Good Afternoon Governor DeSantis and Mayor Gimenez,
Hope this email finds you and your families in good health during these challenging times.
I’d like to start off by congratulating both of you for handling a difficult situation which we have found ourselves in. The Wall Street Journal wrote an article a couple of days ago and it seems like Florida and Miami Dade County are doing a lot things right, but as always, there is room for improvement especially when it comes to addressing mobility in the era of social distancing.
Here are some facts:
Miami Dade Transit ridership has fallen by 80% since mid-March (Miami Today News)
In the last 6 weeks VMT (Vehicle Miles Traveled) have decreased by as much 50% in the country’s largest cities (24/7 Wall St.)
Travel speeds are increasing in cities by as much as 70% since social distancing orders were put in place (24/7 Wall St.)
Bicycle use has surged in the US during the past 6 weeks. (Reuters)
Nearly 20% of Miami households don’t own a car (Governing)
The Florida Department of Transportation (FDOT) and Miami Dade County control our roads
Seems fair to assume:
Transit ridership will suffer in the short term until a vaccine is discovered or we reach herd immunity (whichever comes first).
We need to provide alternative mobility options for our residents while social distancing is in effect.
As long as our children cannot return to school or attend summer camps, traffic levels will remain low.
During the past 6 weeks there has been a tremendous increase in people using bicycles for transportation and recreation. Many people still need to get to work and are afraid to use public transit. Unfortunately, there is a significant percentage of Miami’s population that cannot afford a car nor do they feel safe riding public transit, so it’s no surprise that cycling has become the transportation of choice for many.
Cycling has also become a leading recreational choice since mid-March. On weekends there are now tens of thousands of people riding bicycles with their families on Saturday and Sunday mornings. Cyclists easily outnumber cars 50 to 1 in Miami’s CBD (Bayshore, Brickell, Rickenbacker Causeway, Biscayne Boulevard and the Venetian Causeway) on weekend mornings, yet the County nor FDOT have done anything to make our roads safer for cyclists and pedestrians.
Given that VMT has decreased significantly and cycling and walking has increased exponentially during the past 6 weeks, why hasn’t Miami Dade County and FDOT created bicycle-only travel lanes on the aforementioned roads to allow Miami Dade County’s residents to properly social distance and get much needed exercise on temporary protected bike lanes?
What are our next steps to make this happen? Here are some ideas that other cities are embracing.
This does not need to be an expensive undertaking nor do we need to overthink this. Orange traffic cones are an inexpensive solution that can be implemented quickly.
There are a number of cities across the world that are taking action to make our cities more livable during these challenging times. Let’s lead by example.
Look forward to working with FDOT and Miami Dade County to make our streets safer for our families during these challenging times.
The last month has been a doozy to say the least. For most of us we have never experienced a pandemic of this scale in our lifetime. Businesses have closed their doors and our city streets are mostly empty. Markets have been more volatile than in 2008 and it seems like volatility will continue into the foreseeable future until there is more certainty about what impact Covid-19 will have globally.
Seems like our “normal way of life” has changed considerably in just several weeks. No one knows how long social-distancing will go on for. But the longer it does go on, the greater the impact it will have on urbanism, the economy and real estate. Our normal way of life will likely change, but hopefully for the better. One thing is for sure, life has slowed down for many of us and that is probably a good thing.
As an urbanist I am enjoying the less congested streets. Bicycling has become more enjoyable and aggressive driving behavior seems to have declined in the last month. For the most part motorists seem to be more respectful of cyclists and people walking. In my Miami yuppy/hipster neighborhood there are exponentially more people walking, biking and running with their families than 1 month ago. In fact, I’ve never seen so many people walking or sitting on their front porch in the ten years I’ve lived in my neighborhood. My local bike shop said business has been booming since “social-distancing” became a thing. With gyms closing, more and more people are dusting off bicycles and they are getting around on 2 wheels. It’s a beautiful thing for us urbanists to experience.
