Property Sectors Archives | Page 52 of 54

Oct 25 No Comments

ULI Recommends Changes To City Of Miami Zoning Code

Author: Admin

Categories: Commercial News,Development,Healthcare,Multifamily,Offices,Retail,Shopping Centers

A new Urban Land Institute report suggests city officials relax certain provisions of the Miami 21 zoning code to encourage denser developments on narrower lots and further incentivize developers who reduce or eliminate parking, among other recommendations.

Report co-author Andrew Frey presented his ULI focus group’s findings on Friday to Miami Mayor Francis Suarez, who declined to comment about how he will incorporate the report’s recommendations into a revamp of Miami 21 that is currently underway.

“We are focused that [growth] happens responsibly,” Suarez said. “That it supports things like transit; that it supports our resiliency efforts.”\

Frey, director of development for Fortis Design + Build, said the focus group was formed last year to look at aspects of Miami 21 that inhibit progress in areas of housing choice, affordability and mobility.

“We wanted to give specific textual recommendations that hopefully can shorten up the cycle between finding glitches or gaps in Miami 21 and filling them,” Frey said. “We tried to make the recommendations as concrete as possible.”

According to the report, city officials should consider deleting lot size minimums and density maximums in certain areas, such as those zoned T4, T5 and T6. The neighborhoods with T4 zoning allow a transition from single-family homes to multifamily buildings with room for small businesses and mom-and-pop retail such as Southwest Eighth Street in Little Havana. In T5 neighborhoods, developers can put up mixed-use buildings that accomodate retail, office and apartments such as Wynwood. And T6 neighborhoods allow developers to build multi-story condo, apartment and office towers such as downtown Miami, Brickell and Edgewater.

Getting rid of density maximums would allow developers to build more apartments sized smaller for mid-market renters because they would be able to build 100 or more units an acre . And by eliminating lot size minimums, Miami can encourage the development of more housing types such as townhouses, row houses and brownstones found in other major U.S. metropolitan cities, the report states.

The ULI focus group also suggested dramatic revisions to the parking standards in Miami 21, including having the Miami Parking Authority provide all on-street parking in single-family residential neighborhoods as residents-only at no cost. Other recommendations included significantly reducing parking requirements for new buildings and allowing developers to obtain parking reductions without having to pay impact fees.

Greg West, CEO of apartment builder ZOM Living and ULI Southeast Florida Caribbean District’s chairman, attended the mayor’s presentation. He noted that the report was produced with input from several heavy hitters from the real estate industry, including urban planner Elizabeth Plater-Zyberk, the original author of Miami 21. In addition to Frey, the focus group included land use attorneys Iris Escarra and Steven Wernick, developers David Martin and Kenneth Naylor and architects Reinaldo Borges and Raymond Fort.

“We had a pretty big tent on whom we sought input from, which also included the people who originally wrote and drafted Miami 21,” West said. “I think from the private side and development community, we got a good base.”

Source: The Real Deal

Oct 23 No Comments

South Florida Developers Riff On The Shift From Condos To Rentals

Author: Admin

Categories: Commercial News,Development,Multifamily,Offices,Retail

The cyclical nature of Miami’s condo market has many developers shifting toward rentals – but not Michael Shvo.

The New York developer, who is making a big push in Miami Beach, said that as long as you have the right site and project, the overall market’s performance is irrelevant.

“It doesn’t really matter what the market is. You build something special in the right location, you’re not competing with something in Brickell or in Wynwood,” Shvo said at The Real Deal’s Sixth Annual South Florida Showcase & Forum on Thursday. “I don’t lose sleep at night over oversupply or undersupply.”

Shvo will be redeveloping the Raleigh hotel in Miami Beach. A partnership led by Shvo, Bilgili Group and Deutsche Finance Group bought the 83-room Raleigh for $103 million from a Tommy Hillfiger and Dogus Group, and also purchased the Richmond Hotel and the South Seas Hotel.

Shvo was joined by Laurent Morali of the Kushner Companies, Florida East Coast Realty’s Jerome Hollo, and developer Lissette Calderon on the panel, “The next wave of South Florida development,” moderated by TRD’s Editor-in-Chief Stuart Elliott.

Hollo acknowledged the slow luxury condo market.

“People are looking to place their investment in a little bit of a safer asset, which right now is multifamily. If that cycle turns again, you’ll see a lot of those buildings convert to condos,” he said.

