Greater Downtown Miami Market Study Update

Transcription

1 Greater Downtown Miami Market Study Update Mid-Year Report Prepared for the Miami Downtown Development Authority (DDA) by Integra Realty Resources (IRR) August 2017

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3 Greater Downtown Miami Market Study Update Mid-Year Report Prepared for the Miami Downtown Development Authority (DDA) by Integra Realty Resources (IRR) August 2017 For more information, please contact IRR-Miami/Palm Beach The Douglas Centre 2600 Douglas Road, Suite 801 Coral Gables, FL

4 Contents 2 Introduction 4 Greater Downtown Miami Market Submarket Map 5 What s Changed Since Year-End 2016? 9 Submarket Analysis 11 Unit Sizes and Pricing Trends 13 Resale Condominium Pricing 16 Rental Market Statistics 19 Conventional Rental Market Supply 21 Condo Development Process Appendix

5 Introduction Integra Realty Resources Miami/Palm Beach (IRR-Miami) is pleased to present the following Mid-Year Residential Real Estate Market Study within the Miami Downtown Development Authority s (Miami DDA) market area, defined as the Greater Downtown Miami market. This report updates IRR-Miami s findings on the local residential real estate market through July Key findings from this mid-year study are as follows: Millicento Three new condominium projects have delivered (Brickell Heights East and West and Biscayne Beach) comprising 1,089 units in total. Downtown reached its midpoint in Q2 2017, with 5,180 new condo units delivered since 2012 and 5,078 units under construction. We project the Flatiron (549 units), Gran Paraiso (317), and possibly One River Point (418) to deliver in Project surveys indicate existing under construction supply in all submarkets is 70% pre-sold on average. Average condominium resale pricing has declined -5.4% year to date, hovering slightly over $400 PSF. IRR s review of trailing 4-year resales volume indicates that the downtown resale condo market began accelerating in Q1-2017, with May 2017 recording the highest number of closed and pending sales volume on record in the past 4 years. Conventional apartment rents have remained steady with 1% - 4% rent growth year-over year since last summer. Only Studio rents declined -1.6% since last year. As a new addition to this report, IRR has surveyed new Class A projects delivered in the prior 18 months including Monarc at Met3 and SoMa Brickell. Class A rents are 25% - 35% higher than IRR s historical conventional rent surveys downtown, demonstrating the premium for newer well-located Class A apartments. 2 Integra Realty Resources

6 Introduction There are no markets that operate in a vacuum dislodged from larger economic trends. The Miami residential market is growing, both in terms of new condominium product and multi-family rental product. This growth and delivery of new product is bringing more product to market at higher quality and price points. The resale inventory listed for sale has been growing also, placing downward pressure on prices. The new conventional rental inventory is delivering and stabilizing quickly with brisk absorption at rents 25% 35% higher than competitive older apartment product, demonstrating the continued demand for downtown as a lifestyle. However, these new conventional apartments are also competing for renters, many of whom occupied some of the aforementioned condominium buildings as renters. This is placing downward pressure on condominium units rents, which in turn has condominium owner-investors deciding it s time to sell. These market dynamics play out on a macro-economic stage currently characterized by mixed consumer confidence, variable but slightly improving global economic conditions, and an uncertain US economic outlook despite the otherwise vibrant local market conditions in South Florida. As of mid-year 2017 in downtown Miami, it wasn t the best of times, it wasn t the worst of times. Respectfully, Integra Realty Resources (IRR) Miami/Palm Beach Anthony M. Graziano, MAI, CRE, FRICS Senior Managing Director Dan Bowen Market Research Analyst 3 Integra Realty Resources

7 Greater Downtown Miami Market Submarket Map The map opposite illustrates the boundaries of the Miami DDA, as well as each submarket within the Miami DDA market. 4 Integra Realty Resources

