Brickell condo rents rise as early buyers sell
By Marilyn Bowden
Demand is pushing up rental rates in Brickell's residential condos, even as some of those units begin to trade.
"It's getting harder to find a good rental at a good price," said Alexandra Goeseke, an associate at Cervera Real Estate. "The good ones are going quickly."
Brian Carter, a broker at Majestic Realty, said even through the summer, generally considered the offseason, rates are competitive and rising.
"I rented a townhouse for $1,850 a month two years ago," he said. "Today, it's renting for $2,100 — a 13% increase."
In general, these rental units are in the condos from the most recent wave of construction, which came to market from 2003-'10, said Alan Gabay, a broker-associate with Zilbert Realty.
"The older ones had a different business model," he said, "targeting snowbirds and full-time residents. The newer condos have smaller apartments but beautiful amenities, and were built to attract a young, urban clientele."
But the recession forced a different dynamic. Developers, left with large inventories when presale buyers could not get financing, sold units in bulk and at deep discounts.
"Those buying were investors driven here by discounted rates," Mr. Gabay said, many of them foreign nationals also attracted by the devalued dollar.
"South Americans and Europeans are used to paying cash," he said, "and are happy with a lower cap rate than North Americans are used to, so these deals were very attractive to them."
Five years down the road, he said, "pricing has come up and rental rates have come up. Most of these buyers had a five- to seven-year exit plan, and we are now seeing a lot on the resale market."
Others, Mr. Carter said, are re-evaluating how long they want to hold their units, with the expectation of prices going higher.
"Some owners who live in their units and are no longer underwater are deciding to sell," he said, "but there are many who are saying that if they hold on, they may get a better deal later."
With financing restrictions gradually loosening up, Mr. Carter said, the buyer profile is changing.
"I see more and more local buyers and buyers from the Northeast stepping in," he said.
"It's hard to define an exact demographic," Ms. Goeseke said. But it's clear, she said, that financing is becoming easier, though "buildings with a good reputation at the bank get financing more easily than the ones with mortgage fraud issues."
Having a sitting tenant is not necessarily an impediment to selling a unit, Mr. Gabay said — and can even be an advantage, since investors like having a source of income in place.
"It's rare that tenants are being asked to move out when the unit is resold," he said.
Renters, Mr. Carter said, are "local students, professionals and others relocating from the North for business or from abroad. I recently did a rental for a specialist from Israel coming over to work at Jackson."
Ms. Goeseke and Mr. Carter said they're starting to see some renters buying their units as they come on the market.
"As lending opens up over the next couple of years," Mr. Carter said, "and as the credit of potential buyers improves, many tenants will convert into buyers. This process is just starting as people find funds to make that purchase and see prices still low but increasing."
In most instances, though, Mr. Gabay said, "it's not the renter in the unit who is buying now.
"It's not that they don't want to, but most renters are recent graduates or in their 20s and 30s, and the qualifications for getting a loan are a challenge for that demographic. But we would see a lot of them convert if banks would open up a little bit."
So far, he said, renters are not being priced out by escalating monthly rents.
"There are always studio apartments or units on lower floors with lower rates," Mr. Gabay said, "or they can get roommates.
"And because basic cable, Internet service, parking, gym membership and so on get thrown in to the package, they can put those expenses towards the rent."
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