Newly amended Live Local Act bill heads to state Senate for a vote

Among the proposed amendments are tax abatements for landlords and parking breaks for projects near train stations.

Tax abatements for landlords and parking breaks for projects near train stations are among the provisions of an amended Live Local Act bill headed to the Florida Senate for a vote.

The SB 328 bill was proposed by State Senator Alexis Calatayud (R-South Miami), who co-sponsored the passage of the original Live Local Act enacted last year.

The state law provides tax incentives and development rights to developers who reserve at least 40% of their units for households that earn up to 120% of a county’s area median household income. It includes granting developers the highest density a municipality or county allows, and requiring that those projects are approved administratively and without a vote from local elected officials.

The latest version of the bill unanimously passed the senate fiscal policy committee Jan. 31. It is scheduled to come before the state senate Feb.7. Additional amendments may be published by Feb. 6 prior to the vote, said Anthony De Yurre, a partner of Miami-based Bilizin Sumberg.

Among the provisions is a clarification that owners of apartment buildings completed in the past five years who reserve at least 70 units for affordable housing can seek property tax abatements of up to 100% for those units as well as a “proportionate share of the residential common areas, including land,” states the bill’s text. Currently, the tax abatement only applies to the units.

The amended law would also allow landlords in the Florida Keys to pursue Live Local Act tax abatements if at least 10 units are set side for affordable or workforce housing.

Other proposed amendments include:

  • Requiring cities and counties to reduce parking requirements by 20 percent for mixed-use Live Local Act projects within a half-mile of a train or bus station, if the area is pedestrian friendly or within 600 feet of on-street parking, a lot, or garage.
  • Clarifying that developers are entitled to the highest floor area ratio (FAR) a city or county allows.
  • Budgets $100 million from the general revenue fund to implement the Florida Hometown Hero Program to provide mortgage loans of up to $35,000 at 0% interest for full-time employees of Florida-based employers.
  • Allowing developers to use the Live Local Act on industrial zoned properties that are not on the waterfront or by a port. An earlier version of SB 328, proposed in January, would have made industrial zoned lands ineligible for Live Local Act projects.
  • Enables developers to build to the maximum height a city allows within a one mile radius of a project’s site – except if it is adjacent on two sides of a single-family zoned neighborhood with at least 25 contiguous single family homes. In that case, the developer is limited to 150% of the maximum height allowed with a quarter mile of the proposed development, or three stories, whichever is taller.
  • Prohibits Live Local Act projects within one-quarter of a mile of an airport runway and within any airport noise zone.
  • Stipulates that Live Local Act projects within a quarter mile of a military installation “may not be administratively approved.”
  • Grandfathers building rights obtained via the act, but only if that project provides affordable housing during the required 30-year period. Builders who violate that 30-year minimum must be provided a reasonable amount of time to fix the violation or the property will be treated as a nonconforming use.

Conflicts have arisen since the passage of the Live Local Act between local governments and developers over how the law can be enacted. The South Florida cities of Doral, Weston, and Florida City enacted moratoriums on Live Local Act projects. And in Bal Harbour, Whitman Family Development filed suit against the village government to force it to process its application to add 600 residential units and 70 hotel rooms to the Bal Harbor Shops.

But as the new version of the law is drafted, developers and state legislators have sought to address concerns brought by city and county officials, Bilizin Sumberg’s De Yurre said.

“Cities that get education on the Live Local Act realize that it is an unprecedented tool to face an unprecedented problem of housing affordability,” he added.

Article Link: Newly amended Live Local Act bill heads to state Senate for a vote
Author: Erik Bojnansky

Florida’s Live Local Act Has People Picking Sides

Developers love the affordable housing law — the first of its kind in the nation — for the same reasons that local officials are starting to loathe it.

Even its critics think Florida’s Live Local Act is working. In fact, they think it’s working too well.

Local politicians are concerned that the new state law encouraging development of rent-restricted workforce housing is encroaching on their authority as it prohibits public hearings on such projects and overrides land development rules in cities and counties.

In response, state legislators feeling the pushback are proposing bills to amend — and perhaps undermine — the 6-month-old law.

“The Florida Legislature has done a complete 180 based on local government political pressure,” said real estate attorney Keith Poliakoff, a partner at Government Law Group in Fort Lauderdale. The Live Local Act was a bipartisan measure that had tremendous support during the 2023 legislative session. It passed on votes of 103-6 in the Florida House and 40-0 in the Florida Senate.

“Senators and House members on both sides of the aisle came together to adopt this plan,” said Poliakoff. “What they did not factor was that the bill would have tremendous pushback, and looked at with venom by cities and counties throughout the state.”

The law has stirred a herd of developers to qualify for its benefits by proposing mixed-income multifamily developments on sites zoned for commercial use.

“Every single client I have with a [property development] project has asked for an analysis as a Live Local and a regular project,” said Miami-based attorney Anthony De Yurre, a partner in the land development and government relations group at law firm Bilzin Sumberg. “Why? They are just trying to get projects built in an impossible environment to get projects built because of construction costs, financing costs and insurance costs.”

To qualify as a Live Local rental apartment development, at least 40 percent of the units must have below-market rents, and they must be reserved for tenants who earn less than 120 percent of area median income. Area median income ranges from $64,215 a year in Miami-Dade County to $70,331 a year in Broward County and $76,066 a year in Palm Beach County, according to U.S. Census data. The Live Local Act defines affordable rents as those below 30 percent of the tenant’s income.

City and county leaders in Florida have criticized the Live Local Act because it can subordinate the application of local land development rules to the state law, overriding local zoning and limits on building height and density.

“Normally, I would tell you that you can’t build an apartment complex in a commercial plaza. That’s where the public is supposed to go. But what Live Local says is, yes, you can do that,” said Eric Power, the director of planning and development services in Deerfield Beach, during his presentation on the Live Local Act at a recent meeting of the city commission. “Live Local also takes away our ability to regulate certain things related to height and density.”

One of the first controversies stemming from the new state law erupted when Montreal-based Jesta Group proposed redeveloping the five-story Clevelander hotel and bar in Miami Beach as an 18-story residential building, where 40 percent of the units would have below-market rents and the unrestricted units would be sold as condos. The former mayor of Miami Beach denounced the proposal to redevelop the iconic Clevelander at 1020 Ocean Drive as a threat to historic Art Deco buildings throughout the city.

“I hope my successor and our next commission build upon my antipathy for your very horrible idea,” Dan Gelber wrote in a letter of protest to Jesta Group just before his six-year tenure as mayor ended in November, due to term limits. “Ocean Drive is the postcard of our Miami Beach, and your idea would effectively destroy it.”

Florida Gov. Ron DeSantis cited the state’s brisk population growth and its upward pressure on the cost of housing at a ceremonial event last March when he signed the 106-page Live Local Act into law. “We’ve got to make sure our infrastructure and our housing supply are able to sustain this growth,” DeSantis said. “There are some creative things in this legislation which I think will make a big difference.”

DeSantis highlighted $711 million of additional funding for housing-related programs and various tax breaks under the Live Local Act, which took effect July 1. The governor left unsaid the Live Local Act’s power to usurp local control of land development in the name of affordable workforce housing. The new state law also prohibits commissions and boards in cities and counties from holding public hearings on Live Local projects or voting on such projects. A development that complies with Live Local requires only administrative approval by municipal staff.

“The problem with the state legislature trying to impose zoning rules on individual cities is that zoning is not a one-size-fits-all proposition,” said Fort Lauderdale Mayor Dean Trantalis. “For people in Tallahassee to tell people in Fort Lauderdale they should realign their zoning to accommodate affordable housing shows a naivete on their part, in thinking that they can dictate something a thousand miles away as to how these cities operate. It doesn’t work that way.”

Resistance from local governments has led to moratoriums on processing Live Local development plans in Doral and Florida City, two Miami-Dade County municipalities. Other jurisdictions are addressing the new state law one project at a time. For example, the Pembroke Pines City Commission voted 3-2 in November to approve a 50-unit townhouse development by Miami-based Lennar on a 6.7-acre site, and one motive was to preclude the possibility of a Live Local project there. “We would have no control over any of that happening,” said Iris Siple, vice mayor of Pembroke Pines. “Someone could just come and put what they want there.”

