When a young Sao Paulo couple with two growing girls needed help with their new vacation home in Sunny Isles Beach, they turned to Brazilian-born designers Luciana Fragali and Daniela Pimenta.

Although the bathrooms and kitchen — equipped with Miele appliances, European cabinetry and black granite counters — were finished, the rest of the four-bedroom, 6 1/2-bathroom penthouse at Jade Ocean was raw space.

The floor-to-ceiling glass walls facing the turquoise waters of the Atlantic Ocean to the east and the sunsets over Indian Creek on the west inspired a canvas of dazzling white spiced with splashes of a South Florida sunrise. And Jade Ocean itself, with its infinity pools, including one with a six-story drop that cascades down the front of the building, accentuated the apartment’s stunning water views.

When entering, the eye is drawn to a 22-foot stacked stone wall in tones of white and a bit of sparkle and flooring of four-foot-square white glass tiles that dance with the morning light.

The designers have warmed up the palette of white, black and shades of gray with splashes of eggplant, terracotta, red and sand. The owner picked up on the color scheme in the foyer with a curvy Fendi Canova console in eggplant lacquer that she selected herself.

“They wanted something modern but cozy, comfortable at the same time,’’ said Fragali, who teamed with Pimenta, who is originally from Sao Paulo, three years ago to form their Miami company, Contemporary Design Group.

The Sao Paulo couple like simple, clean lines and wanted a casual ambience that was also high style. In a nod to the beach, the designers favored organic motifs and layered in texture in the 5,740-square-foot unit, which includes four balconies.

The mingling of sleek contemporary with natural elements such as stone, reclaimed wood and an oversized cowhide rug add up to Brazilian style.

In the living room everything started with the bar. Brazilian clients often ask for a bar but not a high American-style one with stools. Here a glass-topped side table of rough reclaimed wood by Artefacto does bar duty. It sits in a niche of the stone wall framed by six-foot-long pendants (Solis by Pablo Designs) made from strips of fabric that filter the light and give a sense of weightlessness.

“You can see through the lights, so it doesn’t hide the beauty of the stone,” said Fragali.

The owners enjoy entertaining and often bring friends with them from Brazil. To accommodate large gatherings, the living room and dining area flow easily into the media room. It has been designed to seat 10 comfortably with an extra-large sofa, comfy maxi-armchairs by Jai Jalan, and a chenille ottoman with custom-designed ebony trays. The ottoman can be used as a coffee table or as extra seating sans trays.

The designers dropped the ceiling in both the media room and dining room to make the spaces feel more intimate.

The maid’s quarters, which has a complete bath, is on the first level and can double as a second guest room with pullout beds. A first-floor guest suite on the opposite side of the apartment is light and airy with gauzy curtains, white matte furniture and terra cotta accents that pick up the tones of the city roofs visible from the window.

To accommodate large gatherings, the designers had an insert fabricated for the marble-topped dining table, expanding seating to 10. A white, eight-foot-long sculpture — designed by Pimenta to evoke the waves of the sea — pops against an eggplant accent wall. White leather Duna chairs complete the dining room.

A quartz-and-Thassos marble staircase leads to the second story, which houses the two girls’ bedrooms with their accents of hot pink, and the master suite and a master bathroom centered on a tub that commands expansive ocean views. A white leather Crown chair and ottoman by Paul Volther are angled toward the sea and complete the spa feel.

To take full advantage of the light and the views, the master bedroom has a row of windows that overlooks the two-story living room. Remote-control shades come down for privacy and to keep the sleeping quarters dark.

The soothing oasis of the master suite, which also includes a second bathroom, features a sleek fabric-upholstered bed designed by Stefano Gallizioli, custom-made white matte furnishings, a large abstract canvas by Tata D’Avila —one of several commissioned for the home — gauzy white curtains and a chaise positioned by a wall of windows.

The Brazilian couple bought the home as a sunny retreat from their busy lives in Sao Paulo, but Fragali said it is also an investment for them. A similar apartment with an ocean view in Brazil, she said, would cost three times as much.

They aren’t alone. There’s been a stampede of Brazilian buyers for South Florida properties — from luxury downtown Miami condos to beachfront real estate. During the first nine months of 2011 — the latest figures available — 1.1 million Brazilians visited Florida, a 41 percent increase over 2010 figures for the first three quarters. They spent $1.6 billion. That propelled Brazil ahead of the United Kingdom, previously Florida’s top international market.

By far, Miami-Dade Country is the top beneficiary of the Brazilians’ free-spending ways.

Fueled by international buyers’ taste for South Florida real estate, Contemporary Design Group’s business is growing.

But Fragali said the firm wants to keep its personal touch: “I don’t want to grow to the extent that I don’t know who my clients are anymore.’’

International buyers spurred Miami-area home sales to a new record in 2011, even exceeding sales volume during the height of the real estate boom in 2005, according to figures released Friday.

Broward County results were mixed, although inventory across both counties showed widespread depletions.

A total of 24,929 condominiums and homes were sold in Miami-Dade County, up 46 percent from 2010 and up 4 percent compared to 2005, according to the Miami Association of Realtors and the Southeast Florida Multiple Listing Service. Condominiums sales surged 54 percent, to 15,009 in 2011, and home sales rose 36 percent to 9,920.

