Rehabbing old Little Havana apartments becoming hot ticket
By Jaime Levy
Almost as fast as you can find a café con leche on Calle Ocho, investors are pouncing on Little Havana's residential real estate market, rehabbing old apartment buildings and driving up rents.
And despite the possibility of higher rents ousting traditionally working-class tenants from the historic neighborhood, real estate agents and politicians say they aren't worried about gentrifying the community known for its window cafeterias and domino players.
Florida Commercial Realty's Eddie Montes said the real estate market in the neighborhood is aflutter with activity.
"It's happening quite rapidly. If you look at the market in the Little Havana area, in the last year or year and a half, 70% of what's out there has changed hands," he said. "Definitely, people are speculating it's going to improve, especially with the money Miami is supposedly pouring into the river area and the grants for businesses. It seems like investors are following. Prices have gone up - one or one and a half years ago it was $26,000 per unit. Now they're selling at $37,000 or $38,000 per unit."
Andrew Jordan of Marcus & Millichap during the past month has brokered the sales of three small apartment buildings in Little Havana, one of which, Mr. Jordan said, pulled in one of the highest prices per unit the area has seen.
"The price per unit last year was $20,000 to $25,000 - now all of a sudden, they're selling at $40,000. We're blowing right through the 30s," he said, referring to a 1926-vintage 10-unit building at 969 SW Second St. "What you see there is a real renaissance going on. People are buying older properties and making them really nice."
The City of Miami for the last few years has been trying to raise property values in the area through several efforts. Among them is a July allocation of $50,000 to help business owners along Flagler and Eighth streets clean up storefronts and the introduction of Viernes Culturales, or Cultural Fridays, monthly street festivals showcasing artists throughout Little Havana.
Although the programs mostly affect commercial properties, rising residential real estate value is a happy byproduct, Miami Commissioner Joe Sanchez said.
"(Commercial) prices have gone up significantly - people renewing their leases are shocked. But that's capitalism - that's the American Dream," said Mr. Sanchez, whose district includes Little Havana. "There is a lot of interest. I constantly have people calling and saying, 'I'm looking to buy property in Little Havana - where should I buy?' There are apartments there; people are buying them. You'd be surprised at, with a little tender, loving care, what some of the apartments would look like."
According to Neighborhood Enhancement Team administrator Pablo Canton, 95% of housing in Little Havana is multifamily, and most of that is rental.
"It's extremely good for investors at this time. Prices are still moderate, going up," he said. "People who bought a couple of years ago are probably making a killing. But people buying now are going to make a killing five years from now."
Little Havana's new investors have differing plans on their drawing boards.
Some are looking to gradually transform Little Havana into a vibrant artists' community.
A principal with Mountroyal Realty Group IV in Miami, new owner of a 12-unit building at 1306 SW Sixth St., said he intends to turn the property into an "artists' colony" once long-time tenants move out.
Other investors are preparing parcels for redevelopment, such as the new owner of 10 units at 969 SW Second St. According to Adriano Gonzalez of Miami Gables Realty, who represented buyer EPC Holdings in the $400,000 transaction, the new owner intends eventually to sell the property - along with an adjoining site just east of it - for development of 150 to 200 units.
"He's going to hold it three to five years. It's going to be redeveloped. He paid top dollar for the property because he can put the package together," Mr. Gonzalez said of the property, which brought in the $40,000 per unit sales price. "I think it's going to be more modern living, but affordable at the same time. There are certain amenities people can't get in older buildings. Some buildings haven't been maintained for the last 30 or 50 years, and their life is short-lived - to renovate can be prohibitive at some point."
Mr. Canton said he has already seen more upscale developments moving into the neighborhood. Across from the Neighborhood Enhancement Team's office on Southwest Fifth Street he said, a new 20-story apartment building is planned, "and the prices are not cheap."
Miami Commissioner Johnny Winton is among potential investors in Little Havana, but he intends to rehabilitate, not redevelop.
"We have a real opportunity to preserve all the good old properties in that neighborhood and that's the beauty of that," he said. "It's a very unique product, which, as far as I'm concerned, is a selling point.
"A lot of individual investors are looking around that marketplace, buying properties, fixing them up and bringing in a new tenant base - a younger group of people, principally Hispanic, some coming from the suburbs, some coming from Miami Beach," he said. "Those coming from Kendall are sick of the commute, and those in Miami Beach are coming to a more affordable environment that's still close to the fun. I have the sense that rental rates are probably up 20%-25%. I don't see anything but the continuation of that (growth) for a goodly number of years."
Although Mr. Winton has not bought property in the area, he said he is actively looking. And even with climbing rents, he said Little Havana is far from becoming unaffordable.
"It's a long way from maxed out. There is a lot of geography and a lot of units," he said. "If you drive around Little Havana, it's apartment building after apartment building after apartment building."
And Mr. Montes, of Florida Commercial Realty - an agency that deals primarily with government-subsidized housing - said he anticipated that even with higher rents, Little Havana would retain its distinct character.
"I see it improving, but not to where it would turn into a different neighborhood," he said. "It's always going to be the center of the Latin American community here in Miami."