Downtown Miami’s Retail Market Sees Signs of Growth as Residential Population Continues to Surge

During a time when most retail markets across the region remain stagnant, Downtown Miami’s is surprisingly enjoying relative growth. An area widely recognized as the epicenter of where boom turned to bust is turning a corner, and ironically, the downturn is serving as its catalyst. As price discounting continues and demand for urban living remains high, renters and buyers are flooding the Downtown market to take advantage of the killer deals and centralized urban location, in turn, creating a built-in customer base for retail entrepreneurs to capitalize on. In July of this year, Downtown Miami’s Central Business District welcomed four new restaurants, which are the latest to come on line to cater to residents and visitors.

The four new additions – Brickell Irish Pub, Ecco Pizzateca, Mia at Biscayne, and Tré Italian Bistro – join the more than 150 new retail businesses that have opened in Downtown Miami since 2005, and another 25 are slated to open before the end of 2009. Retailers, market analysts, and real estate professionals alike cite the area’s strong commercial base; waterfront location; entertainment and cultural destinations such as The Adrienne Arsht Center for the Performing Arts and the American Airlines Arena; access to public transit; and convenience as Florida’s largest employment center as the primary driving factors behind the surge in residential and retail growth.

In fact, a recent independent Residential Closings & Occupancy Study conducted by Goodkin/Focus Real Estate Advisors in partnership with the DDA, found that more than 62% of the 80 residential buildings that have been built in Downtown Miami since 2003 are occupied by primarily full-time residents. Additionally, the average monthly sales and leasing activity of new units has been averaging approximately 400 units per month; the average monthly sales of new units during the past three months has increased over the three months prior. U.S. Census projections indicate that the Downtown area’s residential base has grown from 40,000 to 60,000 since 2000, with another 10,000 new residents expected to move in over the next six years.

It’s a cyclical evolution – the residential and commercial populations are attracting more retail and businesses to relocate to the district while the emergence of new retail and entertainment options is spurring more residential growth. In similar fashion to how Miami Beach’s Lincoln Road turned the corner in the early 90’s, we’re seeing entrepreneurs look at downtown Miami from a long-term perspective. Business owners are committed to investing in Downtown Miami today because they see the potential in the area tomorrow. And for the first time in years, landlords and property owners are doing their part by seeking out more upscale, service-oriented retailers who are committed to contributing to the area’s new landscape.

Study Confirms Downtown Miami is Coming to Life

As CPN reported last week, the results of a new residential occupancy and closings study for Downtown Miami defy the perception that Miami’s urban core is a ghost town awash with empty condos.

Conducted by independent research firm Goodkin Consulting/Focus Real Estate Advisors in partnership with the Miami Downtown Development Authority, the report surveyed 80 Downtown Miami buildings erected during the height of the boom and found that (1) a healthy majority of these units – 62% -- are occupied by mainly full-time owners or renters, (2) occupancy and closing rates are trending upward, and (3) equilibrium is probable within three to four years.

The study provides the first comprehensive picture of the number of people living in Downtown Miami since the start of the construction boom, reinforcing what people living and working here have witnessed for some time. Take a walk along Brickell Avenue or Biscayne Boulevard, two of Downtown’s major thoroughfares, after 5 pm and it’s clear that Downtown is filling up. We are home to a diverse population of residents who are drawn to the convenience of urban living, Downtown’s affordability, its waterfront location, a host of entertainment and cultural destinations, widespread access to public transit, and to our standing as Florida’s largest employment center.

Up to now, much attention has focused on Downtown Miami’s excess inventory of condominiums, but the Study’s findings suggest that we will see a steady increase of buyers and renters move into the market to capitalize on the competitive pricing. In fact, census projections indicate that the area’s residential base has increased from 40,000 to 60,000 since 2000, with more than 10,000 residents expected over the next six years. Adding to the mix are more than 190,000 employees come to work in Downtown each day. In response to this population growth, we are seeing more and more retailers relocating to Downtown Miami. From 2005 to 2008, Downtown Miami welcomed more than 85 new businesses and another 30 are expected to before the close of this year. These include high-end restaurants and retail shops that remain open on nights and weekends to cater to the growing number of residents.