The proposed revisions to the Live Local Act that are moving through the current session of the Florida Legislature would restrict which projects would be eligible for Live Local designations, as well as their size relative to nearby buildings. One such revision would restrict the maximum height of a building to those in a quarter-mile perimeter, while another would prohibit developers from pursuing Live Local developments in industrial zones. On the other hand, some modifications would affirm that a Live Local project can be as dense as the densest development in a local jurisdiction, and that Live Local projects near mass transit stops could have fewer than the required number of parking spaces.

Other local governments are dragging their feet as they process applications for development plans based on Live Local, Poliakoff said. “There is not a governmental entity out there that is not slow-playing the applications in hopes the new law [revising the Live Local Act] will take effect, so they can deny the plans they have sitting on their desk.”

Some of his clients, however, are worried about possible changes to the law. “My clients are incredibly upset,” Poliakoff said. “I have five Live Local projects that are pending at municipalities, three of which will be destroyed as a result of the language proposed, if the new law passes.”

Perhaps the hottest issue is the maximum height of projects based on the Live Local Act. The law limits the height of a qualified development with affordable housing units to the height of the tallest building within one mile of the development site. But new legislation would shrink that perimeter from within a mile of the development site to within a quarter-mile.

The quarter-mile perimeter to determine maximum building height is one of several proposed revisions to the Live Local Act in bills that were introduced in the current session of the Florida Legislature. Another proposal would prohibit developers from pursuing Live Local developments with rent-restricted residential units in industrial zones.

“My hope is that there will be a legislative compromise,” said Poliakoff. “My hope is that they will allow industrial back into the mix, and that they will grandfather in any project that applied under the existing law.”

But certain changes to the Live Local Act could be a deal breaker for some developers who plan to take advantage of the state law.

For example, Brooklyn-based Condra Property Group wants to use the Live Local Act to replace a cluster of low-rise motels near the beach in Hollywood with a 282-unit, mixed-income apartment building that would be 18 stories — the same height as the Margaritaville Hollywood Beach Resort, which is within one mile of the site. But if the area that determines maximum building height shrinks to within a quarter-mile, Condra Property Group would likely be limited to the site’s current maximum of five stories.

If the proposed quarter-mile perimeter becomes law, Condra will cancel its plan to build the apartment building with 282 units, 114 of them rent-restricted affordable units, and will instead revive an older plan for a hotel project, said Allen Konstam, managing principal of Condra Property Group.

“We would scrap the Live Local plans. We would go back to developing a hotel,” Konstam said. “We’ve spent over a million dollars to redo the plans [under the Live Local Act] and resubmit them to the city. But we would scrap our plan for affordable housing if we had to develop a five-story residential building.”

Konstam and his partners, Mark Drachman and Ira Chaimovitz, are hardly alone. The Live Local Act also has induced other developers to venture into apartment developments with rent-restricted units, largely because market-rate units can comprise 60 percent of the total residential units on a site where it would be prohibited by a municipal code. Tax benefits in the law provide incentives as well, including exemption from property tax on rent-restricted apartments.

But as a catalyst for development, tax incentives appear to pale in comparison to the power to put residential developments in non-residential zones of cities and counties.

“The reality is people are planning attainable housing for two reasons,” Poliakoff said. “Sixty percent of it doesn’t need to be attainable, and they can maximize density and height in an area that otherwise would have prohibited it.”

The Live Local Act also can apply to planned residential developments that are under construction as well as existing properties that have undergone a major renovation.

For example, the law provides a property tax exemption on affordable housing units that led the developer of Laguna Gardens, a complex in Miami Gardens, to take the exemption on all 341 units in the garden-style apartment development now under construction on 14 acres next to Hard Rock Stadium. The developer, Miami-based Cymbal DLT, broke ground about a year ago, before the Live Local Act was enacted, and expects tenants to start moving in within 60 days. Asi Cymbal, who leads Cymbal DLT, said the below-market monthly rents will start at $2,000 for one-
bedrooms and $3,000 for two-bedrooms.

The Live Local Act can exempt rent-restricted units in a newly constructed (or substantially rehabilitated) residential development from property tax if the development has at least 70 rent-restricted units reserved for tenants who earn below 120 percent of area median income.

“We made a financial decision that by lowering the rents by 10 to 20 percent off what we could have charged, we’re actually making more money due to the tax savings Live Local provides,” Cymbal said. “The city has no involvement with this. If we had asked for more density under Live Local, that would have overlapped city guidelines, and perhaps they would have a say on it, but Live Local dominates and controls. We didn’t have to do that.”

Like Cymbal, Matthew Whitman Lazenby hadn’t planned to become an affordable housing developer until Live Local encouraged him to add a multifamily component to his family’s landmark retail property, Bal Harbour Shops. The upscale open-air shopping mall, anchored by Neiman Marcus and Saks Fifth Avenue, is in the village of Bal Harbour, an affluent suburb of Miami Beach.

“Without the Live Local Act, we wouldn’t be in the multifamily development business,” said Lazenby, whose family has been in the real estate business for four generations. “That wasn’t something we were contemplating seriously.”

Now he plans to leverage the state law to develop 600 residential units, including 240 affordable housing units with below-
market rents, on the periphery of Bal Harbour Shops. The mall is part of an 18-acre property along Collins Avenue, north of Miami Beach. Height doesn’t appear to be an issue, Lazenby said, because the planned residential development at Bal Harbour Shops would be 275 feet tall, shorter than a 320-foot hotel across the street from the shopping center. Lazenby said he hasn’t decided whether to sell the 360 unrestricted apartments as condos or rent them at market rates. Either way, he said, “we’re using the market-rate housing that we otherwise wouldn’t have been able to build to subsidize the cost of the affordable housing.”

It remains to be seen whether revising the Live Local Act or leaving it essentially unchanged will put Florida closer to finding a fix for unaffordable housing. State Sen. Alexis Calatayud and Rep. Vicki L. Lopez introduced identical bills on Jan. 9 in the Florida Senate and House, respectively. Senate Bill 328 has advanced from the Florida Senate’s Committee on Community Affairs to its Committee on Fiscal Policy. House Bill 1239 is now under review by the Florida House’s State Affairs Committee.

Senate Bill 328 and House Bill 1239 propose revisions to the law that include prohibiting Live Local developments on industrial sites and shrinking the area that determines the maximum height of a Live Local development to within a quarter-mile..

More expansive is a pending proposal to loosen parking requirements for Live Local projects near mass transit stops. The parking proposal, originally introduced as Senate Bill 386, is now an amendment to Calatayud’s SB 328, De Yurre said.

“That was an important addition because people need housing. They don’t need parking,” he said. “Local parking requirements are not driven by market demand. They are driven by requirements that have been on the books since before the advent of remote work, Uber, mass transportation and the like.”

De Yurre said the Live Local Act, as is, has worked well because it has encouraged developers to start residential projects they otherwise wouldn’t have started.

“That’s the bottom line here. I have a bunch of [clients with] projects that were shelved. The clients have dusted them off, and we’re resubmitting them as Live Local projects,” he said. “This is the only way we can continue to move the state forward. Our Achilles’ heel is going to be this affordability crisis.”

Article Link: Florida’s Live Local Act Has People Picking Sides
Author: MIKE SEEMUTH

Tall Tower Tussles

Florida’s new law promotes affordable housing. Local leaders hate it.

South Florida’s got an affordable housing shortage. And why wouldn’t it?

An unprecedented migration of wealth and business has flowed into the state, sending demand for homes and rentals soaring — as well as prices. Developers are exuberant, building ever more lavish and pricey units to capture this new, well-heeled consumer.

So how do you entice construction of housing that’s reasonably priced for those who are getting priced out?

With a bit of leverage and a whole lot of incentives. Florida last year approved the Live Local Act, which promised to ease the burden of two things builders hate: taxes and zoning restrictions.

Developers are now allowed to pitch ultra-tall projects that bypass local limits on building heights— so long as they designate 40% of their project’s units as “affordable” to people of certain income thresholds.

