INVESTORS GUIDEBrickell and Miami Downtown Real EstateTHE DAVID SIDDONS GROUPwww.luxlifemiamiblog.com2013
2 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALAn Investors Guidehis market report looks back at 2012exploring the growth of the Brickell andDowntown Miami real estate market.From boom to bust to boom, the purposeof this report is to provide the reader with abetter understanding of market prices, valuesand purchase opportunities.I would like to thank the DDA, EWM, and theFlorida Real Estate Association for providingme with much of the information that wentinto this report.What is covered?1. What happened in Brickell and Downtown in 20122. What’s new in Brickell and Downtown Miami3. What to Consider when investing in Miami Condos4. Infrastructural and social developmentsin Brickell and Downtown5. Brickell and Downtown Condos in detail6. Appendix and referencesTAsia corner unit. Asia is currently trading at $855 per sqft.
3 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALWhat happened in Brickell/Miami downtown in 2012?Of key Importance, property prices increased inBrickell and Downtown dramatically. 1 bed unitsincreased on average: 27.9%, 2 bedrooms: 24.5%,3 bedrooms: 27.3% and 4 bedroom units 17.6%.Visit: www.luxlifemiamiblog.com/condomarket or go to theappendix for the complete table of dataThe rental market increased significantly as the popula-tion grew but the inventory of available units for the mostpopular 1 and 2 bed units decreased on average 14%.which in turn pushed rental prices up.Visit: www.luxlifemiamiblog.com/rentalmarket or go to theappendix for the complete table of dataThe speed at which properties sold also increased. Asdemand increased over 2012 so properties sold onaverage 35 days faster than sales of the year before. Weexpect this trend to continue through 2013.Visit: www.luxlifemiamiblog.com/condomarket or go to theappendix for the complete table of dataAs we saw the rate of buying increase we sawinventory drop drastically. Inventory is quite possiblythe most telling factor in a market’s future success.If inventory falls below a critical point then prices can onlyfurther increase. In Brickell inventory currently sits below alevel that maintains market balance and prices can onlyincrease through 2013.$600$500$400$300$200$100$01 Bedroomunits2 Bedroomunits3 Bedroomunits4 Bedroomunits241312262332247323517594PRICES PER SQUARE FOOT2011 2012Information derived from Florida MLS data.Pricesincreased by17-27%Rental Marketprices increasedup to8.3%Time on the Marketdecreased by22.5%Decrease ininventory for2 bed units by31%A superb 3 bed unit at Epic. This building is currently trading at an average of $778 per sqft.
4 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL1. Midtown and Design DistrictPrices went from just $232 to $315 per sq.ft. in less than 1 year.There is significant commercial development going on in the area.2. DowntownPrices rose on average from $297 to $365 per sq.ft.Brickell is divided into 3 areas:Brickell Key, Financial District, and Old Brickell3. Brickell KeyThere are no more condos to be built on the island. Over 2012,there was a 15% price increase per sq.ft.4. Financial DistrictOver 2012 prices per sq.ft jumped from $338 to $395, up 18%.New condos being developed are: MyBrickell, 1100 Millecento,Brickell House and the SLS Hotel and Residences in Brickell.5. Old BrickellStarting with sq.ft. prices in $200 range, these older condominiumscan offer excellent entry-level value.NMiamiAve.NMiamiAve.BrickellAve.BiscayneBlvd.NE2Ave.NW7Ave.Midtown Design DistrictBrickell KeyOld BrickellFinancial DistrictDowntownMiamiSW 8 St.NE 15 St.Rickenbacker CausewayNW 5 St.NW 29 St.SW3Ave.SMiami Ave.MacArthur CausewayJulia Tuttle CausewayPrice change per sq.ft. over 201235%30%25%20%15%10%5%0%OldBrickellFinancialDistrictBrickellKeyMidtownandDesignDistrictDowntownMiamiInformation derived from Florida MLS data.Miami, “The New Global City” as calledby the Wall street Journal, is home to:• 60 International Banks• 29 Consulates• 26 Foreign Trade Offices• 9 International Trade Organizations• 8 International Chambers of Commerce
