Posts filed under 'Economy'
The chart below is one of several I prepared that are based on the latest DDA Development Activity Breakdown Report. It represents office/retail development (built, under construction, and approved) from 2002 to mid-2007 in Brickell Village. In an effort to compare DDA data with with an alternative source (to get the best overall picture), I deferred to CBRE’s market outlook. Let’s look at the DDA derived chart first:
Continue Reading November 14, 2007
Matt Woolsey at Forbes comes up with a great analysis on the national real estate market downturn and the recovery patterns that often ensue. It references three recovery pattern types:
Continue Reading June 8, 2007
The WSJ points out that Florida’s decrease in building permits, construction material sales, and credit quality on residential construction loan portfolios make it the center of the housing “shakeout”:
Continue Reading May 15, 2007
Forbes recently listed Miami as America’s second most over priced real estate market. Now CNBC lists Miami as number 4 in its top five metro areas in (property value) appreciation.
CNBC analysis goes on to report:
“But there continue to be puzzling stories in the national mix that appear to defy employment and land supply. Take, for example, Miami. Florida is leading the housing bust, with existing single-family home sales in March down 28% statewide from a year ago. Prices statewide are down 4%, but not so in Miami…While single-family home prices in the city are flat, condo prices are up 18% over last year, despite the fact that the Miami skyline is still teeming with cranes.”
If you read the Forbes list you saw two of its targets on the downside of the CNBC list (San Diego and D.C.), but Miami, a Forbes target, is on the upside of the CNBC list. The articles are both looking at property value appreciation in the same city but drawing two very different conclusions.
The Forbes conclusion is that the prices in the Miami market are too high to sustain further growth. Forbes formed their conclusion by looking at the median household income of Miami-Dade county but ignoring the city’s appeal to domestic and foreign buyers.
The CNBC report looks at the property value increases as positive and the reality on the ground as highly active. The conclusion is that Miami’s real estate market, particularly the condo sector, is defying the odds and continuing to increase in value.
May 11, 2007
The Miami Herald has reported that “real estate giant” Tishman Speyer has bought Courvoisier Centre for $150 million. Tishman Speyer owns the landmark Rockefeller Center and Chrysler Building in NYC, and according to the Herald, the New York firm recently closed on the biggest real estate deal in U.S. history by acquiring an 80 acre apartment complex in Manhattan for $5.4 billion. Tishman Speyer’s reemergence into the Miami office market is not the only exciting news. Chicago-based Equity Office Properties recently acquired stakes in two Miami office buildings. Transwestern Investments, another Chicago-based company, bought a large office complex in the Gables. In the CBD, office vacancies have gone from 14.4% in the year 2005 to %10.2 in the present. On Brickell office vacancies have gone from 15% in 2005 to 7.7% in the present.
The boom in high rise construction in Miami has been mostly residential. This unprecedented vertical growth in the residential sector is highly unusual. Historically, high density booms throughout the globe, for the most part, have been composed of office buildings. Even today, in the major urban centers of the world (Shanghai, Hong Kong, Moscow, New York, Chicago, etc.) the most impressive high rises are commercial. This is not the case in Miami where there are plans for three 1,000ft towers, all residential, along with dozens of other residential skyscrapers taller than 400 ft.
With the economic growth and trade surplus of Miami, the city is primed for office growth. As mentioned here before, an increase in office development in Miami is inevitable and may eventually evolve into a boom.
April 12, 2007
A Malaysian trade mission toured three (3) U.S. cities in a 10-day effort to boost trade ties with the U.S. The embassy made its first stop in Miami. The Malaysian National News Agency now reports 78.93 million in sales having derived from the Miami trade mission alone. It has mentioned here before that Miami’s trade ties with Malaysia are increasing. The fact that the trade mission began in Miami is symbolic of the city’s growing importance for Malaysia’s trade with the U.S. and Latin America.
April 12, 2007
Miami is vital for U.S. trade with Latin America and the Caribbean. Bob: Miami spends quite some time discussing the Free Trade Area of the Americas despite the trade talks having stalled. This blog’s attention remains on the FTAA because negotiations for the trade bloc have been occurring since the first Summit of the Americas in 1994, which by no mere coincidence was held in Miami. In other words, the FTAA was not dreamt up yesterday and has maintained over 12 years of lasting power—at least as an idea. The FTAA is endangered not just because of lack of dialogue and compromise but also by the China Effect.
