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Shrinking Space Forces Miami-Dade Developers to Seek Alternatives

Tue September 28, 2004 - Southeast Edition
Giles Lambertson



Look at the map: The lower portion of Florida is long and skinny with ocean and Gulf waters on either side and large areas of swamp in between. Combine that restricted land mass with a swelling population and it is no surprise that land for development is at a premium.

“It’s just common sense,” said Len Mills, vice president of the Associated General Contractors [AGC] of South Florida. “We are bordered by the Atlantic Ocean — and you can’t go out into it and build — and by the Everglades, and you can’t go out into it either.”

Indeed, the geography of south Florida does not lend itself to infinite, sprawling development. In Mills’ words: “This is not Wyoming, or Montana.”

Right again. The south end of Florida does not compare with the upper prairie states; its geography is much smaller and its popularity as a destination much larger. Consequently, the Miami-Dade County region of Florida is running out of land to develop.

The crowding out of buildable land is not a recent phenomenon, though it grows more critical each year. None of the principal players in the development market disputes the shrinkage, and their responses to the situation vary only slightly.

One of the options open to builders is to return to partly developed areas and build on pockets of undeveloped land that, for one reason or another, were skipped over the first time around.

Codina Group, a prominent builder in Miami-Dade, has set its sights on the inner core of existing communities. Armando Codina told a Miami Herald interviewer in August that “the heart of our company is development. In Dade County, that will be infill.”

Some of the fill-in projects will be residential construction. Miami’s Downtown Development Authority estimates that at this time 15,000 condominium or rental units are planned or being built in that area, according to Florida Realtor magazine.

“There is a lot more infill,” Mills said, “more rebuilding of areas that had been neglected or abandoned.”

The executive director of the Builders Association of South Florida agrees.

“There are some areas that the only way to build is infill development,” said Toni Pacelli-Hinkley. “Property that wasn’t considered a premium site, builders now are looking at differently.”

She noted, for instance, that the area around Homestead Air Reserve Base, which was devastated by Hurricane Andrew in 1992, has not been fully redeveloped since the storm. Developers are just now revisiting the area and finding it attractive.

Then there were the 15 former Florida emissions inspection stations that were put on the block a few years ago. A dozen of them were sold in 90 days.

The quick sale was reported at the time in Florida Real Estate Journal.

“Land is so expensive and in such short supply, it is difficult to find small buildings that have excess land for parking or vehicle storage,” a vice president of Easton and Associates said, explaining the rapid change in ownership.

A second, but corollary, response to shrinking availability of land is to build upward. Some of the property being reappraised now by developers will end up with buildings of several stories on it.

“Construction of vertical buildings is how our area is growing,” Pacelli-Hinkley said.

An example is the $125 million Downtown Dadeland project in Miami. Seven multi-story buildings are going up on about 7.5 acres (3 hectares), including retail shops at ground level and more than 400 condominiums. The project is a joint venture of Gulfside Development Co. and The Canyon-Johnson Urban Fund.

Industry observers know that adapting to the marketplace is what good contractors do, with the best builders adjusting methods and materials to suit changing times. Mills said just such adaptation is what is going on in the south end of his peninsular state.

“The construction industry is very flexible,” the AGC vice president said, citing various infill rebuilding projects of which he is aware.

It is pertinent to note that Mills exhibited a certain level of exasperation the day of this interview. He indicated that he has been asked more than once about the land shortage in his part of the state, though he politely denied that he was “sensitive” about the subject.

In fact, Mills might have been feeling a little impatient for an entirely different reason: He was being interviewed between hurricanes. Frances left the state a week before the interview and Ivan still roamed the Caribbean in search of a landfall.

Hurricane anxiety aside, the AGC official stayed focused on the subject of a land shortage.

“Most planners, citizens, politicians have known there is a finite amount of raw, developable land in the area. You just had to look at a planning map to see how much there was,” Mills said, adding that the “megalopolises” of the world do not stop growing when things get tight.

“Decades ago, New York City ran out of developable land, but that community has not stopped growing. Capitalism and free enterprise will find a way to accommodate demand.”

Mills added that he has not seen a slowdown in construction, notwithstanding a predictable rise in the price of land.

“There is still quite a lot of undeveloped, raw land that a person can purchase,” he said. “It’s not cheap, but it is being done all the time.”

Rising with the cost of land is the cost of homes built on the land. The median-priced home in Miami-Dade County, for instance, now is more than $230,000.

Does this sharp inflation in land and property values mean fewer middle class subdivisions are being built in that area? Pacelli-Hinkley of the Builders Association of South Florida doesn’t think so.

“I don’t know that I have seen fewer subdivisions being built,” she said.

Rather, she said, single-family home builders have “diversified,” and expanded the territory in which they contract to build. In other words, they simply go where they can find buildable land.

Such flexibility notwithstanding, some economists have expressed concern that home-building and home-buying can continue in south Florida at the current pace beyond this year.

That is not necessarily true elsewhere in Florida. The slow disappearance of land for building at the lower end of the state is not a situation that is rippling northward, at least not that Steven Hall has noticed.

“I’m not seeing any evidence of that,” the executive vice president of the Associated General Contractors of Greater Florida said, not in the Jacksonville area nor in popular metropolitan areas immediately southward.

“I’m not hearing any of my contractors say there is a scarcity of developable land.”

Hall said any slowing of construction that he knows about has more to do with inadequate infrastructure development and bureaucratic oversight.

“I think there is property out there,” he said, “though sometimes the planning and approval process for the property might be looked at with a little more scrutiny.”

AP Photo: More and more of South Florida’s open land is being sold for housing and commercial development as shown here in Homestead, FL. Growth spurts in Broward, Miami-Dade and Palm Beach counties in South Florida have accounted for 27 percent of the growth in the past four years.