That’s unleashed a flood of proposals for income-restricted, or “workforce,” housing. But it’s also drawn the ire of local officials who aren’t pleased with the unusually tall tower plans cropping up in their towns, which state law declares must be approved.

Now, legislators are looking to change the law, less than one year since it was enacted, and before almost any proposed project has gotten under way.

This week, we look look at the highs and lows of Florida’s attempt to build more reasonably priced rental housing.

A Plot Twist! (And a Tax Break)

Laguna Gardens (Photo: Jo Palma and Partners)

Asi Cymbal didn’t intend to build workforce housing when he broke ground on a luxury apartment community in Miami Gardens.

Halfway through construction, things changed.

The Live Local Act was signed into law while his firm, Cymbal DLT, was underway on the 341-unit rental development, called Laguna Gardens. And that new law dangled a perk that was hard to ignore: a 70% property tax reduction for any portion of the project designated as “affordable,” Cymbal said.

So Cymbal DLT went all-in — and declared every single apartment as such, with plans to lease them at below-market rates.

“Nothing’s changed with the project other than the rents,” Cymbal said of the low-rise development. “And that decision was made because of the financial incentive that was provided.”

Rents at Laguna Gardens—where amenities include a lap pool, a meditation garden and a “metaverse room” — now start at $2,000 for a one-bedroom, instead of $2,300 as originally planned, he said. That makes them accessible to tenants who earn up to 120% of the area’s median income — or $86,760 for a single-person household, according to state guidelines.

”Attainable luxury housing” is what Cymbal now calls it: “That’s housing that our hometown heroes can afford —our local police officers, teachers and nurses,” he said.

Cymbal is looking to retroactively apply the Live Local law to his other projects, including a rental community in Dania Beach that’s been open for over a year. He’s considering placing rent restrictions on 71 units there, the minimum required by law, as a way of realizing property tax deductions.

And he’s exploring doing the same within the $1.5 billion waterfront hotel and restaurant district he’s planning in Fort Lauderdale. There, the 71 rent- restricted units could be nestled among luxury condos in a neighborhood that will also offer a yacht valet, he said.

For now, Laguna Gardens is among the first projects in Florida to welcome middle-income tenants under the new law. Move-ins start in March.

“We’re certainly the first to implement it, in fact,” Cymbal said.

Clubhouse at Laguna Gardens (Photo: Jo Palma and Partners)

Brawls, Barbs and Canadian Bacon

Jesta Group proposal for 18-story tower in Miami Beach

Applying the Live Local Act hasn’t been easy for most anyone else. Developers across the state have filed plans for tall towers, with affordable units, and they’re getting a hefty serving of backlash in return.

“I have not seen a single project being approved under Live Local in the state of Florida,” land use attorney Keith Poliakoff said in an interview this week. “I have only seen pushback, by every municipality across the board, to prohibit its implementation.”

Here’s a rundown of that resistance:

🥊 Miami Beach: In a plan derided by the former mayor as “the worst idea ever,” Montreal developer Jesta Group suggested a 30-story building on South Beach’s iconic Ocean Drive. The structure would tower over everything else on the low-rise Art Deco strip.

Jesta scaled back its plan to 18 stories. And local officials responded: “Not since Canadian bacon was introduced into breakfast tables has Canada been responsible for something so thoughtless,” Dan Gelber, the Miami Beach mayor at the time, said.

🥊 Bal Harbour: A luxury mall owner set off an uproar last week, when it filed plans for a residential project that would rise 275 feet—about five times higher than what local law allows in this village of 3,000 people.

The blueprints, by the owners of Bal Harbour Shops, propose 600 “high-end” residential units, 70 hotel rooms and over 45,000 square feet of retail space, Axios reported. Forty percent of the residential units will be designated as “affordable,” with rent caps— which, the mall owners says, allows the project to supersede the area’s height restrictions.

The village’s Mayor said the fight against the project is headed to court.

🥊 The city of Doral, home to Donald Trump’s Blue Monster golf course, placed a six-month moratorium in July on all new proposals invoking the Live Local Act.

🥊 Pasco County voted to sue any developer seeking to invoke the new law.

Proposed hotel and apartment development by Bal Harbour Shops

From Boardwalk Hotel…to Apartments to ….?

New York developer Allen Konstam has been buying up low-slung motels along Hollywood’s boardwalk since 2021. And last year, he and his partners were readying plans to build a new luxury hotel and beach club on their site.

Once Florida passed the Live Local Act, they had a different idea.

Konstam’s firm, Condra Property Group, spent over $1 million to redo its development plans. And it proposed instead to build an 18-story condo and workforce rental tower— along a beachside stretch where building heights are capped by local law at five stories.

“What we need is more housing,” Konstam said in an interview. “So we looked into it, and it made financial sense to go that route.”

While not in line with Hollywood’s zoning, an 18-story plan is legal under Florida’s Live Local Act, which allows properties with affordable housing to be built to the same height of any building within one mile. Condra’s site is less than a mile away from the Margaritaville Hollywood Beach Resort, which is an 18-story property, Konstam said.

Having extra height is key to making an affordable housing plan work, he said. Because extra height means he can build more units, and have a larger number of market rate apartments and condos to offset the 40% of units he must lease at below market rates.

He said Hollywood officials rejected Condra’s tower plan— even though it should be legal.

“It looks like were going to be switching back to a hotel,” Konstam said.

Condra Property Group proposed an 18-story tower in Hollywood

That’s a Wrap?

Florida state lawmakers introduced a pair of bills this month that would scale back the scope of the Live Local Act, and give local officials tighter control over building heights in their towns.

If the changes are approved, affordable housing developers would no longer be able to build as high as the tallest building within a mile. Instead, they’d have to be comparable in height to buildings within one quarter of a mile.

And if their project abuts a building that’s three stories or less, the project’s height will be limited to 125% of the neighbor’s stature — about 5 stories max, says attorney Keith Poliakoff, managing partner of the Government Law Group.

Poliakoff — the attorney who represented Condra in its 18-story Hollywood plan, as well other builders filing affordable projects — said the changes, if approved, would effectively quash any future workforce housing proposals in Florida.

“The legislature got it right the first time,’“ Poliakoff said. “A developer is simply not going to develop workforce housing out of goodness of their heart without an incentive to do so.”

A Texas Win In Takings Dispute ‘Could Have A Chilling Effect’

While U.S. Supreme Court justices may very well overturn a lower court ruling in a Texas takings dispute, a decision in favor of the state could open the floodgates for states across the country to avoid making payments in alleged takings disputes, experts say.

Justices earlier this week heard oral arguments in Devillier v. Texas, a case involving an alleged taking of property following the state putting up a barrier along a portion of Interstate 10 and multiple storms later rolling through the area. Areas along the interstate flooded allegedly as a result of the barriers, and owners claim the state has unconstitutionally taken value from their land.

Experts expect the high court to reverse a lower court decision that had found in favor of Texas, cautioning that a win for Texas in the Supreme Court could embolden various states to claim they are not liable for alleged takings.

“Texas’ argument could have a chilling effect if it’s found to be valid,” said Keith Poliakoff, co-founder of Government Law Group PLLC, noting that states would then cite the Devillier case as precedent in future cases.

“It’s unbelievable that it even made its way to the Supreme Court. To me, as someone who practices in the government field, it’s hard to imagine that Texas truly believes that it can take private property without compensation solely because Congress failed to draft a law on point in regards to their taking,” Poliakoff added.

Plaintiffs first filed in state court, and the suits were then consolidated as one federal court case. Most recently, the Fifth Circuit said private owners can’t sue state governments in federal court over takings disputes.

“The Devillier case is an important case that will define property rights and dictate whether property owners have any recourse against a state for a taking,” said Tina Nguyen, a partner at Baker Botts LLP. “The U.S. Supreme Court’s answer will define the property rights throughout the United States and stands to resolve disagreement within the circuits on this question.”

“At the heart of the case is the simple question of whether a property owner can sue a state for a taking, when the Fifth Amendment provides that no ‘private property [shall] be taken for public use without just compensation,'” Nguyen added.

The 14th Amendment applies the Fifth Amendment to states.