8 What s Changed Since Year-End 2016? The new development market downtown continues to project strength in the wake of fewer reported buyers. With 18% less inventory under construction resulting from recent deliveries, each new project close-out is a success to be celebrated in favor of less competition among the remaining projects. Cancellation of projects, or re-positioning continues with Auberge (298 units) now on indefinite hold, and Chelsea (222 units) reportedly considering repositioning as retail use. Wynwood 26 (15 units) has announced conversion from rental to condo, while 2000 Biscayne (393 units) announced conversion from condo to rental. Brickell House In June 2017, Forbes reported improvements in the Brazilian economy, and a weaker US Dollar, are bringing Brazilians back to Miami to buy. These early reports of stabilization in Brazil unfortunately do not extend to many other key feeder markets in South America, and American foreign policy on visas and immigration may be counter-productive to a full resurgence anytime soon. Increases in European, Eastern European and Canadian buyers are reflective of strengthening economics in those large markets. Apartment developers remain active in planning new projects, and early reports of new potential land deals signal continued appetite for downtown multi-family development. Apartment rental absorption, rent levels, and demand all coupled with ample equity for apartment deals will continue to drive the multi-family pipeline. The challenges will be feasibility and financing terms, which have constrained all but the most well-capitalized multi-family developers in the past year. The overall Miami economy remains relatively strong. Continued multi-family demand will correlate to job growth and regional economic expansion, fundamentals that have been in question in the broader US economy. Despite persistent expectations of a broader recession, the US and Miami have weathered the storm. The real estate landscape continues to adjust to this potential uncertainty, but is proceeding based on the current economic framework of continued expansion, albeit more cautiously. 5 Integra Realty Resources

9 What s Changed Since Year-End 2016? Figure 1a Greater Downtown Miami Current Growth Contracts and Reservations Submarket Building Avg. SF Units Status Brickell One River Point 1, Contracts CBD Aston Martin Residences 2, Contracts Edgewater Elysee 3, Contracts Edgewater Gran Paraiso 1, Contracts Edgewater Bentley Edgewater Condo-Hotel Reservations Edgewater Missoni Baia 2, Reservations Edgewater Naranza Reservations Wynwood Wyn26 1, Reservations # in Contracts 1,225 # in Reservations 505 Total/Average 1,682 1,730 Figure 1b Greater Downtown Miami Current Growth Under Construction and Q2 Completions Submarket Building Avg. SF Units Status Brickell Brickell Heights - East 1, Complete Brickell Brickell Heights - West (BH02) Complete Edgewater Biscayne Beach 1, Complete A&E 1000 Museum 5, Under Construction A&E Canvas Under Construction Brickell 1010 Brickell 1, Under Construction Brickell Brickell Ten 1, Under Construction Brickell Echo Brickell 1, Under Construction Brickell Flatiron 1, Under Construction Brickell SLS Lux 1, Under Construction CBD Paramount Miami 1, Under Construction Edgewater 26 Edgewater Under Construction Edgewater Aria on the Bay 1, Under Construction Edgewater One Paraiso 1, Under Construction Edgewater Paraiso Bay Tower I 1, Under Construction Edgewater Paraiso Bayviews 1, Under Construction Edgewater Spark 1, Under Construction Edgewater The Edgewater Under Construction Midtown Hyde Midtown Under Construction # Completed Since Prior Report 1,089 # Under Construction 5,078 Total/Average 1,302 6,167 6 Integra Realty Resources

10 What s Changed Since Year-End 2016? The market reached the development cycle mid-point with about 50% of the total projects since 2012 now completed, and slightly less than 50% of units remaining under construction. The contract/reservation pipeline remains relatively unchanged, notably with the Aston Martin project converting reservations to contracts. Figure 2 Current Greater Downtown Miami Condo Pipeline Q Submarket Complete Since 2012 Under Construction Contracts Reservations Proposed Totals A & E ,834 2,430 Brickell 3,767 1, ,287 11,193 CBD ,198 6,452 Edgewater 1,050 1, ,389 5,185 Midtown Wynwood Total (2017 Midyear) 5,180 5,078 1, ,381 26,369 Total (2017 Annual) 4,091 6, ,215 13,980 26,343 Total (2016 Q2) 2,790 7, ,606 27,447 Total (2015) 1,889 7,308 1, ,615 28,893 Total (2014) 1,044 6,019 2,070 1,598 12,543 23,274 These condominium project deliveries also coincided with 969 units of Class A apartment deliveries, bringing the total number of multi-family units under construction below 3,600 units. The key takeaway is that the under construction pipeline is getting thinner in both the for-sale new condominium projects and the future rental pipeline, which could provide stability into 2018 provided no material adverse changes in the broader economy. 7 Integra Realty Resources

