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Hipsturbia: CRE’s Vibrant New Home?

How hipsters as well as many other fleeing city-dwellers could remake the suburbs

From Brooklyn to Boca Raton, the once ultra-hip urban core of America’s cities now finds itself beyond the reach of many of the professionals who helped make it so desirable. These former residents are fleeing big metropolises in search of affordable rents and mortgages, safe schools, and open space. But they still crave the comforts of urban life—walkable neighborhoods, vibrant food and culture, access to the city—and, where these features don’t yet exist, they may bring these qualities with them.


This migration marks a new take on the move by an earlier generation, which left cities out of fear for their safety due to rising crime rates. Now, city dwellers are leaving because they simply can’t afford to live there.

Neighborhoods shift

This shift has become a large enough trend that some realtors now specialize in it. One realtor spends much of her time moving New Yorkers out of New York (85 percent from Brooklyn alone), to “laid back” villages and towns in Westchester, along the Hudson River, and in suburban New Jersey—areas once thought of as boring bedroom communities.

The youngest (and largest) generation makes up a significant portion of those making this move. According to global real estate company CRBE, approximately 103,000 more millennials ages 25 to 29 moved out of cities than moved in, and 167,000 more ages 20 to 24 did the same.

Granted, some of this migration can be attributed to underemployed young professionals moving back into their parents’ basements – but a significant portion moved to find a more affordable lifestyle. And it doesn’t stop with millennials. The numbers for Gen X are even more striking: 660,000 more fled cities than settled in them.

Where are they going?

Yes, these young professionals are heading to the suburbs. But not just any ‘burbs will do.

No sprawling neighborhoods with few sidewalks surrounded by causeways clogged with big box stores. For these former urbanites, a healthy mix of affordable housing, locally-based food culture, and cultural literacy are necessary ingredients to complement the leafy-green streets. Towns like Irvington and Hastings in New York, Homewood, and Berwyn near Chicago, and Doral and Plantation in South Florida have stepped up to fill the bill.

Developers have noticed. Many towns within striking distance of the Big Apple have significant building projects underway and in the planning stages:

  • Westchester County saw a seven-fold increase in rental units from 2015 to 2018.
  • The value of new developments in Yonkers grew 50 percent from 2015 to 2016.
  • New Rochelle is in the midst of a $4 billion redevelopment plan.
  • White Plains, Sleepy Hollow, and Ossining are among the towns undergoing similar growth.

What do they want?

In short, these new transplants want the best of urban life, through a suburban lens:

  • Schools. Educating children in urban schools can be a challenge. Suburbs often have fewer students per teacher, and more resources on hand.
  • Walkable downtowns. Former city dwellers are setting up shop on main streets across suburbia, transforming downtowns into havens for artisanal chic.
  • Vibrant food culture. Like their shopkeeper counterparts, restauranteurs and mixologists are bringing the farm-to-table aesthetic a step closer to the farms themselves.
  • Access to the city. Many of the new and upcoming building projects are known as “transit-oriented developments” and are placed squarely in the path of commuter stations.

South Florida is seeing the CRE shift

While much of the focus of the “hipsturbia” movement has been focused on places like New York City, South Florida is no stranger to the trend. Some CRE developers have increasingly turned their attention away from downtowns like Miami, West Palm, and Fort Lauderdale to put down stakes in the likes of Doral, Plantation, Sunrise, and Boca Raton. Indeed, 64 percent of new construction in South Florida has moved to these suburban markets.

Chief among the reasons for this shift are workers reaching their breaking point on commute times and traffic congestion. On the developer side, land costs are significantly less, sometimes by as much as $10 to $15 a square foot.

Make no mistake, the vibrant urban cores of our cities aren’t going anywhere. But just as a rising tide lifts all boats, the suburbs are now seeing a real share of that vibrancy come to their communities. We at Morris Southeast Group are excited to see where this trend leads and are ready to work with you on your CRE project, no matter the locale. Call us at 954.474.1776 for a free consultation on commercial real estate investment or property management services. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Opportunity Zones & Commercial Real Estate in Florida: The Potential & Pitfalls

Opportunity Zones & Commercial Real Estate in Florida: The Potential & Pitfalls  on morrissegroup.com

A tax incentive that could build communities

A hallmark of the Tax Cuts and Jobs Act passed in 2017 was the creation of Opportunity Zones. In short, the program was another effort to encourage investment in economically depressed communities around the country. And true to the current state of politics in the country, both cheerleaders and critics were quick to voice their opinions.

In 2018, Florida joined the list of states eager to participate in the program. The candidate neighborhoods, identified as census tracts, represent counties throughout the state but South Florida leads the pack in the number of communities in need of investment. Nevertheless, nearly two years after its passage, Opportunity Zones (OZ) remain a highly debated topic.