Biking in the Time of Covid-19
Last month, a group of nearly 50 academics and experts on public health and transport wrote an open letter to the UK government urging elected officials to encourage walking and biking amid the crisis. According to The Verge, the Colombian capital, Bogota, is adding 47 miles of bike lanes to reduce crowding on public transport and help prevent the spread of COVID-19. New York City, which has witnessed a surge in cycling as people avoid public transportation, has said it would install bike lanes on 2nd Avenue between 34th and 42nd streets in Manhattan and Smith Street in Brooklyn. Mexico City is considering a fourfold increase to its cycling network. With parks, beaches and playgrounds closing our streets have become our default public spaces. Seems like closing some streets to motor vehicles in order to allow people to bike and walk safely is a no-brainer. Cities can quickly and inexpensively create protected bike lanes by simply closing traffic lanes for cyclists and pedestrians by erecting orange cones. We’ve already seen a significant decrease in traffic volume, so closing lanes of traffic would have minimal effect on traffic.
Hopefully more cities will start taking steps to make our streets safer during this time of increased demand from cyclists and from people walking, running and skating. It seems like we’ll be on lockdown until the end of April and it’s important that people stay healthy by exercising.
The more prolonged our containment measures are in effect the greater the dramatic plunge in production and trade. Last month Pierre-Olivier Gourinchas, Professor of Economics, UC Berkeley, wrote “Flattening the Pandemic and Recession Curves”. In short, flattening the infection curve inevitably steepens the macroeconomic recession curve.
According to Professor Pierre-Oliver Gourinchas:
“Consider China, or Italy: increasing social distances has required closing schools, universities, most non-essential businesses, and asking most of the working-age population to stay at home. While some people may be able to work from home, this remains a small fraction of the overall labor force. Even if working from home is an option, the short-term disruption to work and family routines is major and likely to affect productivity. In short, the -appropriate- public health policy plunges the economy into a sudden stop. To wit, all indicators coming out of China, for instance, indicate a dramatic plunge in production and trade.
The first thing to note is that, even in that `perfect’ world, the economic damage would be considerable. To see this, assume that, relative to a baseline, containment measures reduce economic activity by 50% for one month and 25% for another month, after which the economy returns to the baseline. Such a sharp but short-lived decline in activity does not seem unreasonable if one thinks that a majority of the labor force is currently shuttered at home in places like Italy or China. In fact, we could anticipate a much more drawn out process. Yet, that scenario would still deliver a massive blow to headline GDP numbers, with a decline in annual output growth of the order of 6.5% relative to the previous year. Extend the 25% shutdown for just another month and the decline in annual output growth (relative to the previous year) reaches almost 10%!”
This is a slippery slope for all of us. If strict containment goes on for much longer Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product.
The real estate industry will be severely impacted. Rents and mortgages will likely go unpaid and non-performing loans will likely mount. This is a big threat to the $3 trillion commercial mortgage market according to The Wall Street Journal. Lacking rental revenue, many property owners could default on their mortgages—forcing banks, already struggling with the pandemic’s fallout, to write down loans and raise capital to cover for their losses.
Cities, counties and states will also face some tough times ahead. Property values will likely decline, which will directly affect property taxes, the main sources of revenue for cities and counties. Consumers are only spending on essentials, so sales tax revenues will decrease for states during a time when Coronavirus pandemic-related expenses are increasing.
A recession is coming according to Professor Gourinchas. From his perspective the priority should be:
(a) to ensure that workers can remain employed -and collect their paycheck- even if quarantined or forced to stay home to look after dependents. Temporary layoff assistance is a key component. Without it, it is even unclear whether public health advisories can be followed. Households need to be able to make basic payments (rent, utilities, mortgages, insurance).
(b) to ensure that firms can weather the storm without going into bankruptcy, with easier borrowing terms, possibly temporarily waving tax or payroll payments, suspending loan payments, or providing direct financial assistance where needed;
(c) to support the financial system as non-performing loans will mount, so as to ensure the crisis does not morph into a financial crisis
Real Estate After Covid-19
Once Coronavirus is a thing of the past (and it will be), there will likely be some changes as it relates to real estate. The retail, hospitality and office assets classes are the most likely to be negatively impacted. Multifamily, self storage and industrial will likely be the winners.
Retail will likely be the biggest loser. Many retailers (restaurants included), which were already struggling, will likely never reopen their doors. Those that do, will quickly discover that many of their customers are now unemployed and are only spending money on essentials. Underwriting retail deals will be tricky in this environment because there are so many unknowns when it comes to the behavior of consumer spending. Vacancy rates will likely increase dramatically. For the opportunistic real estate investor, with cash in hand and a long-term outlook, this could be a great buying opportunity.