5 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL2002Condos For Sale on 12/31 Condos Sold Annually5,000010,00015,00020,00025,0002003 2004 2005 2006 2007 2008 2009 2010 2011 2012Inventory and SalesMiami-Dade County 2002 - 2012UNITS$500$450$400$350$300$250$200$150$100$50$0Q4 2005 Q4 2008 Q4 2012Historic Condo Sales Prices/Sq.Ft$334 $344$434$213$257$303$338$375$462BrickellBrickellBrickellMidtownMidtownMidtownDowntownMiamiDowntownMiamiDowntownMiami1 Historic Brickell2 Financial District3 Brickell Key4 Downtown5 Midtown Design DistrictRETURN ON INVESTMENTModerateModerate/volatileModerateVolatileVolatileTIMELINEShort, Medium Long TermShort, Medium Long TermShort, Medium Long TermLong TermLong TermRISKLowLowLowMediumMediumCondos For Sale 12/31Condo Sold AnnuallyMonths of Supply on 12/3120026475122046.420036260128725.820045259138974.520059643152607.62006198751193220200723517759237.2200822637673140.42009161691068118.22010151171416112.820118651175335.920127175173615The importance of InventoryMarket prices stabilize when inventory hold between6 – 9 months of supply. Current inventory supplies are nowjust below 5 months. Such a current short fall of inventorycan only result in an increase to residential property prices.“Is this just another Real Estate Bubble?”, “Withprices increasing so rapidly, are we not destinedto another Market Collapse?”BURNING QUESTION 1:Answer: Real estate is a cyclical business and like any otherindustry or market, it goes through periods of contractionsand expansions. As a Realtor I cannot tell you what will hap-pen in 5 years but I can give you some market facts thatwill give you more insight into the real estate cycle. Like anyother market the real estate market is never in equilibriumand will fluctuate between excess inventory and shortfallsin inventory due to changes in demand and supply of realestate.Demand for real estate in Miami in the last 2 yearsliterally exploded. Originally it was buyers looking to takeobvious advantage of units selling below construction cost.In the last year demand for real estate has continued asMiami Condos are still seen to provide excellent value tobuyers from the America’s market: Brazil, Argentina,Mexico looking to invest in US property as well as manyfrom mainland Europe and the rest of the US.Brickell and Downtown has not only attracted investorsbut big businesses as it becomes the ‘business hub’ forLatin America. As the population has boomed so rental rateshave increased dramatically further fueling the demand forproperty that provides a much healthier return than otherinvestment mechanisms.Interestingly as the mortgage market tightened its lendingparameters, so a large majority of buyers have been all ormostly cash. New projects have required 40-50% down asopposed to the previous market conditions of 2004 - 2007where buyers were heavily relying on large mortgages tomake purchases. Combined with stronger infrastructural,social and business developments in Brickell and Downtownthis has resulted in a much more robust property market.Data taken from EWM Trendgraphics. Originally derived from the Florida tax rolls and MLS data combined.
