Miami affordable housing builder Pinnacle Housing Group is one of many in the industry trying to address a challenging economic and government mandate to develop new projects in urban areas, where land prices continue to soar.
"The state the last few years, through rule-making, has prioritized urban infill areas close to community amenities" like public transportation, schools and grocery stores, according to Pinnacle partner Michael Wohl.
And those who qualify for subsidized housing in South Florida simply cannot afford to live in the suburbs anymore.
A recent study on housing and transportation costs from the Center for Housing Policy and Center for Neighborhood Technology ranked the Miami metropolitan area as the least affordable U.S. city for moderate-income families, defined as those making between $25,444 to $50,888 per year. According to the study, those families spend 72 percent of their income on housing and transportation, compared to 48 percent nationally.
"That's a choke hold, an absolute choke hold," Wohl said.
To make the much-needed urban affordable housing developments financially viable, Pinnacle and other builders must get creative. The real estate recovery has spurred a new land rush in South Florida, particularly in Miami's urban core. Affordable builders cannot compete with the boom-era prices some high-rise developers are currently paying for land.
Finding an available piece of land for affordable housing is as much of a challenge as the burdensome acquisition costs.
"We're effectively Manhattan; we're out of land," according to Ron Kohn, a board member of the Commercial Industrial Association of South Florida. Kohn has sold numerous sites to affordable housing builders over the years through his company, Kohn Commercial Real Estate.
With these obstacles in mind, Pinnacle is working with nonprofit East Little Havana CDC LLC on a West Brickell project currently called Brickell View Terrace. Wohl and fellow Pinnacle partner Mitchell Friedman say the development, which is targeted for a late 2014 completion, would be "the first true mixed-income development in South Florida."
East Little Havana CDC owns the site, which was originally planned as the second phase of a for-sale affordable housing development. Pinnacle plans to build 95 market-rate rental units on top of 100 affordable housing rental units. The market-rate and affordable apartments would look nearly identical to an uninformed observer.