Investors Guide to Brickell and Downtown Miami 2013

Brickell and Miami Downtown Real Estate

THE DAVID SIDDONS GROUP www.luxlifemiamiblog.com

2013

INVESTORS GUIDE

An Investors Guide

T

his market report looks back at 2012 exploring the growth of the Brickell and Downtown Miami real estate market.

From boom to bust to boom, the purpose of this report is to provide the reader with a better understanding of market prices, values and puchase opportunities.

I would like to thank the DDA, EWM, and the Florida Real Estate Association for providing me with much of the information that went into this report.

What is covered?

1. What happened in Brickell and Downtown in 2012 2. What’s new in Brickell and Downtown Miami 3. What to Consider when investing in Miami Condos 4. Infrastructural and social developments in Brickell and Downtown 5. Brickell and Downtown Condos in detail 6. Appendix and references

Asia corner unit. Asia is currently trading at $855 per sqft.

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INVESTORS GUIDE 2013

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

What happened in Brickell/ Miami downtown in 2012?

Of

key

Brickell

Importance, and

property

Downtown

prices

dramatically.

increased 1

bed

in

units

increased on average: 27.9%, 2 bedrooms: 24.5%,

Prices increased by

17-27%

3 bedrooms: 27.3% and 4 bedroom units 17.6%.

Visit: www.luxlifemiamiblog.com/condomarket or go to the appendix for the complete table of data

The rental market increased significantly as the population grew but the inventory of available units for the most

Rental Market prices increased up to

8.3%

A superb 3 bed unit at Epic. This building is currently trading at an average of $778 per sqft.

2011

2012

22.5%

PRICES PER SQUARE FOOT

$600

which in turn pushed rental prices up.

Visit: www.luxlifemiamiblog.com/rentalmarket or go to the appendix for the complete table of data

The speed at which properties sold also increased. As demand increased over 2012 so properties sold on average 35 days faster than sales of the year before. We expect this trend to continue through 2013.

Visit: www.luxlifemiamiblog.com/condomarket or go to the

594

$500

appendix for the complete table of data

517 Decrease in inventory for 2 bed units by

$400 $300 $200

Time on the Market decreased by

popular 1 and 2 bed units decreased by on average 14%.

332

312 241

262

31%

323

As we saw the rate of buying increase we saw inventory drop drastically. Inventory is quite possibly the most telling factor in a market’s future success.

If inventory falls below a critical point then prices can only further increase. In Brickell inventory currently sits below a

247

level that maintains market balance and prices can only increase through 2013.

$100 $0

1 Bedroom units

2 Bedroom units

3 Bedroom units

4 Bedroom units

Information derived from Florida MLS data.

3

INVESTORS GUIDE 2013

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

1. Midtown and Design District Prices went from just $232 to $315 per sq.ft. in less than 1 year.

There is a significant commercial development going on in the area.

Tuttle Causeway

2. Downtown Prices rose on average from $297 to $365 per sq.ft.

Midtown & Design District

Brickell is divided into 3 areas: Brickell Key, Financial District, and Old Brickell 3. Brickell Key

NE 15 St.

There are no more condos to be built on the island. Over 2012,

thur Causew MacAr a

there was a 15% price increase per sq.ft.

y

N Miami Ave.

New condos being developed are: MyBrickell, 1100 Millecento,

Financial District

e.

Av

.

ve iA

4

5. Old Brickell Starting with sq.ft. prices in $200 range, these older condominiums can offer excellent entry-level value.

Miami, “The new global city” as called by the Wall street Journal, is home to:

10%

5%

• 60 International banks • 29 consulates

Old Brickell

S

15%

iam

M

INVESTORS GUIDE 2013

useway

Rickenbacker Ca

• 26 Foreign Trade Offices • 9 International Trade organizations • 8 International Chambers of Commerce

0%

Downtown Miami

Brickell Key

Brickell House and the SLS Hotel and Residences in Brickell.

Brickell Key

Brick

ell Av e.

SW 8 St.

3

20%

Over 2012 prices per sq.ft jumped from $338 to $395, up 18%.

Downtown Miami

SW

25%

Financial District

NW 5 St.

4. Financial District

30%

Old Brickell

NW 7 Ave.

N Miami Ave.

NE 2 Ave. Biscayne Blvd.

