory. I’m with Gus.
Prices are stabilizing, not sinking…
Besides thats Residential real estate, we’re talking commercial which has roughly 10% or less vacancy rate in the county
Hey, like, do these office spaces come with jobs and stuff???
Excellent question, Manola. Office space + companies that want to move in = jobs. I would think it would happen, though – Miami has one of the strongest economies in the country.
“Prices are stabilizing, not sinking…”
Call it what you want, Gabriel – they’re going down, and have been for months.
MBBB,
Can’t attract more jobs if there isn’t enough space…
Its a Catch 22…
Wait a second though, correct me if I am wrong Alesh, but, I agree that condominuim prices are sinking, but, the price of land has remained constant throughout the county. I think when we analyze housing costs we should look at two categories: actual houses vs condos.
From what I have seen, the selling market has cooled off for houses but their prices have remained constant. Condos have seen drastic decreases in both….
Is there some validity to my logic? I swear I read this not too long ago in a local news report…
I just want to know if they are going to put in some parking areas downtown to support these offices. So far I’ve seen two of my parking lots converted to office construction sites, and I’m paying $100/month for a parking space, and that’s at a discounted corporate rate.
I wouldn’t mind so much if there was reasonable mass transit option, but right now it’s an hour and a half each way by bus. I’m working ten hour days as it is.
It’s Gary Henne’s job to sell the Kool Aid in what is obviously a real estate market that is collapsing. But some others, well, you know those kids that get on those websites and post pictures of the latest shiny, colorful towers proposed from here to the Congo resembling no project that will ever be built. Colored glass, reflective metals, geometrical shapes, and the latest Autocad tricks seem to make these kids drool. God save us from those kids, should they ever grow up and move beyond x-boxes; they’ll fill the market for new generations of Trekki geeks. And they will be victims of Gary Henne. (And that’s not a blog, it’s an advertisement.) I even detect some of that glass eyed “optimism” in the face of reality from Transit Man. I so like him and his sight that I want to do an intervention.
Still I understand that Gary needs a new game now that the housing bubble has burst all over his gelled hair, perma-tan and porcelain veneers. Alesh said it- Foreclosures, rising interest rates, skyrocketing cost of materials (China’s economy just grew by a record 12% so materials will become even more expensive). It’s his job to sell, not to fix underlying problems with bad government, an unprepared workforce, declining infrastructure,
1. More visitors from South America go to New York and LA, even though virtually all flights go through Miami. South American visitors are thus bypassing Miami, even as they fly through. Disturbingly, almost as many South Americans visit Orlando as Miami. More business and investment by Latin Americans goes to New York and Los Angeles too. There are actually more Hispanics in New York than the entire population of Dade County (all races). Same is true of L.A. Orange County and suburban New Jersey have larger Hispanic middle income populations. Miami is so “Latin” because of the absence of those who are not Latin. But that’s a whole other story. Miami is by no means the “capital of Latin America”. It is the capital of the Cuban Diaspora.
As long as there are sun loving Germans and Brits, and there always will be, we will continue to vie with the rest of the Caribbean, and the south of Spain and France for that matter. But our real breadbasket of tourism will continue to be the Northeast, Midwest and Canada. Americans (and residents of our vassal state Canada) still prefer to stay in country rather than travel abroad. And that’s why we get the “sophisticated New Yorkers” (see Memorial Day) who do in fact vacation. But that’s tourism, not real estate. Mr. Henne is confusing the issue.
2. Strict height and density control? What? Okay, official moron alert! The City of Miami has approved what may be one of the most liberal height and density provisions of any city in America. The county has determined that you can build anything you want, even on their parents’ graves if you contribute campaign donations and a little sticky money. And what is this shortage of land? You can develop along the water front for seven counties up. This isn’t New York and the Northeast where there is a densely packed corridor for 400 hundred miles. There are over 25 million people in the immediate New York City metro area. Florida is like an unsettled wilderness in comparison. South Florida’s growth happens because of available land, not the shortage of it.
3. Coral Gables, I’ll let you take that one. As for Boca and Palm Beach, I don’t like them personally but they are experiencing record growth while Dade County continues to have record out-migration of Americans. Our county is getting more Haitian, Dominican, Puerto Rican and Cuban by the day. Ironically, even the Hispanic middle class is leaving for Broward and West Palm Beach.
4. Gastronomical delights? The restaurants aren’t that great in Miami Beach. More importantly, no one is going to say, “hey, that’s was a damn good meal, let’s move to the poorest city in America!” You’d have to sprinkle crack on the sea bass. The spike in interest rates and the record high personal debt has put an end to the second home boom.
5. Crime has been “going down” throughout the nation. Comparatively, Miami is still one of the highest crime cities in the nation (and the highest city in violent crime in 2005). It has some of the highest home prices (for now at least) and we all know how infamous both local traffic and driving etiquette has become. The beaches are still great though!!!