While there is still much work to be done, we are encouraged by the findings in this report, which send a clear signal that Downtown Miami is coming alive. As price discounting continues – for sales and rentals – we will see even more people move into Downtown Miami and live here year-round. The DDA plans to update this study on a regular basis to learn more about the growing residential population. The more we can learn about this demographic, the better positioned retailers and service providers will be to meet their needs. To download a free copy of the full report and methodology employed, please visit www.miamidda.com

With Migration Back to Urban Core, Miami Sees Opportunity for Revitalization, Sustainability

Miami’s commercial real estate sector is intently focused on a recent court ruling that rejected the planned development of a Lowes hardware store outside Miami-Dade County’s Urban Development Boundary (UDB), our line of demarcation for westward sprawl. Essentially, commercial and residential developers are pushing to expand the boundaries while environmentalists and advocates of sustainable growth favor holding the line in place.

Another planned development that would require moving the UDB – this one a large-scale residential community – is still awaiting a decision from the court.

Unlike many U.S. cities, Miami evolved after the arrival of the car, a factor which has had a profound impact on our urban development and exacerbated our susceptibility to urban sprawl. The last 30 years have seen residents populate the western and southern reaches of our County in droves.

But the psyche seems to be changing as people migrate back to our urban core. Since 2000, our Downtown population has grown by more than 50%, and another 15,000 people are expected to move in over the next few years. They are drawn to Downtown Miami’s new residential infrastructure, waterfront location, entertainment and cultural destinations, active nightlife, existing commercial base, public transit system, and wealth of employment opportunities.

Recognizing this renewed interest in urban living, commercial developers should seek opportunities for infill development in our existing communities, many of which are among the area’s most desirable neighborhoods.

We have already seen progress in Downtown Miami, which has been the target of more than $13 billion in investment in recent years, including dozens of residential high-rises, two million square-feet of commercial office space set to come online in 2010, and a number of mixed-use projects.

Going forward, Miami’s civic leaders, business community, and commercial developers must continue to support sustainable development. We can start by expanding and revitalizing our existing urban areas, and that requires concentrating our efforts on this side of the line.

Miami: A New Take on the 'Tenant's Market'

Many of us have jumped through hoops to meet a residential landlord’s demands prior to renting an apartment. Before you even have a key in hand, you’ve already shelled out thousands of dollars in the form of credit check and application fees, a security deposit, up-front rental payments, even background check fees. All of this in the name of due diligence.

With the commercial real estate industry and broader business world intently focused on what landlords are doing to lure and retain tenants in today’s economy, it’s time for commercial asset owners to get aggressive in requesting tenant guarantees that offset the risks associated with leasing space in a volatile economy. The fact is, tenants’ are just as vulnerable – more so, in many cases – to the ups-and-downs of this shaky economic climate as their landlords, as is evidenced by continued increases in the unemployment rate, the corporate bankruptcy rate, and the loan default rate.

The notion that landlords should be demanding more from their tenants becomes even more important in a market that enjoys a roster of stable owners, such as the Miami office market. By requesting letters of credit, tenant contributions to upfront TI costs, and other case-by-case guarantees, landlords have an opportunity to safeguard themselves for the long-term. From a tenant’s perspective, this is a small price to pay considering the concessions that landlords are making in today’s economy.

by Danet Linares, President of CREW-Miami (Commercial Real Estate Women) & executive vice president of Blanca Commercial Real Estate

Miami: Downtown Focus

Much has been reported lately about downtown Miami’s challenges absorbing the influx of residential development that has taken shape in recent years. To examine where Miami stands today and how it will move forward, it’s helpful to take a step back. The latest wave of urban growth began in the late 90s, when Miami’s civic and business leaders saw sustainable vertical development in our urban core as the logical place to begin expanding the City. We’re neighbored by the Everglades to the west, the Atlantic Ocean to the east, and we sit atop our own drinking water, so condensed infill development in downtown Miami – the state’s largest employment center – was the bull’s-eye for residential developers and local leaders.

There is a perception among some that poor planning got us here. But in reality, development in our urban core – as opposed to urban sprawl – was the best method for meeting our community’s population needs. From an urban development standpoint, Miami is in prime position for long term, sustainable growth while other metropolitan areas are busy trying to curb sprawl. The fact that residential development took off in downtown Miami has built a strong platform for enterprise and job growth, government investment, and renewed interest in downtown Miami as a destination. The next step toward becoming a 24/7 city is boosting investment in mass transit and encouraging retail and commercial businesses to relocate and expand here, in turn creating a vibrant mixed-use environment for downtown’s growing population.

