South Florida Report

Miami-Dade County area experiences unprecedented building boom

By Jennifer LeClaire

From Miami's urban core to its sparkling beaches to its quiet suburbs, multifamily residential, commercial and public projects are rising from the ground at a breakneck pace.

"Our guys report to me that they are so busy they can't see straight," said Len Mills, executive vice president of the South Florida chapter of Associated General Contractors. "Office buildings are coming back. New school construction is backlogged. The condo market is just unbelievable."

Dan Shaw, president and CEO of the Florida East Coast chapter of Associated Builders and Contractors in Coconut Creek, said not only is the construction market in South Florida booming, the projected levels for the next 12 months exceed anything he's seen in recent history.

The boom begins with Florida's growing population and historically low interest rates, but it goes well beyond those typical drivers.

"South Americans are rapidly purchasing much of the high-rise multifamily residential that's being built, particularly in Dade County, for investment purposes," Shaw said.

"The fact that we are almost built out in Broward County is feeding the frenzy. The multifamily boom in Dade is driving commercial development to support all the residential properties. Even office construction is coming back."

Urban Residential

Miami's urban core remains the focus of many new projects. There are almost too many new construction projects - planned, under construction or near completion - to count. Downtown Miami has become a concrete jungle with palm trees and Latin flare, undergoing dramatic and rapid evolution as general contractors break ground on one new project after another.

In the city of Miami alone, more than 9,100 units are under construction and nearly 40,000 more are waiting to break ground, according to data from global real-estate services firm Cushman & Wakefield.

Miami's multifamily sector, already strong, accelerated in 2004. According to McGraw-Hill Construction's Dodge Analytics group, the value of apartment/condo projects in the Miami area increased by 46 percent in 2004 compared to 2003, with nearly $1.1 billion of new contracts awarded.

Perhaps the highest-profile example of downtown's condo boom is One Miami, a project being built by John Moriarty & Associates of Hollywood. The 44-story east tower and 45-story west towers are topped out. The $122 million construction contract includes 896 one-, two- and three-bedroom condominiums; offices; restaurants; retail; and a "riverwalk."

Right next door, Bovis Lend Lease of Miami is starting work on the first phase of the reportedly $600 million Metropolitan Miami project. Also, just down the road, Fort Lauderdale-based Facchina-McGaughan is building the $90 million, 1.67 million-sq.-ft. Quantum on the Bay condo apartments on Bayshore Drive. Tower one is scheduled for completion in late 2006. The second tower will break ground later this year with a 2007 completion date.

Also, the $300 million Performing Arts Center project (see Southeast Construction, June 2004) is reportedly rejuvenated after some project management changes and is headed for a 2006 completion.

Officials with that project say the pending completion of this major cultural amenity is driving the surrounding development. For instance, a few blocks south, Bovis Lend Lease is building Ten Museum Park, a mixed-use office, condo and restaurant project on Biscayne Boulevard. Next to that, Soares Da Costa is following up on its $66 million Blue project for Hyperion Development by starting work on the owner's next effort, the 60-story, $125 million Marina Blue project.

It's not all high-rises. Lofts are also hip. Kaufman Lynn General Contractors is building Park Lofts, a 70-unit loft-style condominium being developed by Intrepid Development. The $12 million, six-story condo is being built in Miami's Overtown district and is scheduled for completion this summer.

Midtown is also booming. The $1.2 billion Midtown Miami development, a community of 3,000 condominium residences, rental units, a hotel and street-level shops and cafes, will include Four Midtown, a 33-floor, 380-unit residential tower that is scheduled for completion by mid-2007. The entire project is expected to transform the neighborhood into a vibrant urban center.

Busy at the Beaches

Across the bridge on the beach it's a similar story. Among other Trump-branded projects on Sunny Isles Beach, Coastal Construction Group is building the Trump Royale, a 55-story luxury oceanfront condominium with completion expected in 2007.

Trump Royale is part of the $700 million, 11-acre enclave known as Trump Grande Ocean Resort and Residences that includes the 278-unit Trump Palace, which is also currently under construction.

