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Miami Briefs
Hotel room rates continue to rise
Miami-Dade County ranks third after New York and Oahu in Hawaii as the country’s most expensive hotel market. The average room rate in Miami was about $142 in 2006, and prices continue to rise. According to a Smith Travel Research survey, Miami’s rate went up 11 percent last year. But the rise in rates and the threat of a busy hurricane season pushed down occupancy levels, the Miami Herald reported. The occupancy decline would have been greater if a number of hotels weren’t closed for renovations and condo conversions, market watchers said.
Home, condo sales drop in 2006
The number of home sales in South Florida reached a low point during 2006. Fewer single-family houses in both Miami-Dade and Broward counties sold in the past year than in the last 12 years, the Miami Herald reported. For 2006, single-family home sales fell 21 percent in Miami-Dade and 26 percent in Broward compared to the year before. Condominium sales fell even further — there was a 24 percent drop in Miami-Dade and a 32 percent slump in Broward in the same period. Still, in Miami-Dade, prices went up 7 percent over the year and prices in Broward County went up 2 percent, according to the Florida Association of Realtors.
Higher prices for office space
The South Florida office market is tightening up. At the end of 2006, the average rental rate for luxury downtown office space in Palm Beach County was $40.69 a square foot, up from $36.42 the previous year, according to a Cushman & Wakefield report. Broward’s rental rate increased from $29.29 a square foot in 2005 to $31.08 a square foot by the end of 2006. By the end of 2006, Palm Beach County’s office vacancy rate was 11.3 percent and Broward’s rate was 11.7 percent. Analysts attribute the increased demand to limited office development.
Plan aims to blunt growth impact
A massive government plan to guide development in the South Miami-Dade area will be released in this month. The $4 million Watershed Plan from the County Commission’s Infrastructure and Land Use committee has 68 recommendations to minimize the impact of growth in Miami-Dade, which will gain an estimated 204,000 new households by 2050, the Miami Herald reported. The plan attempts to even out residential density along state highways and encourage townhouse and low-rise condo development near mass transit lines located in single-family housing neighborhoods. Local officials say expected growth over the next several decades will burden county infrastructure.
Trump, Perez to build luxury condos
Two major developers are pressing ahead with plans for a $200 million luxury high-rise, despite the softness in the condo market. The Sun-Sentinel reported that Donald Trump and Jorge Perez recently announced plans to work together for the third time to build the 23-story Trump Tower Palm Beach in West Palm Beach. The project will have 150 two- and three-bedroom condos priced from $900,000 to more than $2 million. Construction will start next year. Trump and Perez are also working on luxury condos in Hollywood and Sunny Isles Beach in Broward County. However, recent overbuilding in South Florida has left many investors unable to find buyers and some projects, like 550Q in West Palm Beach, have been halted.
Demand slows for pre-built condos
CondoFlip.com, a Web site for investors who flip condos in Miami, has closed. Using CondoFlip.com, buyers were able to resell units before construction was complete. But an oversupply of units slowed demand among investors to buy pre-construction units, the South Florida Business Journal reported. According to Miami’s planning department, from September 2005 to September 2006, more than 6,000 units were completed in Miami. There are more than 22,000 units under construction. The creator of CondoFlip.com is launching Condo Super Center, a site that taps into the downward-spiraling market with a service that connects “desperate” sellers with buyers.
Limited inventory fuels higher rents
South Florida’s rental market remains robust, with low vacancy and rising rents, the Sun Sentinel reported. According to investment brokerage Marcus & Millichap, Miami ranked 13th and West Palm Beach ranked 15th in apartment markets across the nation. A condo conversion craze in 2005 reduced the inventory of apartments in South Florida, and brokers say the limited supply has led to strong rent growth in many submarkets. Analysts expect a number of condos to revert to rental stock as developers abandon conversions or speculators rent their units because they can’t flip them. Marcus & Millichap predicts Broward County’s apartment market will continue to have low vacancy rates and healthy rent gains throughout 2007. Lack of affordable housing in Broward will raise rents by 6 percent, to an average asking rent of $1,163, say analysts. Rents in Palm Beach County are projected to rise 5.6 percent this year, to an average asking rent of $1,179. In Miami-Dade County, asking rents are projected to increase by 5.8 percent, to $1,151 per month.
Housing slowdown to impact retailers
The slower housing market in South Florida has building supply and home furnishing retailers concerned about the health of their businesses. According to the National Retail Federation, retail sales are expected to grow by 4.8 percent in 2007 — a significant drop from 2006’s growth of 6.3 percent. Analysts also saw a marked decline for retailers of building materials, furniture and appliances. Growth in sales for these retailers fell from 16.5 percent in 2005 to 2.5 percent last year, the Sun-Sentinel reported. The slowdown in the housing market will continue to have an impact on furniture and home improvement stores, brokers say.