Tuesday, July 13, 2010

Living the High Life as Renters in Miami

Bloomberg's story on the condo-turned-rental scene in downtown Miami makes me wish I were a recent college graduate with an accounting degree. Who cares about the financial meltdown when you are having this much fun? If you can fast forward through the crazy amount of real estate development of the mid-oughts, when developers neglected to give each other a call or count the cranes already littering the skyline and deduce that maybe the city didn't need ANOTHER luxury condo development in downtown Miami, things haven't turned out too bad. Oh wait, you also have to fast forward through the real estate bust, when a bunch of empty and half-built buildings sat among the chirping crickets, awaiting a buyer for all the excess units. Then forget about the part where a bunch of buildings were handed over to the lenders, prices were slashed, bulk sales occurred, and large losses were booked. Finally we come to present day in downtown Miami, where are bunch of 24 year-old accountants are renting luxury condos with wraparound decks, rooftop pools and spas, and going out every night to the restaurants and bars that have popped up to satisfy the partying needs of a its new tenants.

See? It all worked out after all. Developers didn't really misjudge demand, they just mispriced it. There are plenty of people that want to live in luxury high-rises in the middle of the action in exciting downtown locations. It's just that most of them are accountants in their 20's, who noted that it was far cheaper to rent a unit from a bankrupt developer for $900 a month than pay $500,000 for it. I know accountants get a bad rap, but for once they actually did the math right.

The biggest problem now? Older residents (probably owners who are bitter about paying too much for their unit) are complaining about "crowds by the pool, loud music, and women taking their tops off" in one particular development that has been overrun by recent University of Miami graduates who are renting. Jorge Perez, President of The Related Group in Miami which was forced to hand back two of the three Icon Towers it built said it the best: “Over the long run, what we did in building those buildings, was it wrong?” Perez said. “I wish there wasn’t the suffering on a personal basis, on a banking basis and individual basis. But have we made Miami a much better city? Absolutely, yes.”

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