Is investing in coastal Florida dead?
Back to back major hurricanes, I don't know who on earth will insure anything in the state of Florida after this. Along with rising sea levels, I just don't think the risk is worth the reward. Thoughts?
This has been a conversation at our shop for a few years. We’ve missed out so n a lot of “great” deals as a result, but the general thought was if this continues, and insurance continues to climb, the next buyer will underwrite that resulting in a significant impairment to value.
Investing in Florida has personally been dead to me for years. Never understood why anyone would invest in Florida with all the weather related risk.
Here’s the deal though. Every area of the US has its issues. SE=weather. TX=power. West Coast = earthquake and politics. Southwest =heat and water. North East = politics. Midwest = declining population and industry in many areas.
So you need to figure out what works for your strategy and pick your battles.
I happen to think the Midwest/rust belt makes or continues a comeback. Why are those areas losing population and jobs? Because of weather and changing work patterns.
Now that people are actually going to have to pay to live in the Gulf States or Southwest instead of passing on their costs to wealthy liberal urban areas, I think you're gonna see a change in demographic patterns, and places like the Great Lakes are going to see a corresponding bump.
Funny you should say this. I’ve had this long term thesis for a very long time.
My favorite project in our portfolio is in pittsburgh. Everything about it feels like a home run. Very slept on city/story.
completely agree. i think we'll start to see reverse migration and midwest / rust belt will be major benefactor
While you're not wrong you need to pick your battles, some of those factors are materially different than others. You can plan around politics, our earthquake tech is good for 99% of the earthquakes the west coast experiences (we're gonna be fucked regardless when the Big One comes), you can install backup generators, etc. There is really very little, outside of literally barricading your entire building, you can do to guarantee your real estate in the path of these hurricanes. It's similar to issues with water in the SW, sure you can try to do your best to manage what you have, but once the groundwater is gone you're fucked.
politics hahaa what
By politics I’m sure he probably is referring to rent control and/or government waste resulting in ever increasing property taxes.
I was talking to someone at a conference back in May I think who dealt with affordable housing in Florida. Based on what he said he was just completely fucked.
If you're gonna invest in Florida do it north of Miami-Dade county. Otherwise use of proceeds will really be cocaine and bottle service.
Florida native here - a lot of us scratch our heads, but Miami is seeing growth beyond understanding. Miami has over 90 high-rises under construction, double the entire state of California. It's a full-on construction site and it's nonstop. All these high-end condos are pre-sold before a shovel is in the ground, and although it's calmed this year, it's not "slow" by any means. Seperately, Elliot just closed on a Brickell office this week for $443MM, and it's not Class A.
Being on the operator side now, I see how much insurance has gone up and the general fear of hurricanes coming to obliterate assets or just cause horrible flooding. I don't know how some of these guys sleep during hurricane season, but as of now, the big boys are still full-speed investing in Florida.
Miami high rises don’t suffer the same consequences from hurricanes that single family homes do. Also as a Florida native you know that Miami has had some pretty amazing hurricane luck and absent Andrew has really managed to avoid major damage. Maybe that luck runs out but Miami isn’t the same as the other coastal Florida areas.
100% spot on. Lucky beyond believe.
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