His firm built the luxury mixed-use building Panorama Tower in Brickell, with rentals, retail, office and hotel components. The 2.6 million-square-foot, 85-story tower was completed in 2018 and secured a $425 million refinance earlier this year. It’s about 70 to 75 percent leased, he said.

“Renting is good for everyone now,” Hollo said. “Wherever they are in their life cycle, they love renting.”

Kushner Companies has purchased or is under contract to buy three sites in South Florida, and all of them will have rentals as opposed to condos, Morali said. In Edgewater, where it’s planning an 1,100-unit apartment development, the property is in a designated Opportunity Zone, giving Kushner substantial tax benefits.

But Morali said recent changes in the federal tax code and the wave of rent reform legislation in markets like New York and California didn’t impact Kushner’s decision to target South Florida.

“We’ve been looking [in Miami] for five years,” he said.

Calderon, president and CEO of Neology Life Development, said it was a personal choice to go from building condos to building rentals.

“It was a natural progression to go into the rental side, [with me] wanting to make an impact on the community we’re in,” she said.

Targeting the right renter and buyer via social media is vital to a project’s success, the panelists emphasized.

“You really have to be hyper-focused in terms of authenticity, local context,” Calderon said, referring to when she became a young, successful profession. “I had two options: living in the suburbs or living in the urban core with my mom. There was no product for someone like me.”

Hollo, whose firm coined the term “Brickellista” to market Panorama to renters, said that now with social media and technology, developers can hyperfocus on a certain demographic.

“There’s traffic, and then there’s traffic that might not be great for your product,” he said.

Shvo took offense to the term “demographic.”

“I think you have to stop using the word demographic,” he said. “Because demographic doesn’t matter anymore. … It’s all about the psychographic. What’s their lifestyle?”

Source: The Real Deal

Oct 21 No Comments

Medical Office Buildings Still Rule The Outpatient Space In Healthcare Real Estate

Author: Admin

Categories: Commercial News,Development,Healthcare,Trends

Of the five main outpatient facility types, medical office buildings (MOBs), urgent care centers and ambulatory surgery centers (ASCs) have the most positive outlooks and futures in the healthcare and healthcare real estate (HRE) sector.

On the other hand, the outlook is not quite as positive for micro-hospitals, which have a “moderate” outlook, and freestanding emergency departments (FEDs), which have a “negative” outlook. That’s according to a scorecard, if you will, compiled by well-known healthcare research and consulting firm The Advisory Board Co., which is based in Washington, D.C., and is part of Eden Prairie, Minn.-based Optum.

Providing insights into The Advisory Board’s rankings and outlooks for the various outpatient property types was the company’s Fred Bayon, managing director. He did so during a 100-minute presentation that covered a wide range of topics affecting the healthcare sector during The Colliers National Healthcare Conference, held Sept. 12-13 at the Hyatt Centric Chicago Magnificent Mile.

“My job with The Advisory Board is to travel around the country and meet with our members … hospitals and health systems, C-suite executives and the health system boards of directors and let them know what’s happening in the healthcare market place, what they need to be strategizing about and be aware of concerning healthcare policies and healthcare changes and issues,” Mr. Bayon told the audience.

Near the end of his presentation, which included plenty of insight into current healthcare policy and disruptors to the status quo, Mr. Bayon gave the firm’s outlook on the various property types.

As has been the case for several years, The Advisory Board is most optimistic about the short- and long-term prospects for MOBs. The rise of MOB development and investment has occurred in large part because they allow hospitals and health systems the best and most economical way to enter new markets, to protect market share, to provide convenient access to patients and to help facilitate the coordination of care.

“The MOB market continues to be a positive, intriguing play for hospitals, health systems and investors,” Mr. Bayon told the audience. “Those players are and will remain interested in MOBs for years to come because they “are conveniently located, essentially for Medicare patients and commercially insured patients. Health systems do not want their patients to have to come downtown, they don’t want you to come into the maze that is the big hospital campus. Instead, they want you to go somewhere where there is parking and where there is a pleasant atmosphere, because that’s where they think they can drive volumes.”

The Advisory Board gives its next highest ranking to ASCs — which, even though they carry some risk because of the lower-profit margins they deliver — will continue to experience increased volumes in years to come, he said.