11 What s Changed Since Year-End 2016? Figure 3 Greater Downtown Miami Condo Market Size Q Submarket Current Market Current % Potential Long % Growth Size [1] Growth Growth Term Growth Longterm A & E 4, % 1,834 45% Brickell 23,610 2,139 9% 5,287 22% CBD 6, % 5,198 78% Edgewater 5,102 2,746 54% 1,389 27% Midtown % % Wynwood % % Total (2017) 40,493 6,808 17% 14,381 36% [1] Includes all deliveries. [2] Long-Term Growth is the remaining Conceptual units, net of current growth. [3] Current Growth is all Under Construction, Contracts and Reservations. The large-condominium projects under construction are concentrated primarily in Brickell and Edgewater, with A&E and CBD providing the biggest long-term growth markets. Conversely, the conventional rental projects in CBD and A&E are offering for rent housing options in those submarkets. In prior reports, IRR projected smaller projects would proceed in niche underserved submarkets, and Wynwood 26 announced its conversion from rental to condo. We expect to see an increase in smaller-scale project announcements in the coming months as developers capitalize on the slack in the broader market in favor of in-fill projects. The future completion of Hyde Midtown will leave no condominium development occurring in Midtown, while the major rental expansion of Midtown 6, 7 and 8 will continue the submarket s measured residential growth. 8 Integra Realty Resources

12 Submarket Analysis A summary of the key changes to date: Brickell There have been two new deliveries in Brickell as the two Brickell Heights towers have been completed; Brickell Ten is likely only weeks away from being turned over to its buyers and work has begun on MaiZon, a 262-unit Class A rental project. The completion of Brickell City Centre in Q was a major milestone, although it also represents the first project to deliver without being substantially (90%+) sold out upon TCO. Swire has confirmed publicly they do not intend to rent the developer units, and will proceed to selling the balance of the standing inventory. The Panorama Tower topped off in Q2-2017, marking a major milestone for the mixed-use rental and hotel project with expected delivery in late CBD Work is continuing on Paramount MWC condominium with expected delivery in 2019, and on the 7th Street Promenade, Vice, Met Square, and MiamiCentral apartment projects all slated for delivery. Arts and Entertainment Auberge has been once again put on hold, deducting 298 units from the pipeline. The under construction pipeline includes Canvas (513 units) which topped of in Q and 1000 Museum (83 units) both of which are expected to deliver in late Integra Realty Resources

13 Submarket Analysis Edgewater Biscayne Beach (399 units) has completed. There have been a variety of unit count revisions. The 2000 Biscayne project has been converted from a 450-unit condo to a 393-unit rental. The submarket will see the largest balance of deliveries in 2017 as Related s three major projects (Paraiso Bay Tower, One Paraiso and possibly Paraiso Bayviews with a combined 1,020 units are expected to deliver by year-end Midtown Progress continues on Hyde Midtown, and work is ongoing at Pearl Midtown 29. Significant proposal activity is occurring in the rental pipeline, with Midtown 6, 7, and 8 being proposed with near-term plans to reportedly commence construction on Midtown 6. Wynwood The Wynwood 29 project has moved from rental to a proposed condo; Wyn26 (15 units) remains in the reservations. Wynwood is known for its vibrant boutique art and gallery scene, and its hip restaurant and bar culture. New retail continues to emerge in the submarket, but the market has not seen any measurable residential development in this cycle. Mana Wynwood remains the largest potential catalyst in the western areas of Wynwood with a critical mass sufficient to attract large-scale investment. Overtown The land sale needed to complete the Miami Beckham United stadium was agreed upon in early Although located outside of the DDA s borders, this project is the largest and most transformative currently in the pipeline with long-term positive implications for the Overtown neighborhood. 10 Integra Realty Resources

