Going High-Rent in Humble Hialeah

“Hialeah has been known as a location where Cubans can go and live and feel like they’re still in Cuba,” said Miami-based Matthew Rotolante, the South Florida president of brokerage firm Lee & Associates. “You’re going to hear predominantly Spanish, not English. You go to the grocery, it’s predominantly Spanish food brands and food types.”

In recent years, it’s become a magnet for multifamily developers in addition to the steady stream of migrants that have made Hialeah home. As Miami real estate values soared, and the circle of development widened, branching out from Wynwood to once-forgotten neighborhoods like Edgewater and Little River, it was only natural that developers would set their sights on Hialeah. 

But the neighborhood’s unique makeup sets it apart from other Miami suburbs. More than 90 percent of the population speaks Spanish as a first language, about 70 percent were born in a foreign country, and many of them work in the local industrial economy.

“There’s a lot of employers,” Rotolante said. “Hialeah has got a nice mixture of retail, residential and industrial real estate. Not too much office. Hialeah has become a very important industrial market.”

Hialeah has 30 million square feet of warehouses and manufacturing plants (and more on the way)  with a vacancy rate of 1.7 percent, the lowest of Miami-area submarkets, according to research from JLL. However, it also had the lowest asking rates, averaging $12.03 per square foot in the fourth quarter of 2022, compared to the countywide average of $15.11 in Miami-Dade.

“It’s definitely not a premier neighborhood,” Rotolante said of the industrial side of Hialeah. “It’s not as glossy or manicured as other markets. But it has a lot of utility for the people that are operating there. And it has a great employment base; you can get workers who live in and around there.”

The gritty local economy, in turn, has long supported rock-bottom vacancy rates at rental apartment buildings in Hialeah.

Last year, rental vacancy in the Hialeah area was 2.6 percent, the second-lowest vacancy rate among 13 submarkets of Miami-Dade County, according to a Cushman & Wakefield research report written by Calum Weaver, executive managing director of the brokerage’s Florida multifamily group.

“Historically, the vacancies have always been less than 3 percent,” said Weaver. “The vacancy rate right now in Hialeah is 1.8 percent, and that’s pretty much the lowest in Florida.” 

The biggest shopping center in Hialeah is a microcosm of the city. Westland Mall is a popular meeting place thick with multigenerational foot traffic that recovered quickly after a two-month shutdown during 2020 in the initial months of the COVID-19 outbreak. The following year, Starwood Capital Group sold the mall to Centennial, a Dallas-based national real estate investor that owns 33 retail centers.

“It’s one of the top-performing retail centers in our portfolio. It’s actually one of the top-performing malls in the country,” said Carl Tash, chief investment officer of Centennial, even though Westland Mall lacks a lineup of big-ticket retailers. “It does today over $750 a square foot in sales,” said Tash, who previously worked for Starwood and helped with its 2011 acquisition of Westland. “But you don’t have Tesla, you don’t have an Apple Store, you don’t have Louis Vuitton. You sort of bang that out with a lot of $10 and $25 items there.”

Westland Mall opened in 1971 with three anchor stores and 240,000 square feet of inline space on one level, and its layout hasn’t changed in over half a century. “The mall is really exactly the same as when it opened,” Tash said. “It has always had tremendous traffic. It has never been high-end. It’s more of a meat and potatoes mall for a hardworking community.” 

But when they’re done shopping at the 52-year-old mall, some local patrons increasingly drive home to modern new apartments in Hialeah. “For the first time that I’m aware of, developers are building amenitized apartments in Hialeah,” Tash said. “Units built prior to 2018 were really built as B product, with no swimming pools, no amenities.”

The average asking rent in Hialeah was $1,800 per month in 2022, up 10.4 percent from 2021, a rate of growth much faster than in most of Miami-Dade County, according to the Cushman & Wakefield report. But the trend line is much more drastic. In the last three years — since the pandemic began in March 2020 — average asking rents for a one-bedroom apartment in Hialeah are up more than 40 percent, according to data from Zumper. 

That’s exacerbated the lack of affordable housing in Hialeah, where household income is low compared to the rest of the Miami area. The median household income in Hialeah was $43,181 for the period between 2017 and 2021, while 18.6 percent of the city’s residents lived in poverty, according to Census Bureau data. In contrast, the median household income was $57,815 throughout Miami-Dade County, and 15.2 percent of the countywide population lived in poverty.

That’s not to say the new development isn’t necessarily unwelcome.

The city is leading efforts to encourage residential development. Hialeah’s local government has approved a zoning overlay in mass transit corridors on the city’s east side to allow for dense residential redevelopment of industrial areas. “What they did was take a large swath of warehouses and gave it the zoning overlay to become multistory residential,” Rotolante said. “We’ve been marketing a few industrial properties in those areas that may get rezoned to residential and redeveloped as apartments.”

Elsewhere in the city, the fresh supply of new apartments is coming from such developers as Prestige Companies, headquartered just north of Hialeah in Miami Lakes. In mid-March, Prestige had four rental developments with a total of 109 apartments under construction in Hialeah. All four are scheduled to open this summer. Weaver says monthly rents for Prestige’s one-bedroom units will average $1,800 to $1,850.

Prestige has listed its apartment developments with Cushman & Wakefield, which plans to market the properties after the city government issues certificates of occupancy. “I suspect that all the apartments are going to be preleased before they get their certificate of occupancy,” Weaver said.

Prestige also plans to build more than 300 apartments on part of the 200-acre Hialeah Park racetrack and casino. The rentals are planned as part of a development including a public charter school that Prestige would develop in a partnership with the Brunetti family, the owners of Hialeah Park, and Mater Academy, which will operate the school. The Hialeah City Commission voted in August 2021 to approve the mixed-use development.

