Crimson developer sees green in Miami’s future

Fernando Levy Hara predicts developers will achieve up to 60 percent profit on new properties

TRD MIAMI /
Jul.July 03, 2013 12:00 PM

Demand from Miami’s burgeoning, young population for rentals and condos suggests that the region is at the beginning of an extended boom, Fernando Levy Hara, a principal of the mckafka development group, told The Real Deal.

“This is the time to jump back into this market,” he said. “Those who enter during the next 24 months will be buying at the beginning of a new, virtual cycle of real estate expansion.”

Argentina native Hara and fellow mckafka principal Stephan Gietl met at Harvard Business School, where they focused a thesis on Miami’s recovery they are now hoping to realize by developing a 90-unit condo tower called The Crimson in Miami’s Edgewater neighborhood.

Miami’s explosive population growth, especially foreign immigrants between 25 and 45 years old, has gobbled up most of the inventory from the last boom and created demand for new construction.

“There is a demand for 6,542 new units every year in Miami’s urban core due to the new trend of young professionals looking to live near the city in order to avoid long and tedious hours of commuting in the car every day. This demand is not currently satisfied,” Hara said.

Of 42,000 unsold units in the city in 2008, leftover supply from Miami’s last cycle, only 850 are left. The city’s residential vacancy rate of 1.4 percent is roughly a third of the national average, Hara said. Only 200 new condo units have been built in the past seven years, he said.

Tight supply spurred rental rates to jump 10.6 percent in 2012 and an estimated 6 percent this year with 3.5 percent annual growth over the following four years, according to Hara, who says where rental rates rise, property prices follow.

“As investors can finance 50 percent or 60 percent of the investment with a bank loan, this will allow them to “leverage” their investment, achieving profits between 40 percent and 60 percent when they sell the property, an unthinkable scenario not so long ago,” he said –Emily Schmall


Related Articles

arrow_forward_ios
Renderings of the project and Gil Dezer (Getty; Renderings via  Zyscovich Architects)

Dezer’s 30-acre megaproject in North Miami Beach gets first approval

Dezer’s 30-acre megaproject in North Miami Beach gets first approval
Mayor Carlos Gimenez (Credit: Joe Raedle/Getty Images)

Miami-Dade approves $10M emergency rent relief program

Miami-Dade approves $10M emergency rent relief program
Jeff Burns, Nick Rojo, The Bohemian Lake Worth

Affiliated Development’s Lake Worth Beach apartment project approved

Affiliated Development’s Lake Worth Beach apartment project approved
A rendering of the Intracoastal Mall and Gil Dezer

Dezer’s plans to remake Intracoastal Mall face opposition

Dezer’s plans to remake Intracoastal Mall face opposition
Alta Developers CEO Raimundo Onetto and Le Parc at Brickell rendering

Le Parc at Brickell condo association sues Alta Developers and partner for alleged construction defects

Le Parc at Brickell condo association sues Alta Developers and partner for alleged construction defects
Vacation rentals, gyms, fitness studios get the green light to resume operations in Miami-Dade

Short-term rentals, gyms, fitness studios can operate again in Miami-Dade

Short-term rentals, gyms, fitness studios can operate again in Miami-Dade
Biscayne Beach

Lawsuit accuses Biscayne Beach developer and construction firms of shoddy work

Lawsuit accuses Biscayne Beach developer and construction firms of shoddy work
Mayor of Miami Beach Dan Gelber (Credit: Nicholas Hunt/Getty Images)

Miami Beach creates $550K rent relief fund

Miami Beach creates $550K rent relief fund
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...