Hotels and short-term rentals will be hit hard. International travel will likely be impacted for at least the next 3 to 4 months. It will be some time before conferences and events with hundreds or thousands of attendees can go on. Domestic hospitality will likely recover more quickly, but there will still be plenty of pain. It will be interesting to see if short-term rentals are able to transition back to multifamily rentals where we are likely to see greater demand as homes are foreclosed on. I suspect that many of the short-term rentals were underwritten with much higher ARRs (Average Room Rate) than a multifamily monthly rental so we will likely see an increase in short-term rental foreclosures.
The office sector will likely feel some pain, as many employers will likely realize that many of their employees are capable of working from home responsibly (and probably more productively). So it seems like there will be less demand for office space. Companies will likely downsize office space and have more “shared work spaces” . That being said humans are social animals and 90% of our communication is non-verbal. We need human interaction to work efficiently. Remote work will likely be an occasional tool for us to use at most 2 or 3 times per week.
Multifamily & Self Storage
As people lose jobs and paychecks are cut, foreclosures are likely to increase. Everyone needs a roof over their heads, so multifamily should do well as people look to downsize and cut expenses. But where will Americans put all their useless junk they rarely use? Self Storage. Both of these asset classes did well in the last recession and they will likely do the same in this downturn.
Covid-19 has forced most people to do their non-essential shopping online. This will have a direct impact on supply chain logistics of goods and the winner here is industrial. Retail’s loss will be e-commerce’s gain in the long run, with industrial investments looking more attractive as physical retail has been exposed during the Covid-19 pandemic.
Life after Covid-19
The longer social-distancing goes on the greater the negative impact it will have on our economy and real estate. Ironically, the longer social-distancing goes on the greater the positive impact it will probably have on urbanism. Hopefully, people will come to miss safer bike rides, spending more quality time with their families, going for walks and getting to know their neighbors.
So when will social distancing end? It all comes down to how many deaths we as a society are willing to deem acceptable. As “The Donald” stated every year 40,000 people are killed in motor vehicle crashes (a pandemic in its own right). Many of these crashes are preventable if we designed roads that prioritized safety of all users rather than moving motor vehicles quickly. Many Coronavirus deaths can also be prevented if we prioritize social distancing over opening up the economy quickly. As a society we are willing to turn a blind eye to the 40,000 people that are killed every year and the hundreds of thousands of people that are critically injured in motor-vehicle crashes. Is our priority saving lives or saving the economy? My guess is that at some point we will prioritize the economy. This will probably happen sooner rather than later. Hopefully we won’t forget about all the good that has come out of social distancing and the quick and positive impact it has had on urbanism, even if it was only for a couple of short months.
The ULI Miami Symposium is on of the biggest South Florida real estate events of the year. All South Florida real estate ballers will be in attendance. If you’re a baller or think you’re a baller, then you should attend. Attendee list can be found here.
Join ULI on Wednesday, November 13th for the 2019 Miami Symposium. Click here to register.
South Florida is one of the fastest growing metropolitan areas in the country. Comprised of 3 counties, Miami-Dade County, Broward County and Palm Beach County, the area is home to approximately 6,700,000 people. Miami Dade County is comprised of 34 cities, Broward 30 cities, and Palm Beach County has an additional 39 cities. In total there are 103 cities in South Florida. South Florida also has 3 transit agencies (Miami-Dade Transit, Broward County Transit and Palm Tran), which are controlled by each respective county.
Who controls South Florida’s Roads? Roads in South Florida are controlled either by the respective county or by the Florida Department of Transportation (FDOT). For the most part, with the exception of the Miami Dade Expressway Authority (MDX), highways and interstates are entirely controlled by FDOT. Non-highways and interstates are controlled by the county or by FDOT.
Rail in South Florida Tri-Rail is a commuter rail line that links Miami, Fort Lauderdale, and West Palm Beach. Tri-Rail is managed by the South Florida Regional Transportation Authority (SFRTA) and the rail line is owned by the Florida DOT. The 70.9-mile-long (114.1 km) system has 18 stations along the Southeast Florida coast, and connects directly to Amtrak at numerous stations, and to Metrorail at the Tri-Rail and Metrorail Transfer station and at Miami Airport station.
South Florida Regional Transportation Authority is a tri-county public transit authority operating out of Pompano Beach, serving Miami-Dade, Broward and Palm Beach counties. SFRTA was created by the Florida Legislature and enacted by the Florida Department of Transportation. The goal of creating SFRTA was to expand cooperation between the Tri-Rail commuter rail service and the existing county public transport authorities: Broward County Transit, Miami-Dade Transit, and Palm Tran. Tri-Rail is solely operated by SFRTA.
