Are We Overheating?

MIAMI—In case you hadn't heard, historic Flagler Street is seeing triple-digit appreciation. Some say it all started Israeli investor Moishe Mana and his buying spree last year.

Mana has been assembling commercial real estate properties along Flagler Street and has acquired a critical mass strategically located for future redevelopment. Of course, that's not the only reason. Downtown Miami is generally hot but Flagler Street is suddenly en vogue with investors.

Marcus & Millichap's senior vice president of Investments Alex Zylberglait, who recently brokered the sale of 219 East Flagler Street, which just sold for $9 million, up from $2.6 million in 2009. The appreciation rate there was about 250%.

So here's the question: Could the rapid appreciation be perceived as a sign of an overheated real estate market?

“Some investors may be concerned about the rate of appreciation for Downtown Miami but those are probably investors with a short-term vision,” saysZylberglait. “Other investors understand the fundamental changes taking place in downtown and its potential.”

As Zylberglait sees it, the latter are the ones investing for the long haul, knowing that economic and demographic trends will only strengthen over time. Downtown Miami never in recent times experienced such a wave of development around it, he says, and that's why you are seeing a lot of long-time, multi-generational owners sell their properties now.

“They recognize it is right time to sell and let a new generation of investors and visionaries take Miami's historic downtown to the next level,” Zylberglait says. “I am sure many of them never thought their properties could be worth so much. At the same time, it is a good time to buy in Downtown Miami because values will continue to rise, especially as the large mixed-use projects around it begin to take shape.”