“We’re on the verge of a real estate boom,” said Miami Association of Realtors Residential President Patricia Delinois, citing an array of properties from the Design District and Brickell to Miami Beach.

International investors, with wads of cash, are behind the surge.

“Miami is a top market for international buyers,” Delinois said. “We are attracting people from Latin America, South America, Europe, all over the world. What could they not like in Miami?”

In December, sales of existing single-family homes in the Miami area jumped 16 percent, compared to December 2010. Sales of condominiums rose 22 percent. Those percentage increases beat the change in sales statewide, which dropped 2 percent for both condominiums and single-family homes.

Nationally, sales of existing single-family homes, townhomes, condominiums, and co-ops rose 3.6 percent from December 2010, according to the National Association of Realtors.

Overall, the inventory of residential listings in Miami-Dade dropped 39 percent from 24,278 to 14,087 over the last year, and 8 percent from November 2011 alone, figures show.

Bank-owned properties and short sales, comprising “distressed sales,” drove the rapid absorption, Realtors said. In December, 54 percent of all closed residential sales in Miami-Dade were distressed, compared to 59 percent in December 2010. Unlike a year ago, there are now more short sales closing than bank-owned properties, Realtors said.

“There is a waiting list of investors, with dual and triple offers on REO properties,” said Delinois, who is president and CEO of Century 21 Premier Elite Realty. “We have more of a demand for bank-owned properties than we have a supply.”

Cash sales continue to dominate in Miami-Dade, at 63 percent of total closed sales in December. Cash sales accounted for 42 percent of single-family and 77 percent of condominium closings. Nearly 90 percent of international buyers in Florida purchase properties all cash, Realtors said, compared to 29 percent nationally, reflecting the stronger presence of international buyers in the Miami real estate market.

In the Miami area, the median sales price of condominiums in December spiked 31 percent to $129,900 from a year earlier. The median price of single-family homes jumped 16 percent to $182,300. Statewide median prices in December increased 4 percent to $91,900 for condominiums and 1 percent to $134,300 for single-family homes. The national median existing-home price for all housing types was $164,500 in December, a 2.5 percent drop from December 2010.

In Broward, single-family home sales increased 9 percent in December to 1,082, and condominium sales dropped 8 percent, compared to December 2010.

For the year, total single-family home sales in Broward fell 9 percent to 12,817 in 2011. Condominium sales rose 11 percent, to 16,714 in 2011.

Overall inventory in Broward dropped 35 percent for the year, to 12,997, the figures show.

In December, 46 percent of all closed residential sales in Broward were distressed, and there were more short sales than bank-owned properties.

Cash sales accounted for 38 percent of single-family and 81 percent of condominium closings in Broward.

In December, the median price of single-family homes in the Fort Lauderdale area was $189,600, up 7 percent compared to December 2010. The median price for condominiums dropped 3 percent to $78,200.

South Florida’s residential market, once barren and now booming, was buoyed by an influx of foreigners, led by Latin Americans. But a new player could be emerging from the Far East: China.

Largely quiet for much of the real estate rebound in Florida, Chinese buyers are beginning to consider residential investments in the area.

“It’s the first wave [of Chinese buyers],” said Ophir Sternberg, managing partner at Lionheart Capital, which owns the Ritz-Carlton Residences Palm Beach. “We think a lot of this is due to the recent downturn in the real estate market in China in the last couple of quarters. People that made a lot of money in China are now looking overseas to invest their money, and buy some prime real estate.”

Premier Sales Group co-owner Carolyn Block-Ellert, who is leading sales at the property, said the Ritz-Carlton had already completed several deals with buyers from China, and had begun developing a relationship with a master broker in Shanghai who is helping the project with marketing in that country.

“We’ve worked with our contacts to actually participate in events in Beijing, and we’re promoting and educating qualified potential prospects, leaders, and promoters [in China],” she said, noting that Ritz-Carlton was already a well-established brand in the country.

But the new Chinese buyer isn’t coming just for a place in which to invest her money. Many Chinese real estate buyers are also interested in obtaining the coveted EB5 Visa, which can entitle them to residency in the U.S.

Coral Gables-based Coldwell Banker Realtor Jeanne Nicastri said she had heard from a number of developers who had gone to China and Singapore looking to attract investments of $500,000 in their projects — the threshold for obtaining an EB5.

“I would say the main reason they’re interested in coming to the U.S. is for the visa, and a secondary interest is to choose a city that’s really interesting — with New York at the top of the list, and Florida next on the list.”

Nicastri said she had been working with Margaret Liu, a broker in New York City, one of the main entry points for Chinese buyers to the U.S., to facilitate deals in Florida.

Liu, owner of Battery Park Realty in New York, said another factor driving the trend was a recent policy change in China that limited the number of real estate units that can be purchased — most notably Beijing.

“A lot of the people who are coming are wealthy people cannot keep buying,” Liu said. “Another point is that everybody made their money [in China] and wants to put it in a safe transfer, or for their kids, who are coming over to study.”

Just how much Chinese investment eventually comes to South Florida is unclear

Generally, Nicastri said, Chinese buyers like to purchase where there is already an entrenched Chinese community, with Chinese people and Chinese restaurants — something which South Florida lacks right now.

But they’re also influenced by their friends, she said, and the more Chinese buyers that decide to make the move, the more that could join them.