One of the newest rental housing developments in Hialeah is Shoma Village, a two-building, 304-unit multifamily project where more than half of the apartments were preleased when the developer, Coral Gables-based Shoma Group, opened the amenity-rich, eight-story property last summer. Monthly rents at Shoma Village start at $2,100.

Another local multifamily development that opened last year is Pura Vida Hialeah. Coral Rock Development of Coral Gables developed Pura Vida as a mixed-use property with 260 apartments, first-floor retail space spanning about 10,400 square feet, and commercial outparcels allocated to a Wawa gas station and convenience store, a Taco Bell restaurant, a Youfit gym and a Dollar Tree store. Three of the 260 apartments were available, as of March 15, at monthly rents ranging from $2,300 for a one-bedroom to $3,345 for a three-bedroom, according to the ApartmentFinder.com website.

While newer apartment developments in Hialeah have much higher rents, the city is still cheaper than Miami, where rents average $2,200 a month, according to Weaver.

“It’s an extremely tight market; a lot of demand and, up until recently, almost no new supply,” he said. “There’s a lot of 50-year-old product, and if you wanted something newer, you had to move out of Hialeah. … But now, you’ve got newer product coming in, and it’s filling a massive void in the market. The rents on this new construction are a lot more affordable than in other parts of Miami.”

New apartments rarely replace old ones in Hialeah because landlords generally are reluctant to sell their properties, said Roberto Pesant, senior managing director, investment sales, of Berkadia in Miami. 

“Hialeah is typically pretty illiquid,” Pesant said. “The people who own there really value those properties and want to accumulate rather than dispose of assets.” He also said institutional multifamily owners in Hialeah raise rents more aggressively than private, individual owners whose priority is minimizing tenant turnover. “Some of the private owners find that to be a better business model for them,” he said. “Keep rents in place, keep tenants in place.”

Cushman & Wakefield’s Weaver said newer rental buildings with higher rents may be pushing some low-income tenants out of the market, but they also are giving professionals in Hialeah a reason to stay in the city rather than rent a modern apartment elsewhere. He says gentrification, or local population replacement, isn’t widespread in Hialeah because new apartments generally have replaced other types of property rather than replace older, more affordable apartments.

For example, the 28-acre Manor Hialeah, a 642-unit rental housing development by Miami-based Related Group and Aventura-based Fontainebleau Development, is being built on the site of a greyhound kennel. The project is in the final stages of construction. Manor Hialeah will have monthly rents ranging from $2,217 for a 543-square-foot studio to $4,600 for a 1,900-square-foot apartment with two bedrooms and two and a half bathrooms. The property’s grand opening is set for April 20.

Apartment developers in Hialeah face little competition from homebuilders. New construction of single-family homes is sparse, not only in Hialeah but throughout South Florida, Weaver said. “You could say that for all of Miami; I don’t think that’s unique to Hialeah.”

The median sale price of a single-family home in Hialeah is 17.3 percent higher than three years ago, or about $55,000 more expensive, according to market data gathered by Realtor.com. The median sale price was $372,500 in February 2023 compared to $317,500 in March 2020, the month COVID-19 began to lock down the U.S. economy.

Median asking prices for Hialeah homes rose almost three times faster, leaping 37.3 percent from $313,000 in March 2020 to $430,000 in February 2023, according to Realtor.com. The median ratio of sale price to asking price sagged to 86.6 percent in February.

The wide gap between asking prices and sale prices for single-family homes has started to narrow a bit, said Juan Carlos Fernandez, an agent of Keller Williams Realty Miami Lakes. “We are seeing some price adjustments, a lowering of list prices,” he said. “But we are still in a seller’s market.”

Higher home prices may lead some Hialeah residents to move to more affordable housing elsewhere, as the city gentrifies — if they can find it. Research by New York-based RealtyHop shows that the least affordable housing market in the nation in March was Miami and the fifth least affordable was Hialeah, where residents pay about 66 percent of their annual income, or nearly $2,300 a month, on homeownership.

Among other developers betting on the shiny appeal of newly built Hialeah apartments is Coral Gables-based MG Developer, which equates density with affordability.

Monthly rents planned at the 559-unit apartment building “will probably be in the low to mid-$2,000s on average,” says Catie Naranjo, chief investment officer of MG Developer.

MG Developer, which historically has focused on luxury condo development in Coral Gables, has launched its first project in Hialeah, Metro Parc, a 559-unit rental development with 19,000 square feet of ground-floor retail space. MG Developer leads a joint venture behind the development that includes Los Angeles-based Township Capital and New York-based Baron Property Group. Construction is scheduled to start in April.

Naranjo said the development site at 955 East 25th Street appealed to MG Developer because it’s near a transfer station for Metrorail and Tri-Rail mass transit service and is eligible for greater developmental density. Her firm spent about a year assembling the site, which included a vacant office building, surface parking and a couple of vacant lots.

Naranjo said dense residential development holds down per-unit costs that developers pay and, ultimately, the rents they charge in Hialeah. “In comparison to the rest of South Florida, it’s still one of the most affordable markets to live in,” she said. “Other municipalities in Miami-Dade have gotten more expensive, pushing people out of those markets who are looking for good-quality new product at a lower price.”

A lower price for whom? Building housing that’s more expensive than locals can pay, but affordable for newcomers priced out of the more popular neighborhoods might be considered the definition of gentrification. 

It’s a process that’s certainly underway, but it’s gradual and hasn’t quite transformed the unique city just yet, said Keller-Williams’ Fernandez

“In general, I think Hialeah is becoming gentrified slowly,” he said. “We’re far from it.”