Miami — While a lot of top global cities turned dark during the pandemic, Miami is flourishing. With outdoor malls, restaurants, and plenty of beaches, it became a haven for those trying to get some fresh air and semblance of normalcy. But it’s not just the tourists - and northeasterners - who have been flocking to South Florida, tech companies, investors, and financial institutions have made the migration, too. Just last week Microsoft announced that it would be opening its Latin American headquarters in Brickell - the heart of Miami’s financial district. It signed a contract for a 50,000 sq ft lease in a building that’s yet to be built at 830 Brickell. Earlier in the year we saw the likes of Founders Fund, a prestigious Silicon Valley VC open an office in Miami, too. And let’s not forget one of the early movers, BlackStone, who announced in October, 2020 that they would be coming to town and opening up more than 200 tech jobs.
With all this increased stardom has come higher prices. Bloomberg Línea spoke with Alex Horenstein, Associate Professor of Economics at the Miami Herbert Business School at the University of Miami to learn what are the top 5 things that have gone up in price in the Magic City and surrounding South Florida. Spoiler alert: Some of it is good news.
- Hotels: “Prices of hotels in New York have remained the same, but in the Florida Keys they have almost doubled,” Horenstein said. “Everything tourism related has gone up because Miami has been a very sought out destination during the pandemic,” he added. The Florida Keys have become one of the more expensive places to visit in the U.S. with room rates for a weekend stay in September in Key Largo at a four star hotel, ranging from $299 - $1266 according to Google Travel. Since most Americans have been unable to travel abroad the last 1.5 years, tourism in the U.S. in general has skyrocketed, as more people opt for road trips and destinations with short flights. Hawaii, for example, another hot vacation spot, has actually asked tourists to stop coming. Across the country the picture is a little different. According the Market Watch, a summer 21 study shows that while hotel prices nationally have increased by about 17% since this time last year, they largely remain flat compared with pre-pandemic prices.
- Restaurants: “Tourism related businesses have seen a faster recovery [in Miami] than in other cities,” Horenstein said. Many restaurants had to reduce their capacity or close-off indoor dining completely as well as implement more stringent cleaning protocols. According to the U.S. Bureau of Labor Statistics, the largest increase was the index for meats, poultry, fish, and eggs, which increased 8.0 percent as the index for beef rose 12.2 percent over the year. The only group to decline was dairy and related products, which fell 0.5 percent over the last 12 months. The index for food at restaurants rose 4.7 percent over the last year. As a result, many restaurants have raised their prices, including the fan favorite: Casa Tua Cucina where in 2019 pastas started at $12, and now start at $15.
- Rents and Real Estate: “Latins who own apartments in Miami are making more money, because their properties are going up,” Horenstein said. With remote work becoming feasible for so many people during the pandemic, many New Yorkers and California residents have made Miami their home - even if temporarily, and vacant units have been flying off the shelves. This goes for rentals and homes, alike. “I was looking for a house in June, and people increased their prices by 10-15% within just one week,” Horenstein said. In Brickell, home to banks and luxury high rises, rent for a 2 bedroom apartment ranges from $2,600 - $7,000 per month, according to Zillow. *We looked at prices in the 33130 zip code, which consists of the core of Brickell.
- Insurance: But if you own a place, your insurance has likely gone up too, said Horenstein. In general, the price of goods has gone up across the U.S. so everything that would need to be replaced by insurance has gotten more expensive as well. Luckily we’re almost in the clear in terms of hurricane season!
- Car rentals: If you’re thinking of making a trip to Miami and renting a car, you better plan ahead. Not only have car rental prices gone up exorbitantly, but the demand has increased, too, leaving many rental car companies with bare parking lots. What happened is that at the height of the pandemic last summer, when everyone was at a standstill, many dealers sold off large swaths of their fleet.
As a result, investing in Miami has become a more expensive proposition. But for those who got in early and have owned real estate for years, now you’ll finally be plagued with the question: to keep or to sell?