“Although we’re a long way from China, we have become very trendy, and we’re on the trendy map,” Nicastri said. “Since they’re already involved in New York, and Miami is an offshoot of New York, that’s what’s driving them to come here.”

One X-factor is the Genting casino resort project in downtown Miami.

“If the Genting project breaks ground, and especially if the gaming gets approved, I think that will create a real rush of Chinese buyers into South Florida,” Sternberg said. “But right now what we’re seeing is the first trickle.”.

As difficult as it may seem to fathom, given the current macroeconomic data plaguing South Florida, indications are growing that the luxury condo resale market in Miami-Dade County is back — at least for the time being.

Foreign buyers with strong currencies complemented by a scattering of wealthy domestic purchasers acquired more $1 million condos in 2011 than in the last year of the South Florida real estate boom in 2006, according to an analysis of data from the Southeast Florida Shared Multiple Listing Service Database.

Buyers purchased nearly 590 condos for at least $1 million each in 2011 after acquiring less than 500 high-priced units in 2006.

On a year-over-year basis, the 2011 luxury condo resale activity represents a 29 percent increase from 2010 when fewer than 460 units were purchased for at least $1 million each in Miami-Dade.

Weeks into 2012, an additional 100 luxury units are already under contract waiting to transact.

Topping the list for the most expensive condo resale in the year 2011 is a penthouse in the Setai Resort & Residences in Miami Beach that sold for $21.5 million.

A pair of units in towers on South Pointe Drive in Miami Beach’s South of Fifth neighborhood rounded out the top three rankings for the highest priced resales for 2011.

In separate transactions, buyers paid $11.5 million for a penthouse in the Apogee condominium and $10.6 million for a high-floor unit in the Continuum On South Beach, respectively.

The resurgence in the luxury resale market has inspired an increasing number of owners – who had previously been unwilling to accept lower prices during the last five years of the real estate crash – to put nearly 1,000 condos on the resale market with an asking price of at least $1 million each.

Nearly 20 ultra-luxury condominium units are on the resale market for at least $10 million each with one unit asking as much as $38 million in the wealthy enclave of Bal Harbour.

Developers are also taking notice of the resurgence in the luxury condo market.

At least five new luxury condo towers – ranging from the one-unit-per-floor Regalia to the drive-the-car-to-the-unit Porsche Design Tower in Sunny Isles Beach – are planned or under construction in Miami-Dade County where the proposed sales prices are expected to surpass $1 million each.

The luxury condo revival in Miami-Dade County is not occurring at the same pace in Broward County where foreign buyers play a somewhat more limited role in transactions.

Buyers purchased less than 70 luxury condo resales in Broward County in 2011 compared to 100 high-priced units at the top of the market in 2006.

On a year-over-year basis, 2011 luxury condo resales in Broward County are up 11 percent from 2010 when 61 condos traded at a price of at least $1 million each.

Going forward, it is unclear if the Miami-Dade luxury condo market can maintain the resale pace given the current economic challenges in the European Union with the erosion of the Euro currency, the adoption of unpopular austerity measures and a series of downgrades by at least one influential rating agency.

Western European buyers from counties such as France, Germany, and Italy represent 19 percent of the estimated $318 million in monthly sales in the Miami-Fort Lauderdale-Miami Beach market attributed to foreign investors, according to an August 2011 report by the National Association of Realtors.

After buyers from Venezuela, the Western European buyers are the second largest concentration of $1 million buyers of any international group purchasing in Florida, according to the report.

An estimated 12 percent of Venezuelan buyers spend at least $1 million while six percent of Western Europeans are purchasing in that high-priced category.

By comparison, an estimated two percent of buyers from Brazil spend $1 million and one percent of buyers from Canada are in the high-end price range, according to the study.

Another issue facing the Miami-Dade County luxury condo market is the growing number of units available for purchase on the resale market aside from the unsold developer units remaining from the last real estate boom.

Even at the strong 2011 resale pace of an average of nearly 50 units per month, Miami-Dade County has about 20 months worth of high-priced condos currently available for purchase.

Many industry watchers consider a healthy market to have about a six-month supply of inventory.

Reinvigorated sellers with optimistic pricing expectations are another issue facing the luxury condo market.

Sellers of luxury condos are currently seeking a median price of more than $1.75 million in 2012 compared to median transaction prices of $1.6 million in 2011, $1.5 million in 2010, and $1.51 million in 2006.

Given the emerging economic and psychology issues combined with continuing challenges associated with obtaining financing, it is unknown if the Miami-Dade County luxury condo market can maintain the 2011 sales momentum into the latter half of the year once the winter tourism season ends in the second quarter.

Forget Orlando. Miami could soon give tourists to the Sunshine State a run for their money once the new location of the Miami Science Center (MiaSci) opens. In the works for quite awhile now, the museum is slated for construction in late February. MiaSci will be centered around an indoor and outdoor “living core” of terrestrial and aquatic spaces, featuring a 600,000-gallon aquarium, a full dome 3-D planetarium and hands-on exhibits.

Fittingly the building, which will feature the latest in cutting edge sustainable practices, will itself be built to meet the U.S. Green Building Council‘s Leadership in Energy and Environmental Design (LEED) standards for energy use, waste management and environmental impact.  The U.S. Department of Energy has funded a number of studies to help make the building more energy-efficient and a weather station will be installed on site to provide information about amounts of sunlight, wind and rain available.

image via Miami Science Center

The Museum will include an Energy Center to monitor the green building’s performance, including everything from water consumption to the amount of renewable energy being produced on site. And of course, those monitoring systems will be incorporated in interactive displays for visitors to view.