14 Unit Sizes and Pricing Trends The active projects in the construction phase commenced construction generally 55% 60% presold. New average quoted pricing in Brickell is in the $600 $700 per SF range, with notable luxury projects at One River Point and Echo Brickell over $1,200 per SF. Paramount pricing in the CBD at Miami World Center reports increased asking prices in the $700+ per SF range, with Aston Martin Residences over $1,000 per SF, the latter slated to break ground shortly. The Edgewater market has the highest level of diversity in pricing, with some projects like Spark, Naranza, Paraiso Bayviews, Biscayne Beach and Aria on the Bay offering well-located units in the $400,000 $800,000 range ($450 $600/SF), with luxury projects Missoni Baia Elysee, Gran Paraiso and One Paraiso between $700 $950 per SF ($1.2 $3 Million excluding penthouses). Interviews with major brokerage houses indicate that developers are seeking the right buyers, and market participants would not confirm any specific trends on discounts or incentives except to say that price discounts are not moving the market. Brokers confirmed that the market is measurably slower, and despite expectations that pre-election malaise was slowing buyer confidence, the first half of 2017 showed only a minor uptick in traffic and activity in the pre-sale market. Market metrics indicate that 2016 and 2017 (to date) have demonstrated about 50% of the sales activity experienced in 2015, which was down 25% 50% from 2014 activity. While these metrics are not entirely uniform by price point, the higher-priced product downtown has far fewer units per project, and expectations on unit sales per month are much lower hurdles. The larger mid-priced product generally needs 6-10 contracts per month to reach feasible sell-out, and many market participants indicate that this threshold sales pace is not achievable in the current market. For under construction product that started 55% 65% sold out, the slower absorption is not necessarily creating distress. In terms of new project feasibility, it remains unlikely that new projects will commence for the balance of Absent those projects outperforming the market on absorption/sales. 11 Integra Realty Resources

15 Expected New Condo Deliveries by Year Figure 4 Projected Condo Unit Delivery by Year Submarket Name/Location # Units Year Quarter A & E 1000 Museum Q4 Canvas Q1 Brickell Flatiron TBD One River Point 418 Contracts TBD Echo Brickell Q Brickell Q4 Brickell Ten Q3 Brickell Heights - East 358 Completed 2017 Brickell Heights - West (BH02) 332 Completed 2017 SLS Lux Q4 CBD Paramount Miami TBD Aston Martin Residences 390 Contracts TBD Edgewater Aria on the Bay Q4 Biscayne Beach 399 Completed Edgewater Q4 Bentley Edgewater Condo-Hotel 207 Reservations TBD Elysee 100 Contracts TBD The Edgewater Q4 Gran Paraiso 317 Contracts TBD Paraiso Bay Tower I Q4 One Paraiso Q4 Missoni Baia 146 Reservations TBD Spark TBD Paraiso Bayviews Q4 Naranza 137 Reservations TBD Midtown Hyde Midtown Q4 Wynwood Wyn26 15 Reservations TBD Projected New Total 2017 Jul-Dec 3,365 Condo Deliveries Total Total ,061 Total Total 5, Integra Realty Resources

16 Resale Condominium Pricing Figure 5 Average $/SF Sale Price Trend Greater Downtown Miami Resale Market $500 $400 $372 $457 $431 $426 $403 $300 $200 $221 $224 $240 $305 $ YoY Rent Change 5% 5% 4% 4% -6% Timeline End of Recession (June 2009) Wynwood Walls and Doors open First Delivery (23 Biscayne) Launch of Miami Trolley Presidential election year Perez Art Museum opens Second Condo Delivery (MyBrickell) Flagler on the River (rental delivered IRR reports 4,458 condos under construction 1,500th condo unit delivered 1,000th rental unit delivered Weakening in many non-usd currencies, including Colombian Peso, Euro, and Russian Ruble 2,500th condo unit delivered Construction peaks at 7,499 condo units in Q2 Presidential election year 5,180 condo units delivered 5,078 under construction 13 Integra Realty Resources

