Greater Downtown Mid-Year Report Market Study Update

Prepared for the Miami Downtown Development Authority (DDA) by Integra Realty Resources (IRR)

August 2017

Greater Downtown Miami Mid-Year Report Market Study Update

Prepared for the Miami Downtown Development Authority (DDA) by Integra Realty Resources (IRR)

August 2017

For more information, please contact

IRR-Miami/Palm Beach The Douglas Centre 2600 Douglas Road, Suite 801 Coral Gables, FL 33134 305-670-0001 [email protected] Contents

2 Introduction 4 Market Submarket Map 5 What’s Changed Since Year-End 2016? 9 Submarket Analysis 11 Unit Sizes and Pricing Trends 13 Resale Condominium Pricing 16 Rental Market Statistics 19 Conventional Rental Market Supply 21 Condo Development Process Appendix Introduction

Integra Realty Resources – Miami/Palm Beach (IRR-Miami) is pleased to present the following Mid-Year Residential Real Estate Market Study within the Miami Downtown Development Authority’s (Miami DDA) market area, defined as the Greater Downtown Miami market. This report updates IRR-Miami’s findings on the local residential real estate market through July 2017.

Key findings from this mid-year study are as follows:

• Three new condominium projects have delivered ( Heights East and West and Millicento ) comprising 1,089 units in total.

• Downtown reached its midpoint in Q2 2017, with 5,180 new condo units delivered since 2012 and 5,078 units under construction. We project the Flatiron (549 units), Gran Paraiso (317), and possibly One River Point (418) to deliver in 2019.

• Project surveys indicate existing under construction supply in all submarkets is 70% pre-sold on average.

• Average condominium resale pricing has declined -5.4% year to date, hovering slightly over $400 PSF.

• IRR’s review of trailing 4-year resales volume indicates that the downtown resale condo market began accelerating in Q1-2017, with May 2017 recording the highest number of closed and pending sales volume on record in the past 4 years.

• Conventional apartment rents have remained steady with 1% - 4% rent growth year-over year since last summer. Only Studio rents declined -1.6% since last year.

• As a new addition to this report, IRR has surveyed new Class A projects delivered in the prior 18 months including Monarc at Met3 and SoMa Brickell. Class A rents are 25% - 35% higher than IRR’s historical conventional rent surveys downtown, demonstrating the premium for newer well-located Class A apartments.

2 | Integra Realty Resources Introduction

There are no markets that operate in a vacuum dislodged from larger economic trends. The Miami residential market is growing, both in terms of new condominium product and multi-family rental product. This growth and delivery of new product is bringing more product to market at higher quality and price points. The resale inventory listed for sale has been growing also, placing downward pressure on prices. The new conventional rental inventory is delivering and stabilizing quickly with brisk absorption at rents 25% – 35% higher than competitive older apartment product, demonstrating the continued demand for downtown as a lifestyle. However, these new conventional apartments are also competing for renters, many of whom occupied some of the aforementioned condominium buildings as renters. This is placing downward pressure on condominium units rents, which in turn has condominium owner-investors deciding it’s time to sell. These market dynamics play out on a macro-economic stage currently characterized by mixed consumer confidence, variable but slightly improving global economic conditions, and an uncertain US economic outlook despite the otherwise vibrant local market conditions in South .

As of mid-year 2017 in downtown Miami, it wasn’t the best of times, it wasn’t the worst of times.

Respectfully,

Integra Realty Resources (IRR) – Miami/Palm Beach

Anthony M. Graziano, MAI, CRE, FRICS Senior Managing Director

Dan Bowen Market Research Analyst

3 | Integra Realty Resources Greater Downtown Miami Market Submarket Map

The map opposite illustrates the boundaries of the Miami DDA, as well as each submarket within the Miami DDA market.

4 | Integra Realty Resources What’s Changed Since Year-End 2016?

he new development market downtown continues to project strength in the wake of fewer Treported buyers. With 18% less inventory under construction resulting from recent deliveries, each new project close-out is a success to be celebrated in favor of less competition among the remaining projects.

Cancellation of projects, or re-positioning continues with Auberge (298 units) now on indefinite hold, and Chelsea (222 units) reportedly considering repositioning as retail use. Wynwood 26 (15 units) has announced conversion from rental to condo, while 2000 Biscayne (393 units) announced conversion from condo to rental. In June 2017, Forbes reported improvements in the Brazilian economy, and a weaker US Dollar, are bringing Brazilians back to Miami to buy. These early reports of stabilization in Brazil unfortunately do not extend to many other key feeder markets in South America, and American foreign policy on visas and immigration may be counter-productive to a full resurgence anytime soon. Increases in European, Eastern European and Canadian buyers are reflective of strengthening economics in those large markets.