The $275 million dollar project is being paid for by a mix of private donations and public funding. The John S. and James L. Knight Foundation just committed a challenge grant of $10 million to the Museum. The grant must be matched with an additional $20 million in funding. The donation is a way to encourage additional community support.

image via Miami Science Center

“Our gift to the science museum, equal in size to an earlier gift to the art museum that will stand by its side, is a recognition of the importance of science education and of the museum’s leadership,” Alberto Ibargüen, president and CEO of Knight Foundation, said in a statement. “Knight’s challenge grant is intended to galvanize support and accelerate the exciting community transformation at Museum Park.”

The new grant means fundraising for the project is in the home stretch, given that $70 million in private funding has been raised out of the $100 million goal. The remaining costs are being paid for government sources and by Miami-Dade County’s Building Better Communities Bond Program. The project was overwhelmingly approved by local voters in 2004.

Grimshaw Architects will be designing the 250,000-square-foot complex that is meant to be a shining example of ecological and sustainability principles, harnessing energy from water, sun, wind and museum visitor energy to power exhibits and conserve resources. The estimated completion date is early 2015.

South Florida saw continued strength in the residential market in 2011, enough so that a host of developers are planning new condominium and multi-family projects -- something that would have been unthinkable a few years ago. As inventory falls, and prices begin to tick up, The Real Deal talked to some of Miami's real estate experts about what to expect in 2012. Here is what they had to say:

Philippe Lieberman, a partner at Miami law firm Kluger Kaplan Silverman Katzen & Levine

 A change in mood is palpable in the Miami real estate market. We are finding that our large real estate clients are turning guardedly optimistic about the direction in which the market is headed and are once again planning large construction projects of residential homes throughout South Florida. Developers are eager to build again.

Alyce Robertson, executive director of the Miami Downtown Development Authority

Downtown Miami's condo real estate market is bouncing back more rapidly than expected. This turnaround is thanks in large part to foreign buyers who see the value of owning property in our urban core and young renters who have fueled strong demand for downtown living. We expect that this trend will continue in 2012, further positioning downtown as a vibrant, 24-7 center.

Franck Dossa, principal broker at Condhotel

The banks will not start lending. I think they'll start lending in 2013 or 2014, but not significantly. In 2012, prices will go up, especially in the prime areas like Brickell, Midtown and Miami Beach. The suburbs will continue to suffer, but the foreclosures will not have any effect in the prime areas. International buyers will continue to come to Miami, but less than this year -- but we're going to have more traffic.

Daniel De La Vega, a broker at One Sotheby's International Realty

I think prices are going to stay the same, but I think there's going to be a lot more activity. We had a great second and third quarter of 2011, and I expect that continue the momentum through the season and into the second quarter of 2012.

Peter Zalewski, founder of Condo Vultures

It looks like all the overhang of new condo product from the boom and ultimately the bust should probably be taken down by this time next year. In 2012, you'll start to see a thawing of financing for existing owners, i.e. the refis, and I think you probably start to see a little bit of loosening up on the individual buyer. There's just too much action to think that it's going to slow down from a financing perspective. We're not back to where we were in 2006, but it will be a noticeable difference from 2008 to 2009. But we've still got quite a way to go.

Diane Lieberman, founder and broker at SBI Realty

If we're talking about the Miami/Miami Beach area, I think that prices are going to start to go back up again. That's because inventory has dropped so significantly. What's happening is that at the really good properties, prices are all tightening up. And anybody that's been sitting around on the sidelines and thinking they're going to get a steal -- there's not going to be anything left.

Alicia Cervera Lamadrid, chairman of Cervera Real Estate

I think we're going to continue to see increased activity. I'm expecting that banks will finally start coming into the real estate game, and we've already seen them tiptoe in and slowly get more sensitive in their loans to value. I think that's starting to change, and it will open more of the domestic market, which has been slow entering to the Miami market.

Philip Spiegelman, co-principal at Related ISG

What we see for 2012 is the substantial completion of the sale of the standing inventory that was built during the boom. So we believe that the majority, or a substantial majority, of that inventory will have been absorbed by the end of 2012. We see more development coming in 2012, and we see that adjustment or shift as it starts to create more offers. Latin America will continue to play a significant role, but we believe we will start to see real activity out of New York, the Northeast and Canada. I think it's a watershed moment in the economy of South Florida and the industry of real estate construction.

Foreign ownership in American real estate sits at about eight per cent - but that percentage is worth $82 billion US, says the National Association of Realtors.

Homes in many parts of the United States are now worth what they were nearly 10 years ago in 2002, says a report from the association - and it's this decline that is attracting foreigners, mostly Canadians, to snap up a seasonal home at dirt-cheap prices.

From a seller standpoint, the market is "pretty bleak," says Tom Burk, an associate broker with Sotheby's Realty International who has a long career of selling real estate on both sides of the 49th parallel. "Given all the bad economic news in Europe and the near political paralysis in the U.S., markets there are struggling to show any kind of consumer confidence."

In cities where investor interest is high "like Phoenix, Palm Springs or Las Vegas, there is optimism - but in most cities, it's pretty bleak," says Burk.