17 Resale Condominium Pricing The resale condominium market, which includes all projects delivered from 2001 to the present, saw a significant increase in average unit price in 2012 (27%) 2013 (22%), 2014 (16%) and 2015 (6%). Pricing has continued to decline from the 2015 peak of $457/SF down to current mid-year 2017 pricing at $403 PSF. We forecasted early in 2016 that the condo re-sale inventory was accumulating, and pricing would likely adjust accordingly. At this lower pricing, sales volume is increasing rapidly; with May 2017 marking the best month for closed sales in two years and the strongest in the past three years, with 142 closings and 160 pending in May Market participants are seeking correlations between the resale pricing and pricing of new projects. But the level of inventory in the resale market is increasing, and the inventory of new product is declining. This fact, coupled with developer resolve to push through this slowdown, is decoupling resale and new product pricing. A review of Figure 6 demonstrates the year over year inventory build-up, but also offers encouraging signs that early 2017 was a recovery in total sales and pended sales. This return of condo sales activity was offset by continued increases in the available for sale inventory. The key takeaway on resale pricing is that the market average pricing was increasing when total inventory available per month was less than 2,500 units, and average sales velocity was units per month. As monthly velocity dipped below 125 units per month, and inventory approached 3,000 units per month on average, pricing started to decline. To reach pricing equilibrium, the market needs to clear an additional resale units currently listed. 14 Integra Realty Resources

18 Resale Condominium Pricing Figure 6 Greater Downtown Miami Condo Listings (Built 2001+) by Month (Zip codes: 33127, 33128, 33129, 33130, 33131, 33132, 33136, 33137) Date For Sale New Listing Sold Pended Jul-13 1, Aug-13 1, Sep-13 1, Oct-13 1, Nov-13 1, Dec-13 1, Jan-14 1, Feb-14 2, Mar-14 2, Apr-14 2, May-14 2, Jun-14 2, Average 1, Jul-14 1, Aug-14 1, Sep-14 1, Oct-14 2, Nov-14 2, Dec-14 2, Jan-15 2, Feb-15 2, Mar-15 2, Apr-15 2, May-15 2, Jun-15 2, Average 2, Date For Sale New Listing Sold Pended Jul-15 2, Aug-15 2, Sep-15 2, Oct-15 2, Nov-15 2, Dec-15 2, Jan-16 2, Feb-16 2, Mar-16 2, Apr-16 3, May-16 3, Jun-16 3, Average 2, Jul-16 3, Aug-16 2, Sep-16 3, Oct-16 3, Nov-16 3, Dec-16 3, Jan-17 3, Feb-17 3, Mar-17 3, Apr-17 3, May-17 3, Jun-17 3, Average 3, Source: Trendgraphix, compiled by Integra Realty Resources, Inc. 15 Integra Realty Resources