Justices in oral arguments, particularly Justice Elena Kagan, suggested courts are in place to protect violations of the Constitution, even if states or Congress have failed on that front, Poliakoff noted.

“To me, it is likely that the Supreme Court will overturn the decision of the appellate tribunal,” Poliakoff said. “I believe that the Supreme Court fully recognizes in other decisions that the takings clause in the Fifth Amendment is the highest law in the land and can’t be ignored … because Congress has not enacted a statute specifically on the point. I’m not sure yet what grounds they will overturn it on.”

But just exactly what road map may be drawn up in terms of how owners go about pursuing takings claims against states remains to be seen, experts say.

“Justices do believe there is a federal floor,” Kevin King, a partner at Covington & Burling LLP, said in reaction to oral arguments Tuesday. “There is debate about what that minimum would look like. [Justices believe] there is some kind of process available under federal law, in state court or some other way.”

“If a state under its own laws provides a process to vindicate Fifth Amendment claims, that’s going to be sufficient,” added King, who believes the high court will side with the plaintiffs.

Counsel for Texas couldn’t be immediately reached for comment Thursday.

“Our position is based on the Supreme Court’s rulings, so we felt good in that area. The [oral argument] questions for Texas and the [U.S. solicitor general] were much harder to deal with and coming from all angles,” said Daniel Charest, a partner at Burns Charest LLP and counsel for the plaintiffs. “We hope the court follows its own precedent and rule that the Fifth Amendment, by its own terms, provides a cause of action to takings victims.”

More than a dozen states joined Texas in support of the argument that Texas should be immune in the Devillier case from being sued in federal court, and the case has cast a nationwide spotlight on the jurisdictional question at play.

But some states, including California, also have laws on the books that set forth a process for pursuing such claims.

“In California, our constitution actually says taking or damaging property is unconstitutional,” said Rick Friess, a partner at Allen Matkins Leck Gamble Mallory & Natsis LLP, who expects the high court to overturn the Fifth Circuit decision in Devillier. “We [in California] have the advantage … that our constitution specifically addresses it. We don’t get caught in that same catch-22 that they’ve found themselves in in Devillier.”

Poliakoff said there could be a unanimous decision among justices, with the liberal justices on the court siding with the property owners. Liberal justices historically have tended to side with governments in takings disputes.

King and Friess also said liberal justices on the high court may support the property owners in this case.

“This isn’t government versus owners. This is fundamentally, ‘Do you get your day in court?’ A catch-22 like they’ve got in Texas is you don’t get your day in court,” Friess said. “I don’t think anybody on either side of the spectrum thinks that not getting your day in court is a good idea.”

The plaintiffs are represented by Robert McNamara, Christie Hebert, Andrew Ward and Suranjan Sen of the Institute for Justice, Daniel Charest and Larry Vincent of Burns Charest LLP and Charles Irvine of Irvine & Conner PLLC.

The defendant is represented by Lanora Christine Pettit of the Office of the Texas Attorney General.

The case is Richard Devillier et al. v. Texas, case number 22-913, in the Supreme Court of the United States.

–Additional reporting by David Holtzman. Editing by Janice Carter Brown.

Article Link: A Texas Win In Takings Dispute ‘Could Have A Chilling Effect’
Author: Andrew McIntyre

Developers Clamor to Build Along South Florida’s Passenger Rail Lines

‘We’re still seeing a lot of demand to be close to a Brightline station.’

South Florida’s intercity passenger train service was barely two years old when the COVID-19 pandemic suspended operations for 20 months. That pause in Brightline service hasn’t derailed developers determined to build projects near train stations.

“We’ve sold several sites that are within a block or two of the Brightline station in Fort Lauderdale that are going to become multifamily developments,” said Jaime Sturgis, founder and CEO of Fort Lauderdale-based real estate brokerage Native Realty. “We’re still seeing a lot of demand to be close to a Brightline station. Fort Lauderdale is a great example of that.”

The Brightline passenger train service started in 2018 with three downtown stations in Miami, Fort Lauderdale and West Palm Beach. After suspending its service from March 2020 to November 2021 due to the pandemic, Brightline opened two more South Florida stations in Aventura and Boca Raton in 2022 and extended its service to Orlando in September.

At the same time, ridership levels have increased coming out of the pandemic. For instance, 1.6 million tickets between West Palm Beach and Miami were sold during 2023’s first 11 months, up from 1 million during the same period the year before.

Coral Gables-based FECI has developed apartments and offices in and around MiamiCentral, the Brightline station in Downtown Miami. It also developed ParkLine Miami, a two-tower, 816-unit rental apartment complex built as a residential component of MiamiCentral. Also part of the same development, FECI built Two MiamiCentral, a 10-story office building located on top of the train station, and Three MiamiCentral, a 12-story office building one block west of the station.

In West Palm Beach, FECI developed ParkLine Palm Beaches, a 24-story, 290-unit apartment building that opened five years ago next to the downtown Brightline station.

Of course, FECI is not the only developer building along the rail line. Near ParkLine Palm Beaches, West Palm Beach-based Navarro Lowrey Properties is developing an 88-unit apartment building a short distance from the train station. In 2023, the city government contributed a strip of land to the development site, and Navarro Lowrey agreed to set aside 13 of the 88 apartments at below-market rents for eligible tenants.

“In Fort Lauderdale, we don’t have any major office towers right next to the station, in comparison to Miami, where when you step out, you’re there,” Sturgis said. “That will accentuate the importance of Brightline because they will have an office component. They’ll get talent [commuting] from Miami and Palm Beach, so I think the proximity of that station will be huge.”

Several other projects near the Fort Lauderdale train station are in the planning phase. For example, Fort Lauderdale property development firm Ocean Land Investments Inc. plans to build a mixed-use project with 392 residential units on a site directly adjacent to the station. In early 2023, Ocean Land paid FECI $13.2 million for the vacant, nearly 1-acre site.

“We are begging them for anything they want to sell,” said Jean Francois Roy, founder and chief executive officer of Ocean Land. “We are committed big time to anything around the Brightline station in Miami or Orlando.”

Miami Beach’s Bachow Ventures LLC and New York-based Infinity Real Estate are partners in a 37-story multifamily development on land just east of a Brightline station in Fort Lauderdale, which they’ve held for about two and a half years while watching interest rates and construction costs escalate.

The developers are entitled to develop a mixed-use building with 316 residential units on the site, but they plan to seek city approval of denser development with about 400 residential units, said Noah Bachow, who runs Bachow Ventures. “We’re moving forward on everything, despite the climate,” he said.

During Brightline’s COVID-induced suspension, a company controlled by Bachow paid $8 million for the more than half-acre site occupied by a Goodyear Auto Service shop at 11 North Andrews Avenue, a block and a half east of the Brightline station, according to Broward County records of the June 2021 transaction.

Construction of the 37-story multifamily tower is expected to start by 2026. “The tenant will occupy the space in the short term, so it’s going to be roughly 18 to 24 months before we can actually get started,” Bachow said.

Developers are interested in sites not only near existing train stations but also near possible station locations.

Brightline trains run on the Florida East Coast railroad, which lies east of (and roughly parallel to) Interstate 95 in South Florida. In Central Florida, a new extension of the railroad bends west of I-95 toward Orlando. The service eventually may expand to Tampa on Florida’s west coast.

Potential locations of new Brightline stations in Central Florida are a subject of speculation in real estate circles. FECI has acquired land near the tracks in Cocoa Beach, about 60 miles east of Orlando, but hasn’t yet committed to putting a train station there.

“Those locations between Cocoa Beach and Orlando and Tampa aren’t set in stone yet,” said Louie Granteed, a senior vice president at Hollywood-based Tobin Real Estate, a family-owned property developer and manager. “So, it’s been hard to pin down properties around where the stations are going to be.”

It’s also possible that more train stations will pop up in South Florida. Brightline eventually may add stations along the Florida East Coast railroad in Miami-Dade, Broward or Palm Beach counties. “I’ve heard different stuff over the years,” Sturgis said. “I’ve heard Hollywood. I’ve heard Wilton Manors. I’ve heard Oakland Park.”