6. What infrastructure improvements is he talking about? The flyover on 69th? Miami needs new east-west and north-south corridors like a man in hell needs ice water. Yet our own DOT estimates say that we almost 30 years behind and falling deeper in the hole… if bond money did not magically disappear into LBA, lobbyist and politician pockets we might have new schools, a new airport, new roads and a transit system worthy of the name. Oh well.
5. Crime has been “going down” throughout the nation. Comparatively, Miami is still one of the highest crime cities in the nation (and the highest city in violent crime in 2005). It has some of the highest home prices (for now at least) and we all know how infamous both local traffic and driving etiquette has become.
7. Good government… Miami… Brain… Hurts…
8. People don’t live here BECAUSE of the lack of diversity. Our diversity amounts to, “What part of Latin America are you from?” There are few cities that are more racially/ethnically charged than Miami, and none where the U.N. isn’t currently deployed.
9. Doral and downtown have record office vacancies. Why are they not filled with jobs? We need new office space! Jobs come with new industries, technology and a highly competitive (educated, healthy) work force. Let’s see tourism… Highest drop out rate; highest illiteracy rate in the country, highest proportion of non-English speakers, lowest rate of college graduates, highest rate of HIV/AIDS and infectious diseases…
10. “Growth fuels more growth”. Now there’s an argument any Floridian can understand. Boom and bust. There is a new group of suckers to fuel a new cycle every twenty five years. It’s a lot easier to wait for the next one rather than building a sound economy.
Intervention? Save it. Just a forward thinking engineer that would rather see some progressive plans instituted to deal with whatever mayhem may arise in the next “Boom”. We need a combination of things to control our growth and need a sound educated public to make better decisions for our community. A total reversal needs to occur in Miami in nearly every department (Education, Industry, Politics, etc.) before we can dream big. I Understand that. However, we have to start attacking the problems somewhere. Sustainable development is not a bad thing for our community, especially if it’s controlled and guided properly. Unfortunately, we lack the political foresight and know-how to do any of those objectives soundly and lack the college educated citizens to make better decisions. Our politicians are not going far enough to create reasons for industries to come back to South Florida.
Optimism, precisely, because I choose to see the glass half full and know that with determined and motivated citizens we can hold our elected representatives as well as ourselves more accountable for what is going on in our city. I know it’s easy to sit here behind a computer and dictate what should or shouldn’t be done, that’s why I go out into my community and try to turn my words in actions…
Gabriel (#10)~ you’re right; my figures average all homesales. Distinguishing between condos and houses (i love your use of the word ‘actual’) probably has prices of houses still slowly rising. I see the trend, but we’ll have to wait and see how it bears out.
Marc~ I know, right?? Parking downtown is a fucking nightmare (even on the weekends). Unfortunately, I don’t see how even a dozen garages would significantly change it. Might make your monthly bill go down, tho ($100 is fucked up). When I work in downtown, I’ll be taking public transportation, but I realize it’s unrealistic for many; more then one transfer, or more then 150% of by-car travel time, are probably both deal-breakers for car owners.
John~ Good grief; that’s over 1,000 words!! I’m not sure what you mean by “ironically” in #3. Re #6, FDOT assures me that no new highways and no new lanes on existing highways are on the way. Otherwise, you’re hilarious, and probably right on target. Damn.
Gabriel (#13)~ Rock on.
Thanks for the backup Alesh and looking into the figures. A recent Herald article spoke of how Homes are retaining their value while sales have decreased. Condos, are facing decreases on both sides, thus making the market seem much gloomier than what it really is. Condo’s were speculative investments on many occassions, but not all. Homes will retain their value because of the land they are sitting on, especially here in South Florida and do not face any risk of starting to decrease in value unless huge tracts of land outside the UDB suddenly become available or a mass exodous of people suddenly occurs (Due to hurricanes, massive employment issues, etc)...
I agree with the gist of what you’re saying Gabriel, but just like referring to ‘actual’ houses (implying that a condo is a figment of someone’s imagination), you’re making some huge semantic mistakes.
You’re using the word ‘home’ to mean ‘free-standing house.’ I take issue with that from an ecological-footprint perspective. It’s absurd to imply that a condo is not a home, and while I don’t think you’re doing it consciously, it’s a significant mistake. Every person living in a condo is one less person buying a house. The further condo prices drop, the more attractive condos start to look compared to houses. So, and this is contrary to many peoples’ notions – the two markets really are one and the same.
A condo is a home. A house is a home. Some people will insist on living in a house, but as the difference in prices increases, those people will tend to defect and purchase condos.
Granted, It’s not a separate category currently and overall the trend shows a downward pull due in part to condo sales. However, I think the two types of homes in general should be divided up into separate categories when discussing the housing market. There is a fairly large difference between both types of dwelings and it has become fairly evident that each one has its own market strengths and weaknesses before looking at an overall picture.
Excellent points though. On a separate note, I wish we would see a greater supply of Apartments becoming available as rentals to satisfy the lower-income needs…
I enjoyed John’s long rant and I do agree many real estate agents are putting on the rose colored glasses to hide their panic. I think there is as much of an oversupply of realtors as there are of units. Many people switched careers to latch on the real estate train and its promises of riches. Here in Miami Shores it seems like every other resident is a realtor. That too will correct itself.
