Soccer superstar Lionel Messi and Amazon founder Jeff Bezos moved to Miami in 2023, creating two major stories that dominated headlines around the world.
The real estate market was somewhat insulated from headwinds facing other parts of the U.S. But higher interest rates, construction costs and insurance premiums kept deal volume low across sectors.
Still, a number of sales set records. In April, car dealer Michael Cantanucci paid $170 million for an oceanfront estate in Palm Beach, a record residential sale in Florida. Green Mountain Coffee Roasters founder Bob Stiller and his wife, Christine Stiller, sold the mansion eight years after buying it for just $25 million, clearly exemplifying a continuation of rising residential prices.
On the commercial front, Trinity Investments and Credit Suisse paid $835 million for the 1,000-room Diplomat Beach Resort in Hollywood, setting a new benchmark for hotel sales in the region.
Developers proposed dozens of new apartment buildings and office projects throughout the tri-county region. Yet, cracks are beginning to show in the office and multifamily sectors — specifically aging suburban office stock and multifamily projects owned by landlords who underwrote those deals at numbers that no longer pencil out. Office sublease availability rose amid remote work.
Branded residential developments boomed from Coconut Grove to West Palm Beach, though it’s unclear how many will actually be built, despite strong interest from prospective buyers.
Some developers brought on additional equity or new partners to get their projects moving, while others are hoping to hang on until the debt markets improve.
Real estate continued to shape politics and vice versa, with a number of scandals at Miami City Hall and other cities across South Florida. Miami Mayor Francis Suarez, at the center of criminal and ethics investigations, was found to have been paid at least $170,000 from ex-Location Ventures developer Rishi Kapoor, who had a stalled project in the city’s Coconut Grove neighborhood.
On the legislative front, Gov. Ron DeSantis signed a massive affordable housing bill into law that sets aside hundreds of millions of dollars in funding and creates a set of incentives for developers that incorporate workforce housing into their projects. The full effects of the law, dubbed the Live Local Act, have yet to be seen. But some municipalities have attempted to create guardrails because the legislation supersedes local height and density regulations.
DeSantis also signed a contentious law that nearly bans all Chinese national real estate purchases in the state and restricts purchases from buyers in a handful of other countries, including Venezuela and Russia. It’s being challenged in federal court.
The insurance crisis hit condo owners and associations especially hard. It became more difficult to secure coverage, as companies stopped writing and renewing policies two years after the deadly condo collapse in Surfside. Condo and townhome communities are grappling with new statewide legislation requiring associations to complete costly financial reserve studies, fully fund their reserves and bring their properties up to code. Some associations have had to pass special assessments just to cover the cost of insurance.
On a similar note, examples of alleged fraud at condo and townhouse communities kept popping up in the wake of the multimillion-dollar fraud at the Hammocks, one of the largest associations in the state, which is playing out in court.
More distress is expected, despite the Federal Reserve’s recent announcement that it plans to cut interest rates next year.
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