Miami’s real-estate market is strong, but the good times can’t last forever, industry leaders said at a Greater Miami Chamber of Commerce event Friday.
One speaker, longtime commercial broker Jack Lowell, donned a top hat and a pair of rose-tinted glasses to illustrate the prevailing attitude of many real-estate professionals at the South Florida Real Estate Summit. Lowell also pulled out a bottle of Dom Perignon champagne.
“We’re all excited about the real-estate market that we’re currently in, but we should be realistic,” said Stephen Owens, president of the major developer Swire Properties, as he accepted a lifetime achievement award at the event. “And realistic means that we can’t have a party where everyone is drinking all the time. You have to have a day where you wake up and say maybe I drank a little too much last night.
“I think the community as a whole knows that we have a good thing going and we need to show some discipline going forward.”
Panelists at the event acknowledged that rising construction costs and tumbling foreign currencies could slow growth in South Florida. Condo inventory is reaching the upper limits of a healthy market — and the downtown condo boom has shown signs of cooling down.
Rick Kolb, senior vice president at Suffolk Construction Company, said the construction industry in South Florida is still about 40,000 workers short of where it was during the last boom.
“Those workers have left and not come back,” Kolb said, with many of the workers heading to the fracking rush in North Dakota and other western states. The shortage of skilled workers has driven up construction costs in South Florida, he continued.
And the foreign investors who have driven the current cycle with all-cash transactions are seeing their buying power reduced as currencies in Latin America, Europe and Russia decline against the dollar.
“If a year ago you could spend a million dollars, today you can only spend half a million dollars,” said Jay Parker, CEO of Douglas Elliman‘s Florida brokerage. “That will have an impact on us.”
But Parker said wealthy foreigners around the world continue to see the United States as a safe place to invest and would continue to bring their business to an increasingly cosmopolitan Miami.
Latin Americans account for about 68 percent of foreign buyers in South Florida, said Teresa King Kinney, president of the Miami Association of Realtors, but Kinney said she has high hopes for Chinese investors, who are beginning to make inroads here and whose currency remains strong against the dollar.
Venezuelans are the biggest international drivers of Miami’s market, followed by Argentinians and Brazilians, Kinney said.
No one at the event said they expect anything like the disastrous crash that destroyed the market after the financial crisis.
Eddie Diaz, senior vice president at Ocean Bank, noted that this cycle is built on cash deposits and equity, not speculation and debt, which were the illusory foundations of the last boom.
Also speaking at the event was former Miami mayor Manny Diaz, now a senior partner at the law firm Lydecker Diaz. In his speech, Diaz discussed the state of Miami in the 1990s, when he said crime was rampant, the downtown was abandoned and the city was the butt of jokes worldwide. (Diaz served two terms between 2001 and 2009.)
Diaz warned attendees that Miami’s real-estate market would suffer if developers and other industry leaders did not address the most serious civic issues of the day: sea-level rise, a widening gap between rich and poor and a lack of affordable housing and public transportation.
“This is a long-term investment,” Diaz said. “The financial success of you and your children is directly linked to the future competitiveness of our city. Invest your time today and enjoy the fruits of your efforts tomorrow.”