NW 29 St.

35%

Midtown and Design District

J u lia

Price change per sq.ft. over 2012

Information derived from Florida MLS data.

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

Inventory and Sales Miami-Dade County 2002 - 2012

BURNING QUESTION 1:

25,000

“Is this just another Real Estate Bubble?”, “With prices increasing so rapidly, are we not destined to another Market Collapse?”

20,000

Answer: Real estate is a cyclical business and like any other industry or market, it goes through periods of contractions and expansions. As a realtor I cannot tell you what will happen in 5 years but I can give you some market facts that will give you more insight into the Real Estate cycle. Like any other market the real estate market is never in equilibrium and will fluctuate between excess inventory and shortfalls in inventory due to changes in demand and supply of real estate.

UNITS

15,000

10,000

5,000

0 2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Condos For Sale on 12/31

Historic Condo Sales Prices/Sq.Ft

$500 $450

$462 $434

$400 $350

$303

$250

$338

$257

Q4 2005 Condos For Sale 12/31 Condo Sold Annually Months of Supply on 12/31

Low

Moderate/volatile

Short, Medium & Long Term

Low

Moderate

Short, Medium & Long Term

Volatile

Long Term

Volatile

Long Term

Q4 2008

Q4 2012

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 6475 6260 5259 9643 19875 23517 22637 16169 15117 8651 7175 12204 12872 13897 15260 11932 7592 6731 10681 14161 17533 17361 5 5.9 12.8 18.2 40.4 37.2 20 7.6 4.5 5.8 6.4

Data taken from EWM Trendgraphics. Originally derived from the Florida tax rolls and MLS data combined.

INVESTORS GUIDE 2013

Downtown Miami

Medium

TIMELINE

Midtown

Medium

Brickell

4 Downtown $0 5 Midtown & Design District

Short, Medium & Long Term

Midtown

Midtown

2 Financial District $100 3 Brickell Key $50

Low

RETURN $213 ON INVESTMENT Moderate

Brickell

1 Historic Brickell $150

Brickell

RISK

Downtown Miami

$200

5

Brickell and Downtown has not only attracted investors but big businesses as it becomes the ‘business hub’ for Latin America. As the population has boomed so rental rates have increased dramatically further fueling the demand for property that provides a much healthier return than other investment mechanisms.

$375

$344

$334

Downtown Miami

$300

2012

Condos Sold Annually

Demand for real estate in Miami in the last 2 years literally exploded. Originally it was buyers looking to take obvious advantage of units selling below construction cost.

In the last year demand for real estate has continued as Miami Condos are still seen to provide excellent value to buyers from the America’s market: Brazil, Argentina, Mexico looking to invest in US property as well as many from mainland Europe and the rest of the US.

Interestingly as the mortgage market tightened its lending parameters, so a large majority of buyers have been all or mostly cash. New projects have required 40-50% down as opposed to the previous market conditions of 2004 - 2007 where buyers were heavily relying on large mortgages to make purchases. Combined with stronger infrastructural, social and businss developments in Brickell and Downtown this has resulted in a much more robust property market.

The importance of Inventory Market prices stabilize when inventory hold between 6 – 9 months of supply. Current inventory supplies are now just below 5 months. Such a current short fall of inventory can only result in an increase to residential property prices.

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

What’s new in Brickell/ Miami Downtown?

1

Icon Bay

J u lia

A 40 story, 300 unit development

Tuttle Causeway

6

with 1,2,3 bedrooms ranging

90% sold

95% sold NW 7 Ave.

N Miami Ave.

NE 2 Ave. Biscayne Blvd.

NW 29 St.

Resorts World Miami

The Genting Group $3 billion project which includes two residential towers with 1000 units.

The plans to include a casino in the mega project have now been put on hold.

1

Midtown & Design District

innovative, urban-style residencesNW 5 St. including lofts, apartments and

and mixed-use development with a total of 800 units. Estimates ranging from 900- 2500 sq.ft and

2 thur Causew MacAr a

priced between $450,000 and $850,000.

8

penthouses. Set for completion in the first quarter of 2015.

5

1000 Museum The skyline changing new residential tower of World famous and prize winning architect Zaha

7

SW 8 St.