19 Rental Market Statistics IRR s reporting in Summer 2016 provided in-depth analysis of the rental demand and pricing for both conventional rental properties and the shadow condo market. Since then, rental rates in condominiums have declined somewhat, reflecting new deliveries and better affordability for Miami residents. Average rental price declines in the condominium sector range from -2% to -6% by unit type. Figure 7 Average Condo Leasing Price Greater Downtown Miami Studio 1 BR 2 BR 3 BR Year Overall $/Unit $/SF $/Unit $/SF $/Unit $/SF $/Unit $/SF 2012 $2,255 $1,421 $2.64 $1,804 $2.33 $2,625 $2.13 $4,340 $ $2,371 $1,504 $2.67 $1,926 $2.30 $2,819 $2.21 $4,427 $ [1] $2,481 $1,632 $2.92 $2,008 $2.48 $2,908 $2.32 $4,346 $ [1] $2,582 $1,698 $3.03 $2,139 $2.62 $3,008 $2.45 $4,773 $ [1] $2,677 $1,683 $2.97 $2,165 $2.66 $3,009 $2.46 $4,675 $ [1] $2,522 $1,628 $2.96 $2,008 $2.49 $2,942 $2.38 $4,573 $2.77 [1] Midyear. Figure 7a Average Condo Leasing Price Year-over-Year Changes Studio 1 BR 2 BR 3 BR Year Overall $/Unit $/SF $/Unit $/SF $/Unit $/SF $/Unit $/SF 2013 $5.1% 5.9% 1.4% 6.8% -1.4% 7.4% 4.0% 2.0% 11.8% % 8.5% 9.4% 4.3% 7.5% 3.1% 4.8% -1.8% 3.5% % 4.0% 3.6% 6.5% 5.8% 3.4% 5.7% 9.8% 11.1% % [2] -0.9% -2.0% 1.2% 1.5% 0.0% 0.4% -2.0% -6.0% % -3.3% -0.3% -7.3% -6.4% -2.2% -3.3% -2.2% 2.0% 16 Integra Realty Resources

20 Rental Market Statistics Conventional Apartment Rents Within conventional rental communities, the picture is generally one of stability, although one-bedrooms continue to reach new highs at $1,831 per month and 3.4% annual rent growth through June Figure 8 Overall Downtown Conventional Rental Rent Survey (2,474 Total Units, Class A- and B) $/Unit Studio 1 BR 2 BR 3 BR Average SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF Q $1, $1,585 $ $1,605 $1.86 1,221 $2,106 $1.73 1,752 $2,622 $1.50 Q $2, $1,856 $ $1,774 $2.05 1,221 $2,241 $1.84 1,752 $2,707 $1.55 Q $2, $1,937 $ $1,772 $2.05 1,221 $2,257 $1.85 1,752 $2,652 $1.51 Q $2, $1,906 $ $1,831 $2.12 1,221 $2,274 $1.86 1,752 $2,378 $1.36 Q Q % 17.1% 10.5% 6.4% 3.2% % Change Q Q % 4.4% -0.1% 0.7% -2.0% % Change Q Q % -1.6% 3.4% 0.7% 3.6% % Change New to this 2017 mid-year report is IRR s survey of new Class A communities delivered in the past 12 months. We then compare these new projects to the prior conventional apartment surveys which indicate that new projects are achieving a 25% 35% premium (one and two bedrooms); and a 75% premium in the three bedroom. The studio premium shows the smallest premium, but notably the older multi-family product has fewer studios, and therefore a premium is already priced into the studios based on lower overall monthly pricing. 17 Integra Realty Resources

21 Rental Market Statistics Figure 8a Overall Downtown Conventional Rental Rent Survey (2,474 Total Units, Class A- vs. B) $/Unit Studio 1 BR 2 BR 3 BR Average SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF Q $2, $1,906 $ $1,831 $2.12 1,221 $2,274 $1.86 1,752 $2,751 $1.57 Class A- & B Q $2, $1,615 $ $2,064 $2.66 1,095 $2,711 $2.48 1,437 $3,960 $2.76 Class A Class A 9.1% 4.8% 25.7% 33.0% 75.5% Premium (%) Figure 9 shows average asking and achieved rents, as well as velocity, by submarket in greater downtown Miami. There has been almost a 21% year-over-year increase in monthly volume, from 258 to 318 signed leases indicating that demand for rentals continues to grow, and lease turn-over is up. Figure 9 Average Current Asking vs. Achieved Leasing Price and Velocity (2016 YTD) Overall Overall Year-over-Year Total # Leases/ Year-over-Year # of Households Submarket Asking Achieved Price Change Month Volume Change (2016 est.) Brickell $2,619 $2,535-3% % 19,053 CBD $2,337 $2,259-11% 70 3% 8,180 A & E $3,958 $3,875-7% 15 63% 8,188 Edgewater $2,515 $2,435-13% 43-6% Midtown $2,643 $2,529-2% 13 17% 7,852 [1] Wynwood [1] Wynwood, Midtown, and Edgewater were not broken out in the 2016 population report % 43, Integra Realty Resources