Mr. Bayon noted that volumes in ASCs are expected to increase by nearly 28 percent by the year 2027, driven in large part by ongoing policy changes by the Centers for Medicare and Medicaid (CMS) that will “reimburse Medicare procedures done in ASCs. For example, total knee (replacement) and some cardiac procedures” have recently been added to the list of procedures that, when done in ASCs, will be reimbursed by Medicare.

Also receiving a positive score, or outlook, from The Advisory Board are urgent care centers, which the firm is “pretty bullish on,” Mr. Bayon said.

“More and more health systems are looking at urgent care centers and having some sort of investment in them, or some sort of partnership in sites across the United States,” Mr. Baynon said. “We still see these growing rather rapidly and for us, this is becoming a primary care alternative that can alleviate some of the capacity crunch for primary care in some markets.”

Even though The Advisory Board is not as bullish on FEDs and micro-hospitals, Mr. Bayon noted that the firm is “neutral” on the facility type, as those that are placed in the right locations can provide benefits for health systems, especially when they are expanding into new markets.

“Micro hospitals, the eight- to 12-bed hospitals can help a system bring together some inpatient and outpatient services, with core services being acute care, emergency care, pharmacy and additional services,” Mr. Bayon said. “(Micro-hospitals) continue to be a big, big play in the Texas marketplace, but we can see this growing in other markets as well. What’s interesting about micro-hospitals for developers and healthcare providers is that these facilities are not subject to site-neutral payments, meaning they can bill at inpatient rates and then they can generate their own on-campus or off-campus definition, meaning they can put outpatient services within 250 yards of those micro-hospitals and not be subject to a site neutral rate. For us, I would say that right now we are pretty neutral on micro-hospitals.”

The Advisory Board gives its lowest ranking, or outlook, to FEDs, which, in some instances,

“One of the things to keep in mind is that government payers do not reimburse freestanding emergency departments, but they are dotted across the United States and there are some hospital systems that believe such facilities are something around which they can build more services over the longer term,” Mr. Banyon said.

The Advisory Board, however, has a negative outlook on the facility type in large part because “they could drive unnecessary utilization if we see a preponderance of them.

“And I think that CMS could look at decreased reimbursement to FEDs moving forward,” Mr. Banyon continued, “and this is not to distinguish between an ED in a hospital setting and a freestanding setting. That’s a big risk for health systems.”

Source: HREI

Oct 17 No Comments

Finding Opportunities In Miami’s Multifamily Market

Author: Admin

Categories: Allapattah,Commercial News,Development,Multifamily,Trends

Employment and population growth continue to fuel Miami’s multifamily market across all segments.

With more than $3 billion in originations in South Florida and 146 loans granted in 2018, Berkadia is one of the region’s largest commercial mortgage lenders.

As part of its expansion in Florida, Berkadia hired Charles Foschini as senior managing director back in 2016. In an interview with Multi-Housing News, Foschini talks about Miami’s current multifamily investment trends and how new supply will impact the market. He also shares his predictions for the metro’s multifamily landscape for the next 12 months.

Foschini: Miami’s market is incredibly vibrant, but it’s also unlike most other major metro markets in that we have so much wealth imported here from other parts of the country and flight capital from around the world. That said, there are three distinct changes we’ve seen in the past two years.

First, there’s extraordinary demand for multifamily product not only as a result of strong job and population growth but also due to the limited inventory of affordably priced single-family homes. A shortfall of homes priced at $250,000 or below has prolonged renting for many would-be first-time homebuyers and those who lost their homes during the housing market collapse of 2008. At the same time, more people across the age and income spectrum—from Millennials to retirees—are renting by choice. They like the choice amenities many new developments offer and the worry-free lifestyle of renting.

Lastly, there has been an extraordinary amount of urban infill development in this cycle, not just in Miami’s downtown, although that’s practically unrecognizable from just five years ago but also in other urban submarkets. We’ve seen an incredible amount of new multifamily development directly on or adjacent to mass transit rail lines. In a city with incredible traffic congestion, walkability is a huge draw.

Construction is expected to mark a new cycle high with more than 16,000 units delivered by year’s end, according to Yardi Matrix. How will the new supply impact the Miami market?

Foschini: The new supply will be absorbed. Demand is still incredibly strong. More than 900 people are moving to Florida every day and our population is expected to soar to 22 million over the next three years. Absorption continues to outpace deliveries by about two to one in South Florida at large. The reality is that Miami is really a confined space, a peninsula. There are only 13 miles between the Everglades to Biscayne Bay and that’s all the land there is.