What’s new in Brickell/ Miami Downtown?6 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALMiami World CenterA nine block mix-used devel-opment which will offer variousinnovative, urban-style residencesincluding lofts, apartments andcondominiums.Brickell House374 units and a robotic parking garage. Unitswill range from 400 sq.ft studios to 1775 sq.ftpenthouses. Set for completion in the firstquarter of 2015.Resorts World MiamiThe Genting Group $3 billionproject which includes two resi-dential towers with 1000 units.The plans to include a casino inthe mega project have now beenput on hold.Brickell CiticentreA $1.05-billion urban shoppingand mixed-use development withtwo 42-story condo towers witha total of 800 units. Estimatesranging from 900- 2500 sq.ft andpriced between $450,000 and$850,000.One Bayfront PlazaThe 80 story plaza will offer 700 luxuryresidences which are expected to becompleted in 2018.NMiamiAve.NMiamiAve.BrickellAve.BiscayneBlvd.NE2Ave.NW7Ave.Midtown Design DistrictBrickell KeyOld BrickellFinancial DistrictDowntownMiamiSW 8 St.NE 15 St.Rickenbacker CausewayNW 5 St.NW 29 St.SW3Ave.SMiami Ave.MacArthur CausewayJulia Tuttle Causeway123 45678910Appendix and referencesIcon BayA 40 story, 300 unit developmentwith 1,2,3 bedrooms rangingfrom 928 to 1530 sq.ft interior.My BrickellSet for completion November 2013, My Brickellis a 27 story boutique building with 192 units.1000 MuseumThe skyline changing new residential tower ofWorld famous and prize winning architect ZahaHadid. Prices are estimated at $900/sq.ft.Condos will cover half or the entire floorstarting at 4 million,Penthouses at $30 million.SLS hotelA Philippe Starck designedHotel and Residential build-ing with 1,2 and 3 bedroomunits. Prices start in thelow $400s per sq.ft. andwill range from 600 sq.ft to1600 sq.ft units.1100 Millecento ResidencesA 42 story and 382 unit condo inspired bydesigns of legendary Italian Automobiledesigner Pininfarina. Currently under con-struction. Set for completion in the thirdquarter of 2014.1234567891095% soldUnder planUnder planUnder planUnder plan90% sold95% soldSelling nowUnder construction95% sold
7 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALThere is a huge variety of Condos in Brickelland Downtown and the best deals are oftenfound not by generalizing a choice of oneCondo over another, but in the specifics ofa single unit. My role is to assist clients inlooking for specific unit opportunities and tosearch for anomalies in the market that givelight to potentially excellent deals or riskyinvestments. Understanding key factorsand spotting these anomalies is essential inchoosing a wise investment.1. Price per sq.ftPrice per sq.ft. is of course of key importance.Buyers should be aware of the average priceper sq.ft. not just in their neighborhood but inspecific buildings. The chart on page 10 and11 shows the average price per sqft for allbuildings in Downtown and Brickell.Icon Brickell saw substancial increase in valuefrom 2011-2012. This is inpart due to itsenormous popularity with renters, and priceswere still considered cheap in 2011 incomparison to other similar Condos.Bristol Towers is a good example of a building inexcellent financial health. Unit 3302 is currentlyfor sale for $1,749,000.2. Financial stabilityBased on income levels and reserves heldwithin a Condominium. This will affectchanges in future maintenance costs andif reserves held are too low this can resultin building assessments. Please call me forthe 2012 financial summary reports for anyspecific Condo in Brickell or Downtown thatyou may be interested in.3. Maintenance CostsPlease refer to page 10 and 11 to see thecurrent maintenance fees for any of theBrickell and Downtown Condos. Maintenanceis calculated on a per sq.ft. basis.Carbonell Condo 2706 , 4/4.5, currently forsale for $1.8 million, has one of the lowestmaintenance fees in Brickell. This is due to itsstrong and establlished financial situation.4. Location and ViewsMiami has always been about water views.As the city develops so these prices hold apremium but also weather economic changemuch better than city view units.5. Amenities, Facilities and ServicesSpa’s, state of art gyms, large lap pools,concierge, restaurants are all highlyattractive to owners and renters alike andmake such buildings a top choice. However,high levels of amenities can also mean highermaintenance fees as the running costs of thebuilding are usually higher. Unique and Bou-tique style features such as private elevatorscan also help Condos appreciate well. In thesame way ‘overly generic’ units and Condoscan be far more vulnerable to market changeas there are hundreds of choices to potentialbuyers in the future.What to consider when investing in Miami condos.All units at Paramount bay enjoys direct bayviews where owners can enjoy the city lightsof Miami beach and water views. Unit 1409 ofParamount is currently for sale for $699,000.Icon Brickell has the largest pool in NorthAmerica! Epic is home to Zuma and 2 otheraward winning restaurants. Both have higherthan average maintenance fees, but in returnoffer an exceptional level of services andfacilities.