Separately, the Broward County government is working with the Florida Department of Transportation to bring commuter train service to south Broward on the Florida East Coast railroad between Aventura in northeast Miami-Dade County to Fort Lauderdale. Conceivably, Brightline or another passenger rail service, called Tri-Rail, would serve these stations. The Broward County commuter rail project doesn’t specify the operator.

In particular, the county has decided to support development of commuter train stations in three recommended locations: in Hollywood, at Fort Lauderdale-Hollywood International Airport, and on Fort Lauderdale’s south side near Port Everglades. Broward would spend an estimated $317 million to support what it dubs the Commuter Rail South project, which the county expects to complete by 2027.

Unlike privately owned Brightline, publicly owned Tri-Rail is managed by the South Florida Regional Transportation Authority (SFRTA). Started in 1989, Tri-Rail handles passenger traffic at 18 stations from Mangonia Park, just north of West Palm Beach, down to Miami International Airport and runs its trains on a railroad that lies west of Interstate 95.

But Tri-Rail also has been working with FECI on possible ways to share the same tracks and train stations on the Florida East Coast railroad east of I-95. Indeed, SFRTA said in a Dec. 4 press release that Tri-Rail was modifying its schedule to start operating at MiamiCentral along with Brightline. The agency said without elaboration that Tri-Rail service to the Downtown Miami train station was “coming soon.”

“There has been a lot of lobbying and jockeying among municipalities to get the proper transit authority to agree to place a [train] stop in their municipality,” said Keith Poliakoff, a Fort Lauderdale attorney who has worked on such lobbying efforts.

FECI and SFRTA are hearing pleas from real estate developers, too. “Developers are incentivizing them to stop at their location,” Poliakoff said. “I have been to FECI several times with clients, lobbying for locations.”

For example, University Place is a mixed-use development in Hollywood designed to accommodate construction of a train station across the street along the Florida East Coast railroad.

Expected to open in 2025, the eight-story project will have 216 apartments designated as affordable and workforce housing units, with below-market monthly rents ranging from $374 to $1,634. University Station also will have more than 2,000 square feet of commercial and retail space and 12,210 square feet to serve as the new home of Barry University’s College of Nursing and Health Services. The Miami-based developer, Housing Trust Group, held down the project’s cost by leasing the 2.5-acre development site from the city government for 75 years.

Tobin Real Estate’s Granteed said passenger train service in South Florida may create a new class of cross-county commuters who use the trains to hold down their own housing costs.

“The Tri-Rail and the Brightline would allow people who currently live down in Miami to come a little farther north and have more housing options, at more reasonable pricing,” he said. “If your rent is $3,500 or $4,000 on Brickell, and you can come to Hollywood and rent the same thing for $2,500 or $2,800 and then buy yourself passes on the train, you can save yourself a lot of money.”

Article Link: Developers Clamor to Build Along South Florida’s Passenger Rail Lines
Author: MIKE SEEMUTH

Proposed Live Local Act amendments would remove industrial, restrict height bonuses

The Live Local Act has been hailed by some developers and economists as a means of encouraging the development of more affordable housing.

A Miami-Dade state senator has proposed a series of amendments, some of which will limit or restrict developers’ ability to utilize the zoning benefits of the Live Local Act.

State Senator Alexis Calatayud, whose district includes South Miami and Coral Gables, is sponsoring SB 328. It adds several amendments and clarifications to the Live Local Act.

Among the proposed changes to the Live Local Act:

  • Developers will no longer be able to use the Live Local Act to build projects in industrial zoned areas. As a result, the law will only apply to commercial and mixed-use zoned areas. (Single-family residential areas and industrial waterfront areas were already exempt.)
  • Developers can’t use Live Local Act provisions within a quarter-mile of a military installation and exempts “certain airport impacted areas from the act’s provisions,” according to a state senate analysis.
  • Live Local Act developers will only be entitled to build to tallest height allowed in a municipality within a quarter-mile of a project’s site. Currently, developers are entitled to the tallest height allowed by a city within a mile radius of the project.
  • If a project is “adjacent” to a building that is three stories in height, a local government can restrict the height to within 125% of the tallest adjacent building or to three stories, whichever is taller.
  • Clarifies that the maximum height and density a Live Local Act developer is entitled to does not include any bonuses, variances, and other special exceptions provided by a city or county.
  • Clarifies that Live Local Act projects are entitled to the highest floor area ratio a local area allows.
  • States that the zoning provided a Live Local Act project will be “conforming” after the 30-year period. Meaning the land will have the zoning entitlements provided under the act even after the set asides for affordable or workforce housing are no longer required.

The Live Local Act was hailed by some developers and economists as a means of encouraging the development of more affordable housing. Besides zoning bonuses, $771 million was budgeted for affordable housing programs and provided tax abatements to apartment landlords where substantial portions of the units are set aside for low and medium-income housing.

However, some municipal and county government officials denounced the law as an infringement of their sovereign ability to control zoning in their respective jurisdictions. In Miami-Dade County, Doral and Florida City enacted development moratoriums until they could create procedures that could administratively control how Live Local Act projects are built.

The SB 328 amendments are likely the first of many proposed for the Live Local Act, said Javier Vazquez, a partner at the Florida-based law firm Berger Singerman.

“I have always felt that the original law had its holes and patchwork is necessary when game-changing laws come out,” Vazquez said.

But some of those amendments will remove several zoning incentives developers are counting on to build attainable housing, said Keith Poliakoff, managing partner of Fort Lauderdale-based Government Law Group.

“It completely undermines the original intent of the Florida legislature,” Poliakoff said. “In addition to that, I have numerous clients who have previously spent millions of dollars to develop properties in compliance with the current law.”

Poliakoff was particularly critical of the new height regulations, insisting that the “adjacent” provision is too vague. “Does that mean the property next door? Across the street?” he asked.

The removal of all industrial properties from the Live Local Act was also harmful, Poliakoff said.

“Industrial properties are those you would want a mixed-use or alternative use,” he said.

The industrial provision, however, worried officials from Doral who argued that building housing in such areas may be unsafe and unhealthy for future residents.

Vazquez of Berger Singerman said legislators likely realized that residential development in an industrial area was not a great idea planning-wise. For example, school bus routes will be regularly crowded by trucks and other industrial vehicles.

“Transition and compatibility have always been important in the world of zoning,” Vazquez said. “And transitioning residential into an industrial zones creates all kinds of challenges.”

Article Link: Proposed Live Local Act amendments would remove industrial, restrict height bonuses
Author: Erik Bojnansky

Workforce housing units coming to Delray Beach

Flo will have 116 units with 23 designated to workforce housing


A new multi-family development is in the works in Delray Beach that will provide workforce housing units. It’s called the Flo and will have a total of 116 units with 23 designated to workforce housing.

DELRAY BEACH, Fla. — A new multi-family development is in the works in Delray Beach that will provide workforce housing units.

It’s called the Flo and will have a total of 116 units with 23 designated workforce housing.

“Doing anything to increase affordability even through workforce housing is a tremendous benefit,” said Neil Schiller with Government Law Group, which is representing the Flo project.

Khalil McLean/WPTV
Neil Schiller is with Government Law Group who is representing the Flo project.

The 4.8-acre project will be located on the North East corner of West Atlantic Avenue and Military Trail behind a shopping center.

The workforce housing options will be available in 1, 2 and 3 bedroom units.

City of Delray Beach
Affordable housing incomes in Delray Beach project.

To qualify you can’t make more than 120% the area’s median income which last year in Palm Beach County was $98,000, according to the Department of Housing and Urban Development.

“I know a lot of different people that are taking roommates on because they just can’t afford their monthly rent now,” Schiller said. “Having projects like the Flo with a new overlay district that allows for more density so you can get more affordable units really will make a big deal in the end.”

Residents like Reggie Cox said they’ve lived in Delray Beach for 54 years.

“The real impact has been really trying to survive with higher rent, higher mortgages, increases in insurance,” Cox said.

He said the city has become a tsunami of new development, but just a trickle of affordable options.

“The area has gentrified, the prices are through the roof,” Cox said. “We definitely need workforce housing particularly for public sector employees, for people with a certain income range, that’s needed it’s just not enough.”

Schiller said land west of I-95 is quickly becoming a target for affordable options as areas east of I-95 have become more congested.

