Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: miami

  • How Cubans transformed Miami into a global city

    I have a large, and growing, stack of books sitting beside my bed. It is a symptom of my interest in reading exceeding my actual capacity to read, given all the other things I’m doing. However, summer is a good time to get caught up and over the long weekend I did finish reading, The Global Edge: Miami in the Twenty-First Century. It was great, and so now I can confidently recommend it to all of you.

    The most interesting storyline for me was the leading role that “pre-Mariel” Cubans (more on this below) played in transforming Miami from a winter destination to an emerging global city. According to 2015 figures, the City of Miami’s population is 70% Hispanic, of which 34% are Cuban. About 70% of the city’s population speaks Spanish at home. And only about 11.9% of the population is white (non-Hispanic).

    But the bit that really intrigued me was the distinction that Alejandro Portes and Aerial C. Armony make between the “pre-Mariel” Cubans who arrived in the 1960s and 1970s — many of whom became successful entrepreneurs — and the “Marielitos” who arrived in the 1980s onward. This latter group has, on average, not seen the same kind of financial successes as its predecessors.

    The other thing that I think many of you will appreciate is that the authors recognize that all urban phenomena are inherently spatial. And so almost everything they discuss is described in terms of its physical manifestation within the city. Perhaps the most stark is the region’s growing inequality. Wealth along the water; poverty inland.

    Here’s some more information on the book if you’re interested.

    Photo by Alejandro Luengo on Unsplash

  • 17 years of inventory in Miami

    Miami has historically had a volatile housing market because of its position as a second-home destination and because of its dependency on Latin American buyers. There is perhaps no other housing market in the US with the same kind of overall reliance on capital from abroad. This recent article by Candace Taylor in the WSJ is yet another reminder that we are once again in one of those cycles. Below are two excerpts that I found interesting. Note the stats, particularly the last bit in bold. It is also a reminder that when housing supply exceeds demand, usually something happens: prices come down.

    At the same time, new condos launched just as the owners of older units looked to cash out. There were 691 condo sales in Miami Beach in the first quarter of 2019, down 24 percent from 909 in the first quarter of 2015. During the same period, single family homes sales dropped to 81 from 117. The threat of climate change has had some impact on Miami home buyers’ decisions. A 2018 study showed that the value of single-family homes near sea level in Miami-Dade County rose more slowly than that of homes at higher elevations. But agents said a greater threat to the high-end market is inventory buildup.

    Meanwhile, a strong dollar incentivizes international buyers to sell the units they already own, even at below-market prices. The result is a glut of condos for sale, both new and resale. In December 2018, there were 3,663 condo listings for sale in the greater downtown Miami area—more than double the 1,591 for sale in December of 2013, according to an Integra Realty Resources report. Sunny Isles, where new buildings include the 53-story Jade Signature, the Porsche Design Tower and the Turnberry Ocean Club, is estimated to have about 17 years of inventory of condos priced at $5 million and up.

  • Development is a local business

    This past weekend I toured my friend’s purpose-built rental project in Wynwood, called Midtown 29. It was completed last year and has already been stabilized.

    Real estate development is very much a local business. It is that way because so much of it is driven by relationships, but also because every market has its own little idiosyncrasies.

    This is always valuable to see. Sometimes we do things in our home market because it makes perfect sense to do so and sometimes we do it just because it’s, “the way we’ve always done it.”

    One of the most obvious things about development in South Florida is that the parking is always above-grade. No basements. That has the result of bringing down construction costs; though I understand that, with sea level rise, insurance costs are on the rise.

    If (or when) this whole autonomous vehicle thing does in fact take hold, it’s going to be a hell of lot easier to convert all of that excess parking in Miami than it will be in Toronto.

    Image: Midtown 29 (Art by Peter Gronquist)

  • Miami in the 21st century

    I started reading a new book this weekend called, The Global Edge: Miami in the Twenty-First Century.

    When many (or perhaps most) people think of Miami/Miami Beach, they think of its beaches and resorts. And that is certainly a mainstay of the region’s offering. But over the past few decades, Miami has also emerged as an important global city (albeit at a more regional scale) and as a center for art and culture. Miami has the second largest concentration of international banks in the United States after New York, which begins to speak to the region’s importance for Latin America.

    New York City is what it is today because it was the port of entry for new immigrants coming to the United States. This same phenomenon is what reshaped the Miami economy, starting first with Cuban exiles. Today, the city remains a refuge for Latin Americans searching for greater political and economic stability. As my friend from Miami likes to tell me, “the best thing about Miami is that it’s so close to the United States.”

    I’m enjoying this book and I bet some of you will as well.

  • Climate gentrification is reshaping coastal cities

    Last year, Jesse Keenan, Thomas Hill, and Anurag Gumber of Harvard University, published a research paper called, Climate gentrification: from theory to empiricism in Miami-Dade County, Florida.

    What they were trying to uncover was a possible relationship between climate change and single-family home pricing in places, like Miami, that are vulnerable to sea level rise and flooding. This phenomenon is colloquially referred to as “climate gentrification.”

    One of the things that they uncovered through their work was, in fact, a positive correlation between the rate of price appreciation of single-family homes in Miami-Dade County and incremental measures of higher elevation. In other words: there’s value in higher ground.

    Recent reports (like this one from the WSJ) that Little Haiti in Miami is experiencing a surge in investment, seem to, at least partially, support this finding. Little Haiti sits about twice as high as Miami Beach, which is only about 4 feet above sea level.