There is a need for new rental product in just about every submarket to lower the impact of the car and lessen commutes. In some areas like the Central Business District, Brickell and Miami Beach, you have all the elements of a true live-work-play environment already in place, but in emerging areas of the city that don’t have a direct tie to our rail lines, the easiest way to do that is to add high-quality residential communities near centers of employment—in submarkets like Doral or North Miami for example.

Which Miami submarkets are most attractive for investors and developers? Why?

Foschini: Miami is so dense that any area can be successful. The key is finding land at a value where you can hit your return on cost and make a profit. With that in mind, developers are finding some interesting deals in neighborhoods that are still technically in the city, but west of Interstate 95—neighborhoods like Allapatah, Opa-Locka and even Hialeah.

How is investment in the metro responding to the current economic environment?

Foschini: It’s extremely healthy—our commercial sectors are really thriving. In fact, ownership in the CBD has become increasingly institutional and the level of long-term investment in Miami from institutional and global capital is impressive. There are several high-profile, long-term infrastructure projects that are going to create new jobs and demand for housing. Absorption may slow as a result of all the new deliveries, but projects are filling up over time and most are hitting their rent and investment objectives.

What can you tell us about financing multifamily projects in Miami? How has the process changed in the past few years?

Foschini; In this cycle, lenders have maintained their discipline and seasoned developers have come to the table with more equity and more patient capital than we’ve seen in the past. That has allowed for more projects to get off the ground and have the breathing room to lease up. The market has no shortage of capital in both a recourse and non-recourse format. Banks, life companies and—on larger deals—debt funds have all stepped in to bring projects out of the ground.

As developable land in South Florida becomes scarcer, how do you see construction activity going forward? What about the cost of construction financing?

Foschin: Land is scarcer, that’s true, but there is no shortage of opportunity. As the highest and best use of land evolves, we will see more existing projects such as shopping centers and small offices come down to make way for redevelopment as multifamily. It is my belief that lenders’ spreads have been higher than in previous cycles and they were able to get away with it because the baseline indexes were so low. I believe that if the indexes trend up, competition will push spreads down and the environment, at least on the debt side, will remain favorable.

What are your overall market predictions for the next 12 months?

Foschini: Existing projects will continue to lease up and new projects that are well thought out and have well-capitalized and experienced operators, will get funded. Investment sales activity will be slower—that’s a given since a lot of product has been picked over and traded in this cycle—but there will still be activity from developers and investors who are creative and capitalize on things like access to mass transit, Opportunity Zone incentives etc. Overall, the demand from the investment community for product in Miami and South Florida as a whole will remain strong.

Source: Multihousing News

Oct 16 No Comments

Miami Among Top US Cities In 2019 For Growth

Author: Admin

Categories: Commercial News,Development,Multifamily,Retail,Trends

When it comes to economic growth, Miami ranks among the best in the nation, according to a new list.

New York-based WalletHub ranked over 515 cities on economic growth over several years, considering over 17 separate areas to score each city as part of an index out of 100. Those metrics included population growth, job growth, building-permit activity, growth in businesses and other economic factors. The study broke the cities into three categories: large, more than 300,000, midsize, 100,000 to 300,000 and small, fewer than 100,000.

Other cities in the area included:

Davie, No. 68
Boca Raton, No. 69
Boynton Beach, No. 92
West Palm Beach, No. 111

Source: SFBJ

Oct 14 No Comments

Ross Dress For Less Signs Lease At Historic Former Burdines Building In Downtown Miami

Author: Admin

Categories: Commercial News,Retail

Ross Dress for Less signed a lease at the historic former Burdines building in downtown Miami.

The retailer plans to lease 34,192 square feet at 22 East Flagler Street. The vacant building was most recently occupied by Macy’s. Macy’s closed the store in early 2018 as part of a wave of closures as it looked to shed its assets and reduce costs.

Nearby, Ross has another location at One Bayfront Plaza at 100 South Biscayne Boulevard. Florida East Coast Realty plans to build a 92-story, 1,049-foot tall building on the site, which will also include over 1.4 million square feet of Class A office and hotel space.

In 1917, Miami businessman Richard Ashby originally leased the 48,000-square-foot building at 22 East Flagler Street to Burdines for about $30,000 a year. In 1956, Burdines merged with Federated Department Stores, which also owned Macy’s, Bloomingdale’s and other stores. By 2005, Federated had brought all its Burdines outposts under the Macy’s brand.

