MIAMI—Over the last few years we have seen construction costs rise and now lenders are becoming more conservative. However, global population is continuing to grow and there is still demand for all different types of multifamily facilities.
As the shift to “urban-suburban” becomes increasingly popular and consumers want newer amenity based homes, is reimagining older buildings the solution? Or is the true value still in building new class A product? Plus, where are the value-add opportunities?
Ryan Shear, managing director at Property Management Group and Greg T. West, chief development officer at ZOM Holding, were on hand at RealShare Apartments East 2018 to discuss these topics. Shear and West are both heading up multifamily projects in Miami.
The panel was called Spruce Up Vs. Ground Up: Which Makes Sense in a Saturated Market? Mitash Kripalani, vice president of Colliers International, moderated the discussion.
“Renters are different than condo buyers,” West said. “Condo buyers are thinking about how much their condo will be over time. A renter is thinking about now. Downtown Miami has become a place that's great to live right now. That has driven a pretty extreme uptick in demand for rental housing.”
ZOM in January bought land and won a construction loan for a rental project in Fort Lauderdale. The land is along Federal Highway in Downtown Fort Lauderdale. Plans call for a 456-unit multifamily project.
Of course, Downtown Miami is an urban market. And developers are still targeting sites in and around the urban core. Some of them are rehabs. But Shear is not a fan of that multifamily model.
“In New York you do a lot of rehabs,” Shear says. “They are typically more difficult to build. Everyone thinks you are buying structure but you are not saving. You can't build the product you want if you are doing gut rehabs often. Ceiling heights are an example. To keep up with the times, we prefer to build ground up we actually save money, you control a lot more, you are able to modify units to what you want to build.”
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