22 Conventional Rental Market Supply Figure 10a Greater Downtown Miami Rental Pipeline - Under Construction and Complete Projects Figure 10 illustrates the current status of Miami s under construction rental pipeline. There has been a wave of completions, comprising Broadstone at Brickell, Midtown 5, and Eve at the District, as well as groundbreakings on the second tower of 7th Street Promenade, MaiZon at Brickell, Biscayne 27, and Modera Edgewater. Submarket Building 2017 Q2 Status # Units Completion Date A & E Square Station Under Construction 710 Q Brickell Solitair Brickell (former Brickell Bayview Center) Under Construction 438 Q Brickell Panorama Under Construction 821 Q Brickell MaiZon at Brickell Under Construction 262 Q CBD Avant at Met Square Under Construction 391 Q CBD MiamiCentral Apartments (up to 5 towers) Under Construction 800 Q CBD Vice Under Construction 464 Q CBD 7th Street Promenade Tower 1 Under Construction 450 Q CBD 7th Street Promenade Tower 2 Under Construction 413 TBD 2019 Edgewater 2500 Biscayne Under Construction 156 Q Edgewater Biscayne 27 Under Construction 330 Q3-Q Edgewater Modera Edgewater Under Construction Midtown Pearl Midtown 29 Under Construction 309 Q Midtown Midtown 6 Under Construction 447 TBD A & E Melody Complete 500 Q Brickell SoMa Complete Brickell Broadstone at Brickell Complete Brickell Brickell View Terrace Complete CBD Flagler on the River Complete CBD Monarc at Metropolitan 3 Complete Midtown Midtown 5 Complete Midtown Eve at the District Complete Total # of Units Under Construction 3,568 Total # of Units Completed in ,545 Total # Units Completed , Integra Realty Resources

23 Conventional Rental Market Supply Figure 10b Greater Downtown Miami Rental Pipeline - Proposed Projects Submarket Building 2017 Q2 Status # Units A & E 17 Edgewater Proposed Plaza Proposed 760 School Board Proposed 1,000 Melody II Proposed 630 The Arts Proposed TBD Art Plaza Proposed 667 Miami Plaza Proposed 437 Resorts World Omni Terminal Proposed TBD Brickell One Brickell II Proposed 500 Brickell Market Place Proposed TBD TBD Allen Morris/Related Proposed TBD Megacenter Brickell Proposed Brickell (Yacht Club Phase II) Proposed 897 Brickell Fire Station Proposed 196 CBD Luma at Miami World Center Proposed 434 Lynx Tower Proposed 900 Miami World Center Block E Proposed 418 Miami River Village Proposed TBD Cultural Center Garage Redevelopment Proposed 432 Grand Station Proposed 300 Nexus Riverside Proposed 462 Nexus Riverside Central Proposed West Flagler Proposed SE 2nd St Proposed TBD M-Tower Proposed 440 Miami Station Tower f/k/a Krystal Proposed NMA Proposed NE 2 Ave Proposed 150 Apartments at Yotel Proposed 188 One Bayfront Plaza (RENTAL) Proposed 1,100 (approx) Edgewater 1900 Biscayne Proposed Biscayne (Possible Condo) Proposed Edgewater Proposed TBD AR Edgewater Proposed 171 Quadro 3900 Biscayne Proposed 198 Ellipsis Proposed 34 The Village Proposed TBD Miami 18 Proposed 1, Biscayne (Rental) Proposed 393 Midtown Midtown East Phase 1 Proposed 208 Midtown East Phase 2 Proposed 492 Midtown 7 Proposed 391 Midtown 8 Proposed 387 Wynwood 2801 NW 3rd Avenue Proposed 264 Wynwood 25 Proposed NW 24th St Proposed 80 Wynwood Plant Proposed 306 Wynwood 26 Proposed Wynwood Proposed N Miami Ave Proposed 163 Total # of Units Proposed 17, Integra Realty Resources

