Lagoons, Luxury Bunkers, and 4 More Real Estate Trends for 2023
By Dan Avery / December 30, 2022
Another year has come to an end. And though it appears we’ve (hopefully) put the worst of the COVID pandemic behind us, its impact on real estate trends is still being felt in some rather unusual ways. We spoke with pros across the industry to see what’s ahead for 2023.
Miami’s hot streak continues
Miami will be the hottest real estate market in the US next year, according to a report from real estate consultants Knight Frank, with prices expected to increase 5%. Across the 25 top global luxury real estate markets, Florida’s Magic City came in second only to Dubai, where prices are set to increase a whopping 13.5% next year.
The metropolis has exploded as a luxury market in recent years—a trend only exacerbated during the pandemic, when buyers were drawn to more outdoor space and a business-friendly environment. A dizzying number of residential towers are going up in Brickell, Coconut Grove, Edgewater, Sunny Isles Beach, and other neighborhoods. The new 66-floor Aston Martin Residences in downtown Miami is the city’s tallest residential building, with a $59-million triplex penthouse on top. Five Park Miami Beach, a 48-story luxury condo designed by Arquitectonica, will be completed in 2024. The market has even attracted hotel groups like Waldorf Astoria, Ritz-Carlton, and the Standard, and outside luxury brands like Baccarat, Bentley, and Porsche.
More conversions to residential
Adaptive reuse will remain a real estate buzzword in 2023, as developers continue to struggle with limited inventory, construction shortages, and supply-chain issues. Earlier this month, a report commissioned by RentCafe found that the conversion of offices, warehouses, schools, and other non-residential properties into apartments has spiked 25% since before the pandemic.
According to Yardi Matrix, the data analysis firm that conducted the survey, adaptive reuse projects are actually outpacing new apartment construction, which only grew 10% in the same timeframe. “The residential market needs significantly more density in the areas of the largest cities, where the demand is greatest and where the tallest office buildings are located,” Doug Ressler, Yardi Matrix’s manager of business intelligence, said in a statement. “Existing building architecture is the critical starting point.”
Office-to-apartment conversions have recently hit a record high, with 11,090 apartments delivered in 2020 and 2021—a 43% uptick compared to the previous two-year timeframe. Additionally, the number of apartments converted from healthcare buildings more than tripled during the pandemic, and reuse of religious buildings increased 73%. (Hotel conversions also grew by 65.6%.) Nationwide, planned adaptive reuse projects are expected to generate 77,000 new apartments in the next few years. According to Ressler, larger office buildings in underutilized central business districts are better suited to conversion than smaller office complexes in the suburbs.
But Kuba Jewgieniew, CEO of Realty One Group, said the trend is crossing neighborhoods and price points. “In the next five to 10 years, we’re going to see a lot of conversions in cities with NFL franchises,” Jewgieniew says. “These cities have 10 to 12 malls sitting on 100 acres, and they’re just dying. We’re going to see a number of these malls turn into warehouses and fulfillment centers, and the office buildings across the street convert into condos or rentals—or even smaller hotels.”