8 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL6. Surrounding DevelopmentsValues for units for sale in Midtown andDowntown (such as Paramount Bay andIcon Bay) have done very well on accountof the upsurge in new commercial and retaildevelopments within the Design district –New supermarkets, designer stores, and overa dozen top level new restaurants.The new SLS in Brickell will follow the sameformat as the new SLS in South Beach andis currently selling pre construction with anaverage price of $500 per sq.ft. This price isexpected to rise to $600 once the project isphysically completed.Bay House - Midtown / EdgewaterHot on the heels of the sold out Icon Bayproject in Downtown is Bay House. Thisnewest project from the Melo Group willconsist of 38 floors and 164 exclusiveresidences. Read the full report on thisnew project on my Blog site.http://www.luxlifemiamiblog.com.1000 Museum on Biscayne will be designed by Zaha Ahid, considered the worlds most famousArchitect. Heralded to have units selling from $4 million upwards, and set to redefine the luxuryCondo market in Downtown. Information on this project and all other new developmentscan be found on my Blog site: http://www.luxlifemiamiblog.com.Search Categories: Brickell and Downtown New Condos.New Designer shops in the design district hashelped boost sales in Midtown2 and the newIcon Bay Condo as seen here.7. New developmentsBuying a pre-construction unit is certainlymore of an unknown quantity than buyingan established Condo but can offer excellentvalue as they can sell around 20% or morebelow the price of the finished value.
Infrastructural and Social Developments within Brickell andDowntown that will affect future sales and rentals.9 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONAL9%8%7%6%5%4%3%2%1%0%1 Bedroomunits2 Bedroomunits3 Bedroomunits4 Bedroomunits4.4%8.3%2.0%1.4%Rental Increase per sq.ft. over 2012Information derived from South Florida MLS data.One of the most significant reasons why wehave seen such an increase in populationwithin Downtown and Brickell (populationgrew from 71,800 to 78,000 between 2011-2012) is that these neighborhoods havebecome a much better place to live:Better transportation:The metro mover has extended from Brickelldirectly to the airport. The Brickell Trolley, afree trolley service around the neighborhood,started last year and has been incrediblypopular.Commercial development:Significant amounts of Commercial buy uphave occurred in Brickell and Downtown with18 million sq.ft. of class A and B office spaceand 2.5 million sq.ft. of retail space. The Portof Miami is chartering more than $2 billiondollars in infrastructural development.Over 2012 Commercial property inmidtown and downtown has in some casesincreased in value by over 30% as so manybusinesses move into the ‘business hub ofLatin America’.Infrastructure:A new cinema and a new Wholefoods inDowntown. The building of the new ArtMuseum and History Musem (the biggestin the whole of the US) also in Downtown.New supermarkets in the Midtown area. 30new restaurants in Downtown, Midtown andBrickell have all opened in the last 12 months.The new Brickell City Center with a host ofnew retail stores as well the new designerstores in midtown will continue to make this ahighly desirable neighborhood and add valueto the surrounding Condos.Mary Brickell Village - seen as the center of Brickell will soon be joined by Brickell City Centerwhich will further expand the number of restaurant, shops and services to a neighborhood whichis currently growing in population by a staggering 10% per year.Information derived from DDA Miami.