How Opportunity Zones work

The basis of the program is to promote economic investment while offering a tax break incentive. In short, when taxpayers sell an appreciated asset, they can then invest that gain in governor-nominated census tracts. Some key details:

  • If the amount of the gain is invested in a qualifying opportunity zone within 180 days, the gain is not included in the investor’s income until the investment is sold or when the program comes to an end on December 31, 2026.
  • If the OZ investment is held for at least five years, the taxpayer will receive a 10% discount on the capital gains tax. If held for at least seven years, that discount increases to 15%. Because of the December 31, 2026 deadline, taxpayers must invest no later than December 31, 2021, to receive the 10% discount, and no later than December 31, 2019, to receive the 15% discount.
  • In addition, if the taxpayer holds onto the Opportunity Zone investment for 10 years, there will be no taxes on the sale of the new investment.

Pros and cons of Opportunity Zones

Naturally, there are pluses and minuses – philosophical and economic – to investing in Opportunity Zones. For investors, it’s a tax incentive that also holds the potential to do good: reduce poverty, increase employment, and spur growth in some of the poorest communities in the nation. In fact, of the top 10 cities predicted to benefit the most from the Opportunity Zones program, five are in Florida: Orlando (1), West Palm Beach (2), Tampa (3), Fort Lauderdale (8), and Miami (10).

Critics, on the other hand, say, “not so fast.” Some point to previous programs that they say failed in the long run, as well as the number of people who would be displaced as a result of living in an Opportunity Zone and the convergence of investments in neighborhoods that were already seeing a surge in investments prior to the start of the new law.

Investors need to pay attention

Even in the midst of the debate, though, opportunities are there – but for the investor, the best advice is to proceed with caution, for some very good reasons:

  • The purpose of the Opportunity Zone program was to encourage investment in very poor communities. As a result, investments may carry more risk than if one were to invest in a more solid, established neighborhood. If the investment results in a loss for the taxpayer investor, that loss may erase the initial benefit of the hoped-for tax break.
  • Opportunity Zone investments are managed through “Qualified” Opportunity Funds (QOF), which are partnerships that can be formed and managed by anyone. In other words, “qualified” doesn’t necessarily indicate that the QOF and its investments are under the umbrella of any regulatory agency. The onus is on the investor to do the vetting.
  • It’s also important to keep the program’s end date in sight. On December 31, 2026, the taxman will come knocking to collect the capital gains tax, regardless of if the investment has sold. Again, the onus is on the taxpayer/investor to have the funds to pay that tax.

Opportunities in South Florida

Morris Southeast Group is excited about the possibilities found in Opportunity Zones throughout the region – especially when one of these investments is researched thoroughly and represents the right move for one of our clients. To learn more about property investment opportunities, and/or other services, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Start Now: Prepare Your CRE Property for Hurricane Season

Don’t wait for the warnings

While it may seem a far way off, June 1 is right around the corner – the start of the 2019 Atlantic hurricane season. You don’t have to be a meteorologist or climatologist to know the far-reaching effects that hurricanes have on South Florida. After a storm hits, the future of the local economy sometimes hangs in the balance, and CRE plays a crucial role in helping get businesses and neighborhoods back on their feet.

This makes it all the more important to set your disaster preparation in motion to protect your commercial property from mother nature’s wrath.

Review your insurance policy

Don’t wait until your property is in the midst of repairs or a rebuild to consult your insurance policy. When prepared properly, these policies are living documents, adapting to the ever-shifting risk landscape. Review them annually, if not more frequently, to be sure they accurately reflect your understanding of what will happen once they take effect.

Some questions to consider:

  • Do you have a flood insurance policy through either the National Flood Insurance Program (NFIP) or a private company, and what does it cover? Policies through NFIP are often insufficient to cover most commercial property needs.
  • Are there any limitations – in any policy – on coverage in the event of a hurricane or named tropical storm?
  • Does each tenant have mandatory insurance (if so, usually required in the lease)? And if they do, do they have proof of insurance?

Make a plan

When that “Hurricane Watch” alert flashes across your screen, it is typically too late to begin complete preparations for what’s likely to come. Ideally, the planning process begins every January – just over a month after the close of the previous season – which will give you the time and clarity to properly plan your disaster response.

Every CRE business should have the following on their active agenda, even while hurricane season is the faintest glimmer in the distance:

  • Write a hurricane plan with step-by-step instructions for each stakeholder on how to protect your facilities during the storm. This should include a communications component that outlines the property manager’s responsibilities to keep key personnel informed throughout the hurricane and its aftermath.
  • Be clear about what triggers the plan going into effect.
  • Set evacuation procedures and allot certain times of the year to drill your teams in them.
  • Establish protocols to secure and safely back up all digital properties and equipment.

Once that “Watch” bulletin pops up, these protocols should be put into action. If you wait until the alert elevates to a “Hurricane Warning,” time may not be on your side. As always, contact your local emergency management agency to learn about specific risks in your area.