    Here is a diagram from the WSJ showing the change in home prices since 2018:

    I’m not sure that this diagram necessarily reinforces the above finding. Mid-Beach in Miami Beach is shown as having an 8% gain, and yet it sits, like pretty much the rest of the Beach, within a 100-year floodplain. But already Miami is looking to manage the impacts of, “gentrification that is accelerated by climate change.”

  • Spaces for the Instagram age

    In 2017, the New York Times Style Magazine ran a piece on Harry Nuriev – and his design firm Crosby Studios – titled: The man designing spaces for the Instagram age. 

    Since then, Harry and his firm have been in Time Magazine, have had a solo show at Design Miami, and have been named to the Architectural Digest 100, among many other things.

    There has obviously been a lot of talk over the last few years about the impact that Instagram is having on physical spaces and design #IRL (in real life). 

    Some, or perhaps many, worry that it is having a “homogenizing effect on design.” Everyone is following a kind of global minimalism that looks good on social, but is maybe getting a bit monotonous. 

    There’s no question that online is having an impact on how we design offline. But I am far less fussed about it than most. 

    Architecture, design, and art have always reflected the cultural milieu at the time, and it just so happens that we are living through a period where the internet is transforming so much of what we know.

    It is always important to question what is going on. But I think Crosby Studios is doing some really great work.

  • US cities with the highest construction costs

    BuildZoom, which is a tool to help people find local contractors, recently looked at construction costs across the US.

    Here is their 30-city average index running from 1950 to roughly today:

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    Here is a chart showing the most and least expensive cities (that is, the cities that deviate the most from their 30-city average):

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    And here is a chart that compares labor cost appreciation to material costs:

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    Labor costs account for the bulk of the geographic variation in construction costs and the most expensive cities to build in also tend to have the highest median home prices.

    The way to read the above chart is that any city with a y-axis value greater than 1 means that labor costs have appreciated faster than material costs from 2008 to 2017.

    In the case of San Francisco, labor costs have appreciated 32.8% (> 1.3) faster than material costs. 

    Part of this likely has to do with the fact that San Francisco is an expensive city in which to live. People have to be paid more if they’re going to work there.

    Full blog post from BuildZoom, here.

  • Three nights only

    For this year’s Art Basel Miami Beach, artist Carsten Höller collaborated with Fondazione Prada to create a 3-night-only pop-up club called, The Prada Double Club Miami.

    By time you read this post, the pop-up is likely to be over. But it is an interesting space nonetheless.

    The installation made use of an old 1920s film studio and was comprised of two distinct spaces – hence the double club reference. 

    The interior bar and dance floor were entirely monochromatic.

    Höller wanted all color to instead come from participants within the space. 

    The exterior bar, on the other hand, was “hyper-polychromatic.”

    Perhaps some of you might find inspiration here for your next condo sales office. That would be fun.

    Photography: Casey Kelbaugh, courtesy of Fondazione Prada and via The Spaces

  • Cities are always changing. What’s happening in Miami Beach?

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    The Miami Herald has a recent article up asking: Has Miami Beach lost its mojo? While the beach will always be an immense draw, there’s concern that entertainment dollars could now be starting to favor mainland neighborhoods like Wynwood, Brickell, and the Design District. 

    Here are some of the reasons why it is believed that may be happening:

    – Structural changes to the retail landscape

    – High rents have pushed out all of the interesting and distinctive tenants

    – City is too lenient when it comes to the nighttime economy; South Beach has become a circus

    – Investors and developers are worried about the Beach’s exposure to sea level rise

    – Strips like Ocean Drive and Lincoln Road have simply completed their urban cycle and are no longer attractive and novel

    – Overdevelopment of luxury housing (curiously, there’s a preservationist quoted in the article who appears to believe that restricting development to only mid-rise will result in less luxury housing)

    Many of these points are certainly not unique to Miami Beach. We know the retail landscape is changing. But as I was reading through the article, I was once again reminded that cities are always changing – even when we try and stop them from doing that.

    There are over 900 historic buildings in the Miami Art Deco District. Most are low-rise and mid-rise. This includes the iconic Ocean Drive. And yet the above article is all about the changes that the Beach has seen and experienced over the years.

    Oftentimes we only associate change with new buildings. But architectural preservation does not guarantee any sort of urban stasis. Cities are far more complex than that.

    Image: Photo by Ryan Spencer on Unsplash

  • A more distributed startup geography

    The Economist recently argued that Silicon Valley’s innovation hegemony is waning and that it is a product of two factors: there appears to be more innovation happening elsewhere (good news), but that innovation in general also seems to be harder to achieve (bad news). Here is an excerpt from the article:

    Other cities are rising in relative importance as a result. The Kauffman Foundation, a non-profit group that tracks entrepreneurship, now ranks the Miami-Fort Lauderdale area first for startup activity in America, based on the density of startups and new entrepreneurs. Mr Thiel is moving to Los Angeles, which has a vibrant tech scene. Phoenix and Pittsburgh have become hubs for autonomous vehicles; New York for media startups; London for fintech; Shenzhen for hardware. None of these places can match the Valley on its own; between them, they point to a world in which innovation is more distributed.

    Part of the problem, of course, is rising costs in the Bay Area. Everything from the cost of living to the cost of operating a business. The article cites a recent survey where nearly half of all respondents said they are planning to leave the Bay Area in the next few years. This is up from 34% only two years ago.

    I don’t doubt that rising costs are causing some people to look to other cities, as well as other countries in the case of draconian visa policies. But I am suspect of the claim that we’ve heat peak “innovation” – however you want to define that.