10 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALBrickell and Downtown Condos in DetailHere you will find key information for ALL Condos in Brickell andDowntown. We reveal changes in price per sq.ft. in the 12 monthsfrom the end of 2011 to the end of 2012. This information hasbeen sourced directly from the South Florida MLS. We also revealcurrent maintenance fee rates which is extremely important andthe health Grade of the buildings as provided by Condoreports.com.BURNING QUESTION 2:Answer: Those investors who were willing to takea greater risk and invest in a pre-constructionproject over the last year have yielded significantfinancial returns on their investments, far in excess ofreturns they would have otherwise yielded onbuying into an already established Condo.Investors must be aware of a Developers trackrecord, financial stability, their payment structureand the unique selling points of that project that willenable it to stand out from the crowd. My Blogsite:www.luxlifemiamiblog.com details ALL the newCondo construction projects in the whole of MiamiDade with prices, floorplans as well as how thatproject compares to other existing Condos. Thegolden rule I use is: ‘If it existed today how wouldit compare in price to the competition?’ If an equalquality unit sells at $600 per sq.ft. today and youcan buy pre construction at $450 per sq.ft. for thesame product or better you will see a significantappreciation.“Should I buy pre-construction?”Carbonell
11 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALSource: MLS data, www.condoreport.com for Healthgrades.The building health grade ranks from 0-100 and measures price trends and condo association stability. Generally speaking,buildings with higher index readings are more stable than buildings with lower readingsBrickell and DowntownCondominium Informationon www.luxlifemiami.comDetails of all the buildings can be found onmy website: www.luxlifemiami.com under thetab “Featured Condos”. I feature all of themajor Miami condominiums and present thereader with pictures, videos, floorplans andinformation on amenities.1450 Brickell, an all-office skyscraper on BrickellAvenue
12 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALAPPENDIX: Sales Analysis of 1,2,3,4 bedroom units in Brickell and Downtown Miami.We analyzed the Brickell and Downtown areaby comparing the 4th quarter of 2011 salesinformation with the 4th quarter of 2012 salesinformation. We made a general analysis forthe greater Brickell/Downtown Area and amore specific analysis focusing specificallyon Downtown Miami, Wynwood/Art District,Brickell Financial District, Brickell Key andHistoric Brickell.In order to be more accurate for budget andinvestment purposes we analyzed 1,2,3 and4 bedroom units separately.Market Analysis Brickell/Downtown MiamiWhen comparing the 4th quarter of 2011with the 4th quarter of 2012 it can be seenthat the amount of closed sales for 2 and 3bedroom units increased with a significantpercentage. The (more scarce) 4 bedroomunits had the same amount of sold units inQ4 2011 compared to Q4 2012 and1 bedroom units sold 8.1% less than duringlast quarter in 2011. This doesn’tautomatically mean there is less demand forthese units. Sales prices went up by 17.6%to 27.9% (27% for 1 bedroom units) andthe average price per sq.ft, increased with aminimum of 14.9% for 4 bedroom units andwith a maximum of 31% for 3 bedroom units.Not only did properties increase in value theywere also less days on the market (15.1%-26.9%) before being sold.As can be seen from the availability of units,the months of inventory in the last quarter of2012 for 1, 2 and 3 bedroom units went downby 31.3%, 4.9% and 12.7% respectively.Applying the supply and demand theory onthese units, we can conclude that demandfor these units is still high as the inventory isdown and prices are increasing.Only for 4 bedroom units the months ofinventory did increase by 30% to 13 months.A 6-9 month inventory is considered normal.Given that the inventory is higher than 6-9months we are still finding ourselves in a buyersmarket. The 1 and 2 bedroom unit marketis close to becoming a sellers market (lowmonths of inventory and decreasing levelsof available units) whereas 3 and 4 bedroomunits are still in a buyers market with higherlevels of inventory and more units for sale.Information derived from Florida MLS and EWM Trendgraphics
13 INVESTORS GUIDE 2013 DAVID SIDDONS GROUP, EWM REALTY INTERNATIONALAPPENDIX: Rental Market Analysis of 1,2,3,4 bedroom units in Brickell and Downtown Miami.From the table above it can be seen that theprice per sq.ft. increased for all types of rentalunits in the Brickell and Downtown Marketover 2012.In general it can be said that all units didbetter than the year before regarding anincreased price of sq.ft. The months ofinventory decreased drastically for almost alltype of units to a level below 3 months.Investors who would like to rent their invest-ment properties out this analysis will onlybecome truly interesting when we include therental prices into the equator.It can be concluded that the Brickell/Down-town Miami Market is growing significantlywith inventory levels decreasing for almostall types of units to a level below 3 monthsand resulting in price increases over shortperiods of time. From the table above it can beseen that the price per sq.ft increased for alltypes of rental units in the Brickell and Down-town Market over 2012. The buying demandfor units in Brickell/Downtown Miami will bestimulated by the increasing number ofnew residents coming to Miami, the neweconomical and demographical boost thatwill be given to the city by projects such asResorts World and Brickell CitiCentre and theeconomical and political instabilities in Europeand South America help fuel the opinion thatthe purchase of the Miami condo units oftenmake for a safe and profitable investment.