The pandemic supercharged a mass migration from the Northeast to Florida — and a bevy of New York real estate players shifted their business to follow suit.
Hurricane Ian, one of the costliest storms in U.S. history, which displayed the ever-worsening threat of the climate crisis on the Sunshine State and threatens the state’s teetering insurance market, isn’t likely to kick-start a reversal, real estate players told Bisnow.
“Natural disasters and weather circumstances have always been a part of Florida,” said Steven Sperandio, the co-head of debt and structured finance at Ripco in Miami, who relocated from New York City at the start of the pandemic.
He initially moved on a temporary basis to work remotely for his previous firm, B6 Real Estate, but is now running the Florida debt business for the primarily New York-based Ripco, with most of the deal flow stemming from ground-up development and bridge financing for sites in Palm Beach, Broward and Miami-Dade counties.
“It’s really sad to see what happened on the west coast of Florida, but it is a really big state,” Sperandio said. “While those risks are here, I don’t know that it’s really going to outweigh a lot of the positives that we’ve seen over the last couple of years.”
Those positives — stemming from Florida’s population explosion — have created a real estate gold rush. An extra 200,000 people moved to the state between 2020 and 2021, according to census data reported by the New York Post. To serve them, there have been a swarm of businesses both expanding and launching in the state.
More than 600,000 new businesses were launched in Florida last year, per federal data. That figure was nearly 30% higher than the previous year and twice as high as in New York.
Florida has drawn corporate relocations from cold-weather cities, notably Ken Griffin’s Citadel shifting its global headquarters to Miami from Chicago and Starwood Capital Group moving its headquarters to Miami Beach from Connecticut.
Elliott Management and billionaire Carl Icahn’s Icahn Enterprises announced plans to move offices from New York to Florida last year, and Blackstone and Goldman Sachs have expanded in the state this year.
That migration and the pro-business sentiment has caught the attention of many in real estate — even those who had been exclusively focused on New York City in the past. Many New York City brokers, developers and investors were using the state as something of a satellite office to conduct business after Florida relaxed its pandemic restrictions in the summer of 2020.
Hurricane Ian, which has done an estimated $47B worth of damage and resulted in a death toll that is at 100 and rising, is unlikely to deter anyone who sees it as a great place to do deals, multiple industry players said.
“Climate change isn’t stopping me from spending more time in South Florida for the next however many years I can,” Ackman-Ziff Real Estate Group President Simon Ziff said.
He spent three months during the worst of Covid in Miami, making use of the ability to do in-person meetings outdoors without braving the cold in New York.
This winter, he is planning to spend three weeks a month in Miami, though his business is almost entirely run out of New York City.
“Too many companies are committing to South Florida,” he said in regards to whether real estate firms will continue to invest in the state, even with a fresh reminder of its vulnerability.
Shelton Weeks, the director of the Lucas Institute for Real Estate Development and Finance at Florida Gulf Coast University in Fort Myers, doesn’t think investors will be put off from the state — quite the opposite, in fact.
“If it’s anything like what we saw after Hurricane Irma and Charlie, the phones are probably ringing from people hoping they can swoop in for a discount,” he told Bisnow Wednesday. “Florida is still Florida, and we’ve got some really big positive factors going for us. The weather most of the time is a huge asset, the tax structure in the state, folks are still going to move to Florida.”
The fallout from the storm could actually work to the benefit of owners of newer properties in the affected area, Weeks said. South Florida experienced enormous rent increases in the last two years — apartment rents jumped by nearly 25% between July 2021 and 2022.
U.S. Secretary of Housing and Urban Development Marcia Fudge describe Miami this summer as the epicenter of the housing crisis in the country. Miami had the biggest rent premium over historical averages of any city in the country last month, according to a rental index Weeks produces with colleagues at the University of Alabama and Florida Atlantic University.
Cape Coral, which took a direct hit from Ian, was the second-most-overvalued rental market in the country, according to the index. Tampa was third.
“If we had a tight market going in, and we had a loss in space as a result of the storm, I could see upward pressure on rents there, at least in the short term,” Weeks said.
The impact on home prices, however, could be severe, said Gay Cororaton, an economist and the director of housing and commercial research with the Research Group of the National Association of Realtors. Home prices have dropped this summer as mortgage rates have spiked, which could pose issues for rebuilding.
“It took about five to seven years for Atlantic City to recover [from Superstorm Sandy],” she said. “I think it’s even going to be worse for Florida … I anticipate that. It could, as a recovery, take longer because the housing market conditions are not as favorable now.”
The short-term impact of Ian show the downside risk of investing in Florida — but that risk is still outweighed by New York’s political climate and business environment, Compass Vice Chair Adelaide Polsinelli said.
In early 2021, she told Bisnow she worried Miami was “stealing New York’s lunch,” and she remains worried, even as scenes of Ian’s devastation of swaths of property are splashed across the news.
“I think that having seen how ugly it can get here in New York City has definitely made investing in other states more permanent,” said Polsinelli, an investment sales specialist. “And I’m seeing families actually picking up their roots and planting them somewhere in a more business-friendly state like Florida.”
Allen Morris Co. President Spencer Morris said he thinks the momentum of people moving to the Sun Belt is too powerful to reverse — but on a hyperlocal level, storms like Ian could change people’s preference for location.
“I think that the trend of people moving down from the southeast United States generally is an enduring trend that has legs and is going to continue for years to come for a variety of reasons,” said Morris, whose firm has projects in Orlando and Miami. “I think people will probably be more reticent to live in or pay premiums for homes that are on the water.”
Polsinelli’s clients have largely focused on the inland areas, she said. She pointed out that it’s not as if New York is immune from climate threats.
“There can be storms here, there could be flooding,” she said. “We’re not completely excluded from hurricanes. We’ve had our share also.”
Ripco’s Sperandio said he has seen his deal flow shift significantly to Miami-focused work. Florida used to be 5% of his deal activity and is now 50% to 60%, he said.
“People are coming here, retailers are coming here. It’s just proving to be a more robust, more well-rounded economy,” he said. “To the extent people have to get back on their feet after a storm like this, it’s sad. But I think there’s still a lot of those positive elements of the area that are going to keep it very active down here.”
Ethan Rothstein contributed reporting to this article.
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