24 Condo Development Process Appendix Proposed Reservations Contracts Under Construction Completed The proposed phase is the initial phase of the development process; a conceptual plan for a new building or project is initiated by a developer or property owner. The developer may release a press release or a news story with an initial rendering to gauge the interest in the project, but the project size may change over time to conform to market demand and/or as site due diligence constrains the process. The reservations phase is the second phase of the development process; the developer and architectural/ design team produce additional renderings and floor plans; the sales centers are opened and the finishes, amenities, and features of the project are disclosed. The developer files with the State of Florida to be able to take reservations and deposits for units during this stage. This begins the pre-sale phase during which reservations are taken. The contracts phase is when the initial proposition and reservation of a completely undefined development idea meets the actual contracting for sale upon the receipt of further deposits. The architectural and construction drawings are completed; the developer obtains government permitting and approvals. The final unit floor plans are defined as the reservations are converted to sales contracts with additional buyer deposits upon filing of the Master Declaration of Condominium. Changes to these documents are costly, and therefore the development plan tends to be more static following this phase. The Contracts stage is typically the make-or-break stage of development as the project was either well-received by buyers, investors, and lenders, or it was not. If the developer has as a sufficient number of sale contracts, buyer deposits, and a commitment for financing, the project s construction will most likely commence. If the project was not well-received, either by a lack of pre-sales, or insufficient equity from initial investors or debt financing, a project may be scrapped, shelved, or significantly altered in another future attempt (either later in the cycle or in the next one). Projects which fail the Contracts stage may move all the way back to Proposed during this process. The site improvements and vertical construction have commenced. At this stage of development, the project has secured sufficient pre-sales with significant deposits and most likely a financing commitment. These projects will enter the market under a reasonably definitive timeline of months, depending upon the scale of the project and surrounding infrastructure requirements. This is the final stage of the development process; as the construction of the units is completed, CO s (Certificates of Occupancy) are issued, and the closing of the unit sales are finalized. 21 Integra Realty Resources

25 Disclaimer & Acknowledgment The information provided herein is for informational purposes. This publication does not render legal, accounting, appraisal, counseling, investment, or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person or firm, having access to the details of the situation, be employed. 22 Integra Realty Resources

26 Images Cover: Photo courtesy of Miguel Gonzalez. Page 2: Photo credit: 2015 IRR-Miami/Palm Beach. Page 4: Photo credit: 2015 IRR-Miami/Palm Beach. Map courtesy Miami DDA. Page 5: Photo credit: 2015 IRR-Miami/Palm Beach. Page 9: Brickell, artist s rendering of Brickell CityCentre used by permission of Swire Properties Inc. CBD, photo courtesy Miami DDA. Arts and Entertainment, photo courtesy Miami DDA. Page 10: Edgewater, photo credit: 2015 IRR-Miami/Palm Beach. Midtown, photo courtesy Miami DDA. Wynwood, photo credit: 2014 IRR-Miami/Palm Beach. Overtown, by Ebyabe, Wikimedia Commons. Page 11: Photo credit: 2015 IRR-Miami/Palm Beach. Page 13: Brickell, artist s rendering of Brickell CityCentre used by permission of Swire Properties Inc. Page 16: Photo credit: 2015 IRR-Miami/Palm Beach. Page 19: Photo credit: 2015 IRR-Miami/Palm Beach. 23 Integra Realty Resources

27 About Integra Realty Resources With corporate headquarters in New York City, Integra Realty Resources (IRR) is the largest independent commercial real estate market research, valuation, and consulting firm in North America, with 66 offices and more than 200 MAI-designated members of the Appraisal Institute who are among its more than 900 employees located throughout the United States and the Caribbean. Founded in 1999, the firm specializes in real estate appraisals, feasibility and market studies, expert testimony, and related property consulting services. Many of the nation s largest and most prestigious financial institutions, developers, corporations, law firms, and government agencies are among its clients. For more information, visit or blog.irr.com.

28 Contact Information: 200 S. Biscayne Blvd, Suite 2929 Miami, Florida T F W - MiamiDDA.com