How temporary slowdowns do not undermine the strength of Miami’s real estate
David Martin President – Terra
How are developers coping with the slowdown in the luxury condominium market?
There is an assumption that demand has cooled, but you have to realize that Miami is comprised of different neighborhoods, some of which have higher barriers to entry than others. There is scarcity of oceanfront product, developable areas in Coconut Grove and land in Doral for single-family homes. With scarcity comes an opportunity to develop special projects, as Terra is doing in Coconut Grove, Weston and North Beach, areas that are still seeing thriving demand and price appreciation. In the end, the value proposition offered by certain real estate asset classes in particular submarkets will dictate what pricing will bear. That’s why Terra invests in neighborhoods with high barriers to entry and “voids” in the market. Real estate demand in Miami, whether for residential, office space, shopping centers or industrial, is vibrant and strong—especially over the long term.
For exurban development, what are the key trends?
Whether you are talking about urban or suburban development, people are looking for better quality of life. In the urban core, that exists in walkability, access to parks, shops, restaurants and culture. Buyers accustomed to life in a single-family home are drawn to the idea of living in a high-rise that is home to like-minded residents and new quality-of-life offerings. In suburban areas, you have peace, natural environments, top-rated schools, a village-like community. Critical mass is building in suburbs like Doral, Dadeland and Weston; we’re finding nodes with urban characteristics emerging. We’re seeing mini urban cores with office, hotel and residential being developed around anchors. In the case of Dadeland, it’s Dadeland Mall. In Weston, it’s Cleveland Clinic.
How might you characterize the evolution of the residential luxury product in this market?
Miami is about people discovering it, falling in love with it and then moving here or buying a place. Much of the world is looking to Miami as a stable place to invest. We’re seeing flight capital enter the market from Europe, Latin America and Asia, with the ultra-premium buyer segment being particularly active. What’s interesting is where and how they spend their money once here. Our developments are attracting worldly, sophisticated buyers coming from Latin America, New York and the U.S. If you can pique their intellectual interest with your product, then you are contributing something to the market. We’re seeing a shift toward “intelligent luxury,” which I define as buyers looking to “be” more, rather than “have” more.