A survey by U.S.-based Credit Sesame of where foreigners are buying, what they are purchasing and how much they are paying shows that the largest group comes from Canada, with Asians and Europeans second and third.

Arizona is the fourth most popular destination for these buyers, trailing Florida, Texas and California.

The largest percentage are buying detached single-family homes for use as a primary residence - and they are paying less than $100,000 each.

Recent reports have claimed that Canadians are the top-ranked outof-state buyers of homes in Arizona, which is still under siege by the flagging economy.

The average Arizona home now sells for about half of what it would have five years ago, says the Federal Housing Finance Agency in the U.S.

The price dropped another 4.6 per cent from the first to second quarter of this year - driving the decline to nearly 15 per cent compared to the same period last year.

The housing market likely won't turn around until the fundamentals improve, said Marshall Vest, an economist at the Eller College of Management at the University of Arizona in an interview with the Arizona Republic.

But that won't start until the excess of available homes is absorbed, he said.

"We have enough vacant houses in Arizona to accommodate an entire decade worth of population growth - and that's if the population were growing," said Vest.

The recession has changed the way people look at real estate, says Burk.

"It has affected people's ideas about timing, but it has not affected the basic belief that buying a home and raising a family in that home is fundamental to American values, in many cases," he says.

Burk's views are shared by Frank Anton, CEO of the national research firm of Hanley Wood in the U.S.

"We thought people would be soured after watching home values fall, but instead we found the typical American still places high value on home ownership," says Anton. "We found this holds across all demographic groups and across the country, even in hard-hit places like Arizona and Nevada."

Credit Suisse Group surveys real estate professionals in several cities in the United States on a monthly basis.

The global financial services company uses 50 as the benchmark for each of nine questions. Above 50 indicates a positive trend, while below 50 means a negative one.

For Phoenix, the report says home prices held steady for October (50 points versus 40 in September), listings remained high (76 points), and buyer traffic inched up to 40 points.

Down the road in Tucson, buyer traffic jumped to 43 points from 27, while prices totalled 43 points (an improvement from 27).

"The economy is poor and unemployment is too high. Nobody wants to buy in this type of environment," says one realtor.

Las Vegas is also being hit hard by the continuing economic chaos.

"Traffic remains steady on interest from deal-seeking buyers," says the Credit Suisse report.

But prices remained under pressure with an index of 44, down from a previous 48, while listings were high at an index of 59.

"Low prices and interest rates continue to spur inquiries and activity," says a Vegas realtor in the survey. "Cash buyers are really driving sales."

In San Diego, buyer traffic remained very weak with an index of 15, while house prices sat at 25.

"The constant negative news is affecting buyers' confidence and there is a lot of uncertainty about a potential double-dip (a return of inflation)," says a realtor.

Meanwhile, traffic levels in the San Antonio, Texas, market left a lot to be desired - falling to an index of 14 - while the price index sat at 36.

"Many sellers would like to take advantage of the low interest rates, but we need the buyers to feel confident to keep the ball rolling," says one real estate professional.

In Miami, Fla., things were looking up, with traffic improving to an index of 39 while priced edged up to 48.

"Cash buyers, both domestic and foreign, are controlling the market," says a realtor in the Miami area.

Meanwhile, Portland, Ore., which sees buyers from B.C., has seen a strong jump in traffic - almost doubling to an index rating of 25, while prices held steady at 19 points.

Traffic is on the increase, says Debbie Tebbs, broker/ owner of Cascade Sotheby's International Realty.

"They are doing so because they believe we are at the bottom," she says.

"There has been a price correction of up to 60 per cent in some areas."

Miami Beach hotels have a good thing going compared to Las Vegas.

An analysis conducted for the city of Miami Beach by Strategic Advisory Group shows Miami Beach’s top hotels ring up dramatically higher rates – often twice as much – as similar properties in Las Vegas.

The figures underscore concerns by hoteliers in Miami Beach and elsewhere in Miami-Dade County, who fear that the arrival of two proposed destination resort casinos could drive down room rates. That worry is driven in large part by the size of Genting’s Resorts World Miami, the $3.8 million project with plans for 5,200 rooms on The Miami Herald site.

That amounts to a 25 percent increase in Miami-Dade’s current upscale hotel market, which includes 20,313 luxury and deluxe hotel rooms. The largest hotel now in this category is the Fontainebleau Miami Beach, with 1,504 rooms.Based on past history, it would take 19 years for the county to absorb an additional 5,000 rooms , Strategic Advisory Group found.

“If you put 5,000 hotel rooms in Downtown they will suck out everything surrounding them,” said Stuart Blumberg, the retired head of the Greater Miami and the Beaches Hotel Association. “It will take 19 years for the current hotels to break even. They’re going to destroy the market inventory.”

Max Sklar, director of tourism and cultural development for Miami Beach, referred calls for comment on the analysis to the Miami Beach City Manager Jorge Gonzalez, who did not respond to multiple messages. Strategic Advisory Group declined to comment on the report. A spokesman for the Greater Miami Convention and Visitors Bureau said it had had not received any information from the city.

If Miami-Dade County were to see two projects of this magnitude come online simultaneously that would be the equivalent of 34 years of historical supply growth. In the short term, that could mean a supply of room nights about twice the level of demand, based on the analysis, which used rate information from Smith Travel Research.