Continue Reading April 11, 2007
The first quarter stats for home sales and foreclosures in Miami indicate a downward trend for the former and an upward trend for the latter:
In February 2007, there were 12,430 single-family homes for sale, and 519 homes sold. The story was very similar with respect to condos. In February 2006, there were 13,436 condos for sale in Dade, and 965 condos sold. In February 2007, there were 22,025 condos for sale in Dade, and 617 condos sold. According to a recent published report, Florida foreclosure activity in February of 2007 was up more than 63% from January. That’s one foreclosure filing for every 382 households in Florida. There were 19,144 foreclosure filings in Florida during February, the most of any state.
View the full article here.
April 10, 2007
What do Hong Kong and Miami have in common? Well, for one, they are nearly on the same latitude. The city’s both deal with massive tropical storms, except call them by different names (hurricane and typhoons). Both metropolises are a hub for hundreds of multinational corporations, but Hong Kong is still leaps and bounds ahead of Miami. Aside from these basic similarities, the Magic City has a little bit of Hong Kong in it: Swire Properties Ltd. This international conglomerate is a big part of Hong Kong’s vertical evolution. The firm is one of the largest developers in the Chinese island-metropolis. They are the builders of Taikoo Shing, a 61 tower development. Swire also developed the monolithic multi-phase Pacific Place project, which includes four towers with three hotels (Shangri-La Hotel, Conrad Hotel, and J.W. Marriot - all with a presence in Miami: SLH in Island Gardens). Pacific Place also includes a high end shopping mall. Also in Hong Kong, the firm is the master mind behind the highly successful City Plaza project.
Their Far East projects are not confined to Hong Kong. They are building Taikoo Hui Cultural Plaza in Guangzhou (formerly Canton), north of Hong Kong. The impressively designed three tower project looks more like a new United Nations than a cultural plaza. The three towers are connected by a major hub in the center that includes a convention center, shopping mall, commercial spaces, along with a major transit interchange. The building’s main lobby is a massive glass-encased cube. Swire has built and is building dozens more major projects in Hong Kong and throughout the region.
- Image Source: Emporis - Taikoo Hui Cultural Plaza in Guangzhou
The multi-faceted international conglomerate has the ability to build more than just “big”. Now, consider their involvement in Miami’s urban market. Swire has all but claimed Brickell Key (Claughton Island) as their own Miami outpost. As of late, Swire is responsible for all three Tequesta towers, the Courts, Courvoisier Courts, the Mandarin Oriental, the Carbonell, and their latest development, Asia (pun intended). As a result, Brickell Key has evolved into a highly unique urban island community. Swire Properties has played the role of catalyst.
What is amazing about Swire is that their projects go vertical consistently, quickly, with minimal buzz, and the result is always an excellent development. Strikingly, since the 1970’s, Swire has focused its North American real estate activity solely on Miami. From their site:
Swire Properties Inc., the USA real estate operation of Swire Pacific, has been active in the development of investment and trading properties in Florida since the 1970s. Its primary focus is on Brickell Key in downtown Miami, where a number of commercial and residential properties have been developed.
Could there be something in Miami that reminds Swire of Hong Kong? There is, and you can rest assured that it isn’t the weather. Miami’s abuzz with economic activity and Swire’s latest Miami developments have been their most ambitious to date. The Far East firm has a proven track record of success on Brickell Key. Its efforts have largely remained within the quaint man made island, but there have been mini-forays into other nearby markets: South Beach’s Floridian and Jade Brickell. A mini-foray however is nothing compared to what this quiet giant could really accomplish.
Swire’s activity on Brickell Key could be a microcosm of what might happen in mainland Miami should the firm delve heavily into it. Let’s just say that Swire is running out of space on Brickell Key, and the mainland looms temptingly close. Should Swire move more aggressively into the Miami urban market, there will be no doubt of its ability to execute and in grand style. The resulting development could bring Miami closer to Hong Kong than previously thought.