“You’ll find there’s some big projects in the pipeline that will bring more units to west Delray on Congress Avenue that will be more affordable that will be along the bus line that will be along the Tri Rail,” Schiller said. “Things are really looking up here in terms of affordability workforce housing and just development in general.”

Schiller expects to break ground by the end of this year if not the beginning of 2025.

Delray Beach City commissioners will meet Thursday to discuss multi-tenant housing opportunities, which would increase affordable living options in the city.

Article Link: Workforce housing units coming to Delray Beach
Author: Joel Lopez

What They’re Saying About South Florida Real Estate

Law360 (December 21, 2023, 5:58 PM EST) — As the year closes, Law360 Real Estate Authority checked in with attorneys, developers, brokers and other professionals for their views on what 2023 meant for the South Florida market and what they are anticipating for 2024.

The region was not spared economic headwinds that swept the nation, but nevertheless, the year proved to be one of perseverance that showed the inflow of people and businesses that took off during the COVID-19 pandemic will have a lasting effect, experts said. The potential for lower interest rates and more economic consistency in 2024 also brings hope for increased development and transactional activity, but how the area handles more growth will be worth watching.

The following comments have been lightly edited for length and clarity.

As you look back on 2023, what events in South Florida real estate do you think were most significant or provided important indications about where this market stands and where it’s headed?

David Martin

One thing we learned in 2023 is that the South Florida market is resilient. Although it was a tough year in terms of uncertainty and increased interest rates, we continued to see great activity and momentum in our market compared to other states across the nation. With the Federal Reserve announcing no additional interest rate hikes in 2024, South Florida will continue to see a flood of  new deal flow and activity.

– David Martin, CEO of Terra, whose current development projects include Five Park Miami Beach, The Well Bay Harbor Islands and Villa Miami

Gary Saul

South Florida has always been a great place to live and to work, but we started to notice people caught onto it a little bit. From a real estate standpoint, obviously, that was great. You’ve got pockets of the country that are very, very concerned about office occupancy. Not the case down here. We’ve got a shortage. A new building being developed, 830 Brickell, has some of the highest absorption, highest prices per square foot of any building in the country. … Miami, historically, for way too long was a tourist-only destination. That’s just not the case anymore. You can tell by the types of entities that are coming down here that the growth is real and it’s significant.

– Gary Saul, co-chair of the Miami real estate practice at Greenberg Traurig LLP

Neil Schiller

An important event was the passage of Senate Bill 102, the Live Local Act, which aimed to kickstart development of workforce and affordable housing. … The act has succeeded in making traditional developers consider more affordable [and] workforce projects, but with financing concerns and a lack of consistent local adoption, the housing hasn’t yet come to fruition.

– Neil Schiller, partner with Government Law Group in Fort Lauderdale

Mike Pappas

2023 continued to accelerate the movement of ultra-high-net-worth people to South Florida, not only for second homes, but to live and bring their families and businesses — i.e., Amazon’s Jeff Bezos and Citadel’s Ken Griffin. The predictions of Miami being the Wall Street of the South have now been confirmed, and all of those ancillary businesses that served those financial firms are also moving here and leasing space. It’s now personal, family and business.

If looking back at 2023 negatively, it was a surprise to see mortgage loans hit 8% in September and October. That hurt the affordability factor, combined with the insurance escalations in Florida. The good news is we’re seeing that drop precipitously now. The uncertainty of inflation and wars in the Middle East and Europe exaggerated the mortgage rate to a higher spread than normal between the Treasury rate and interest rates. I’m very bullish on the news I’m hearing about mortgage rates in 2024.

– Mike Pappas, CEO of The Keyes Co., Florida’s largest independent brokerage

Rafael Aregger

During a year when most other national real estate markets stood still or were in crisis mode, South Florida kept pushing forward and saw several announcements of large-scale projects. It is especially encouraging to see large-scale developers —e.g., Swire & Related Cos. — announcing substantial new office development, which is unthinkable in most other parts of the U.S. It demonstrates the strength of the underlying local economy in South Florida, which benefits the performance of all types of real estate.

– Rafael Aregger, head of U.S. investments with Switzerland-based Empira Group, which plans to develop two multifamily projects in Miami’s Brickell area

Daniel Diaz Leyva

In 2023, creativity has been crucial to structuring and closing deals amidst a tightening credit market increasingly threatening to derail transactions. It required creative solutions beyond the norm. For instance, we focused on sellers’ financing strategies to compensate for the lack of traditional lending.

– Daniel “Danny” Diaz Leyva, chair of the Florida real estate practice at Day Pitney

Liam Krahe

Over the course of 2023, lenders have tightened their underwriting requirements and pulled back on offering higher leverage due to rising interest rates, regulatory pressures and a higher perception of risk. Accordingly, several developers added alternative sources of financing to their capital stacks for projects in South Florida. We saw preferred equity investments receive the most attention. Additionally, we are seeing new players enter into the preferred equity space.

– Liam Krahe, managing attorney at Cohen Property Law Group PLLC in Miami

Calixto (Cali) Garcia-
Velez

South Florida has benefited from the latest migration trends, reaffirming the region’s position as a business hub both nationally and internationally, with significant capital coming from Europe, Latin America and northern parts of the U.S.

– Calixto (Cali) Garcia-Velez, president & CEO of Banesco USA

Ryan Shear

2023 was a strong year for luxury condo development specifically. Several highly creative developments launched sales or began construction, many ushering in new ways to complement or transform surrounding communities with exciting new concepts of luxury living. We saw a slew of high-priced penthouse listings hit the market and an increased wave of investment from international buyers.

– Ryan Shear, managing partner at PMG, whose Miami development projects include E11even Hotel and Residences and The Elser Hotel & Residences

Nitin Motwani

While rents and costs remained higher than expected throughout the year, I think insurance was the biggest lesson — it’s important to be well capitalized and disciplined because the fundamentals are still incredible for those that can weather the storm.

– Nitin Motwani, managing partner of Miami Worldcenter Associates, developer of Miami Worldcenter and managing partner of Merrimac Ventures, whose recent projects include the Waldorf Astoria Residences Pompano Beach

What is your outlook for the South Florida real estate market in 2024 in terms of the economy’s impact and activity in different market segments?

Jeff Polashuk

Following the Federal Reserve’s recent announcement [of no interest rate increases in 2024], it is expected that home buyers will now have more confidence in the real estate market. With lower mortgage rates, consumers will be able to save on costs, and this will bring more people back to the market for buying homes. All of South Florida is expected to experience significant growth in the upcoming years. The region offers something for everyone, making it an attractive option for a wide range of people, including but not limited to families, couples and retirees. With its exceptional schools, stunning beaches, sunny weather and various entertainment opportunities, South Florida appeals to people all over the world.

– Jeff Polashuk, regional vice president, Compass Florida

The worst pain of the past on all levels is lessening. Rates are coming down, the insurance tort reform by the state is taking effect and bringing more insurance into the market. … We’re seeing rising inventory that will stabilize prices, and we’re encouraged that we’ll see a 10% to 15% rise in total home sales in 2024 because we’re coming off the bottom of the market. Historically, there’s a five-to-10 year run when you hit the bottom, and we believe that occurred over the last two years.

– Pappas, The Keyes Co.

hope the Florida Legislature will amend the Live Local Act with some fixes to make it easier for local governments to adopt the legislation and approve workforce and affordable deals. Hospitality will remain hot, with tourism reaching all-time highs, with no real slowdowns expected. I expect the continued migration of restaurants from the Northeast and Midwest to continue to South Florida, with a number of staples already being announced for 2024. Industrial deals will remain hot, with the amount of industrially zoned property shrinking.

– Schiller, Government Law Group

Bradley Colmer

Next year looks to be the year of financing — or, for some, when the bill finally comes due. While many developments have been approved, the next challenge will be securing capital for many of those developments and likely resetting expectations with the realignment of risk capital. While anticipated federal rate cuts should provide opportunities to secure better rates than what we are seeing today, getting through to banks who remain conservative, or who have troubled portfolios, will be a primary curve to navigate.