Some of Strategic Advisory Group’s findings:

•  Miami Beach hotels in 2010 rang up an average daily room rate of $189 with an occupancy rate of 68 percent. That number jumps to $243 if you only include the city’s six convention hotel: Fontainebleau, Loews Miami Beach, Renaissance Eden Roc, Royal Palm Hotel, Shore Club Hotel and The Palms Hotel & Spa.

By contrast, the hotels on the Las Vegas Strip in 2010 posted an average daily room rate of $112 with an occupancy rate of 89 percent. That number drops to $48 for the hotels in Downtown Las Vegas.

•  Surveys of published hotel room rates for January through June 2012 found that the Wynn was the only Las Vegas hotel of the six surveyed that had an average rate comparable to those of nine hotels surveyed on Miami Beach. The survey looked at the Hilton, Luxor, MGM, Caesars, Venetian and Wynn in Las Vegas. The Miami Beach survey looked at the Palms, National, Marriott, Eden Roc, Loews, Fontainebleau, Ritz, Delano and W.

•  Miami Beach’s average published room rate during January through June was $448 on Tuesday and Wednesday nights – nearly double the average that Las Vegas Hotels ring up on Fridays and Saturdays.

•  Miami Beach published rates on Friday and Saturday nights for January through June 2012 range from an average of $367 at the Palms to $747 at the W Hotel, with an average of $506. By comparison, Las Vegas published rates for the same months range from $119 at the Hilton to $476 at the Wynn., with an average of $239. If the Wynn is taken out of the average it drops to $192.

•  Miami Beach published rates on Tuesday and Wednesday nights for the same period, range from an average of $280 at the Palms to $661 at the W Hotel, with an average of $448. By comparison, Las Vegas published rates range from $74 at the Luxor to $353 at the Wynn, with an average of $206.

But Blumberg questions the point of the analysis. He thinks the data simply reveals what has always been obvious.

“Las Vegas is not a comparable market to Miami Beach and it never was,” Blumberg said. “We’re always going to come out with a higher rate. You want to compare us to New York, New Orleans or Atlanta.”

In South Florida’s turbulent real estate market, 2011 was a year marked by competing and contradictory trends.

A November sales report released Wednesday by the Miami Association of Realtors highlights a few of the head-scratching trends of the past year, with rising sales volumes, depressed prices, cash-buyers and unprecedented international demand for distressed properties.

Consider:

•  International buyers flocked to South Florida in 2011, spending more than $3.5 billion in cash on discounted real estate, while thousands of locals struggled with underwater homes, a nation-leading foreclosure backlog and a tight credit market.

•  Soaring sales and shrinking inventory—two trends that normally lead to price appreciation—were accompanied by low, stagnant prices as the market anticipated a second wave of foreclosures.

•  More former homeowners became renters, but that actually helped the home sales sector (which normally competes with the rental market for demand). That’s because investors bought up thousands of distressed homes, renovated them and flipped them into rental properties.

•  The supply of homes for sale decreased by 40 percent to about 28,000, but the so-called “shadow inventory” of foreclosure homes not yet for sale ballooned to more than 200,000, thanks to a temporary slowdown in foreclosures.

In pure numbers, South Florida existing home sales in November increased at a slower pace than earlier in the year, but median prices began to show signs of improvement.

There were 1,064 condo sales in Miami-Dade County in November, up about 2 percent from the same month last year and down from 1,202 in October, according to Wednesday’s report. Single family sales rose 11 percent year-over-year to 755, little changed from October’s total.

In Broward, condo sales fell 1 percent year-over-year to 1,089, and that total was down slightly from 1,150 sales in October. There were 961 single-family sales in November, up 22 percent from last year but down 3 percent from the previous month.

South Florida’s sales pace is cooling just as the sluggish national housing market is starting to pick up steam. National home sales increased 4 percent between October and November to an annual pace of 4.4 million, up 12.2 percent for the year.

So what’s on the horizon for South Florida in 2012? Well, the forecasts are as conflicting as the year past.

“I don’t think any real rebound is going to happen until at least 2013,” said Jack McCabe, CEO of Deerfield Beach-based McCabe Research & Consulting. “Right now we have 371,000 open foreclosure files in Florida, and you have 800,000 mortgages that are 60 days late or in default. I don’t see the market rebounding for at least two years.”

Terri Bersarch, Broward County board president of the Miami Association of Realtors, sees it differently.

“Condominium prices in Broward County have risen consistently since January of this year, a very important sign of market strengthening,” she said in a statement. “Strong demand resulting in limited supply should yield continued market strengthening in 2012.”

Only 2012 will tell who’s right. Meanwhile, here’s a look at some of the main trends from 2011, along with forecasts for the 2012 housing market.

•  International buyers fuel record sales year

South Florida home sales will likely set a new sales record in 2011, mostly because buyers from Latin America have spent record amounts of cash investing in local real estate. In November, about 60 percent of South Florida home sales were all cash, and most of those involved international buyers.

Buyers from outside Miami are the main reason Miami Beach-based One Sotheby’s International Realty grew its business by 250 percent this year, topping $1 billion in sales, said company president Beth Butler.

“We’ve done a lot this year to expand and engage international markets, specifically Brazil, Argentina and Peru,” she said.

In overbuilt areas like downtown Miami, international buyers have helped populate formerly empty condo towers created before the housing bust.