Virgin Trains USA, formerly Brightline, is an express inter-city rail system in South Florida. It is currently owned and operated by Fortress Investment Group. Virgin Trains USA currently operates service between Miami and West Palm Beach with a train station in Fort Lauderdale. Virgin Trains USA is currently the United States’ only privately owned and operated intercity passenger railroad. Virgin Trains recently announced that it has secured funding to extend its current Miami to West Palm Beach route to Orlando. The extension will consist of 40 miles (64 km) of new track allowing for speeds of 125 mph (201 km/h). It will also include upgrading 129 miles (208 km) of existing track to allow for passenger trains to operate at 110 mph (180 km/h). When completed in 2022, it will be the only modern higher-speed passenger rail operated privately in the United States.
Zoning in South Florida Since there are 103 municipalities in South Florida, that means each city has their own zoning code. In addition, there are areas in each of the 3 counties that are unincorporated (not part of an incorporated city, village or town), which falls under the purview of each respective county. Effectively, South Florida has 106 unique zoning codes.
Land-use and Mobility Options In order for a multi-modal transit system to succeed in South Florida, cities must encourage density and mixed-uses. Low density zoning, which encourages the separation of uses, only helps to perpetuates the use of the automobile. Cities which embrace density and mixed-use zoning encourage less dependency on the automobile and as a result promote mobility options such as walking, biking, scooter-use and public transit.
South Florida: A hot mess when it comes to transportation and planning
With 106 zoning codes (103 cities & 3 counties) 3 transit agencies (Miami-Dade Transit, Broward Transit and Palm Tran,) 5 agencies that control South Florida roads (Miami Dade County, Broward County, Palm Beach County, FDOT and MDX), 1 agency that controls Tri-Rail (SFRTA) and a privately owned inter-city rail system (Virgin Trains) it’s no wonder why South Florida is in the transportation and planning conundrum that we’re in. The truth is there is hardly any coordination between these institutions.
To make matters even worse, several cities in Miami Dade County are now operating “trolleys” (a glorified bus), without coordinating with Miami Dade County Transit’s bus and rail schedules.
There seems to be no coordinated effort to address South Florida’s future transit needs. If we want to attract an educated population and new businesses, transit needs to be at the top of the list of every elected official’s agenda. South Florida needs a real Regional Transportation and Planning Authority with the power to make strategic planning and transit decisions on a tri-county level.
Whatever we’re doing now (which seems like nothing) isn’t working. We can’t continue to piece-meal local and regional transit decisions. Regional planning and transit has been neglected by our elected officials for too long and our growing pains will only worsen if we continue with our current modus-operandi.
For anyone looking to elevate their commercial real estate game this course is highly recommended. Dive into Urban Commercial Real Estate Development through The U’s upcoming Intro to RED course on October 12, 2019 (8:30am -2:30pm). Learn the fundamentals to become a successful developer at this all-in-one MRED+U seminar taught by Prof. Steve Nostrand (of One Commercial)
Full disclosure: Steve was my professor while I was enrolled in the University of Miami’s Masters of Real Estate Development + Urbanism program. Steve is a real estate and a great teacher with decades of commercial real estate knowledge.
This seminar offers the keys to the core issues facing real estate developers today such as:
What type of developer do you want to be? How developers make money Assessing the real value of land Understanding land use, zoning and other public policies The keys to successful development Managing risk How to conduct a preliminary financial feasibility Important financial terms and ratios Key aspects of developing each property type The integrated stages of development The different types of leases How to borrow money Details of joint venture structures Purchasing notes and distressed properties
Who should attend?
Real estate brokers and associates Mortgage brokers Bankers Lawyers Financial advisors and planners Public officials Real estate owners Property managers Investors
As the third generation in his family to specialize in commercial real estate, Stephen has a diverse background in not only executive leadership, but CRE service lines including investments sales and leasing brokerage, development, debt and equity capital markets, project management, strategic planning, asset and property management, receiverships, training and education. Prior to joining ONE Commercial Real Estate, he was CEO/COO of NAI Miami and CEO of the Colliers International South Florida office. Mr. Nostrand is a professor in the Master of Real Estate Development + Urbanism program at the University of Miami.