As Miami’s real estate market continues to soften, multifamily developers will find it harder to obtain financing at a time the city desperately needs more apartments for low-to-middle income renters, according to industry experts who participated in a Bisnow forum Tuesday morning at the Atton Brickell Miami hotel.
As a result, people working at service and hospitality jobs in downtown Miami and the neighboring financial district can only find modestly priced housing in the southern outskirts of Miami-Dade County, said Marc Suarez, director of commercial real estate financing firm Hunt Mortgage Group.
“For example, at Brickell City Centre, where are all the people cleaning the hotel rooms going to live?” Suarez said. “How are they going to commute to where the jobs are? The only real place you can have affordable housing without government assistance is in Naranja or Homestead.”
Today, obtaining capital for a market rate apartment building in Miami’s urban core is very difficult, Suarez added. “If you have a second or third tier developer that has four projects out there, he doesn’t have the balance sheet to get equity to get that fifth deal done,” Suarez said.
Jay Jacobson, managing partner for Eden Multifamily, a development and real estate investment company, said Miami is in the midst of an affordable housing crisis that has hit close to home. “I have a 25-year-old millennial [daughter] who is the poster child for my market research, Jacobson said. “She can’t support herself with three college degrees in South Florida right now.”
To prevent millennials like his daughter from leaving Miami for cities with more affordable housing options, developers and local government officials have to figure out innovative ways to build more apartments for the working class, Jacobson said. “It’s a conundrum,” he said. “We haven’t done much to move the needle.”
Jacobson also warned that lenders, especially traditional banks, will look for any reason to cancel financing. “If you have a term sheet from a lender, sign it,” he said. “If you try to change it, they will pull out.”
However, Albert Milo, principal of Related Urban Development, said city of Miami officials have made tweaks to Miami 21 that make it more cost-effective to build market rate housing in areas like Little Havana and Wynwood.
“They have done a lot already,” Milo said. “They passed [legislation] that relaxes parking requirements. And they have already done an impact fee reduction ordinance for working housing [projects].”