It's not all about Trump, though. Fortune International Realty of Key Biscayne contracted with Pavarini Construction of Miami Lakes to build Jade Beach, an estimated $100 million condominium in Sunny Isles Beach. The 50-plus-story structure will measure more than 1 million sq. ft.

John Moriarty & Associates is finishing the 900,000-sq.-ft. ICON on Miami Beach as well as the $77.5 million, 672,000-sq.-ft. Ocean Four condo in Sunny Isles Beach. And Bovis Lend Lease is also building the Carillon Hotel, a mixed-use project that is part of a revival in Miami's North Beach.

Suburbs, Industrial

Even Miami's suburbs are booming. Miami-Dade housing demand is at an all-time high, according to Metrostudy's South Florida division.

During the most recent four quarters, Metrostudy - a national provider of housing market information - reported there were 8,614 single-family starts in Miami-Dade County. That's up from the average number Miami-Dade builders started for more than a decade of roughly 5,000 units a year.

New multifamily housing is also popular. Lennar Homes is building the Colonnade at Dadeland Condominium in South Miami suburb Kendall. The 1 million-sq.-ft. project is scheduled for building out in 2007.

Fort Lauderdale-based construction manager Moss has taken over the construction of Downtown Dadeland, a retail-residential complex in Kendall. Also in Kendall, construction is under way on the Kendall Regional Medical Center.

On the industrial side, Miami-Dade's industrial market is resurrecting itself with speculative buildings. Flagler Development Co. recently completed construction on a 200,000-sq.-ft. warehouse at its Flagler Station business park in Miami and has a second 160,000-sq.-ft. building planned.

Even hospitals are expanding their facilities to serve the growing population. The South Florida Hospital and Healthcare Association reports $650 million in planned construction projects. Nova Southeastern University plans to propose a teaching hospital in early 2005. And Skanska USA Building is constructing the $96 million Homestead Baptist Hospital that is scheduled for completion in 2006.

Public Work Subdued

While all the residential and commercial construction continues, experts said public works are scrambling to keep up.

"Right now because of the increase in private-sector work, the public-sector work, like prisons and schools, is taking a back seat because contractors can't get people to work on their jobs," said John Siegle, executive director of the Construction Association of South Florida in Fort Lauderdale. "When the private sector slows down, the public sector will heat up like it did in the 1990s."

Meanwhile, the University of Miami plans to build a $20 million, 40,000-sq.-ft. research park and 20,000 sq. ft. of incubator space for new businesses. And Florida International University's College of Business Administration plans to break ground on a $45 million, four-building complex this summer.

There's infrastructure news, too. The Miami-Dade Expressway Authority has selected HNTB Corp. and MCM for the State Road 836 design-build project in Miami-Dade County. The $52 million project involves the construction of 3.9 mi. of roadway and access ramps to be completed by July 2006. Also, Community Asphalt Corp. of Miami is working on a $100 million extension of S.R. 836 ranging from 137th to 107th avenues.

Good laborers hard to find

The price of materials such as rebar, electrical conduits and cast iron continues to rise, but the climbing construction costs are not slowing progress as much as the lack of qualified labor to keep up with the demand.

Florida is second only to Alabama in the percentage gain in construction employment, year-over-year, among states in the Southeast. The Bureau of Labor Statistics numbers, sent out by the AGC of America, show the Florida numbers up 3 percent to 474,500 jobs in December, from 459,800 jobs in December 2003.

"The biggest impediment right now is the lack of skilled labor," Shaw, the Associated Builders and Contractors CEO, said. "There are numerous general contractors that have told me that there are enormous dollars of work that they are turning down because they don't think the subcontractors have a sufficient workforce to perform."

"Subcontractors are picking and choosing their work and suppliers are beginning to pick their jobs," Shaw continued. "It's an interesting phenomenon."

What do the next 12 months look like? Experts agree that the lack of skilled labor is just going to back up inventory and predict boom times will continue through 2005 and beyond.

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