South Florida real estate’s biggest stories of 2021
Surfside collapse tops list, hot residential market also registers
All eyes were on South Florida real estate for various reasons in 2021, from rising rents that propelled record investment trades to huge multimillion-dollar home sales, to the expansion of financial giants such as Blackstone, and the many preconstruction condo sales launches.
But the deadly collapse of the Champlain Towers South that killed 98 people in the middle of the night on June 24 rattled the region and will likely have the greatest impact on the market, with ramifications for building safety and maintenance, government oversight, condo law, insurance and more.
Here are some of the top real estate stories The Real Deal covered in 2021.
The unexpected collapse of the Champlain building this summer prompted federal and local investigations, as well as the formation of a grand jury and Florida Bar task force formed with an aim of preventing similar tragedies.
The oceanfront property will be sold and is in contract to stalking horse bidder Damac Properties, a Dubai-based developer that offered $120 million for the site. An auction where others could bid on the property is expected to occur next summer, and the proceeds from the sale will go toward the survivors and families of the victims.
- How to prevent another Surfside tragedy: Grand jury outlines recommendations
The calamity shed light on the need for greater oversight of older structures, and the approval and construction processes of Champlain more than 40 years ago as well as today. Counties and cities sent building inspectors out to older properties and in some cases had the buildings evacuated for life-safety issues. The collapse also created a greater divide between the demand for older and newer condos.
Developers doubled down on targeting old waterfront buildings for redevelopment opportunities, and some unit owners even banded together to list their properties for sale.
Housing market boom
Celebrities, C-suite executives, developers and even real estate agents picked up some of South Florida’s most expensive homes this year. Buyers hailed from high-tax states and regions, including California, Chicago and the Northeast. Tech CEOs and venture capital investors clustered in and around the Venetian Islands, in some cases tweeting their reasons why they left the San Francisco Bay area.
On the multifamily side, monthly rents soared by hundreds or thousands of dollars. With both occupancies and rents up, landlords cashed in, leading to a seemingly never-ending stream of huge investment sales. The largest closed in December, when social media influencer and motivational speaker Grant Cardone paid $744 million for four properties in Broward County.
The increase in new-to-market buyers and the big jump in prices pushed some locals out of their neighborhoods–and in some cases out of South Florida altogether. Developers moved forward with renovating or knocking down existing buildings, eliminating affordable housing, which is already lacking in the market. At the Hamilton on the Bay in Miami’s Edgewater, apartment giant Aimco, which is beefing up its South Florida portfolio, terminated the leases of all of its tenants to complete renovation work to the aging bayfront building, where some tenants had lived for decades.
Preconstruction condo market
The new condo market had lagged behind single-family home sales and existing condo sales until the start of 2021. Developers tested the market at first, opening presales up to “friends and family” and quietly launching new projects – or finally selling out developments that had been in the works for years. One of the first ones to launch and sell out was E11even Hotel & Residences Miami, prompting the developers, Property Markets Group and E11even Partners, to begin selling the second tower. They are also accepting cryptocurrency.
Condo behemoth Related Group unveiled projects from Miami’s Brickell to Pompano Beach, a largely underdeveloped town in Broward County.
There is also much more in the works, as developers increasingly try to buy out older condo buildings on the waterfront.
Financial giants, tech firms expand in South Florida
Microsoft, tech-focused private equity firm Thoma Bravo, Blackstone, Paul Singer’s Elliott Management hedge fund and others all expanded or signed their first leases from Miami to West Palm Beach this year. Blackstone ended up shelling out $230 million for the office buildings at Brightline’s MiamiCentral station, where it had signed a 41,000-square-foot lease months earlier.
Despite the increase in rents and institutional sales, new-to-market tenants and bump in Class A office development, office vacancy rates remained high. In the third quarter, vacancy rates averaged over 10 percent across South Florida.