However, I took exception with a couple of his points; namely the one about Miami being the capital of the Cuban diaspora (Cubans, although the largest group, are not the absolute majority anymore and haven’t been since the nineties). And Miami has the highest income per-capita Hispanics on the nation, by far. BTW, when you say “Haitian, Dominican, Puerto Rican and Cuban” you are forgetting Venezuelans, Nicaraguans and Colombians, which actually outnumber all other groups except Cubans in recent years.
I want to know where John’s data comes from for “Doral and downtown have record office vacancies” (I understand it’s actually the opposite) and “More business and investment by Latin Americans goes to New York and Los Angeles too” (WTF? Prove it buddy).
And the overall tone, which seems to be “Miami is fucked because of inmigration and white flight”, especially #8. All that “white flight” to Broward and such, how is that helping those cities? The bubble is actually bursting up worse up there. Every problem we have in Miami -- high median home prices, lack of affordable housing, overpriced properties -- is worse in Fort Lauderdale.
There has been no real study (to my knowledge) of who buys what, so this is all speculative and annecdotal from all sides. People are just bending the argument to fit their purposes. Any good realtor will tell you that many of the buyers for those new luxury condos are retiring baby boomers, Northeners looking for a second home and wealthy South Americans who have moved their families here escaping political and economical unrest. Those people saying “who can afford those condos” are partly mistaken. The units will be absorbed eventually, but the overinflated prices will have to come down to earth. It’s all basic supply and demand guys. The market is not just here – but then it never was anyways. Look at Bal Harbour and tell me how many of those condo owners actually live here. Too whealty, you say, not a good example? Ok, look at the condos right before Surfside in Byron and Abbot. Out of 18 units in my old condo, 8 or 7 were owned by Germans who rented them.
Finally John, go eat at the Setai, Timo or Michy’s, then tell me the food here is not that good. Yes it’s expensive, but so are all the restaurants people keep talking about in NYC, Las Vegas and Chicago.
I didn’t mean the crossed out text in my previous post. Don’t know where that came from, I’m not HTML literate enogh to use tags, so maybe Textile or whatever the software is just lives in Ft. Lauderdale and doesn’t like my trashing of it.
“I want to know where John’s data comes from for “Doral and downtown have record office vacancies” (I understand it’s actually the opposite) and “More business and investment by Latin Americans goes to New York and Los Angeles too” (WTF? Prove it buddy).”
-Excellent. Downtown Vacancy is hitting an all time low. Miami is only second to NYC in International Banking.
Bravo, gansibele! I forgot to mention this when Rick brought it up, but I totally second the cries for you starting your own blog.
I fixed your crossed out text. Textile is a trickt bastard, and when you surround a bit of text with dashes it does a strikeout. Pretty dumb, but there you go.
Excellent post gansibele….This guy John is looking at the glass half empty and does not see the overall picture…He talks about Cubans, Puerto Ricans, Dominc, amd the Hatians, sorry buddy I see more people from South America than I have ever seen since I lived in South Florida (Broward county)...I will admit, I bought a condo in Midtown for an investment, but guess what happend since then. My wife got a job working in the design district, my job transferred my to Doral and now that condo investment is going to be our home….I am a financial advisor for a Private Wealth division that just created a whole new department here in Miami. Guess who my clients are south americans and europeans…Dollar is weak, guess who is investing with us oh by the way they are buying condos here in mia…especailly in south america with most of those countries having political problems, people want to move away and I am sorry they are not moving to LA or NY…they are moving to mia and setting up camp here. Why would my company open up a Private Wealth department in Mia to taylor to Latin america/europe. Hey John if you are saying they are moving to NY and LA, then why not just have my department based in NY…becuase they know where the money is and will be, not you John…send your message to goldman sachs and they will laugh at you…you think MIA is going to be a bust…sorry folks Ft. Lauderdale better be careful and I am glad I am moving to Mia. Why restuarants, night life, shops, weather, and my Heat is going to be the next dynasty..no parking, guess what MIA is going to be the next NY and LA but with more of European/Latin twist…Lets see John when this whole picture develops where will you be, applying for a job in Miami and looking for a place to buy….No I don’t thinks so, you are better off living in Ocala eating at Wendy..talking about no nice restaurants…do you go out at all..do you have a wife or girlfriend you can take her out to dinner…send me an e-mail,and I will recommend a couple of restaruants for you to eat and enjoy.
The vacancy rate stands at 8.4 percent in Miami Beach, 9.6 percent in downtown Miami and 10 percent in Miami’s Brickell area, according to real estate brokerage CB Richard Ellis. By comparison the brokerage reported that vacancy rates a year ago were 17 percent in Miami Beach, 13 percent in downtown Miami and 17 percent in Brickell.
http://www.miami.com/mld/miamiherald/business/15088841.htm