Records show Aetna paid $15.6 million for the property in 2013.

Source: The Real Deal

Oct 04 No Comments

FIP Commercial To Host State of the Market Open Forum

Author: Admin

Categories: Commercial News,Development,FIP News,Healthcare,Leasing,Multifamily,Offices,Retail,Trends

Come join us next Tuesday, October 8th, at 10:30 AM for a State of the Market Open Forum being held at Soho Studios (2136 NW 1^st Ave) in Wynwood.

This event is hosted by FIP Commercial and is free to all real estate agents in the Miami area. Topics covered will include the following:

National Commercial Real Estate Trends
State of the Market – Miami Multi-Family
State of the Market – Miami Retail
State of the Market – Miami Office

We will also discuss asset class transactions, rental rates, occupancy, demand, and much more. This is an open forum setting so questions and comments throughout are appreciated.

Seats are limited so please RSVP at rsvp@fipcommercial.com.

Oct 03 No Comments

Miami’s Population Is Changing And That’s Making Real Estate Change, Too

Author: Admin

Categories: Multifamily,Trends

A population increase of foreign-born and northerners is influencing real estate in South Florida.

About 94 new people a day moved to Miami-Dade, Broward and Palm Beach counties from July 2017 to July 2018, most of them from out of the country. Meanwhile, about 58,000 Floridians over the course of the year moved to another state, according to data compiled by Bloomberg and the U.S. Census Bureau.

The Bloomberg study credited the loss of locals in major metro areas to pricey real estate and tax law changes.

“Northerners and foreigners coming down here, that’s going to drive prices,” said Kevin Morris, a senior director for Colliers International Affordable Housing division.

Developers continue to see an international clientele, especially those from Latin America, moving to the Magic City.

“Latin American economies are not in a good place but you can expect the elite to find the right liquidity that would be required to move abroad,” said Marcelo Kingston, developer and managing director for Multiplan Real Estate Asset Management.

High-earning professionals able to work from anywhere also are moving to South Florida from Connecticut, Massachusetts and New York.

The influx of northerners is reshaping development strategies in two ways, he said.

First, it forces Kingston’s team to build for someone putting down roots.

“We see Miami as a final destination,” he said. “When we position ourselves, we try to find well-established communities in Miami Beach.”

Second, northerners are looking for interior upgrades such as fancy flooring and cabinetry.

In the case of the condo 57 Ocean at 5775 Collins Ave., Kingston said: “As the developer, you need to be flexible in customizing the right upgrades” that a permanent resident would want.

“Design has to be in the right mindset towards meeting those needs,” he said.

The affordable housing market will also benefit from the population changes. The number of renters will grow as it becomes harder for the middle class and blue-collar workers to buy. Vacancy rates will drop and rents will increase, Morris said.

“From an affordable developer’s perspective if there’s an increase in rent levels it helps them because they are going to be able to charge more rent for their properties,” he said. “The developer will reap a benefit in the market increasing in rental value.”

Increased rents in affordable housing options will still be cheaper than what else is on the market since rent is based on an area’s median prices.

So, how could offering affordable housing benefit a developer?

Take an average $1,000 monthly rent in a market as affordable property, it’s marketed at 60% of that rent, or $600. If the median rent increases to $1,200 in the area, then affordable-property owners can charge $700. So, “from an affordable housing owner’s standpoint, higher rent is actually a good thing,” Morris said. And that could mean more affordable housing being made available.

The predictions for affordable housing may mean a brighter tomorrow but, for now, Floridians are looking elsewhere as rent and the cost of living inch higher. Over half of Miami’s population, 70%, are renters, according to research by Florida International University’s Jorge M. Perez Metropolitan Center. And a good chunk of the population spends over 30% of their paychecks each month on housing, which is more than what’s recommended for housing costs.

It costs a family of four about $85,000 a year to live in Miami-Dade County, according to the Economic Policy Institute’s Family Budget Calculator. And wages aren’t keeping up.

“What I’ve seen now is that some Floridians might be leaving because the cost of living has been growing a lot,” Kingston said.

The lack of available affordable housing is such a concern that Metropolitan Center’s AICP Associate Director Ned Murray’s team is trying to solve it with an affordable housing master plan.