10

Brick

Penthouses at $30 million.

ell Av

Appendix and references

9

Under plan

Downtown Miami

9

3

low $400s per sq.ft. and will range from 600 sq.ft to 1600 sq.ft units.

8

Selling now

e A5v

10

Old Brickell

residences which are expected to be

.

ve iA

completed in 2018.

Under plan S

M

iam

A Philippe Starck designed

units. Prices start in the

Financial District

One Bayfront Plaza The 80 story plaza will offer 700 luxury

SLS hotel

ing with 1,2 and 3 bedroom

Brickell Key

.

SW

95% sold

Hotel and Residential build-

6

e.

Hadid. Prices are estimated at $900/sq.ft. starting at 4 million,

Brickell House will range from 400 sq.ft studios to 1775 sq.ft

Under plan

Condos will cover half or the entire floor

Under construction

374 units and a robotic parking garage. Units

condominiums.

INVESTORS GUIDE 2013

A $1.05-billion urban shopping

NE 15 St.

3 4

N Miami Ave.

Miami World Center opment which will offer various

6

7

two 42-story condo towers with

Under plan

A nine block mix-used devel-

4

Brickell Citicentre

y

3

Set for completion November 2013, My Brickell is a 27 story boutique building with 192 units.

from 928 to 1530 sq.ft interior.

2

My Brickell

1100 Millecento Residences A 42 story and 382 unit condo inspired by designs of legendary Italian Automobile designer Pininfarina. Currently under con-

useway

Rickenbacker Ca

struction. Set for completion in the third quarter of 2014.

95% sold

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

What to consider when investing in Miami condos.

There is a huge variety of Condos in Brickell

3. Maintenance Costs

4. Location and Views

and Downtown and the best deals are often

Please refer to page 10 and 11 to see the

Miami has always been about water views.

found not by generalizing a choice of one

current maintenance fees for any of the

As the city develops so these prices hold a

Condo over another, but in the specifics of

Brickell and Downtown Condos. Maintenance

premium but also weather economic change

a single unit. My role is to assist clients in

is calculated on a per sq.ft. basis.

much better than city view units.

looking for specific unit opportunities and to search for anomalies in the market that give light to potentially excellent deals or risky investments.

Understanding

key

factors

and spotting these anomalies is essential in choosing a wise investment.

1. Price per sq.ft Price per sq.ft. is of course of key importance.

Buyers should be aware of the average price per sq.ft. not just in their neighborhood but in specific buildings. The chart on page 10 and 11 shows the average price per sqft for all buildings in Downtown and Brickell.

Bristol Towers is a good example of a building in excellent financial health. Unit 3302 is currently for sale for $1,749,000.

2. Financial stability Based on income levels and reserves held within a Condominium. This will affect changes in future maintenance costs and if reserves held are too low this can result

Carbonell Condo 2706 , 4/4.5, currently for sale for $1.8 million, has one of the lowest maintenance fees in Brickell. This is due to its strong and establlished financial situation.

in building assessments. Please call me for

All units at Paramount bay enjoys direct bay views where owners can enjoy the city lights of Miami beach and water views. Unit 1409 of Paramount is currently for sale for $699,000.

the 2012 financial summary reports for any specific Condo in Brickell or Downtown that

5. Amenities, Facilities and Services

you may be interested in.

Spa’s, state of art gyms, large lap pools, concierge,

restaurants

are

all

highly

attractive to owners and renters alike and make such buildings a top choice. However, high levels of amenities can also mean higher maintenance fees as the running costs of the building are usually higher. Unique and Boutique style features such as private elevators

Icon Brickell saw substancial increase in value from 2011-2012. This is inpart due to its enormous popularity with renters, and prices were still considered cheap in 2011 in comparison to other similar Condos.

can also help Condos appreciate well. In the same way ‘overly generic’ units and Condos can be far more vulnerable to market change Icon Brickell has the largest pool in North America! Epic is home to Zuma and 2 other award winning restaurants. Both have higher than average maintenance fees, but in return offer an exceptional level of services and facilities.

7

INVESTORS GUIDE 2013

as there are hundreds of choices to potential buyers in the future.

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

6. Surrounding Developments

7. New developments

Values for units for sale in Midtown and

Buying a pre construction unit is certainly

Downtown (such as Paramount Bay and

more of an unknown quantity than buying

Icon Bay) have done very well on account

an established Condo but can offer excellent

of the upsurge in new commercial and retail

value as they can sell around 20% or more

developments within the Design district –

below the price of the finished value.