April 9, 2007
I was pleasantly surprised to see a recent BoB article, Know Your Competition: Panama City (Part II), get read over 500 times, this morning alone, by readers of a prominent Panama investment blog. This proves how receptive investors in Panama are to the notion of competing with Miami. A link to BoB’s article appears on Prima Panama’s blog, the country’s foremost real estate and resort investment blog. The article’s true purpose is to increase awareness among well informed Miamians that their city is not alone in vying to be the legitimate Gateway to the Americas. Panama investors are keen to notice.
April 9, 2007
According to an article featured on Azobuild.com (A to Z of Building), Miami’s economy is the thirteenth largest in the U.S. (including states) and has outpaced Chicago and positioned itself behind Beijing in office market growth. Miami’s $7.2 billion trade surplus is the second largest in the U.S. The data was compiled via the U.S. Census Bureau. According to the same source, the Greater Miami area out performed New York and London in terms of investment growth. Miami has already surpassed the Big Apple in new construction activity and currently leads the U.S.
Wikipedia has an article on Manhattanization, which references Miami’s version of it as a great example of the urban phenomenon. Wikipedia, humorously enough, also has an article on the emerging Biscayne Wall.
According to the Beacon Council, 46% of all trade with Central America goes through Miami’s Customs District along with 30% of all Caribbean trade and 20.6% of all the trade with South America. As far as total U.S. exports go, Miami dispatches 49% of all trade to Central America, 42% to the Caribbean, and 38% to South America. Brazil tops the list of Miami’s trading partners with almost $5 billion in yearly trade. According to Florida FTAA, Miami is home to over 500 multi-national headquarters, about half of which specifically target Latin America.
The continued progress of Miami will bode well with domestic and international investors down the line and help sustain what is being considered “over-development” by some. The Magic City continues on its world-class track.
April 5, 2007
Panama City is a force to be reckoned with. Currently, there are plans to build approximately 107 residential properties (20 floors and up) valued at $3.5 billion. It is definitely Latin America’s boomtown. Two of the proposed projects are vying to be the tallest in the southern half of the hemisphere. Many of the projects are extremely impressive but I have to admit not altogether original. The Trump Ocean Club International Hotel and Tower looks like a replica of Dubai’s Burj al Arab.
Continue Reading April 3, 2007
It is argued that Miami is the Gateway to the Americas. Many claim that there is no better place to do business with Latin America. The numerous major corporations that have set up Latin American headquarters in the city testify to this. Miami is in the international limelight. Of that, there can be little doubt. Yet, the lime light does not shine on the Magic City alone. Right now, the high level of new construction in Panama City is beginning to pull attention away from Miami; particularly with South and Central Americans. This is crucial to consider when realizing that Panama City is also vying to be home to the FTAA’s prestigious secretariat.
Continue Reading March 20, 2007
Here we have a comparison of Miami’s real estate market to Dubai’s. The comparison comes from Arabian Business Services Middle East. I find it interesting how they consider Miami’s market to be mature in comparison to Dubai’s. Miami is actually a new city when comparing it to other American cities and definitely other major International metropolises.
Continue Reading March 17, 2007
As political instability continues to loom over South and Central America, Miami’s role as the main entry point for Latin immigrants continues to grow. Miami’s past absorbence of significant immigrant waves from Cuba, Nicaragua, and Haiti during the mid to latter 20th century is well documented. However, Miami’s current role as a gateway to those fleeing strife and insecurity in their homelands has expanded and diversified.
Continue Reading March 6, 2007
More signs that there will be growth in the commercial real estate sector, which given the current decline in prices and demand in the high density residential sector, may offer a bail out to developers for the current growing residential condo glut—if indeed many opt for office/condo conversions. The trend is national, but Miami is cited as having some of the lowest office vacancy rates, which indicates that there, at one point or another, will have to be an increase in office space supply to compensate for the low vacancy rate. Developments such as Park Place, Met 2, and the second phase of Latitude, are signs that developers in Miami are moving towards commercial developments, but the current trend is minimal in comparison to the multi-family trend. The best outcome for Miami’s development arena is a boom in commercial development—an occurrence the city has never seen, and given Miami’s growing international economic influence, is likely imminent.
