By Mark Zannoni, The Center for Cleveland
March 13, 2021
This past Friday, March 12th, a remarkable few words about Cleveland appeared in an article on a South Florida real estate news website. Spider, a real estate investment firm with offices in Miami and throughout Latin America, sold a property in Miami that it had purchased in 2015, scrapping its plans to construct a 12-story, 93-unit condo building.
Here’s the notable part: “Spider’s decision to exit Miami is driven by the city’s high condo inventory and decreasing unit prices, [Spider’s] Goldenberg said. The firm now is focusing on Detroit and Cleveland, which have upside potential and where investors will get a higher return.”
In other words, Cleveland in the eyes of an international real estate investor is hot and, depending on the project type, can provide even higher rates of return than Miami.
After a decade of a building boom, Miami’s condo market is overbuilt; meanwhile, Cleveland suffers from a profound lack of condos. Despite all the fine for-rent apartment construction around the city in recent years, the market excludes those who want high-rise and urban-amenities living, but simply do not want to spend $25K-50K per year in rent. Hence, with the lack of high-rise condo offerings, people are forced into low-rise townhomes or single-family homes, or pushed to live in another city where such common housing options are more readily available. Moreover, condos are important for the economic stability of the city as during economic downturns, neighborhoods, such as rental-heavy Downtown, need owner-occupied (and high-rise) residences whose occupants won’t readily split as renters can once the option to not renew a lease comes around.
But getting back to the article, it’s great to see Cleveland being more readily recognized as a strong and desirable city for international real estate investment—and so much so that an investor is scrapping a condo project in Miami and is looking northward to the shores of Lake Erie instead.