“The two big factors: How much are you going to get paid and where are you going to live? They are getting more difficult even for people looking to move here when you look at wages versus housing costs,” Murray said.

The mid-market is the one area in South Florida not expected to see much growth.

“That’s going away for the most part,” Murray said. “From the developer’s standpoint, they are having a hard time building at that mid-market because of the price of land and the scarcity of land that would be ideal for new housing construction for that mid-market.”

The median purchase price of a home, about $350,000 in Miami, is not affordable to 85% of all city households, Murray said.

“Miami is becoming expensive to raise a family,” said resident Mary Snow, executive director of the Coral Gables Community Foundation. “Could we move to Vero Beach or the Carolinas and live more cheaply? Yeah. And we’ve had a lot of friends do that.”

“But,” she said, “this is home.”

Besides family close by, jobs, and being second- and third-generation Miamians, the Magic City’s amenities and culture also keep Snow and her husband here.

“We always have people that move away and come back. I hope we continue to see that,” Snow said.

Real estate broker and EWM Realty International President Ron Shuffield is not concerned that the population changes will hurt the real estate market: “The community will continue to grow. Will it continue to grow with people born here? Not necessarily, but it can.”

Real estate, regardless of who is buying, is being sold and transactions are expected to continue.

“We’ll always have people moving in and out,” he said. But “we’re selling property” whether it’s through exchanging currency or welcoming someone from South Carolina.

Source: Chicago Tribune

Oct 01 No Comments

Miami’s Upscale Design District Getting First Opportunity Zone Project

Author: Admin

Categories: Commercial News,Development,Retail

A nine-story retail showroom is planned as the first opportunity zone project in Miami’s upscale Design District.

BH3, an Aventura-based real estate investment and development company, will develop the 86,000-square-foot building with floor-to-ceiling glass walls on Miami Avenue north of Interstate 195.

BH3 bought the properties at 3801 and 3819 N. Miami Ave. for $15 million in 2017 and has site plan approval for the building.

The 2017 federal tax overhaul law created opportunity zones to encourage investors to put their funds into new projects and businesses to breathe life into economically struggling areas. In return, investors get tax breaks.

Critics have charged many of the projects are going into less-than-struggling areas. State-designated opportunity zones have been criticized for not living up to their original intent to help low-income and blighted areas.

The Design District was blighted but experienced tremendous redevelopment in recent years led by Craig Robins, becoming home to ultra-luxury brands and plazas with public art. The district has achieved record per-square-foot sale prices previously reserved for destinations like Miami Beach’s Lincoln Road.

BH3 said it didn’t initially plan an OZ project, buying the property two years before the tax bill passed. The company established the 3801 NMA OZF LLC opportunity zone fund this year to help finance the new building. Investors can put their capital gains into the fund by year-end.

The 3801 NMA fund will allow investors to defer paying taxes on their capital gains until 2026 and get tax-free appreciation from the project if they keep their investment for 10 years.

“The fund will provide qualified investors with the full tax benefits afforded to them under the legislation,” Gregory Freedman, BH3 principal and founder, said in an emailed media release.

The new building will have 14-foot ceilings except on the ground floor, which will have a 25-foot ceiling. Targeted tenant are fashion brands and retailers that need showroom space.

Preleasing starts next month with rents from $45 to $55 triple net per square foot, which BH3 says is less than market rates for the areas. Construction is set to start next year, and completion is planned in the third quarter of 2021.

Source: DBR

Sep 30 No Comments

The ‘Incredible’ Flow Of Capital Into Multifamily Is Expected To Increase In 2020

Author: Admin

Categories: Commercial News,Multifamily,Trends

The U.S. multifamily sector has emerged as a top investor target during this cycle, and despite concerns of a looming recession, industry leaders expect the flow of investment to only increase next year.

Top capital markets executives, speaking Wednesday at Bisnow’s Multifamily Annual Conference New England, said they expect equity and debt flow into the sector to continue to rise. They said they see institutional investors allocating more money toward multifamily, banks aggressively competing to provide loans for apartment and condo projects, and Fannie Mae and Freddie Mac beginning a new spending cycle next week with a combined $200B budget.

All of this competition to provide equity and debt for multifamily projects has narrowed the yields on these deals, but with uncertainty in other sectors of the economy, experts believe investors will be happy to accept slightly lower returns. Gregory Bates, the chief operating officer of developer GID, said his firm manages money for some of the world’s largest pension funds and sovereign wealth funds. He said they remain bullish on the multifamily sector. GID’s portfolio comprises more than 30,000 residential units and it has a 10,000-unit construction pipeline.