December 15, 2006
Much has been made about Miami’s Latin American trade connections, but World City has reported some very interesting Miami/Asian trade data in their December 2006 issue—highlighting Miami’s Malaysian connections. The article makes reference to Miami’s growing economic ties to the Southeast Asian peninsular nation, which according to World City is more similar to Miami than most would imagine. Kuala Lumpur, like Miami, is in a subtropical setting, serves as a gateway to several surrounding nations, and is undergoing a building boom. In 2005, Miami officials went on a trade expedition to Malaysia, the results of which are being yielded today. Malaysia opened up its third trade office in the United States in Miami—the other two being in Los Angeles and New York City. From Miami, Malaysian goods are shipped all over the Caribbean and Latin America. In addition to the Miami trade office, Malaysia has trade offices in Sao Paolo, Santiago, and Mexico City. The country ships rubber gloves, furniture, and lumber through Miami to destinations in Latin America. Importantly, the trade ties between Miami and Malaysia are developing and are by no means mature—Malaysia ranks 43rd in the long list of Miami’s international trading partners (despite a 30% increase in traffic in 2005). Exports to Malaysia from South Florida increased 55% in 2006. Plans for a widening of the Panama Canal, it is argued, will boost trade ties between Asia and South Florida. Malaysia, along with other Asian nations, is positioning itself to take advantage of that. Increased trade ties with Asia will decrease dependence on Latin American economies and help foster more balanced trade ties between Miami and other nations.
Miami Asian trade Stats (through September of 2006):
China: 2.9 billion worth of goods traded (18% increase from 2005)
Japan: 724.2 million in trade (11% rise from 2005)
Taiwan: 421.3 million in trade
South Korea: 355 million in trade (13% increase from 2005)
Hong Kong: 240.9 million in trade (9% increase from 2005)
Thailand: 231.9 million in trade (16.9% increase from 2005)
India: 232 million in trade (71% increase in the value of their trade since 2005)
Singapore: 122.2 million in trade (12.6 % increase from 2005)
Indonesia: 115.9 million in trade
Vietnam: numbers n/a but trade increased 22% since 2005
December 15, 2006
With Mercosur drawing Latin American attention away from the FTAA, the whole international trade-bloc idea has stalled. Still, cities like Houston, Dallas, and Atlanta are vying for the secretariat of this proposed trade bloc. The whole idea was concocted in Miami in 1994’s Summit of the Americas in the Biltmore Hotel. Therefore, it seems fitting—given Miami’s unique role in facilitating trade between the north and south part of the western hemisphere, its central geographic location, and huge bilingual population—that the city attains the secretariat, but politics tend to obstruct logic. The 2008 Inter-American Bank conference, which is to be held in the United States is the latest way that Miami is reasserting itself as the best staging point for hemispheric trade talks and negotiations. If the FTAA were to become a reality, and the Secretariat be located in Miami, then not only will the city’s unofficial title as “The Gateway to the Americas” be secured, but the level of economic propulsion for the city would likely be enormous. Continue reading for the BizJournal article on the IDB conference.
Continue Reading November 30, 2006
The housing slump can have broad ramifications on “aggregate employement” and “consumer spending”. With housing prices falling in some areas, home equities are being adversely affected, and this affects consumer spending. This Washington Post report cites Miami as being one of the major markets being affected by the collective home price drop. Still, there is some encouraging news in terms of home sales, which have, risen slightly over recent months. Continue reading for the Washington Post article.