– Bradley Colmer, founder of Deco Capital Group, developer of Eighteen Sunset in Miami Beach

We’re already seeing that construction costs are coming down — and expect them to continue to decline — as many development projects have been significantly delayed or canceled altogether. Headed into 2024, I also think the upcoming election will create some expected uncertainty in the market, which will be helpful to eventually move past.

– Motwani, Miami Worldcenter Associates

Ryan Bailing

With companies, such as Citadel or Thoma Bravo, continuing to bring employees down here, I think 2024 is going to be a year of, how well do we absorb all of these folks that are moving in … not just in terms of having units for them to live in, whether they buy or they rent, but also having schools for them to go to and other infrastructure?

– Ryan Bailine, real estate partner at Greenberg Traurig

There’s been a massive trend toward branded residential … a number of Ritz-Carltons, St. Regis projects, Waldorf Astoria projects, a Rosewood project, Auberge project. They’re all coming down here. The Aston Martin building [in downtown Miami] has been under construction for a couple of years. That should deliver in the beginning of the year, and that’ll be a nice addition. We’ve got the Bentley building in Sunny Isles. So I think we’ll continue to see that. It helps distinguish the generic condo and sets an expectation of level of service that I think is important.

– Saul, Greenberg Traurig

I anticipate the trend toward wellness-focused amenities will continue, resulting in an increased emphasis on fitness centers, green spaces and recreational areas that promote health and well- being. Technology-driven “smart living” features will continue to gain traction. Similarly, I expect to start seeing specific innovations around parcel and food delivery make their way into the design of residential buildings and infrastructure.

– Jean-Francois (JF) Roy, founder and CEO of Ocean Land Investments, whose projects include a proposed residential tower connected to the Brightline train station in Fort Lauderdale

Asi Cymbal

Going into 2024, there will be continued focus on meeting housing demand for Florida’s workforce. The goal is to ensure our teachers, firefighters, police, emergency personnel, etc., don’t have to keep moving further from urban cores due to pricing. The anticipated federal rate cuts should inject a healthy dose of optimism into the South Florida real estate market this coming year. Even with banks continuing to be conservative in their underwriting, developers are standing on the sidelines, ready to hopefully obtain financing at more appetizing rates to get developments off the ground. It will be telling as to who can achieve this, as those with a successful track record and long-standing relationships will likely prevail.

– Asi Cymbal, chairman of Cymbal DLT Cos., whose residential development projects include Laguna Gardens in Miami Gardens and The Nautico District in Fort Lauderdale

Michael Troyanovsky

There is a growing demand for large condominium homes, often referred to as “vertical homes.” These homes offer the benefits and size of a single-family home, along with the amenities and services of a luxury condominium.

– Michael Troyanovsky, managing partner and vice president of marketing and sales at Regency Development Group, which is building La Maré in Bay Harbor Islands

If rate cuts materialize in 2024, this will further charge the local real estate market. Owners with recently completed projects seeking permanent financing and assets with loans maturing in this interest-rate environment will continue to find themselves in special situations or outright distress requiring recapitalizations, forced sales or even foreclosure. Notwithstanding these challenges, the liquidity available in the marketplace to take advantage of these special situations will serve to buoy any possibility of a precipitous drop in valuations.

– Leyva, Day Pitney

Due to the difficult capital markets environment, construction starts have decreased substantially compared to the last two years and will likely remain very low during the first half of 2024. Construction costs may start to decrease as contractors will have to start competing for fewer projects and material supply chains relax, bringing down material costs. As interest rates start declining, the combination of lower construction and lower financing costs will bring developers back to the table; therefore, we anticipate a re-acceleration in activity toward the later part of 2024.

Due to continued immigration and the strong local economy, we expect demand for housing to remain very elevated. However, due to large amounts of new unit deliveries in a few submarkets — e.g., Wynwood and Edgewater — we expect to see temporarily lower rent growth and concessions, especially in these submarkets. As the metro absorbs these units, the situation should normalize throughout 2025. Due to the lack of current construction starts, we expect rent growth to re- accelerate throughout 2025 and into 2026, which provides a positive backdrop for developers who can get projects started in 2024.

– Aregger, Empira

As a leading community bank, we see tremendous opportunity to grow in the commercial and industrial lending segment and in condo financing, as several associations are pursuing financing options for renovations and special assessments. As interest rates decrease, we also expect to see some incremental activity in the middle and lower end of the residential market.

– Garcia-Velez, Banesco

What are you most excited about for South Florida real estate in 2024?

I’m most excited for the ongoing migration of businesses and corporations moving to South Florida, and how the growth of their operations will continue to fuel our market.

– Motwani, Miami Worldcenter Associates

Cymbal DLT remains bullish on developing and embarking on new projects that encompass our pillars of sustainability, design and social quality. We expect to take advantage of interest rates coming down and finance close to $1 billion in 2024.

– Cymbal, Cymbal DLT

I am excited to address the workforce and affordability issues facing new and future residents and how our community is going to accept and come to a solution, because what we are doing now and have been doing for the last 20 years is not working.

– Schiller, Government Law Group

I look forward to seeing buyers taking increasing interest in eco-friendly experiences and community-centric spaces, such as sustainable architecture, co-working spaces, communal gardens and recreational areas that are designed to foster social interaction and well-being.

– Roy, OceanLand Investments

Miami is being transformed into a mixed-use super hub – including dynamic and modern office spaces, world-class retail and entertainment, and some of the most attractive housing globally. Some of the developments that are currently being planned and executed will continue to push Miami into becoming one of the world’s leading cities, which will keep attracting businesses and people into the city. For real estate developers like Empira, this backdrop provides the perfect canvas for continued large-scale investment.

– Aregger, Empira

I’m most excited to see South Florida complete its transition from an emerging growth city to a fully realized global destination. As a Miami local, I’ve seen the region evolve steadily over decades, and then the pandemic was a catalyst that accelerated all the pieces coming together on the world stage.

– Shear, PMG

Alejandro Arias

As an optimistic glance at 2024 seems to provide enhanced credence of interest rate cuts from the Federal Reserve and improved soft-landing prospects, and as global figures such as Ken Griffin and Jeff Bezos continue to flock to South Florida and call it home, I am truly excited to see the continued growth patterns in a multitude of sectors, from already resilient industrial, commercial and residential markets to enhanced global entertainment and restaurant concepts … making South Florida one of the premier destinations in the world.”

– Alejandro Arias, land-use partner at Holland & Knight LLP

The continued population growth consisting of wealthy foreigners escaping insecurity and political instability; retirees and high-income earners of all demographics, including young professionals from high-tax states from the Northeast, the Midwest and California; and the arrival of major employers like Citadel and Amazon will sustain South Florida for the foreseeable future. This will provoke a meaningful discussion on urban planning and transportation as South Florida accommodates this growth. I am very excited to watch Miami continue to grow into the next great American city, distinct from but in direct competition with the likes of New York, Chicago and San Francisco.

-Leyva, Day Pitney

The continued influx of not only blue-chip businesses and financial firms, but also international brands, luxury operators and taste-makers — and an ever-improving level of sophistication. The arrival of Audemars Piguet’s AP House, along with other brand offerings that are synonymous with world-class locations such as Paris, London, Tokyo, etc., illustrates that Miami is on the same path to becoming a leading global city.

– Colmer, Deco Capital Group

Just looking at how cities are being transformed. Pompano Beach has world-class buildings going up there. Related opened the first one with Casamar, but you’ve got the Ritz-Carlton Pompano coming. It’s just things that have never been there before. West Palm Beach has really not seen the type of development they’re seeing right now. Miami Worldcenter is a perfect example, because all that’s left really is the density of retail and restaurants for that area [of Downtown Miami]. … For a veteran like me who’s been in this town for a while, it’s really exciting to see.

– Saul, Greenberg Traurig

–Editing by Philip Shea.

Article Link: What They’re Saying About South Florida Real Estate
Author: Nathan Hale

Self Storage Facing Multiple Headwinds Including Softening Demand

Declines in mobility and existing home sales leading to more normalized metrics.

Softening demand that is mirroring migration and home sales trends has led to continued negative rent growth for the self storage sector, according to Yardi Matrix’s National Self Storage Report for October 2023.