South Florida: Take a Back-to-the-Basics Approach During Challenging Economic Times

The adage “a rising tide lifts all ships” rings especially true during a bull market.  Recent years have been good to our region and many of us have benefited from the booming economy.  But as deal flow and business in general trickles, we are reminded that periods of prosperity inevitably give way to hard times. There’s no question that the problems we’re facing require more than a quick fix, but by revisiting the basics of business development, we can prime ourselves for growth once the good times return.

The first step in going back to basics is keeping poised and focusing on that which is within your realm of control, rather than getting caught up in the panic induced by daily headlines.  It is a common reaction to seek cover, slash business budgets and wait for the storm to pass; but the fact is that businesses that stay front-and-center despite the hard times are usually the first to recover.

Having said that, there are a number of things you can do to weather the storm. While there are countless fundamentals unique to each industry, the following are four of the “basics” that every businessperson should prioritize:

·         Build Relationships – Get to know your clients, customers and colleagues and develop a clear understanding of their personal interests and business objectives. Beyond your existing relationships, invest in new relationships with members of the business community who can help keep you engaged and in front of key audiences.

·         “Smart Communication” – Let’s face it: there’s a lot of anxiety in the business world today. Now is the time to build confidence in your business among both internal and external audiences. Doing this will establish healthy lines of communication that can be put to good use when market conditions improve.

·         Exceptional Client/Customer Service – Many companies claim to be “client-focused,” which is easy to live up to when deals are flowing and serving clients is part of the business cycle. The challenge comes when business slows and natural client contact becomes more infrequent. When this happens, creativity in client outreach is key. Send an article that relates to a personal or business interest of theirs, stop by to say hello once in a while – anything that demonstrates clients are top-of-mind and that you are committed to addressing their needs.

·         Get Involved – Community involvement and business go hand-in-hand. Deal flow might have slowed down, but professional and community organizations are moving full-steam ahead.  Aligning yourself with premier organizations not only helps you rub shoulders with the right people, but it demonstrates your commitment to making a positive impact in the community in which you serve.  People want to work with people who care, lead by example and make a difference.  Getting business cards and following up is nice, but showing your peers how you can make a meaningful difference – through participation in committees, boards, etc. – is ultimately how you will gain respect, and in turn, see the fruits of your labor pay off with more business referrals.

The basic fundamentals have helped us get through tough times in the past, and if past is prologue, then embracing – and acting upon – these principles is what will help get us back on track today.

South Florida: Back to Basics

When I sat down to choose a topic for my first blog entry, I was reminded of just a few short months ago when I was deciding upon a theme for CREW-Miami’s 2009 campaign (Commercial Real Estate Women). At that time, my initial thought was to launch “Close the Deal,” a natural sequel to this past year’s successful “Make the Ask” campaign, which sought to inspire assertiveness among women throughout the industry and generate deal flow among members.

But as the economy plummeted even further and deal flow stalled, it became clear that a new campaign theme was in order. In business, it’s often the simplest actions – making that phone call, getting involved in the community, and as we learned in 2008, asking for the business – that helps strengthen relationships. So this year, CREW-Miami is launching an awareness and education campaign called “Back to Basics” to encourage industry professionals to revisit the fundamental principles of business success and serve as a reminder to all that the same fundamentals that brought us success in the past are what will help us meet the challenges of today.

Throughout the year, CREW-Miami will offer a strong slate of topical and educational programs for members and guests, geared toward building relationships and gaining a better understanding of the critical issues affecting our industry and region. There’s never been a better time to get involved in a professional organization. After all, professional involvement and doing business go hand-in-hand. Active participation not only offers access to and visibility amongst other professionals, but through active participation, you have the opportunity to demonstrate your business prowess and professionalism to potential business prospects. You never know where your next deal will come from. It’s just a matter of uncovering and pursuing the right opportunities.

CPN’s new blog has provided us with a great venue in which to engage one another. I hope this first entry serves to spark a healthy and productive dialogue, and look forward to hearing your thoughts on how, together, we can get back on track.