Out of 23,000 condos built downtown during the boom, only about 2,000 remain unsold, and international buyers account for more than 80 percent of new condo sales.

Led by Brazilians and Canadians, international buyers spent more than $3.8 billion—90 percent of it in cash—on South Florida real estate in the last year.

2012 Forecast: The international buying spree is expected to continue next year. With European markets still turbulent and the Latin American economies thriving, South Florida is well-positioned to benefit from two trends that could lead to more capital investment in the United States. Anticipating continued demand from Latin America and Europe, several developers have launched plans to build more than 20 new condo towers for South Florida.

South Florida-based buyers have been effectively shut out of the market, due to high unemployment and the sheer number of distressed homeowners who owe more on their mortgages than the properties are worth — a condition likely to continue.

•  Prices stay low

Despite a supply of homes for sale that has fallen significantly over the past year, home values remain depressed. The reason: Most of the homes being sold are distressed properties that usually sell at discounts of at least 20 percent compared to non-distressed homes. In November, more than half of all sales involved foreclosures and short sales. In a normal market, distressed homes make up less than 5 percent of sales.

In recent months, however, home prices have begun to show signs of stability. Condo prices have increased for four straight months and single-family home prices are close to where they were a year ago.

2012 Forecast: Overall prices could either continue to strengthen or fall again in 2012, depending on what happens with tens of thousands of currently stalled foreclosures. If banks ramp up their slowed foreclosure machines, as expected, a deluge of discounted properties could drag down prices further in the coming year. On the other hand, if inventory continues to shrink, prices could finally begin to stage a sustained rebound.

“You can look at the falling inventory and see that, especially in some of the far eastern waterfront areas, prices are starting to increase because there’s nothing left to buy,” said Butler.

•  Foreclosure slowdown

In 2011, tens of thousands of South Florida homeowners got a temporary reprieve from foreclosure because of paperwork problems that stalled the court repossession process.

Mortgage lenders, accused of “robo-signing” court foreclosure documents, slowed their repossession machines this year, leaving thousands of cases in limbo. There are more than 100,000 foreclosure cases currently pending in court, and some of them have been in litigation for several years. Those homes are part of the region’s large “shadow inventory,” which industry watchers describe as the true supply of homes once foreclosures and bank-owned properties are included. The sheer size of that shadow inventory, estimated to be as high as 200,000 in South Florida, has kept prices relatively low this year.

2012 Forecast: There’s ample evidence that the year-long foreclosure holiday will come to an end in 2012, as banks look to take back more delinquent homes. Foreclosure filings rose 52 percent in South Florida in October, with bank repossessions nearly doubling from the month before, according to real estate research firm RealtyTrac. As more bank-owned properties make their way onto the market next year, prices could be forced downward, said McCabe.

•  Rental market strengthens, fuels sales

With mortgage rates at record lows and home prices down some 55 percent from 2006, owning a home is probably the most affordable it’s been in recent memory.

But the traditional candidates for homeownership —young couples and growing families — are opting to rent in growing numbers. South Florida’s rental market has seen occupancy increase to more than 95 percent this year, and prices are up between 3 and 7 percent, according to Texas-based MPF Research.

Ironically, the surging rental market is helping boost activity on the sales side.

Raul de Varona, chief operating officer of Miami-based real estate firm The Solution Group, is part of a new crop of investors buying cheap homes at a fast clip with the aim of converting them into rentals.

“We’ve acquired at least 40 percent more inventory than we did last year and our portfolio has really increased, twofold if not threefold,” said de Varona, who often fixes up the homes and sells them to international investors as rental properties. “There is significant interest in U.S. income-producing real estate.”

Mortgage rates in the U.S. again touched record lows over the past week, according to Freddie Mac’s weekly survey of mortgage rates.

“Rates on 30-year fixed mortgages have been at or below 4% for the last eight weeks and now are almost 0.9 percentage point below where they were at the beginning of the year, which means that today’s home buyers are paying over $1,200 less per year on a $200,000 loan,” Freddie Mac Chief Economist Frank Nothaft said.

The 30-year fixed-rate mortgage averaged a new record low at 3.91% for the week ended Thursday, down from 3.94% the previous week and 4.81% a year ago. Rates on 15-year fixed-rate mortgages matched the prior week’s record low at 3.21%. A year ago, the 15-year fixed-rate mortgage rate averaged 4.15%.

Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARM, averaged 2.85%, down from 2.86% last week and 3.75% a year ago. One-year Treasury-indexed ARM rates averaged 2.77%, down from 2.81% in the prior week and 3.4% last year.

To obtain the rates, 30-year and 15-year fixed-rate mortgages required an 0.7-point and 0.8-point payment, respectively. Five-year and one-year adjustable rate mortgages required an average 0.6-point payment. A point is 1% of the mortgage amount, charged as prepaid interest.

The low rates could be helping to boost sales of existing homes, although falling prices are also pulling in buyers. Home sales in November hit the second-highest level of the year, rising 4% from October.

Martin Z. Margulies made his fortune building a series of high-end properties that dot the South Florida coastline. He’s spent much of that wealth collecting and subsidizing contemporary art, both here and around the world.

For the last half-decade, it’s been much more of the latter than the former.

Good news for his accountant: Business, at least for the next 18 months, is back.

Bucking local and national trends, Margulies broke ground last weekend on the boutique Bellini Williams Island, a 70-unit tower of three-bedroom condos listed between $1 million and $4 million.

