2020 was a total shock for everyone. As long as the Covid-19 pandemic was a reality in more and more countries, regulations in political and economic terms started to affect everybody’s life and everybody’s jobs. And the real estate market has not been the exception. For better? For worst?
There’s no doubt that in the beginning, a break happened (no one expected this situation neither was prepared to deal with it), but as months went by people started to relocate, to really think about how and where they and their families were going to establish. And so did the companies.
Unfortunately, the small businesses were hit harder, and one way or another they are finding their way out, but what happened to big and billionaire companies? What happens when high taxes, onerous Covid restrictions, and rising living costs are on a daily basis? Why big tech and finance companies are leaving high-value regions with strong networking and investment opportunities like Silicon Valley and New York, and moving to Miami?
Here we will talk about this phenomenon that is happening in the opening weeks of 2021 and is already affecting the real estate market in South Florida offering exceptional opportunities across the region. For a company to take the decision to move so drastically, there have to be many factors involved. The interesting fact is that it’s not only a couple of companies doing it.
So can we think about a real social and economic trendsetting in the years to come? Or everything will back to “normal” when all this settles down? The truth is one of those who have been most involved and that has played an essential role in this entire process is the mayor of Miami, Francis Suarez.
As proof, we got what happened last year when he gave a tweet response to Delian Asparouhov, a principal at renowned venture-capital firm Founders Fund, by offering his support with a possible move out of Silicon Valley; it triggered more than 2 million impressions and a cascade of thousands of likes on the bluebird social network.
This subtle interaction opened the door to have frequent meetings with major venture tech executives and capitalists from all around the US, top directors who are very interested in relocating to Miami and other regions of the sunny State. Does it mean that Miami could become the next Big Tech mecca?
Another big announcement has been dropped by the Goldman Sachs Group which is considering relocating its asset management division ($8 billion estimated annual amount) to South Florida (recently has looked at spaces in Fort Lauderdale and Palm Beach County) in order to join other financial giants who have left The Big Apple for the Miami area. Like the billionaire Paul Singer who is moving the headquarters of his hedge fund, Elliott Management Corp., from Midtown Manhattan to West Palm Beach.
So does the private equity giant, Blackstone Group, and Ken Griffin’s Citadel, following the exodus started in recent years by notable billionaires Barry Sternlicht (Starwood Capital Group), David Tepper (Appaloosa Management), and Carl Icahn (Icahn Enterprises). One of the main reasons why New York-based firms found this as an attractive option is due to Florida’s lack of state income tax.
Of course, the new offices must fulfill high standards, that’s why projects such as the forthcoming 57-story 830 Brickell tower at the heart of Miami’s financial center is currently being explored for giants like Microsoft (aiming for 30.000 sq. ft.), international law firm Baker McKenzie, and the already mentioned Citadel (80.000 sq. ft.).
Developed by Vlad Doronin and his joint venture partner Cain International, and designed by Adrian Smith + Gordon Gill Architecture (the world-known firm behind the Burj Khalifa, and Jeddah Tower), this gorgeous construction would become the first major new office tower to go up in Miami in the last decades and will feature luxury amenities for its tenants, and high-tech health and safety systems.
Displaying 724 ft. in height, LEED Gold certification, and 8 stories of parking wrapped in a dynamic kinetic wall, the 1.030.000 sq. ft. of uninterrupted glass is leading the way for the future of Miami’s office market.
Not to mention the growing number of private equity investors (like Lee Scott Millstein), fashion designers (Sylvie Millstein), entrepreneurs (Jared Kushner and Ivanka Trump), and many celebrities and sports superstars, who are setting their roots on South Florida. But according to Forbes, it’s not only the wealthy residents fleeing increased taxes, but lower to middle-class income earners are also leaving New York and the costly Northeast, most of them choosing Florida. In fact, an estimated number of 270 people is currently leaving the New York metro area each day, looking for the sun and beach.
The final ingredient is the increased proliferation of startups and the massive investment big companies like the SoftBank Group are making on them. On January the 28th, a couple of days ago, its COO Marcelo Claure said that the Group will invest $100 million into venture capital-backed tech companies in Miami, this will represent an incentive for potential entrepreneurs and their teams to relocate to the Magic City.
There are some issues that the city has to solve in order to welcome such amount of people, companies and investment. Experts like Bernard Zyscovich, urban planner and architect, states that it’s mandatory to develop an efficient large-scale public transit as well as improved tech hubs on health care and education.
In the meantime, the whole situation presents a promising outlook for the real estate market, since the second half of 2020, residential brokers received large quantities of requests for luxury waterfront rentals and for-sale homes, as proof, there were more than 3.000 sales of single-family homes priced at over $1 million (an increase of 99%) according to Analytics Miami. So if the city really wants, and is on its way, to becoming the next Big Apple, Boston, or Silicon Valley, this 2021 could bring more surprises than the unforgettable past year.