Apartment developers remain active in planning new projects, and early reports of new potential land deals signal continued appetite for downtown multi-family development. Apartment rental absorption, rent levels, and demand all coupled with ample equity for apartment deals will continue to drive the multi-family pipeline. The challenges will be feasibility and financing terms, which have constrained all but the most well-capitalized multi-family developers in the past year.

The overall Miami economy remains relatively strong. Continued multi-family demand will correlate to job growth and regional economic expansion, fundamentals that have been in question in the broader US economy. Despite persistent expectations of a broader recession, the US and Miami have weathered the storm. The real estate landscape continues to adjust to this potential uncertainty, but is proceeding based on the current economic framework of continued expansion, albeit more cautiously.

5 | Integra Realty Resources What’s Changed Since Year-End 2016?

Figure 1a Greater Downtown Miami Current Growth – Contracts and Reservations Submarket Building Avg. SF Units Status Brickell One River Point 1,284 418 Contracts CBD 2,000 390 Contracts Elysee 3,383 100 Contracts Edgewater Gran Paraiso 1,549 317 Contracts Edgewater Bentley Edgewater Condo-Hotel 905 207 Reservations Edgewater Missoni Baia 2,950 146 Reservations Edgewater Naranza 935 137 Reservations Wynwood Wyn26 1,204 15 Reservations # in Contracts 1,225 # in Reservations 505 Total/Average 1,682 1,730 Figure 1b Greater Downtown Miami Current Growth – Under Construction and Q2 Completions Submarket Building Avg. SF Units Status Brickell - East 1,078 358 Complete Brickell Brickell Heights - West (BH02) 983 332 Complete Edgewater Biscayne Beach 1,305 399 Complete A&E 1000 Museum 5,389 83 Under Construction A&E Canvas 892 513 Under Construction Brickell 1,283 387 Under Construction Brickell Brickell Ten 1,050 155 Under Construction Brickell 1,510 180 Under Construction 1,334 549 Under Construction Brickell SLS Lux 1,250 450 Under Construction CBD Paramount Miami 1,793 512 Under Construction Edgewater 26 Edgewater 645 86 Under Construction Edgewater 1,317 647 Under Construction Edgewater One Paraiso 1,682 272 Under Construction Edgewater Paraiso Bay Tower I 1,360 360 Under Construction Edgewater Paraiso Bayviews 1,044 388 Under Construction Edgewater Spark 1,378 56 Under Construction Edgewater The Edgewater 778 30 Under Construction Midtown Hyde Midtown 944 410 Under Construction # Completed Since Prior Report 1,089 # Under Construction 5,078 Total/Average 1,302 6,167 6 | Integra Realty Resources What’s Changed Since Year-End 2016?

he market reached the development cycle mid-point with about 50% of the total projects since T2012 now completed, and slightly less than 50% of units remaining under construction. The contract/reservation pipeline remains relatively unchanged, notably with the Aston Martin project converting reservations to contracts.

Figure 2 Current Greater Downtown Miami Condo Pipeline – Q2 2017

Submarket Complete Since 2012 Under Construction Contracts Reservations Proposed Totals A & E 0 596 0 0 1,834 2,430 Brickell 3,767 1,721 418 0 5,287 11,193 CBD 352 512 390 0 5,198 6,452 Edgewater 1,050 1,839 417 490 1,389 5,185 Midtown 0 410 0 0 195 605 Wynwood 11 0 0 15 478 504 Total (2017 Midyear) 5,180 5,078 1,225 505 14,381 26,369 Total (2017 Annual) 4,091 6,254 803 1,215 13,980 26,343 Total (2016 Q2) 2,790 7,499 879 673 15,606 27,447 Total (2015) 1,889 7,308 1,874 207 17,615 28,893 Total (2014) 1,044 6,019 2,070 1,598 12,543 23,274

These condominium project deliveries also coincided with 969 units of Class A apartment deliveries, bringing the total number of multi-family units under construction below 3,600 units.

The key takeaway is that the under construction pipeline is getting thinner in both the for-sale new condominium projects and the future rental pipeline, which could provide stability into 2018 provided no material adverse changes in the broader economy.

