November 26th, 2015 12:25 PM by Nour Ailan
A buying binge
led by Miami Beach-based developer Michael Simkins is generating
seven-figure deals along a four block stretch of Overtown, Miami’s
historically African-American neighborhood.
“Prices have increased
dramatically,” Simkins told The Real Deal of the area, which is one of
the city’s poorest communities. “When we started purchasing land, it was
in the $20 a square foot range. It is now approaching $150 a square
Overtown runs from Northwest Fifth Street to 20th Street
and is bounded on the west by the Miami River and State Road 836 and on
the east by the Florida East Coast Railway tracks on Northwest First
Avenue. In addition to Simkins, a handful of other buyers have proven to
be increasingly bullish on apartment buildings and vacant parcels
between Northwest Eighth and 12th streets and Northwest First and Third
The properties that have been snapped up are in close
proximity to three grand-scale, mixed-use developments: All Aboard
Florida’s MiamiCentral, Miami Worldcenter, and Simkin’s proposed Miami
Innovation Tower, the signature piece to a technology district he wants
to develop in Park West, the neighborhood directly abutting Overtown.
area we are focused on was the main commercial corridor for historic
Overtown,” Simkins said. “The Overtown of the 1940s was a thriving
place. The neighborhood has soul and character.”
During the Jim
Crow era, the neighborhood was known as “Colored Town” and was a
bustling business and entertainment center for Miami’s black community.
It’s where entertainers like Count Basie, Cab Calloway and Josephine
Baker stayed when they performed in Miami. However, the construction of
I-95 through portions of Overtown decimated the neighborhood’s
prosperity. Riots in the 1980s further eroded Overtown.
Today, the annual median household income for Overtown residents is $17,450, according to recent U.S. Census data.
investors like Simkins have recently paid top dollar for Overtown
properties. In mid-October, he closed an all-cash $2 million deal there
for two apartment buildings with a combined 28 units and three
commercial units. Simkins paid $116 per square foot for the
16,300-square-foot assemblage .
“These buildings will be renovated
with our own dollars and continue as rentals,” Simkins said. “The
people living there will hopefully continue living there, as well as
other Overtown residents.”
He said market-rate rent in Overtown
for a one-bedroom unit is $700, compared to $1,963 in Miami, and a
two-bedroom unit is $850, compared to $2,911 in Miami, according to
That deal marks the third seven-figure Overtown
property transaction involving Simkins in the past 10 months. In
February, Simkins paid $94 a square foot for three vacant lots totaling
13,750 square feet . In June, he bought two vacant parcels totalling
15,000 square feet on Northwest 11th Street and Northwest Second Avenue
for $92 a square foot.
Simkins is not alone. In January, Bahia
Apartments LLC, a company registered to Horacio Segal and Marcela Segal,
a North Miami-based real estate broker, paid $3.5 million for three
apartment buildings with a combined 26,887 square feet. That’s $130 a
square foot. According to Miami-Dade records, Bahia obtained a $2.4
million loan from Ocean Bank that it used toward the purchase.
July, an entity called Beacon 87 Member Inc. purchased a 75-unit
apartment building for $3.68 million — about $107 a square foot.
According to state incorporation records, Beacon’s manager is Joanne
Rosen, a partner in New York City-based real estate investment and
development firm, Beacon Advisors, LLC. The seller DJ Acquisitions 1136
paid $2.6 million for the property in May 2014.
recent prices are a far cry from what Simkins paid only a year ago. The
developer purchased a 24-unit apartment complex at 1160 Northwest Second
Avenue for $330,000 in November 2014. Today, the property has a market
value of $1.6 million, according to the Miami-Dade County Property
Appraiser’s website. He also paid $555,000 for a two-floor retail
building at 937 Northwest Third Avenue in October 2014.
year, Simkins purchased another 22 lots between Northwest Ninth and
Tenth streets and Northwest Second Avenue and Second Court for a
combined $14.1 million. Aside from the city of Miami Park West/Overtown
Community Redevelopment Agency, he believes he has the largest portfolio
“It’s an unprecedented level of investment,” he
said. “We are committed to really reviving and redeveloping Overtown
into what it has always been.”
But Overtown still
faces challenges, according to Emile Farah, chief executive of the Farah
Group of Companies. Farah assisted in brokering Simkin’s most recent
deal. “Whoever wanted to buy it had to come with cash,” Farah said.
“It’s difficult to get financing for Overtown properties.”
will only lend money based on the rental income a building produces and
not on the property’s appraisal price, he said. “In that area, rents are
averaging $600 and are starting to go up to $700 a month,” Farah said.
“The income approach doesn’t justify making a deal for most buyers.”
the area remains a tough sell, despite All Aboard Florida and other
major projects. But we was optimistic about the impact of Simkins’
acquisitions. The developer “has a vision for the future of the
neighborhood,” he said.