Dive Brief:
- CIM Group and Falcone Group, developers for the $1.7 billion mixed-use Worldcenter project in downtown Miami, have obtained a $89 million construction loan, according to the Miami Herald.
- The loan is from Fifth Third Bank and Santander Bank and will help finance the 444-unit, 43-story rental apartment tower portion of the project. Also planned for a late 2018 opening is a 60-story, high-end condominium tower, as well as an open-air retail center.
- Developers of multifamily rental buildings in the Miami area, according to the Herald, have had difficulty recently being approved for construction loans due to what some consider overbuilding in a low-demand environment.
Dive Insight:
Project developers said the ability to secure financing highlights the desire for transit-oriented housing. Transit-oriented developments (TODs) feature residential units — condos or rentals — near transportation hubs and can be as varied as a small, 71-unit rental development in Massachusetts to a luxury mixed-use complex in Honolulu.
Last month, a Federal Reserve survey of loan officers found that banks have tightened their purse strings when it comes to commercial real estate loans. The Fed's third-quarter report revealed that land-backed borrowing, including multifamily loans, had proven more difficult to secure, even though there was increased demand for commercial and development loans.
Miami has seen an abundance of luxury condo construction in the last several years, so much so that some developers have temporarily shelved their projects. For example, in August, the Related Group said it had postponed construction on its Auberge Residences & Spa Miami development because of poor presales. Related cited a lack of foreign buyers as one of the reasons for the lackluster interest.
In addition, some Engineering News-Record Top 400 Contractors as far back as May said that they were also seeing tighter lending requirements for hotel, retail and multifamily projects.
In February, developers announced that CoastalTishman — a joint venture between Miami's Coastal Construction and New York-based AECOM subsidiary Tishman Construction — would build the condo, retail (300,000 square feet) and restaurant portions of the Worldcenter project. At the time, condo officials said they had achieved more than $250 million in presales.