7 | Integra Realty Resources What’s Changed Since Year-End 2016?

Figure 3 Greater Downtown Miami Condo Market Size – Q2 2017

Submarket Current Market Current % Potential Long % Growth Size [1] Growth Growth Term Growth Longterm A & E 4,052 596 15% 1,834 45% Brickell 23,610 2,139 9% 5,287 22% CBD 6,640 902 14% 5,198 78% Edgewater 5,102 2,746 54% 1,389 27% Midtown 978 410 42% 195 20% Wynwood 111 15 14% 478 431% Total (2017) 40,493 6,808 17% 14,381 36%

[1] Includes all 2014-2017 deliveries. [2] Long-Term Growth is the remaining Conceptual units, net of current growth. [3] Current Growth is all Under Construction, Contracts and Reservations.

The large-condominium projects under construction are concentrated primarily in Brickell and Edgewater, with A&E and CBD providing the biggest long-term growth markets. Conversely, the conventional rental projects in CBD and A&E are offering for rent housing options in those submarkets.

In prior reports, IRR projected smaller projects would proceed in niche underserved submarkets, and Wynwood 26 announced its conversion from rental to condo. We expect to see an increase in smaller-scale project announcements in the coming 12-18 months as developers capitalize on the slack in the broader market in favor of in-fill projects. The future completion of Hyde Midtown will leave no condominium development occurring in Midtown, while the major rental expansion of Midtown 6, 7 and 8 will continue the submarket’s measured residential growth.

8 | Integra Realty Resources Submarket Analysis

A summary of the key changes to date:

Brickell There have been two new deliveries in Brickell as the two Brickell Heights towers have been completed; Brickell Ten is likely only weeks away from being turned over to its buyers and work has begun on MaiZon, a 262-unit Class A rental project. The completion of in Q4 2016 was a major milestone, although it also represents the first project to deliver without being substantially (90%+) sold out upon TCO. Swire has confirmed publicly they do not intend to rent the developer units, and will proceed to selling the balance of the standing inventory. The topped off in Q2-2017, marking a major milestone for the mixed-use rental and hotel project with expected delivery in late 2018.

CBD Work is continuing on Paramount MWC condominium with expected delivery in 2019, and on the 7th Street Promenade, Vice, Met Square, and MiamiCentral apartment projects all slated for 2018-2019 delivery.

Arts and Entertainment Auberge has been once again put on hold, deducting 298 units from the pipeline. The under construction pipeline includes Canvas (513 units) which topped of in Q2 2017 and 1000 Museum (83 units) both of which are expected to deliver in late 2018.

9 | Integra Realty Resources Submarket Analysis

Edgewater Biscayne Beach (399 units) has completed. There have been a variety of unit count revisions. The 2000 Biscayne project has been converted from a 450-unit condo to a 393-unit rental. The submarket will see the largest balance of deliveries in 2017 as Related’s three major projects (Paraiso Bay Tower, One Paraiso and possibly Paraiso Bayviews with a combined 1,020 units are expected to deliver by year-end 2017.

Midtown Progress continues on Hyde Midtown, and work is ongoing at Pearl Midtown 29. Significant proposal activity is occurring in the rental pipeline, with Midtown 6, 7, and 8 being proposed with near-term plans to reportedly commence construction on Midtown 6.

Wynwood The Wynwood 29 project has moved from rental to a proposed condo; Wyn26 (15 units) remains in the reservations. Wynwood is known for its vibrant boutique art and gallery scene, and its hip restaurant and bar culture. New retail continues to emerge in the submarket, but the market has not seen any measurable residential development in this cycle. Mana Wynwood remains the largest potential catalyst in the western areas of Wynwood with a critical mass sufficient to attract large-scale investment.

Overtown The land sale needed to complete the Miami Beckham United stadium was agreed upon in early 2017. Although located outside of the DDA’s borders, this project is the largest and most transformative currently in the pipeline with long-term positive implications for the Overtown neighborhood.

10 | Integra Realty Resources Unit Sizes and Pricing Trends

he active projects in the construction phase commenced construction generally 55% – 60% Tpresold. New average quoted pricing in Brickell is in the $600 – $700 per SF range, with notable luxury projects at One River Point and Echo Brickell over $1,200 per SF.

Paramount pricing in the CBD at Miami World Center reports increased asking prices in the $700+ per SF range, with Aston Martin Residences over $1,000 per SF, the latter slated to break ground shortly.

The Edgewater market has the highest level of diversity in pricing, with some projects like Spark, Naranza, Paraiso Bayviews, Biscayne Beach and Aria on the Bay offering well-located units in the $400,000 – $800,000 range ($450 – $600/SF), with luxury projects Missoni Baia Elysee, Gran Paraiso and One Paraiso between $700 – $950 per SF ($1.2 – $3 Million excluding penthouses).

Interviews with major brokerage houses indicate that developers are seeking the right buyers, and market participants would not confirm any specific trends on discounts or incentives except to say that price discounts are not moving the market. Brokers confirmed that the market is measurably slower, and despite expectations that pre-election malaise was slowing buyer confidence, the first half of 2017 showed only a minor uptick in traffic and activity in the pre-sale market.

Market metrics indicate that 2016 and 2017 (to date) have demonstrated about 50% of the sales activity experienced in 2015, which was down 25% – 50% from 2014 activity. While these metrics are not entirely uniform by price point, the higher-priced product downtown has far fewer units per project, and expectations on unit sales per month are much lower hurdles. The larger mid-priced product generally needs 6-10 contracts per month to reach feasible sell-out, and many market participants indicate that this threshold sales pace is not achievable in the current market.

For under construction product that started 55% – 65% sold out, the slower absorption is not necessarily creating distress. In terms of new project feasibility, it remains unlikely that new projects will commence for the balance of 2017. Absent those projects outperforming the market on absorption/sales.

11 | Integra Realty Resources Expected New Condo Deliveries by Year

Figure 4 Projected Condo Unit Delivery by Year Submarket Name/Location # Units Year Quarter A & E 1000 Museum 83 2018 Q4 Canvas 513 2018 Q1 Brickell Flatiron 549 2019 TBD One River Point 418 Contracts – TBD Echo Brickell 180 2017 Q4 1010 Brickell 387 2017 Q4 Brickell Ten 155 2017 Q3 Brickell Heights - East 358 Completed 2017 Brickell Heights - West (BH02) 332 Completed 2017 SLS Lux 450 2017 Q4 CBD Paramount Miami 512 2019 TBD Aston Martin Residences 390 Contracts – TBD Edgewater Aria on the Bay 647 2017 Q4 Biscayne Beach 399 Completed 2017 26 Edgewater 86 2017 Q4 Bentley Edgewater Condo-Hotel 207 Reservations – TBD Elysee 100 Contracts – TBD The Edgewater 30 2017 Q4 Gran Paraiso 317 Contracts – TBD Paraiso Bay Tower I 360 2017 Q4 One Paraiso 272 2017 Q4 Missoni Baia 146 Reservations – TBD Spark 56 2018 TBD Paraiso Bayviews 388 2017 Q4 Naranza 137 Reservations – TBD Midtown Hyde Midtown 410 2017 Q4 Wynwood Wyn26 15 Reservations – TBD Projected New Total 2017 Jul-Dec 3,365 Condo Deliveries Total 2018 652 Total 2019 1,061 Total 2020+ 0 Total 5,078

12 | Integra Realty Resources Resale Condominium Pricing

Figure 5 Average $/SF Sale Price Trend – Greater Downtown Miami Resale Market

$500 $457 $431 $426 $403 $372 $400

$305 $300 $240 $221 $224 $200

$100

0 2009 2010 2011 2012 2013 2014 2015 2016 2017

YoY Rent Change 5% 5% 4% 4% -6%

Timeline

End of • Wynwood • First Delivery • Perez • Second • 1,500th condo • 2,500th • 5,180 Recession Walls and (23 Biscayne) Art Condo unit delivered condo unit condo (June 2009) Doors open • Launch of Museum Delivery • 1,000th rental delivered units Miami Trolley opens (MyBrickell) unit delivered • Construction delivered • Presidential • Flagler on • Weakening peaks at • 5,078 election year the River in many 7,499 condo under (rental non-USD units in Q2 construction delivered currencies, • Presidential • IRR reports including election year 4,458 Colombian condos Peso, Euro, under and Russian construction Ruble

13 | Integra Realty Resources Resale Condominium Pricing

he resale condominium market, which includes all projects delivered from 2001 to the present, Tsaw a significant increase in average unit price in 2012 (27%) 2013 (22%), 2014 (16%) and 2015 (6%). Pricing has continued to decline from the 2015 peak of $457/SF down to current mid-year 2017 pricing at $403 PSF. We forecasted early in 2016 that the condo re-sale inventory was accumulating, and pricing would likely adjust accordingly. At this lower pricing, sales volume is increasing rapidly; with May 2017 marking the best month for closed sales in two years and the strongest in the past three years, with 142 closings and 160 pending in May 2017.

Market participants are seeking correlations between the resale pricing and pricing of new projects. But the level of inventory in the resale market is increasing, and the inventory of new product is declining. This fact, coupled with developer resolve to push through this slowdown, is decoupling resale and new product pricing.

A review of Figure 6 demonstrates the year over year inventory build-up, but also offers encouraging signs that early 2017 was a recovery in total sales and pended sales. This return of condo sales activity was offset by continued increases in the available for sale inventory.

The key takeaway on resale pricing is that the market average pricing was increasing when total inventory available per month was less than 2,500 units, and average sales velocity was 120 – 150 units per month. As monthly velocity dipped below 125 units per month, and inventory approached 3,000 units per month on average, pricing started to decline. To reach pricing equilibrium, the market needs to clear an additional 500 – 700 resale units currently listed.

14 | Integra Realty Resources Resale Condominium Pricing

Figure 6 Greater Downtown Miami Condo Listings (Built 2001+) by Month

(Zip codes: 33127, 33128, 33129, 33130, 33131, 33132, 33136, 33137)

Date For Sale New Listing Sold Pended Date For Sale New Listing Sold Pended Jul-13 1,535 446 218 274 Jul-15 2,568 438 130 144 Aug-13 1,588 432 224 230 Aug-15 2,546 410 126 128 Sep-13 1,710 429 218 213 Sep-15 2,619 465 136 139 Oct-13 1,845 477 190 195 Oct-15 2,726 511 128 108 Nov-13 1,908 388 183 166 Nov-15 2,792 396 104 109 Dec-13 1,904 356 182 166 Dec-15 2,747 346 126 100 Jan-14 1,987 535 158 227 Jan-16 2,859 536 90 84 Feb-14 2,045 499 134 213 Feb-16 2,976 528 83 123 Mar-14 2,184 552 216 218 Mar-16 2,980 431 111 121 Apr-14 2,272 521 200 202 Apr-16 3,045 469 95 110 May-14 2,292 496 206 212 May-16 3,041 412 88 136 Jun-14 2,292 441 181 205 Jun-16 3,057 454 120 100 Average 1,964 464 193 210 Average 2,830 450 111 117 Jul-14 1,939 345 132 120 Jul-16 3,032 374 92 86 Aug-14 1,932 340 118 155 Aug-16 2,990 396 105 114 Sep-14 1,931 356 135 147 Sep-16 3,064 457 86 85 Oct-14 2,006 410 131 140 Oct-16 3,121 407 81 77 Nov-14 2,078 342 114 104 Nov-16 3,167 389 88 82 Dec-14 2,152 357 124 99 Dec-16 3,124 353 94 104 Jan-15 2,127 399 109 136 Jan-17 3,198 553 68 90 Feb-15 2,146 408 106 153 Feb-17 3,258 452 85 100 Mar-15 2,264 499 140 143 Mar-17 3,304 530 114 142 Apr-15 2,428 518 112 155 Apr-17 3,264 403 111 109 May-15 2,481 413 152 139 May-17 3,277 467 142 160 Jun-15 2,539 452 133 124 Jun-17 3,251 422 117 120 Average 2,169 403 126 135 Average 3,171 434 99 106

Source: Trendgraphix, compiled by Integra Realty Resources, Inc.

15 | Integra Realty Resources Rental Market Statistics

RR’s reporting in Summer 2016 provided in-depth analysis of the rental demand and pricing for both Iconventional rental properties and the shadow condo market. Since then, rental rates in condominiums have declined somewhat, reflecting new deliveries and better affordability for Miami residents. Average rental price declines in the condominium sector range from -2% to -6% by unit type.

Figure 7 Average Condo Leasing Price – Greater Downtown Miami

Studio 1 BR 2 BR 3 BR Year Overall $/Unit $/SF $/Unit $/SF $/Unit $/SF $/Unit $/SF 2012 $2,255 $1,421 $2.64 $1,804 $2.33 $2,625 $2.13 $4,340 $2.25 2013 $2,371 $1,504 $2.67 $1,926 $2.30 $2,819 $2.21 $4,427 $2.51 2014 [1] $2,481 $1,632 $2.92 $2,008 $2.48 $2,908 $2.32 $4,346 $2.60 2015 [1] $2,582 $1,698 $3.03 $2,139 $2.62 $3,008 $2.45 $4,773 $2.89 2016 [1] $2,677 $1,683 $2.97 $2,165 $2.66 $3,009 $2.46 $4,675 $2.72 2017 [1] $2,522 $1,628 $2.96 $2,008 $2.49 $2,942 $2.38 $4,573 $2.77 [1] Midyear. Figure 7a Average Condo Leasing Price – Year-over-Year Changes

Studio 1 BR 2 BR 3 BR Year Overall $/Unit $/SF $/Unit $/SF $/Unit $/SF $/Unit $/SF 2013 $5.1% 5.9% 1.4% 6.8% -1.4% 7.4% 4.0% 2.0% 11.8% 2014 4.6% 8.5% 9.4% 4.3% 7.5% 3.1% 4.8% -1.8% 3.5% 2015 4.1% 4.0% 3.6% 6.5% 5.8% 3.4% 5.7% 9.8% 11.1% 2016 3.7% [2] -0.9% -2.0% 1.2% 1.5% 0.0% 0.4% -2.0% -6.0% 2017 -5.8% -3.3% -0.3% -7.3% -6.4% -2.2% -3.3% -2.2% 2.0%

16 | Integra Realty Resources Rental Market Statistics

Conventional Apartment Rents

Within conventional rental communities, the picture is generally one of stability, although one-bedrooms continue to reach new highs at $1,831 per month and 3.4% annual rent growth through June 2017.

Figure 8 Overall Downtown Conventional Rental Rent Survey (2,474 Total Units, Class A- and B)

$/Unit Studio 1 BR 2 BR 3 BR Average SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF Q3 2014 $1,976 638 $1,585 $2.49 864 $1,605 $1.86 1,221 $2,106 $1.73 1,752 $2,622 $1.50 Q2 2015 $2,121 638 $1,856 $2.91 864 $1,774 $2.05 1,221 $2,241 $1.84 1,752 $2,707 $1.55 Q2 2016 $2,123 638 $1,937 $3.04 864 $1,772 $2.05 1,221 $2,257 $1.85 1,752 $2,652 $1.51 Q2 2017 $2,116 638 $1,906 $2.99 864 $1,831 $2.12 1,221 $2,274 $1.86 1,752 $2,378 $1.36 Q3 2014 - Q2 2015 7.3% 17.1% 10.5% 6.4% 3.2% % Change Q2 2015 - Q2 2016 0.1% 4.4% -0.1% 0.7% -2.0% % Change Q2 2016 - Q2 2017 0.7% -1.6% 3.4% 0.7% 3.6% % Change

New to this 2017 mid-year report is IRR’s survey of new Class A communities delivered in the past 12 months. We then compare these new projects to the prior conventional apartment surveys which indicate that new projects are achieving a 25% – 35% premium (one and two bedrooms); and a 75% premium in the three bedroom. The studio premium shows the smallest premium, but notably the older multi-family product has fewer studios, and therefore a premium is already priced into the studios based on lower overall monthly pricing.

17 | Integra Realty Resources Rental Market Statistics

Figure 8a Overall Downtown Conventional Rental Rent Survey (2,474 Total Units, Class A- vs. B)

$/Unit Studio 1 BR 2 BR 3 BR Average SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF SF $/Unit $/SF Q2 2017 $2,164 638 $1,906 $2.99 864 $1,831 $2.12 1,221 $2,274 $1.86 1,752 $2,751 $1.57 Class A- & B Q2 2017 $2,360 516 $1,615 $3.13 775 $2,064 $2.66 1,095 $2,711 $2.48 1,437 $3,960 $2.76 Class A Class A 9.1% 4.8% 25.7% 33.0% 75.5% Premium (%)

Figure 9 shows average asking and achieved rents, as well as velocity, by submarket in greater downtown Miami. There has been almost a 21% year-over-year increase in monthly volume, from 258 to 318 signed leases indicating that demand for rentals continues to grow, and lease turn-over is up.

Figure 9 Average Current Asking vs. Achieved Leasing Price and Velocity (2016 YTD)

Overall Overall Year-over-Year Total # Leases/ Year-over-Year # of Households Submarket Asking Achieved Price Change Month Volume Change (2016 est.) Brickell $2,619 $2,535 -3% 177 44% 19,053 CBD $2,337 $2,259 -11% 70 3% 8,180 A & E $3,958 $3,875 -7% 15 63% 8,188 Edgewater $2,515 $2,435 -13% 43 -6% Midtown $2,643 $2,529 -2% 13 17% 7,852 [1] Wynwood - - - - -

[1] Wynwood, Midtown, and Edgewater were not broken out 318 21% 43,273 in the 2016 population report.

18 | Integra Realty Resources Conventional Rental Market Supply

Figure 10a Greater Downtown Miami Rental Pipeline - Under Construction and Complete Projects

Submarket Building 2017 Q2 Status # Units Completion Date A & E Square Station Under Construction 710 Q4 2018 Brickell (former ) Under Construction 438 Q4 2017 Brickell Panorama Under Construction 821 Q4 2017 Brickell MaiZon at Brickell Under Construction 262 Q4 2019 CBD Avant at Met Square Under Construction 391 Q4 2017 CBD MiamiCentral Apartments (up to 5 towers) Under Construction 800 Q4 2018 CBD Vice Under Construction 464 Q3 2018 Figure 10 CBD 7th Street Promenade Tower 1 Under Construction 450 Q3 2018 illustrates the current status of Miami’s CBD 7th Street Promenade Tower 2 Under Construction 413 TBD 2019 under construction Edgewater 2500 Biscayne Under Construction 156 Q3 2017 rental pipeline. Edgewater Biscayne 27 Under Construction 330 Q3-Q4 2019 There has been a Edgewater Modera Edgewater Under Construction 297 2019 wave of completions, Midtown Pearl Midtown 29 Under Construction 309 Q1 2018 comprising Midtown Midtown 6 Under Construction 447 TBD Broadstone at A & E Complete 500 Q1 2020 Brickell, Midtown 5, and Eve at the Brickell SoMa Complete 418 2015 District, as well as Brickell Broadstone at Brickell Complete 372 2017 groundbreakings Brickell Brickell View Terrace Complete 76 2016 on the second CBD Flagler on the River Complete 250 2014 tower of 7th Street CBD Monarc at Metropolitan 3 Complete 462 2016 Promenade, MaiZon Midtown Midtown 5 Complete 400 2017 at Brickell, Biscayne Midtown Eve at the District Complete 197 2017 27, and Modera Edgewater. Total # of Units Under Construction 6,288 Total # of Units Completed in 2016-2017 1,545 Total # Units Completed 2014-2015 1,130

19 | Integra Realty Resources Conventional Rental Market Supply

Figure 10b Greater Downtown Miami Rental Pipeline - Proposed Projects Submarket Building 2017 Q2 Status # Units A & E 17 Edgewater Proposed 240 14 Plaza Proposed 760 School Board Proposed 1,000 Melody II Proposed 630 The Arts Proposed TBD Art Plaza Proposed 667 Miami Plaza Proposed 437 Resorts World Omni Terminal Proposed TBD Brickell One Brickell II Proposed Market Place Proposed TBD TBD Allen Morris/Related Proposed TBD Megacenter Brickell Proposed 57 1111 Brickell (Yacht Club Phase II) Proposed 897 Brickell Fire Station Proposed 196 CBD Luma at Miami World Center Proposed 434 Lynx Tower Proposed 900 Miami World Center Block E Proposed 418 Miami River Village Proposed TBD Cultural Center Garage Redevelopment Proposed 432 Grand Station Proposed 300 Nexus Riverside Proposed 462 Nexus Riverside Central Proposed 900 54 West Flagler Proposed 391 225 SE 2nd St Proposed TBD M-Tower Proposed 440 Miami Station Tower f/k/a Krystal Proposed 153 200 NMA Proposed 328 533 NE 2 Ave Proposed 150 Apartments at Yotel Proposed 188 One Bayfront Plaza (RENTAL) Proposed 1,100 (approx) Edgewater 1900 Biscayne Proposed 429 1836 Biscayne (Possible Condo) Proposed 352 700 Edgewater Proposed TBD AR Edgewater Proposed 171 Quadro 3900 Biscayne Proposed 198 Ellipsis Proposed 34 The Village Proposed TBD Miami 18 Proposed 1,200 2000 Biscayne (Rental) Proposed 393 Midtown Midtown East Phase 1 Proposed 208 Midtown East Phase 2 Proposed 492 Midtown 7 Proposed 391 Midtown 8 Proposed 387 Wynwood 2801 NW 3rd Avenue Proposed 264 Wynwood 25 Proposed 289 222 NW 24th St Proposed 80 Wynwood Plant Proposed 306 Wynwood 26 Proposed 176 222 Wynwood Proposed 35 2110 N Miami Ave Proposed 163 Total # of Units Proposed 17,548

20 | Integra Realty Resources Condo Development Process Appendix

Proposed Reservations Contracts Under Completed Construction The proposed phase The reservations The contracts The Contracts stage The site This is the final is the initial phase phase is the phase is when the is typically the improvements and stage of the of the development second phase of initial proposition make-or-break stage vertical construction development process; a conceptual the development and reservation of development have commenced. process; as the plan for a new process; the of a completely as the project was At this stage of construction of the building or project developer and undefined either well-received development, the units is completed, is initiated by architectural/ development idea by buyers, investors, project has secured CO’s (Certificates a developer or design team meets the actual and lenders, or sufficient pre-sales of Occupancy) are property owner. produce additional contracting for sale it was not. If the with significant issued, and the The developer may renderings and upon the receipt of developer has as a deposits and most closing of the unit release a press floor plans; the further deposits. sufficient number likely a financing sales are finalized. release or a news sales centers are The architectural of sale contracts, commitment. story with an initial opened and the and construction buyer deposits, These projects will rendering to gauge finishes, amenities, drawings are and a commitment enter the market the interest in the and features of completed; the for financing, under a reasonably project, but the the project are developer obtains the project’s definitive timeline project size may disclosed. The government construction of 24-48 months, change over time to developer files permitting and will most likely depending upon the conform to market with the State of approvals. The commence. If the scale of the project demand and/or as Florida to be able final unit floor project was not and surrounding site due diligence to take reservations plans are defined well-received, either infrastructure constrains the and deposits for as the reservations by a lack of pre-sales, requirements. process. units during this are converted to or insufficient equity stage. This begins sales contracts from initial investors the pre-sale phase with additional or debt financing, during which buyer deposits a project may be reservations are upon filing of the scrapped, shelved, or taken. Master Declaration significantly altered of Condominium. in another future Changes to these attempt (either later documents are in the cycle or in the costly, and therefore next one). Projects the development which fail the plan tends to Contracts stage may be more static move all the way following this phase. back to Proposed during this process.

21 | Integra Realty Resources Disclaimer & Acknowledgment

The information provided herein is for informational purposes. This publication does not render legal, accounting, appraisal, counseling, investment, or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person or firm, having access to the details of the situation, be employed.

22 | Integra Realty Resources Images

Cover: Photo courtesy of Miguel Gonzalez. Page 2: Photo credit: © 2015 IRR-Miami/Palm Beach. Page 4: Photo credit: © 2015 IRR-Miami/Palm Beach. Map courtesy Miami DDA. Page 5: Photo credit: © 2015 IRR-Miami/Palm Beach. Page 9: Brickell, artist’s rendering of Brickell CityCentre used by permission of Swire Properties Inc. CBD, photo courtesy Miami DDA. Arts and Entertainment, photo courtesy Miami DDA. Page 10: Edgewater, photo credit: © 2015 IRR-Miami/Palm Beach. Midtown, photo courtesy Miami DDA. Wynwood, photo credit: © 2014 IRR-Miami/Palm Beach. Overtown, by Ebyabe, Wikimedia Commons. Page 11: Photo credit: © 2015 IRR-Miami/Palm Beach. Page 13: Brickell, artist’s rendering of Brickell CityCentre used by permission of Swire Properties Inc. Page 16: Photo credit: © 2015 IRR-Miami/Palm Beach. Page 19: Photo credit: © 2015 IRR-Miami/Palm Beach.

23 | Integra Realty Resources About Integra Realty Resources

With corporate headquarters in New York City, Integra Realty Resources (IRR) is the largest independent commercial real estate market research, valuation, and consulting firm in North America, with 66 offices and more than 200 MAI-designated members of the Appraisal Institute who are among its more than 900 employees located throughout the United States and the Caribbean. Founded in 1999, the firm specializes in real estate appraisals, feasibility and market studies, expert testimony, and related property consulting services. Many of the nation’s largest and most prestigious financial institutions, developers, corporations, law firms, and government agencies are among its clients. For more information, visit www.irr.com or blog.irr.com. Contact Information: 200 S. Biscayne Blvd, Suite 2929 Miami, Florida 33131

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