Downtown Miami now stands strong as one of the most active residential real estate markets following what is considered to be among the worst real estate crashes in our nation’s history. An independent Residential Closings & Occupancy study commissioned by the Miami Downtown Development Authority shows that 93% of the 22,785 condo units constructed since 2003 are now occupied with primarily full-time residents, signaling a tightening of the market as a result of limited remaining inventory.
The report, conducted by Lewis Goodkin and Craig Werley of Goodkin Consulting/Focus Real Estate Advisors, finds a strong demand for urban living in Miami. According to the study, 84% of the condo units built during the building boom in the downtown Miami area have been sold, up six percentage points from only one year ago.
“Downtown Miami continues to defy national trends in real estate economics,” said Craig Werley of Focus Real Estate Advisors. “Foreign demand for residential product characterized by mostly cash buyers is driving a market rebound not seen anywhere else. This is particularly remarkable considering the foreclosure crisis that continues to grip much of the rest of the region and state.”
Photo by Robin Hill (c) for Miami DDA
Other key findings from the Miami DDA’s Residential Closings & Occupancy Study include:
• Sales activity decelerates as inventory shrinks: Diminished inventory saw total condo sales in Downtown Miami down approximately 5% from 2010. Monthly residential sales averaged 307 units per month in 2011 compared to 315 per month in 2010.
• Prices continue to rise for sales: Average sales prices in 2011 were up in Q4 and on a year-over-year basis. The average unit sales price (new and resales) in 2011 was $370,003, representing a 6.4% increase from the average price of $347,729 in 2010, and a total 22.4% increase from 2009. Average price per square foot in new inventory rose by 12.6% to $365. The average rent per square foot also rose 10% year-over-year to $1.78.
• Condo surplus all but eliminated: The unsold inventory of new condo units in the downtown Miami area declined more than 25% in the past 12 months. Additionally, 1,559 condo units are currently unoccupied, representing less than four months of supply given current leasing trends.
Taking a look at where some of the projects hardest hit during the real estate crash stand today further demonstrates a tightening in the market. For example, with 342 units, the Epic was 17% occupied in 2009. Today, occupancy stands at 89 percent. Once classified by the New York Times as a “monument to excess,” the Icon Brickell had an occupancy rate of only 4.9 percent in 2009. Today, this 1,750-unit complex is more than 90% occupied. And the Infinity at Brickell, which had an occupancy rate of 12% in 2009, is today almost fully absorbed with an occupancy rate of 98 percent.
“Downtown Miami continues to prove itself to be one of the country’s most resilient markets,” said Alyce Robertson, executive director of the Miami Downtown Development Authority. “Demand is quickly outpacing supply and as a result, developers are once again coming off the sidelines to build new projects– and nearly a decade earlier than even the most bullish economists predicted.”
Werley adds that the renter demand is playing a major role in stimulating commercial activity within Miami’s urban core. The majority of renters are full-time residents, many of whom have disposable income that translates to heightened demand for goods and services
A Miami DDA report from September 2011 found that downtown Miami is attracting a younger, more affluent residential base. Since 2000, the number of households in the downtown Miami area has increased by 93%, with the highest percentage (57%) of residents falling within the 24-44 age range. Additionally, the area’s per capita income has grown by 39%, far exceeding that of the City of Miami and Miami-Dade County. All told, the area’s population stands at approximately 72,000 people as of mid-2011, representing a 9% year-over-year increase from 2010 and outpacing the 6.8% growth rate experienced during the previous decade.