Continue Reading November 29, 2006
This article addresses the blame game regarding the market slow down. It is interesting in that it implies how volatile the real estate market really is. Hurricanes, mass rumors, and negative media reports are all cited as potential reasons for the slump. It is good to know that Michael Lewis recognizes the most important aspect of this whole debate. Regardless, of what happens, a great new city is rising and the new units, for the most part, are going to be quite valuable in the long run. Condo flippers are not good for the market and the market is not good for condo flippers. Sure, there are those who will make a serious buck off of their flip(s), but their presence leaves the market on shaky ground and delays stability that is provided by more permanent occupants. Many are wishful thinkers that are not going to see their hope of massive profit materialize. The only thing that condo flippers are good for is the helping sustain the upsurge of new construction activity, which may have otherwise not been sustained. There is one point in this article that is bothersome. What is it with this whole “speculator” deal? Everyone that has purchased a unit in this mad rush of new construction, on some level, is a speculator. What difference does it make? In preconstruction, how can you not be a speculator? Ultimately, you have no choice but to take in all the available information on the market, neighborhood, building, and developer, and then make a decision: buy or not. Sometimes, you cannot even be sure that your view is going to be what you expect. No matter what, you cannot be sure that the decision is fruitful until the building gets topped off, the property is closed on, and in the case of non-established communities—like Parkwest and areas of Uptown— the neighborhood develops. Miami is definitely a speculators market. Of that, there can be little doubt, and in my opinion, trying to factor in how many buyers are speculators versus not, is an absurd waste of time and irrelevant. What I hope it is not is a market of condo flippers. Those who cannot pay their bills so put their condo on the market and create a glut. Buyers must be patient. Although Miami is at the threshold of the beginning of urban greatness, there is no on/off switch, and it make take time for the most important developments and infrastructure improvements to take place. Until then, buyers must batten down their hatches, pay their mortgage/maintenance, or rent their units, definitely expect special assessments due to poor developer budgeting and a hostile insurance market, and wait for the right time to sell. Mass condo flipping will devalue the residential condominium market. The good news is that when most of the buildings are topped off and infrastructure improvements take effect, there will be no doubt of Miami’s emerging urban greatness. For the Miami Today article, continue reading.
Continue Reading November 20, 2006
This article, taken from Globest.com, indicates that there is an increase in interest on the part of developers in the office/condo market, just not yet in the form of new construction. The article does not reference major high density developments around the urban areas of Miami (CBD, Brickell Village, and Uptown) but does make the claim that the office/condo market is ripening with activity. The amount of high density, in and around the CBD of Miami, is unprecedented in that almost all the major high rise developments are residential. As I’ve stated in an earlier article “Residential Boom Today. Commercial Boom Tomorrow”, there will likely be an upsurge in the commercial real estate market, because it is inevitable that the residential market will exhaust itself. This is good on many levels. First, historically, the tallest buildings are commercial. Miami has severely broken the mold with the dozens of skyscrapers that are residential. Second, if the office market picks up in the form of new developments (new construction), then the development will likely occur in the development starved interior areas of the CBD. Currently, the vast majority of the new development is on or near the bay. Developers prefer their residential unit inventories to have some access to the bay or ocean. Office developments, however, do not have that requirement. Therefore, new office developments can be located far off the bay without compromising square footage value. The interior of the CBD is not that dense, and most of the density is provided by older office buildings that are not that tall (the Dupont building, the Seybold, One Flagler, the Ingraham building, Ocean Bank building, etc.). If there is not a sufficient demand for the remaining new residential condominium units, then developers may shift their focus to the office/condo market. Developers have to make their profits or at least break even. They will exercise all possible options before cancelling a project (due to the devastating blow to their reputations). If the residential condo market halts, then expect developers to look elsewhere for profits. Elsewhere, is likely to be the office/condo market. Miami’s unique economic position is not reflected adequately in Miami’s skyline—in terms of new or even existing office skyscrapers. Many companies are opting for Doral, the Blue Lagoon area, and Coral Gables instead of Downtown Miami. It is inevitable though that this will change. The signs of this change may already be surfacing, but don’t anticipate major changes taking place until many more existing high density projects get topped off and the infrastructure improvements take place.
Continue Reading November 20, 2006
It is argued that Miami has become the Gateway to the
Americas, economically, politically, culturally, and practically. How is this so? The answer is simple: Miami already is a miniature version of the Western Hemisphere. Why is this important?
Continue Reading October 21, 2006
By now it should be obvious, Miami has hundreds of projects proposed, planned, in the pipeline, and under construction. At least half of them are high rises over 25 stories in height. But, almost every last one, is residential. Since when has a city undergone such a boom in high density development activity and had it remain almost exclusively residential? Throughout skyscraper history, most of the skyscrapers built were commercial. Now, in Miami, almost all of the dozens of new skyscrapers, 40 stories and higher, are residential. What happened to tradition? Where are all the commercial skyscrapers?
Continue Reading October 21, 2006