“Real estate allocations are going to stay where they are or go up,” Bates said. “Apartments and industrial are at the top of everyone’s list … There are terrific tailwinds on the capital side.”

Walker & Dunlop Managing Director Andrew Gnazzo also foresees an increase in institutional investment.

“Life insurance companies this year have allocated more money to multifamily, and everything we’re hearing is they’re going to allocate more in 2020,” Gnazzo said. In addition to large amounts of incoming equity, Gnazzo said debt providers are also clamoring to loan money on multifamily projects. “There is an incredible amount of capital in the debt space,” Gnazzo said. “There is a really nice bucket of capital on both the debt and the equity side.”

The inflow of debt is not just seeking apartment projects, Cornerstone Realty Capital President Paul Natalizio said, but lenders are also bullish on condos, a sector they have had concerns about in the past.

“There is a surprisingly very strong market for condos,” Natalizio said. “It’s an entirely different market now. Lenders will tell you there are not enough condos … Banks have come a long way in that area, they’re very aggressive.”

Fannie Mae and Freddie Mac are also expected to pour more money into the multifamily space in the coming months.

The two government-sponsored enterprises pulled back on spending over the summer, experts said, but last month the Federal Housing Finance Agency announced new loan purchase caps that will allow Fannie Mae and Freddie Mac to spend a combined $200B over a 15-month period from the start of Q4 through the end of 2020.

“The clock starts Oct. 1,” National Multifamily Housing Council Vice President of Capital Markets Dave Borsos said of the Fannie and Freddie allocation. “From that point to the end of 2020, each enterprise will have $100B to purchase loans.”

Gnazzo said this is an encouraging sign for multifamily owners and developers who utilize debt from Fannie and Freddie.

“As Q4 goes on and into Q1 and Q2, I think [Fannie and Freddie] will put their foot on the gas; they have to spend $200B,” Gnazzo said. “It’s encouraging for all that have enjoyed agency debt.”

The inflow of money to real estate comes as economic indicators, such as the inverted yield curve, point to a coming recession. Investment managers and brokers said capital providers are looking to multifamily real estate as a more stable sector than other portions of the economy, and are willing to accept lower returns than they may have in previous years. Bates said his firm, GID, believes there will be a “hitch” in the economy at some point and it will slow the net operating income growth of apartment buildings. He said this may hurt investors who buy projects with three- or- five-year sale horizons, but those with time to wait should still see positive returns. He thinks investors are adjusting their expectations accordingly and would be happy with returns in the 6% to 7% range.

“Every investor we know, they won’t tell you this today, but 10 years from now they’ll be tickled pink if they get 6[% returns],” Bates said. “They think there will be a scarcity of product and believe producing 6 or 7 is going to be incredibly attractive relative to other global options.”

The expected returns on a multifamily project vary in different markets, CBRE Capital Markets Senior Vice President Todd Trehubenko said.

In Boston, where Wednesday’s event was held, he said investors’ return expectations have dropped from the 9%-to-10% range to the 5%-to-6% range.

“The amount of money out there chasing deals is astounding, and you have groups willing to accept low returns,” Trehubenko said.

Weston Associates Head of Acquisitions Elliott White agreed that return expectations are down for the Boston market, leading his firm to look elsewhere.

“A ton of institutional capital is coming in and saying, ‘We can’t buy anything with less than [10% returns], so my advice would be don’t buy deals in Boston,” White said. “The Boston market is still strong and will stay strong, but it won’t be the same source of high-yield investments.”

White instead said he is looking at the Mid-Atlantic, Gulf Coast and Midwest regions as areas providing higher returns to investors. The Davis Cos. Vice President of Investments Rachel Edwards agreed that investors need to look south for better yields.

“I do have to leave [Massachusetts], and the Southeast is the place I’m focused on now, from the Mid-Atlantic to Florida,” Edwards said.

Her firm is far from alone in moving south to find yield.

“It’s getting pretty competitive down there,” she said.

Source: Bisnow

“We are focused that [growth] happens responsibly,” Suarez said. “That it supports things like transit; that it supports our resiliency efforts.”\

“We wanted to give specific textual recommendations that hopefully can shorten up the cycle between finding glitches or gaps in Miami 21 and filling them,” Frey said. “We tried to make the recommendations as concrete as possible.”