Street rates fell month-over-month in September and year-over-year. That Minneapolis only fell 0.7% month over month made it a top performer.

The report said the decline in monthly asking rates was broad-based across the nation, with same-store street rates per square foot falling month-over-month in the top 31 metros.

Self Storage Tracks Existing Home Sales

Charles Byerly, CEO of Westport Properties, tells GlobeSt.com that since July 2022, the demand for self storage has been under pressure, tracking the decline of existing home sales which has been on a steady trend downward with the increase in interest rates.

“Mobility is the number one driver of self storage demand and when consumers buy or sell a home, which is a big piece of the mobility equation for storage, that consumer is a great candidate to use self storage.

“The pressure on demand could last for a while with interest rates remaining high which is leading to some to believe rates will remain higher for longer than initially anticipated. If this persists, self storage will need other demand drivers to pick up the slack.

“This will be important as some new supply continues to creep in, although new supply overall should slow down as projects get shelved due to high interest rates and costs.”

Not Seeing Signs of Distress

Not everyone agrees.

“There has been some softening of asking rents but we’re not seeing any signs of distress,” Brian Somoza who leads JLL’s Capital Markets self-storage team tells GlobeSt.com. “2023 has continued to see healthy YOY revenue growth, which is coming from the tried-and-true ECRI (Existing Customer Rate Increases) model that has long been the driver of operational success for storage.”

Newmark’s Vice Chairman of Newmark in the Houston office, Aaron Swerdlin is also sanguine about the sector, telling GlobeSt.com that for most of 2023, demand for storage has normalized to just above pre-pandemic levels after sitting at historic highs for most of 2020 through 2022.

“As we have moved through 2023, the demand normalization led to adjustments in pricing approaches, with the industry as a whole incentivizing new tenants with lower move-in rates,” Swerdlin said.

“Even during the peak-pandemic demand, significantly more than 50% of revenue growth came from rent increases on existing occupancy, and not from increases to street rental rates. These revenue management strategies rely upon physical occupancy to drive growth.

“Hence, the overwhelming focus has been to stimulate move-in volume, which is best accomplished through discounted rental rates.”

Looking to 2024, I anticipate we will see the historically normal trough in February and rental rates will begin to rise from March through August, making 2024 a more historically normal year across the operating landscape.”

Still Feeling Impacts of Pandemic

Neil Schiller, Co-Founder of Government Law Group points out that the negative growth rate is focused on markets still feeling the impacts of the pandemic.

“While the overall migration from cities in the Northeast and the West has slowed, affecting the overall real estate market, areas such as Central and South Florida are still seeing growth in the local storage industry,” he tells GlobeSt.com.

Self-storage demand is mostly based on existing and proposed rooftops; so, it’s no wonder that construction of new facilities is occurring at a faster pace in southern areas of the country, Schiller explains.

Despite these headwinds, self storage remains one of real estate’s most resilient asset classes, says Katharine Lau, CEO and Co-Founder of Stuf. “While self storage remains a darling among real estate investors, it is not immune to the confluence of high inflation, high interest rates, a slowing housing market, and post-pandemic normalization,” she tells GlobeSt.com.

Article Link: Self Storage Facing Multiple Headwinds Including Softening Demand
Author: Richard Berger

Out with the Old

Developer Edgardo Defortuna is among those who attempt complex bulk buyouts of old condos to score prime sites for future towers, such as this site where he will build the future The St. Regis Residences.

Coming in 2027: The St. Regis Residences, Sunny Isles Beach, Miami, a two-tower luxury condominium on Collins Avenue. Under development by Fortune International Group and Chateau Group, the project will rise just 5.4 miles from the Surfside site where Champlain Towers collapsed.

With prices starting at $5.1 million, the St. Regis is situated on 4.7 acres, with 435 linear feet of ocean frontage — a prime location in a market where buildable land is scarce. It will be constructed on land previously occupied by La Playa de Varadero, a condominium built in 1954. The developers were able to acquire the site in 2014 by reaching agreements with the owners of all 347 units to buy them out at a total cost of $112.5 million. They then terminated the condominium and demolished the building.

“When a buyer says they will pay you one and a half or two times what your unit is worth because they want to knock it down and build a newer building, it’s in many cases very appealing,” says Edgardo Defortuna, president and chief executive officer of Fortune International Group in Miami.

Of course, not all owners want to move. Many residents of aging condos are older adults who don’t want to be uprooted, and that may present a challenge to a developer seeking a 100% buy-in by the unit owners.

“There are a lot more variables in the equation for some people,” Defortuna says. “Also, greed becomes a huge obstacle. You have to dedicate money and legal fees to all these obstacles. So, it has a lot of potential, but it’s not as easy as it sounds.”

Designed by Arquitectonica, with interiors by Sao Paulo, Brazil-based Patricia Anastassiadis, the units at the St. Regis Residences will have two to five bedrooms and range from 2,000 to over 10,000 square feet. Residences will have private elevators, Molteni&C | Dada kitchens, top-of-the-line appliances, including a wine cooler, and unobstructed ocean, city or Intracoastal views.

Relief for Miami-Dade Condo Owners

Miami-Dade County condo owners making less than 140% of the area median income can apply for assistance to pay for special assessments for rehabilitation or repairs due to applicable building integrity recertification requirements. That means that an individual condo owner earning less than $95,620 is eligible.

The county’s Condominium Special Assessment Program is limited to those who reside in the unit as their primary residence. Approved applicants can receive up to $50,000 as an interest-free loan payable over 40 years.

The program’s initial pilot phase was funded with $9 million. As of mid-August, $5.5 million is committed to 350 applications, according to the Office of Miami-Dade County Mayor Daniella Levine Cava. The mayor plans to seek additional funds to continue and expand the program.

“After the tragedy in Surfside, assuring building safety has become more important than ever,” said Levine Cava in a written statement provided to FLORIDA TREND. “Miami-Dade County already had one of the strongest building codes in the country, which included a 40-year recertification process. We launched the Condominium Special Assessment Program last year to support condo owners who cannot afford the special assessments required for life-safety repairs identified in the recertification process. Unfortunately, the prior lack of oversight of condo and homeowners’ associations has led to an increase of properties facing unsafe conditions and/or fraud accusations, which in turn led to very high assessments that many property owners can’t afford. The Condominium Special Assessment Program plays an important role in tackling the housing affordability crisis, as many condo owners and homeowners are forced to move out of their properties or lose them because they can’t afford the increasing maintenance costs that sometimes come after special assessments.”

Healthy History

Panama City engineer Michael Weber can tell when a building has been well maintained by what he doesn’t see. He doesn’t see “spalls,” or chunks of concrete that have broken off a building after years of expanding during hot months and contracting in cold.

Weber, owner of MK Weber Structural Engineering, has done a half-dozen milestone inspections in the past year. Most buildings have been well maintained, he says, minimizing the assessments unit owners will face to repair any deficiencies brought on by age and the elements.

Many of the area’s waterfront condos are used for vacation rentals, and that helped make owners more willing to pay for inspections and maintenance over the years. Condos with mostly permanent residents tend to have older populations, less able or interested in spending their limited incomes on assessments to stave off structural defects they usually can’t see.

“They’re looking at it as saying ‘If this building can last another 10 years, I’ll be gone by then,’” Weber says. State law now eliminates that kind of gamble.

— By Michael Fechter

Remaining Gaps

Legislators amended the Building Safety Act last spring to grant local enforcement agencies the discretionary authority to give condo associations more time to complete their initial milestone inspection. But some of those changes could have dangerous unintended consequences, says Jordan Isrow, an attorney with the Government Law Group in Fort Lauderdale.

One change lets local authorities extend the milestone inspection deadline “upon a showing of good cause by the owner or owners of the building” that it can’t be completed in a timely manner. But good cause is undefined, and there is no maximum extension time.

Local government staff “only has so much bandwidth and resources” to deal with incoming requests, says Isrow, who also serves on the Parkland City Commission. The law’s ambiguity can create “a Russian doll of responsibility” for enforcement and compliance in which no one knows where the buck stops.

Article Link: Out with the Old
Author: Robyn A. Friedman