Wynwood 3.0: The Apartment Boom In Miami's Post-Industrial Chic Neighborhood
When the Wynwood 25 apartment building opens this month, 289 units will come online in the neighborhood, nearly doubling its inventory in an instant.
According to the most recent annual market report commissioned by the Wynwood Business Improvement District, Wynwood's apartment inventory currently consists of 413 units spread across 15 properties. With another 175 expected to open by the end of the year when The Bradley debuts, and at least 757 more units also in the works, Wynwood is reaching a critical turning point.
This represents Wynwood's “pivot from tourist attraction and food and beverage destination to a true neighborhood," said Albert Garcia, the vice chairman of the BID and chief operating officer of Miami-based Mega Shoes Inc.
East End Capital co-founder David Peretz remembered shopping for land in Wynwood around 2013, when a lot of the inventory was one-story warehouses, much of it owned by investors like Irv Lerner, David Lombardi and Goldman Properties.
Peretz said his team bought with the intention of holding properties long-term, though they weren’t sure if it would take five years or 20 years for the neighborhood to mature. Their first deals were land buys for roughly $125 per SF, he said.
“People said, ‘Oh, my God, you guys are crazy. You just bought from the guys that bought for 80! You guys are the knuckleheads that overpaid,’" he said. "So, we went for basically 12 months, made essentially six different deals in Wynwood, paying somewhere between $125 and $250 a foot for the properties. At which point, shortly thereafter, I saw a deal traded for $700 a foot.
"And we were like, ‘Oh my gosh, we're either the smartest people, or the other guy’s the craziest person. They’re the knucklehead.’”
Last July, a retail property in Wynwood sold for $1,400 per SF.
Peretz’s team sought to cater to the creative types who patronized the bars and restaurants that were fast filling in the neighborhood. The area also seemed to need a boutique office building for creative tenants.
So Peretz teamed up with Related Group to build Wynwood 25, a 289-unit apartment building, and an adjacent office complex, The Annex. Move-ins are slated for this month, with the apartments 25% leased, according to Peretz.
Peretz said that zoning changes the BID fought to have implemented in 2015 were instrumental. The zoning went from allowing 35 units per acre to 150. This made it more practical to build smaller units, which could in turn be more affordable. Peretz’s team informally surveyed friends in Miami about what price point they could afford to live in a cool, new building.
“Everyone sort of said that if you can keep the rent under $2K a month, that's the number,” he said.
Wynwood 25 is being marketed to "wynners" and "wynnovators"; prices are advertised from about $1,600 for a studio to $3,500-plus for a three-bedroom apartment. Peretz said Wynwood 25’s seven floors of apartments are about 80% studios and one-bedrooms, with one-beds being about 650 SF.
He is in talks with tenants to lease the ground-floor retail, but declined to name them until leases are signed. Live Nation is taking 8K SF of the 52K SF of office space at the Annex.
Peretz knows that some old-schoolers lament tall and gleaming projects going up in a neighborhood that became famous for being artsy and gritty. Several galleries, the Wynwood Yard, O cinema and the Rubell Family Collection, are all gone or leaving soon.
“People are [saying] ‘Is Wynwood over? What's next? Everyone's in Little Haiti! We'll go to Allapattah!” he said. "We think Wynwood is still in its infancy, when you look at what's happening.”
East End has signed leases with restaurant concepts Bartaco and Barcelona Wine Bar to take space in its portfolio, and Punch Bowl Social, a karaoke and bowling concept, is going to open in the Wynwood Garage. Peretz said that most landlords in the neighborhood work to curate an optimal mix of tenants and are open to getting creative with lease terms.
According to the BID's annual report, Wynwood retail rents average $45 to $90 per SF outpacing Doral and Aventura. Peretz said that prices get more affordable farther away from Wynwood's "Main and Main" on Second Avenue, but he doesn't begrudge property owners there who push rents.
“There was a thought that retailers could do well in those neighborhoods and people want to be there and pay a premium to be there," Perez said.
Diaz recalled when Wynwood had 90% vacancy rates just 15 years ago, and said the the neighborhood is so busy now it triggered property booms even in neighboring districts.
It's a misconception that small tenants are "under siege," he said."It's quite the opposite, actually."
He said hundreds of small businesses have opened and will benefit from the increased foot traffic the multifamily will bring.
Between under-construction and proposed projects, Wynwood could be set to welcome nearly 1M SF of office space in half a dozen hotel projects soon. A street improvement project will make it more pedestrian-friendly, and it is possible that Wynwood could get an exit off of Interstate 95 and even a Tri-Rail commuter stop.
Not even the drumbeat of climate change seems to dampen Peretz's outlook, given that Florida's demographics — some 900 people per day move to the state — are so strong.
"We think the number of people moving to Miami, due to numerous reasons, is exponentially greater than the number of people that are thinking the other [way]," he said. “If you're a retailer with the right concept, I don't think there's a better neighborhood in Miami to open. People always say, 'Let's wait for proof of concept.' Proof of concept has definitely occurred, and we're super, super excited with what we're seeing."