New supermarkets, designer stores, and over a dozen top level new restaurants.

1000 Museum on Biscayne will be designed by Zaha Ahid, considered the worlds most famous Architect. Heralded to have units selling from $4 million upwards, and set to redefine the luxury Condo market in Downtown. Information on this project and all other new developments can be found on my Blog site: http://www.luxlifemiamiblog.com.

Search Categories: Brickell and Downtown New Condos.

New Designer shops in the design district has helped boost sales in Midtown2 and the new Icon Bay Condo as seen here.

The new SLS in Brickell will follow the same format as the new SLS in South Beach and is currently selling pre construction with an average price of $500 per sq.ft. This price is expected to rise to $600 once the project is physically completed.

8

INVESTORS GUIDE 2013

Bay House - Midtown / Edgewater Hot on the heels of the sold out Icon Bay project in Downtown is Bay House. This newest project from the Melo Group will consist of 38 floors and 164 exclusive residences. Read the full report on this new project on my Blog site. http://www.luxlifemiamiblog.com.

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

Infrastructural and Social Developments within Brickell and Downtown that will affect future sales and rentals.

Rental Increase per sq.ft. over 2012 9% 8% 7%

8.3%

6% 5% 4% 3% 2%

4.4% 2.0%

1% 0%

1.4%

1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom units units units units Information derived from Florida MLS data.

Information derived from DDA Miami.

One of the most significant reasons why we

dollars

have seen such an increase in population

Over

in

infrastructural

within Downtown and Brickell (population

midtown and downtown has in some cases

grew from 71,800 to 78,000 between 2011-

increased in value by over 30% as so many

2012) is that these neighborhoods have

businesses move into the ‘business hub of

become a much better place to live:

Latin America’.

Better transportation:

Infrastructure:

The metro mover has extended from Brickell

A new cinema and a new wholefoods in

directly to the airport, the Brickell Trolley a

Downtown. The building of the new Art

free trolley service around the neighborhood

Museum and History Musem (the biggest

started last year and has been incredibly

in the whole of the US) also in Downtown.

popular.

New supermarkets in the Midtown area. 30

2012

Commercial

development. property

in

new restaurants in Downtown, Midtown and

Commercial development:

Brickell have all opened in the last 12 months.

Significant amounts of Commercial buy up

The new Brickell City Center with a host of

have occurred in Brickell and Downtown with

new retail stores as well the new designer

18 million sq.ft. of class A and B office space

stores in midtown will continue to make this a

and 2.5 million sq.ft. of retail space. The Port

highly desirable neighborhood and add value

of Miami is chartering more than $2 billion

to the surrounding Condos.

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INVESTORS GUIDE 2013

Mary Brickell Village - seen as the center of Brickell will soon be joined by Brickell City Center which will further expand the number of restaurant, shops and services to a neighborhood which is currently growing in population by a staggering 10% a year.

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

BURNING QUESTION 2:

Brickell and Downtown Condos in Detail Here you will find key information for ALL Condos in Brickell and

“Should I buy pre-construction?”

Downtown. We reveal changes in price per sq.ft. in the 12 months from the end of 2011 to the end of 2012. This information has

Answer: Those investors who were willing to take

been sourced directly from the South Florida MLS. We also reveal

a greater risk and invest in a pre-construction

current maintenance fee rates which is extremely important and

project over the last year have yielded significant

the health Grade of the buildings as provided by Condoreports.com.

financial returns on their investments, far in excess of returns they would have otherwise yielded on buying into an already established Condo.

Investors must be aware of a Developers track record, financial stability, their payment structure and the unique selling points of that project that will enable it to stand out from the crowd. My Blogsite: www.luxlifemiamiblog.com details ALL the new Condo construction projects in the whole of Miami Dade with prices, floorplans as well as how that project compares to other existing Condos. The golden rule I use is: ‘If it existed today how would it compare in price to the competition?’ If an equal quality unit sells at $600 per sq.ft. today and you can buy pre construction at $450 per sq.ft. for the same product or better you will see a significant appreciation.

