Is Miami Too Dependent on Foreign Capital?

MIAMI—Big deals. Small deals. Foreign deals. Miami is far past the worst, but challenges remain. A over-dependence on foreign capital is on the minds of some industry watchers. We caught up with Jaret Turkell, a director at HFF, to get his mid-year take on the local market.

GlobeSt.com: What's the most significant deal you've done this year so far? And what made it significant?

Turkell: It was the sale of the 4.5-acre Element development site in the Edgewater area. This sale was significant  in that the sale price was almost three times the price previously paid for the property in 2012. We are seeing an extremely active condominium sales market with rapid price appreciation. A recent New York Times article stated that the average condo price in Miami is $440 per square foot, up from $400 per square foot one year ago. This is largely what is driving the increase in land values in Miami.

GlobeSt.com: What surprises you most about the types of deals getting done these days?  

Turkell: What surprises me is the speed and pricing in which pre-construction condominium projects are being sold. On Brickell, we are seeing projects substantially sell-out in weeks at pricing at or near the previous peak and in many cases exceeding it. I think this is a testament to the global demand to be in Miami.  Everyone wants to be here! If you look at other top tier U.S. markets such as Chicago or San Francisco, Miami is still relatively cheap. I think our city still has lots of room for growth and we will see price appreciation continue for a while.

GlobeSt.com: What do you see as the challenges in the market?  

Turkell: With over 60% of new condominium sales being all cash purchases by international investors, we are highly dependent of foreign capital.  It would be great to see more large corporations relocate to Miami bringing more high wage jobs and intellectual capital.