“We had a pretty big tent on whom we sought input from, which also included the people who originally wrote and drafted Miami 21,” West said. “I think from the private side and development community, we got a good base.”

“People are looking to place their investment in a little bit of a safer asset, which right now is multifamily. If that cycle turns again, you’ll see a lot of those buildings convert to condos,” he said.

“Renting is good for everyone now,” Hollo said. “Wherever they are in their life cycle, they love renting.”

“We’ve been looking [in Miami] for five years,” he said.

“It was a natural progression to go into the rental side, [with me] wanting to make an impact on the community we’re in,” she said.

“You really have to be hyper-focused in terms of authenticity, local context,” Calderon said, referring to when she became a young, successful profession. “I had two options: living in the suburbs or living in the urban core with my mom. There was no product for someone like me.”

“There’s traffic, and then there’s traffic that might not be great for your product,” he said.

“I think you have to stop using the word demographic,” he said. “Because demographic doesn’t matter anymore. … It’s all about the psychographic. What’s their lifestyle?”

“And I think that CMS could look at decreased reimbursement to FEDs moving forward,” Mr. Banyon continued, “and this is not to distinguish between an ED in a hospital setting and a freestanding setting. That’s a big risk for health systems.”

“Northerners and foreigners coming down here, that’s going to drive prices,” said Kevin Morris, a senior director for Colliers International Affordable Housing division.

“Latin American economies are not in a good place but you can expect the elite to find the right liquidity that would be required to move abroad,” said Marcelo Kingston, developer and managing director for Multiplan Real Estate Asset Management.

“We see Miami as a final destination,” he said. “When we position ourselves, we try to find well-established communities in Miami Beach.”

In the case of the condo 57 Ocean at 5775 Collins Ave., Kingston said: “As the developer, you need to be flexible in customizing the right upgrades” that a permanent resident would want.

“Design has to be in the right mindset towards meeting those needs,” he said.

“From an affordable developer’s perspective if there’s an increase in rent levels it helps them because they are going to be able to charge more rent for their properties,” he said. “The developer will reap a benefit in the market increasing in rental value.”

“What I’ve seen now is that some Floridians might be leaving because the cost of living has been growing a lot,” Kingston said.

“The two big factors: How much are you going to get paid and where are you going to live? They are getting more difficult even for people looking to move here when you look at wages versus housing costs,” Murray said.

“That’s going away for the most part,” Murray said. “From the developer’s standpoint, they are having a hard time building at that mid-market because of the price of land and the scarcity of land that would be ideal for new housing construction for that mid-market.”

“Miami is becoming expensive to raise a family,” said resident Mary Snow, executive director of the Coral Gables Community Foundation. “Could we move to Vero Beach or the Carolinas and live more cheaply? Yeah. And we’ve had a lot of friends do that.”

“But,” she said, “this is home.”

“We always have people that move away and come back. I hope we continue to see that,” Snow said.

“We’ll always have people moving in and out,” he said. But “we’re selling property” whether it’s through exchanging currency or welcoming someone from South Carolina.

“The fund will provide qualified investors with the full tax benefits afforded to them under the legislation,” Gregory Freedman, BH3 principal and founder, said in an emailed media release.

“Real estate allocations are going to stay where they are or go up,” Bates said. “Apartments and industrial are at the top of everyone’s list … There are terrific tailwinds on the capital side.”

“There is a surprisingly very strong market for condos,” Natalizio said. “It’s an entirely different market now. Lenders will tell you there are not enough condos … Banks have come a long way in that area, they’re very aggressive.”

“The clock starts Oct. 1,” National Multifamily Housing Council Vice President of Capital Markets Dave Borsos said of the Fannie and Freddie allocation. “From that point to the end of 2020, each enterprise will have $100B to purchase loans.”

“As Q4 goes on and into Q1 and Q2, I think [Fannie and Freddie] will put their foot on the gas; they have to spend $200B,” Gnazzo said. “It’s encouraging for all that have enjoyed agency debt.”

“The amount of money out there chasing deals is astounding, and you have groups willing to accept low returns,” Trehubenko said.

“I do have to leave [Massachusetts], and the Southeast is the place I’m focused on now, from the Mid-Atlantic to Florida,” Edwards said.

“It’s getting pretty competitive down there,” she said.

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