Real Estate News

Record apartment sale in Little Havana another sign of Miami’s rising rents

This small apartment building at 553 SW 3rd St. in gentrifying Little Havana just sold for $855,000.
This small apartment building at 553 SW 3rd St. in gentrifying Little Havana just sold for $855,000. Avison Young

As landlords seek profits, apartment buildings in Miami’s poorer neighborhoods are trading at a hectic pace. That means higher rents for residents.

East Little Havana, long a home for working-class families, is high on investors’ lists thanks to its proximity to Miami’s surging downtown. But as new owners renovate old buildings, locals are being forced out to cheaper parts of town, further from their jobs.

A case in point: On Thursday, a small, two-story apartment building on Little Havana’s gentrifying eastern edge sold for $855,000, or $205 per square foot. That’s a record square-foot price for a building in Little Havana built before 1980, according to brokerage Avison Young, which handled the sale. The five-unit building, at 553 SW Third St., dates to 1979 and lies just across Interstate 95 from Brickell, where condo and office towers are rising. It offers large two- and three-bedroom apartments.

$855,000 Sale price for apartment building in Little Havana

The high price was partly the result of extensive renovations performed by the previous owner, a company called Summit 312 553 that through affiliates owns at least eight apartment buildings around Miami.

In 2014, Summit redid the units, replacing kitchens, bathrooms and adding tile floors, said broker Rafael Fermoselle of Avison Young. After the renovations, the landlord raised rents between 30 and 50 percent, to roughly $1,250 per month for two-bedroom units and $1,500 for three-bedroom units.

Only one of the five families living in the building was able to afford the higher rate. The others moved out.

“A lot of the owners in Little Havana don’t realize how strong the rental market is,” Fermoselle said. “Investors really see the value when they come in and invest $8,000 to $9,000 per unit and get the younger millennials who can’t pay Brickell prices but want to live close by.”

Real-estate website Zillow puts the average rent in Little Havana at about $1,520 per month, up more than 9 percent over the last year. In Brickell, rents have soared to $2,450, Zillow found.

A lot of the owners in the Little Havana don’t realize how strong the rental market is.

Rafael Fermoselle, broker

(Fermoselle said he couldn’t identify the new buyer. A deed has not yet been filed with the county.)

Marcus Christensen, an Avison Young broker who also worked on the deal, said Miami needs more workforce housing in its urban core.

“We’re seeing a lot of people being priced out of [East Little Havana] and moving into areas like Allapattah,” Christensen said. “Rents have really gone out of control when you look at Miami and markets around the country in San Francisco, New York and Los Angeles.”

Developers have set their sights on the neighborhood, too. Last year, the city of Miami considered upzoning East Little Havana, making the area more lucrative for new construction. But the proposal was pilloried by community activists and has since fallen into limbo.

In June, reacting to the controversy, the National Trust for Historic Preservation named the neighborhood one of America’s 11 Most Endangered Historic Places.

Government has to kick-start this with funding and property.

Miami-Dade Commissioner Xavier Suarez

Miami-Dade Commissioner Xavier Suarez, whose district includes Little Havana, said the county and city need to develop more properties they already own into affordable, workforce housing.

“Government has to kick-start this with funding and property,” Suarez said. “Otherwise, there is no way to compete with private, market-rate development.”

Suarez said he fears that Little Havana, Overtown and West Coconut Grove could all go the way of South Beach, where last week a record-breaking $59 million sale of 15 working-class apartment buildings sparked fears of rent hikes and locals getting priced out.

Said Suarez: “It will only be the upper-income people who can afford to live close to the jobs.”

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