Tuesday, February 18, 2014

The Perfect Storm is Coming to Miami

Miami has experience many booms and busts. During the late 70's and early 80's Miami's economy thrived. Many would attribute it to foreign investment from Central and South America. Political instability in these regions resulted in many buyers coming to South Florida to buy real estate in the hope for appreciation and security. With the discovery of oil in this region, many found new wealth and came to South Florida to spend it. This, however, was only part of the reason for our local boom. Drugs played a huge part in our then booming economy. Miami had become a major player in the Nation's drug trafficking industry. A great deal of money was being pumped into our economy and the banking institution set their sights on Miami. National and international banks opened local branches, thus creating the financial district we know today as Brickell. During this period hundreds of millions of dollars in cash made their way into local, national and international banks. Alongside the banking boom, many developers set their sights on the Brickell area and many high-rises were built to meet the high demand for luxury real estate in the area.

In the late 80’s through the mid 90’s Miami saw another economic boom. This time, it started in Miami Beach. Miami Beach became the new hotspot and major changes were took place. Dozens of new hotels, condominiums and businesses were constructed dramatically changing the landscape of a city which had been decaying for decades. Many world class nightclubs and restaurants led way to a high energy and trendy life style which had not been seen since the 50’s and 60’s.

This new excitement lured many locals and visitors to the Beach prompting many to buy real estate, further fueling economic growth. This growth spilled across Biscayne Bay into Brickell and Downtown Miami.  During this period, new construction was evident everywhere and in the next few years the population of the Brickell and downtown areas more than doubled. In the early 2000’s further demand for real estate in these areas pushed development north into the Edgewater, Midtown, Wynwood and the Design District.

This lasted for several more years until the balloon burst and the bottom fell out of both the mortgage and real estate markets. Lack of jobs and a majority of homeowners under water resulted in thousands of foreclosures. This was not just in Miami; it was happening all around the Nation and ultimately affecting other countries which had historically seen Miami as a place to invest. As a result of the worldwide economy, many developers which depended on international buyers to purchase condos in their building went bust due to the lack of sales ultimately leading to an overabundance of property for sale.

By 2011, things began to change. Foreclosed properties were being snatched up by investors causing a decline in the number of properties available for sale. Our local real estate market had begun to see signs of a recovery. Today, some say that the market is in full swing is about to experience another boom. This may be true; however, South Florida needs more than just a strong foreign infusion of investment. Although, tourism and foreign investment is an integral part of our economy, South Florida must improve its infrastructure if it is going to compete worldwide.

In order to meet these challenges, South Florida will be doing just that. In the next two years, the city of Miami will receive 10’s of Billions of dollar in capital infusion to improve infrastructure. This major overhaul has already begun at the Miami International Airport and Port of Miami.  Once completed, the Miami International Airport will play a major role in the local growth by efficiently accommodating tourist and business travelers arriving and departing to and from Miami. Already one of the busiest airports in the Nation, the Miami International Airport will increase capacity and serve as a key hub for major airline and a central hub for trains and public transportation as well. The Port of Miami is currently building an underwater tunnel which will accommodate increasing commercial traffic to and from the port.  The deep water channel into the port will be dredged and taller crane have been installed making way for larger cargo ships being facilitated passage to Miami due to the expansion of the Panama Canal.

The improved infrastructure does not stop with MIA and the port, expansion and new construction of highways and new roads, new convention centers and public venues for the arts are just a few of the many other projects being funded by this money. Moneys coming from Federal, State and private sources will energize this new mega boom. Many large private developments are underway in many areas of the magic city.  Resort World Miami, will begin construction on the old Miami Herald site this year with an estimated cost of around 3 billion dollars. Citi Centre, a multi-use development is being built on one of the last available parcels in the Miami Brickell area. It will span 4 blocks and cost over 1 billion dollars. And, One Brickell, a  Related Group project will encompass more than 4 million square feet, including 2 million sellable square feet, at an investment of over 1 billion, this according to the Miami Herald.

So yes, Miami is again poised for a boom, this time a ‘perfect storm’ of the best kind. What this means is jobs and prosperity for people and businesses of Miami. This will no doubt be an exciting time for Miami; a new evolution has begun and it will not stop here.

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