Hurricane-proof the property

Some hurricane preparations will come in the form of standard facility maintenance, such as trimming trees, cleaning roofs, and clearing gutters. But there are a number of additional steps to take in order to fully protect your property:

  • Examine all doors, windows, and the roof to make sure they will keep out water and strong winds.
  • Stock extra fuel for generators (and test them regularly).
  • Securely store outdoor fixtures including building signage, trash cans, and promotional displays.
  • Book your clean-up crew now and avoid the scramble after the storm hits.

Stock your supplies

In the event that a storm temporarily forces you and your staff to hunker down at work, you’ll want a fully-stocked supply of essentials to get you through until the sun shines again. Some items to include:

  • Food and water, such as non-perishables (energy bars, dehydrated fruits and vegetables, and canned items) and at least three days of purified water (typically two quarts per day, per person).
  • Flashlights, glow sticks, and flares.
  • An up-to-date First Aid kit that includes supplies to treat broken bones and heavy bleeding. When the storm hits, it is not a good time to discover you have torn bandages or expired medications.
  • Lightweight blankets with fire and shock retardant.
  • Two-way radios, portable radios, and, of course, batteries. Also consider radios that power up by crank and don’t require electricity (many of them can also charge your phone).

South Florida has – and needs – a lot of experience in hurricane prep

While the exact path and timing of a storm can be uncertain, the preparations needed to withstand it are not. With proper planning and regular maintenance, your team and your property will be ready when the winds begin to blow. Such diligence minimized the impact of Hurricane Irma on South Florida’s CRE market and set new national benchmarks for building codes and construction standards. Morris Southeast Group is proud to serve this market and invite you to consider partnering with us. For a free consultation on commercial real estate investment or property management services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

Motels Are So Cool, They’re Hot

Retro revivalism is breathing new life into roadside accommodations

There’s an old joke that if one holds onto old clothes long enough, they will eventually be back in fashion. While it may be some time before ‘70s polyester leisure suits are chic again, the same cannot be said about motels.

What was once a dilapidated and dying element of the hospitality industry has undergone a revival revolution in recent years, and the momentum isn’t slowing down. In fact, it’s quite the opposite. With a limited number of properties available, more and more smaller independent and larger hoteliers are working feverishly to make kitsch cool – and South Florida, because of its long love affair with midcentury architecture, is at the heart of the motel revival movement.

The birth of the motel

In many ways, the motel industry is the result of a post-WW2 booming middle class from decades ago. With a strong economy and automobiles, American families embarked on road trips, and motels satisfied a need for affordable accommodations located near roadside attractions, such as small amusement parks, western town re-creations, and caverns.

As the nation became more connected through an extensive and well-linked interstate highway system, motels and local roadside attractions were often bypassed. Travellers were more likely to stay in no-frill chain accommodations located near on and off ramps. In order to stay afloat, motel clientele changed, its reputation now tarnished by whispers of extramarital affairs, hourly rentals, criminal hideouts, and overall seediness.

The birth of the new motel

In the decades since the motel’s decline, more branded chain hotels swept in to fill the void and luxury hotels grew more luxuriant and expensive. A younger generation of travelers, weighed down by college debt and a weaker economy but valuing experience and affordability, helped to put Airbnb on the map.

The intimacy of renting accommodations in a stranger’s house, though, wasn’t for everyone – and inventive and creative hoteliers see an opportunity in the supply of aging motels. Often, these relics had remained in families for generations or had owners who were simply overwhelmed by the challenges of running a profitable operation. Either way, buyers and investors found eager sellers – and the revivalism revolution began.

How to make an old motel new again

The new hoteliers have pretty much stumbled upon a formula for re-doing an old motel, one that celebrates the personality of the structure without demolition. That formula’s success, though, is based on a few key elements:

  • No matter where a motel is located, from Austin, TX, to Jackson Hole, WY, to wherever the road takes you, it’s important to be restrained in design. Kitsch can quickly and easily become a cliché.

  • When considering a motel update, it’s important to leverage the work of local craftspeople and artisans. It’s a perfect way to celebrate the local flavor and to add a sense of uniqueness to the traveler’s stay.

On a local level, several South Florida motels have found a way to pay homage to the region’s historic and nostalgic architecture while creating a hip-but-authentic place for not only a new generation of travelers but also an aging Baby Boomer population looking for a stroll down memory lane. In Miami, there’s Vagabond and the New Yorker. Both are known for their nod to classic vintage style and an independent and community mindset. A little further up the coast, in Fort Lauderdale, is Manhattan Tower, with its iconic tower and Intracoastal views.

Searching for a hidden gem in SoFlo

At Morris Southeast Group, we’ve written extensively about the opportunities to repurpose old structures into something else – and we think it’s fantastic to repurpose an old motel into a celebration of its glory days that serves a new market of travelers. To learn more about hidden retro gems and other property investment opportunities, and/or our other CRE services, call Morris Southeast Group at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at kenmorris@morrissegroup.com.

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