Carbonell 10

INVESTORS GUIDE 2013

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

Brickell and Downtown Condominium Information on www.luxlifemiami.com Details of all the buildings can be found on my website: www.luxlifemiami.com under the tab “Featured Condos�. I feature all of the major Miami condominiums and present the reader with pictures, videos, floorplans and information on amenities.

Source: MLS data, www.condoreport.com for Healthgrades.

The building health grade ranks from 0-100 and measures price trends and condo association stability. Generally speaking, buildings with higher index readings are more stable than buildings with lower readings

1450 Brickell, an all-office skyscraper on Brickell Avenue 11

INVESTORS GUIDE 2013

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Analysis of 1,2,3,4 bedroom units in Brickell and Downtown Miami.

We analyzed the Brickell and Downtown area

Not only did properties increase in value they

by comparing the 4th quarter of 2011 sales

were also less days on the market (15.1%-

information with the 4th quarter of 2012 sales

26.9%) before being sold.

information. We made a general analysis for the greater Brickell/Downtown Area and a

As can be seen from the availability of units,

more specific analysis focusing specifically

the months of inventory in the last quarter of

on Downtown Miami, Wynwood/Art District,

2012 for 1, 2 and 3 bedroom units went down

Brickell Financial District, Brickell Key and the

by respectively 4.9%, 31.3% and 12.7%.

Historic Brickell.

Applying the supply and demand theory on these units, we can conclude that demand

In order to be more accurate for budget and

for these units is still high as the inventory is

investment purposes we analyzed 1,2,3 and

down and prices are increasing.

4 bedroom units separately.

Only for 4 bedroom units the months of inventory did increase by 30% to 13 months.

Market Analysis Brickell/Downtown Miami

A 6-9 month inventory is considered normal.

When comparing the 4th quarter of 2011

Given that the inventory is higher than 6-9 months we are still finding ourselves in a buyers

with the 4th quarter of 2012 it can be seen

market. The 1 and 2 bedroom unit market

that the amount of closed sales for 2 and 3

is close to becoming a sellers market (low

bedroom units increased with a significant

months of inventory and decreasing levels

percentage. The (more scarce) 4 bedroom

of available units) whereas 3 and 4 bedroom

units had the same amount of sold units in Q4

2011

compared

to

Q4

2012

units are still in a buyers market with higher

and

levels of inventory and more units for sale.

1 bedroom units sold 8.1% less than during last

quarter

in

2011.

This

doesn’t

automatically mean there is less demand for these units. Sales prices went up by 17.6% to 27.9% (27% for 1 bedroom units) and the average price per sq.ft, increased with a minimum of 14.9% for 4 bedroom units and with a maximum of 31% for 3 bedroom units.

12

INVESTORS GUIDE 2013

Information derived from Florida MLS and EWM Trendgraphics

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Rental Market Analysis of 1,2,3,4 bedroom units in Brickell and Downtown Miami.

From the table above it can be seen that the price per sq.ft. increased for all types of rental units in the Brickell and Downtown Market over 2012.

In general it can be said that all units did better than the year before regarding an increased price of sq.ft. The months of inventory decreased drastically for almost all type of units to a level below 3 months.

Investors who would like to rent their investment properties out this analysis will only become truly interesting when we include the rental prices into the equator.

It can be concluded that the Brickell/Downtown Miami Market is growing significantly with inventory levels decreasing for almost all types of units to a level below 3 months and resulting in price increases over short periods of time. From the table above it can be seen that the price per sq.ft increased for all types of rental units in the Brickell and Downtown Market over 2012. The buying demand for units in Brickell/Downtown Miami will be stimulated by the increasing number of new residents coming to Miami, the new economical and demographical boost that will be given to the city by projects such as Resorts World and Brickell CitiCentre and the economical and political instabilities in Europe and South America help fuel the opinion that the purchase of the Miami condo units often make for a safe and profitable investment.

13

INVESTORS GUIDE 2013

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Market Analysis of 1,2,3,4 bedroom units Brickell Key Condos

14

INVESTORS GUIDE 2013

Financial Distric Condos

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Market Analysis of 1,2,3,4 bedroom units Downtown Condos

15

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Wynwood/Design Districts

DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL

APPENDIX: Sales Market Analysis of 1,2,3,4 bedroom units Old Brickell Condos

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DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL