Miami has been a hotbed of residential development over the past five years. International migrants supercharged population growth, along with a robust influx of wealthy people, not to mention a steady incoming stream of major financial firm relocations attracted by favorable tax laws.

Despite a recent macro slowdown in ground-up housing development and construction, Miami remains a national leader in apartment and for-sale building activity.

In the latest sign of the city’s ongoing momentum, an opportunity zone investment fund paid $20.9 million for six contiguous parcels in the city’s downtown Arts & Entertainment District, with plans for luxury apartments and retail.

Development team McCaffery Interests, Inc., and Grand View Development Co. plan to begin construction early next year. The number of units hasn’t been determined yet.

We’re not just building a tower, we’re creating a high-impact project that aligns with Miami’s growth trajectory and long-term economic development plans,” says David Cohen, co-managing principal in SF QOZ Fund I.

Building up Miami Downtown

The parcels are among the few remaining prime urban development sites in northern downtown Miami. Malaysian casino owner and developer Genting Group, the seller, still owns a nearby 15.5-acre Biscayne Bay site — formerly the Miami Herald headquarters — which it purchased for $236 million in 2011 with plans for a major casino resort.

After failing to secure a gambling license, Genting listed the property for $1 billion in 2022. A $1.2 billion deal with Terra Group and SmartCity Miami collapsed in 2023, and the site remains on the market.

The northern part of downtown — the site of the newly-acquired six-parcel tract —hasn’t developed as quickly as the Brickell financial center district, south of the Miami River.

In 2022, billionaire Ken Griffin's Citadel announced it was moving the firm’s global headquarters to Brickell, and is building a new headquarters building. Several major financial firms have either relocated their headquarters to or expanded significant operations in Miami, including Goldman Sachs, Blackstone, Icahn Capital Management and Founders Fund.

Residential development followed the corporate titans to the high-profile Brickell district, but the corporate development in that neighborhood also helped spur redevelopment projects in the northern downtown area.

This part of Miami is home to several opportunity zones.

Created by the 2017 Tax Cuts and Jobs Act, opportunity zones offer capital gains tax incentives to spur investment and housing development in low-income areas.

Several residential projects have been built in the area. The SF QOZ Fund I project will rise in the shadow of four other residential towers near a stop on the city’s Metromover lightrail system.

International Allure ... Up to Now

Despite attracting companies, Miami has seen net domestic out-migration since 2018, losing over 101,000 residents from July 2023 to July 2024. However, international migration more than offset the domestic migration exodus. As a result, Miami’s overall population growth trend makes it the sixth-largest U.S. metro, with over 553,000 international arrivals since 2020, second only to New York City.

After such a powerful influx from abroad, Miami’s population growth will be tested under a Trump administration that has stepped up efforts that may stifle immigration in general, in addition to expanding initiatives to deport undocumented immigrants.

Wealth Magnet

In addition to international migration, Miami’s millionaire population rose 94% between 2014 and 2024, now totaling nearly 39,000 high-net-worth individuals, according to commercial real estate deals tracking website Traded.  Favorable tax laws, a warm climate, and luxury amenities, influenced the shift, and drove demand for luxury developments that have been reshaping the skyline.

During the Covid-19 pandemic, Miami rent growth led the country and home prices soared. Both have slowed, but housing affordability remains a chronic challenge, prompting state interventions like the Live Local Act, which incentivizes workforce housing and streamlines approvals for affordable developments.

The state amended the law a third time this year to remove roadblocks local governments had erected to the act.

Current State of the Market

Rent growth cooled off as a flood of new supply created at least a temporary overhang during the past couple of years. Vacancy rates haven’t ballooned, however, indicating that rental demand has held up. Vacancy rates of 6.9% are running below a national average of 9%, and rates of 11.1% in the South, according to commercial real estate firm Cushman & Wakefield.

Apartment construction continues holding strong despite a slowdown. The Miami market has the highest ratio of apartment units under construction to inventory in the country.

Cushman & Wakefield data shows that the 32,014 units under construction at the end of March represented 23.75% of existing units, 8,570 more than a year ago. It leads Durham, NC, by nearly 10 percentage points. Sarasota is the only other market in double digits.

Miami is third in the country in number of units under construction behind New York City and Dallas.

For perspective, however, while the Miami metro is the sixth largest in the country, its apartment inventory of 134,783 units ranks 29th. For now, that’s the situation. The current construction pipeline will continue add new units to the inventory at a steady clip.

On the for-sale side, Realtor.com listed Miami as the No. 2 top real estate market for this year, with existing home sales rising 24% year-over-year.

McCaffery Interests and Grand View Development starting early next year puts them on course to increase the inventory more in 2028 or 2029.  

By then the Rev. Edward T. Graham Greenway, a 33-acre public park that will be built underneath nearby Interstate 395, may be well on the path toward completion.

We believe these parcels are situated in one of the most strategic, urban-core locations left in Miami,” Liam Krahe, who manages the OZ fund with Cohen.