If high-rises were trees, downtown Miami could be a forest in about three years, as developers are staring work on thousands of residential units with hopes that South Floridians will choose life in the city over suburbia.
Almost 5,500 condo units are planned for downtown – bound by Miami River on the south, Interstate 395 on the north, Biscayne Bay on the east and Interstate 95 on the west – over the next several years.
Along with nine residential developments expected to open in the next three years, the area also is expected to see new retail space for restaurants, shops and entertainment venues. One project, Metropolitan Miami, 301 SE Third Avenue, is to include a movie theater, 222,000 square feet of retail, and an outdoor plaza.
Metropolitan Miami and cross-street neighbor One Miami are expected to attract more than 1,000 new residents downtown by 2006 and 1,000 more when Metropolitan Miami’s second and third phases come online soon thereafter.
Another cluster of developments – The Loft and the Loft II, on northeast Second Avenue and Second and Third streets and next to a Metromover station – is slated to add 696 condominium units priced as low as $99,000 to downtown next year or in 2006.
Dana Nottingham, head of the city’s Downtown Development Authority, said he expects another wave of development before the end of the decade as projects prove successful and more amenities get built.
“There is something to be said about synergy,” Mr. Nottingham said. “As there is more critical mass, there will be more services and resources there.”
Real estate analysts, however, say there are looming questions: Will residents come? And how many of the projects will actually open their doors?
“The biggest question mark will be in the residential sector,” said Bob Orban, vice president of real estate research firm Trammell Crow Co. “I’d say about 60% to 70% will come to fruition.”
Tim Weller, co-developer at Metropolitan Miami, predicted that his project will be completed and residents will leave west Miami-Dade to fill its 1,500 condos in the next two years.
“We are seeing first-time homeowners, young professionals, couples starting out,” said Mr. Weller, vice president at MDM Development. “We have a lot of people looking at this as a second home. We also have really established professionals that want to come back into the downtown area. We are seeing a lot of people moving from the western suburbs who are really looking to reduce that commute time.”
Mr. Weller said he chose the site for his project over such areas as the Design District or around Miami River because of the amount of land available and its potential for creation of an urban neighborhood.
With One Miami across the street and a planned redevelopment of Dupont Plaza only yards away, Mr. Weller said, the number of residents moving there will give downtown an urban community feel that sets it apart from other neighborhoods.
“By actually building a neighborhood as part of this project, we will automatically distinguish this part of downtown as a very urban residential lifestyle,” Mr. Weller said. “It is creating an instant community.”
Esslinger Wooten Maxwell Realtors broker Kevin Tomlinson said he recently bought an apartment at Metropolitan Miami, which his firm represents, because he and many people he knows have been priced out of the Miami Beach market and downtown is the next-best area.
“A lot of my friends and clients who are in the market but not up for a million-dollar pad can come live in a vibrant, cool, up-and-coming place,” Mr. Tomlinson said. “Property values are rising so rapidly on the Beach that people are getting priced out of the market by the week.”
Mr. Tomlinson said he has noticed that, with his clients, a condo in a high-rise with a bay view has replaced a home in the suburbs as a status symbol.
“Fifteen years ago, it was not considered a status symbol to live downtown,” said Mr. Tomlinson, who specializes in selling high-end homes in Miami Beach. “Now the suburbs are second choice.”
Downtown has an advantage over other areas with several residential areas such as the Design District, Wynwood and the North Biscayne Corridor in that much of its necessary infrastructure is already in place and buyers can get a feel for what the neighborhood will be like, Mr. Tomlinson said.
“Even if someone doesn’t have a lot of vision, they can envision it,” he said. “For people who don’t have that vision, when you go downtown, you can see it. There are beautiful buildings around – it is not an old, blighted neighborhood.”
The success of the new downtown developments depends not only on the developers and buyers, said Mr. Nottingham, but also on the government to provide adequate services such as schools, waste management and mass transportation.
“It is time to take another look at where we are now in the level of services and look out into the future of the population when gauging the services we’ll need,” said Mr. Nottingham.
While residential development booms, office space development is significantly laggard downtown with only two major complexes set to open in two to three years.
But for an area that hasn’t seen a new office building in more than 20 years, there could become high demand for commercial developments.
“There are a couple on the drawing board at least, and they probably have a chance to be successful,” Mr. Orban said. “By the time they come, it will have been about 20 years since a new building has come online.”
A 651,000-square-foot office tower is in the works at 50 Biscayne Blvd., and Metropolitan Miami is to have 86,500 square feet of office space.
In addition, when a new federal courthouse opens at 400 N. Miami Ave. with 577,784 square feet of federal office space in summer 2005, there should be some shifting in the commercial market as several judicial branches relocate to the new facility.
With downtown office space carrying an average rent of $24 a square foot last year, it could prove a more cost-effective alternative to Brickell, Coconut Grove, Coral Gables and Miami Beach.
Currently, office vacancy downtown is at 12.5%, slightly higher than last year but still a sign of a healthy market, Mr. Orban said. By contrast, the Brickell market is at 17% and the Miami-Dade County average is 15%, according to Trammell Crow’s year-end report.
Downtown, with about 7 million square feet of office space, is the second-largest commercial market behind Airport West, with 8.6 million square feet.
Professional services will continue to dominate the downtown commercial market, Mr. Orban said, because the area’s social scene offers plenty of business networking opportunities.
“Professional services will always be looking to have their employees in an environment where they can mingle with a lot of other like professionals,” Mr. Orban said. “There will always be demand for office space in downtown Miami.”