Allure of Brickell,
downtown Miami drives up rental rates
Rents are rising in
Miami, especially in the sizzling Brickell/downtown areas where vacant units
are snapped up quickly amid strong demand for the urban lifestyle and amenities
Photo of Brickell Avenue by Mia Marchand
written by: Martha Brannigan
When Brett Smith
rented a condo at Axis Brickell last year, there were still sweet deals to be
found, but when the lease came up for renewal last month, he got a sour note:
The rent was spiking 15 percent.
The three-bedroom,
three-bath condo would cost $3,800 a month, up from $3,300.
“We actually looked
around at other places, and most looked to be around the same price range,”
said Smith, a 25-year-old construction project manager who shares the apartment
with two friends. “We decided with the cost of moving, we would just stay.”
Smith, who loves the
urban lifestyle — “It’s great, and it’s getting better,” he says — has lots of
company.
In greater downtown
Miami and Brickell, residential rental rates per square foot jumped 10 percent
in the first nine months of 2012 from a year earlier, according to a study
conducted for Miami Downtown Development Authority by Coral Gables-based Focus
Real Estate Advisors.
Rents for the sizzling
Brickell neighborhood leaped even more sharply. The average monthly rental rate
for Brickell jumped 17 percent to $2,242 in the first nine months of 2012 from
the same period in 2010, while the rent per square foot spiked 28 percent over
that period, according to additional data from Focus Real Estate Advisors and
MLxchange.
Fueling the price
increases: Strong demand for rental units and the growing popularity of the
downtown and Brickell areas as new restaurants and entertainment spots help
mold an urban core that is attractive to young professionals and students but
also to an increasingly diverse crowd.
“It’s become like a
restaurant Mecca in Brickell,” said Denise Sicuso, sales manager for
Esslinger-Wooten-Maxwell Realty’s Brickell downtown office, which handles lots
of condo rentals and sales in the area.
With Brickell CitiCentre,
a massive $1.05-billion mixed-use complex with retail, entertainment, office
and residential, going up at 701 South Miami Avenue, “the interest in the
neighborhood is only increasing,” Sicuso added. “When we get rental listings,
they’re gone within a week.”
More than 95 percent
of rental units in the greater downtown Miami area are occupied, according to
the Downtown Development Authority study.
Demand for rental
units is strong for many reasons: Tough lending standards for mortgages are
making it difficult for many people to buy a home. Coming out of the recession
and housing meltdown, many people have credit histories that exclude them from
becoming buyers. Others simply don’t want to own.
At the same time, a
steady influx of foreigners and others relocating to Miami is bolstering rental
demand, as is the gradually improving economy that is enabling some young
people who had moved back to the nest with their parents to get their own
place.
“There is pent-up
demand for rentals, not unique to the downtown or Brickell area,” said Craig
Werley, president of Focus Real Estate.
Another factor: Many
of the professionally managed rental apartment buildings in South Florida were
converted into condominiums before the real-estate market crashed.
Professionally managed
apartment buildings account for just 10 percent of Miami’s rental market, down
from 20 percent in 2000, according to Werley.
While there is a major
push by developers and institutional investors to build more multifamily rental
units in South Florida (and around the country), the lag time before new rental
units would come to market means supply will be tight for some time.
The rising rents also
reflect that condo sales prices have rebounded sharply in Miami from their
recession lows, especially in the downtown Brickell area. Most of the overhang
of new condominium inventory has been snapped up more quickly than many had expected,
with much of it going to cash-rich foreign investors, who rent the units out.
Raquel Colp, the sales
and leasing executive for Axis Brickell, which is still working through sales
of about 44 developer-owned units, said rents have to keep pace with the higher
market selling prices of condo units, since investors expect a certain rate of
return.
Colp recently was
preparing a lease renewal letter for a tenant in a two-bedroom condo that was
renting for $1,925 a month and wondering: “We’re looking to renew, but how do
you tell someone the rent is going up $375?” she said. “$2,300 would be close
to the bottom pricing for a two-bedroom condo,’’ she added.
One tenant at Axis
recently managed to reduce the rent on a two-bedroom unit by $100 a month to
$2,600 a month from the asking price of $2,700 a month “because they paid five
months upfront,” Colp said.
Occasionally, existing
tenants can negotiate breaks. Melissa Samowitz, who in August renewed the lease
on her one-bedroom, 1 1/2-bath condo unit at Latitudes on the River in downtown
Miami for a second year, said the couple who owns the unit sought to boost the
rent $100 a month to $1,625.
“We pushed back,
because we’re good tenants,” said Samowitz, 26, who works at a software company
in Weston. The compromise: A $50 a month increase.
“I know if we moved,
we would be paying a lot more,” Samowitz acknowledged. “Most one bedrooms are
$1,800 or so.” And the neighborhood is in high demand, she said: “There’s
restaurants popping up. The place is booming.”
Focus president Werley
said discounts and come-ons to lure renters in downtown Miami are “at historic
lows.”
“Incentives for all
intents and purposes disappeared in downtown sometime in 2011,” he said. “You
don’t need to offer special deals.”
James Brinker, a real
estate agent with CVR Realty in Miami, agrees that high occupancy rates and
strong demand give landlords the stronger hand.
“You have to pay
market price,” Brinker said. “There’s not a lot of negotiation.”
Brinker said he
recently checked the Multiple Listings Service for rental units between $1,500
and $2,000 a month in the 33132 ZIP code that covers part of downtown. “Only
six listings showed up. It blew my mind.”
Read more here: http://www.miamiherald.com/2012/11/23/3110169/allure-of-brickell-downtown-miami.html
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