The 24-story complex, which is billed as the final property to be built in Aventura’s exclusive Williams Island community, is set to open in summer 2013.

“There’s demand,” said Margulies, 73, when asked why he decided to begin construction. “There are a lot of South Americans that are very much enamored with South Florida. They love Miami, and that’s where we think the market lies.”

Margulies declined to stipulate how many units have been sold, but he did say enough inventory has been moved to lay the foundation on his first new project in some five years.

Before this month, his most recent completed property was the Bellini Bal Harbour in 2006, which he completed before the construction crash. Since then, he has opened a renovated 45,000-square-foot gallery in Wynwood, made a $5 million gift to New York’s Metropolitan Museum of Art and been a fixture at Art Basel.

Yet while art is his passion, real estate is the moneymaker. He is perhaps best known for developing Coconut Grove’s Grove Isle, which he once filled with his own sculpture collection. Margulies bought the Williams Island land in 2007. But the recession kept him on the sidelines until the most severe economic headwinds subsided.

He’s among a handful of brave developers who have determined now’s the time to take the plunge.

Bellini is among at least a half-dozen new condo projects expected to break ground in Miami-Dade in the coming years, a list that includes the $170 million Brickell House high-rise, set for a springtime start.

Select homebuilders have gotten into the act, as well. Construction on a neighborhood of multi-million-dollar villas at Sunny Isles Beach’s Acqualina Resort will begin sometime next year. The development’s crown jewel: the Palazzo di Oro, a 16,000-foot penthouse residence listed at $40 million.

And the mini building boom isn’t limited to east of the Intracoastal Waterway. In Doral, plans are in the works for a 2012 groundbreaking on the Vintage Estates, a 110-home gated community equipped with a lake, jogging path and clubhouse.

Still, neither project is as far along as Margulies’ marina property. On Wednesday, the tower’s first beams stretched toward the skies, allowing the septuagenarian homebuilder to take an early victory lap.

“If I don’t get a luxury property, I don’t do anything,” Margulies said. “In Williams Island, we’re selling a lifestyle.”

With the help of One Sotheby’s Realty, Bellini is selling that lifestyle to a decidedly international clientele – which might be his only move. The dollar is weak, Miami-Dade’s unemployment rate remains in double digits and young, educated professionals are fleeing the area, so there simply isn’t enough homegrown disposable income to fill the area’s elite properties.

That’s why Margulies has pitched the condo as a summer – or winter – home for well-heeled global investors, who have long sought out Aventura and Sunny Isles Beach.

Included in Bellini’s international sales pitch: Designer Paulo Bacchi’s Artefacto will furnish its common areas. Founded in Brazil, roughly 80 percent of Artefacto’s U.S. business comes from Latin customers, Bacchi said.

While the environment has improved, Margulies knows that even in a best-case scenario, his new project won’t bring in nearly as much as it would have seven years ago.

The 2,600-square-foot penthouses that are listed for roughly $4 million may have fetched $6 million during the boom.

But while many of his competitors have accepted refundable reservations for condos that have no set build date, Margulies deals only in hard contracts, and mostly cash buys.

“We broke ground by breaking ground,” he said. “People want to come here.”

Midtown Miami’s original developer has sold the remaining 16 acres of the mixed-use project’s undeveloped land, plus another adjacent six-acre parcel.

Midtown Equities of Manhattan sold most of its holdings in the 56-acre development to Midtown Opportunities, a private investment group. Terms of the deal were not disclosed.

The sale comes as Midtown Miami overcame the challenges of the recession and the real estate market to become one of area’s more successful examples of an integrated urban mixed-use project, where people can live, work and play. It was a vision that the Cayre family of Midtown Equities has spent nearly a decade cultivating.

Jack Cayre, principal of Midtown Equities, said they had Holliday Fenoglio Fowler, a real estate capital markets firm, marketing the property for many months, looking to raise additional equity for the buildout of the site. But Cayre says it wasn’t all about price.

“There were a lot of people that didn’t have the right vision,” Cayre said. “They wanted to turn Midtown into another, ‘Me, too,’ area. We wanted someone that really got it, embraced the whole cool factor and really had the drive to continue to make that happen. We’re not looking to count the last dollar off the table. We’re looking to see Midtown Miami evolve into what we’ve always been talking about.”

Cayre’s firm will continue to own and manage more than 110,000-square-feet of retail and office space, located on the ground floors of the existing three residential buildings. These retail tenants include Sugarcane raw bar grill, Mercadito Midtown, The Cheese Course, Sustain, DogBar and Green Monkey. The company also owns about 20 residential units, Cayre said.

Midtown Equities, which paid $34.5 million for the 56-acre site, recouped most of its initial investment selling half the original parcel to Developers Diversified Realty to build the Shops at Midtown Miami. The deal doesn’t impact the land owned by DDR.

Miami developer Alex Vadia will manage future development on the site through Midtown Development.

“We saw this as an opportunity of a lifetime to purchase 22 acres in an urban setting,” said Vadia, 27, whose family has been a real estate developer in Florida for 50 years, developing the vision for Wellington in Palm Beach County and projects in Lee County and the Florida Panhandle.

But Cayre expects to stay involved in future development on the site as a joint venture partner for individual components.

“A key component of this deal is us working together going forward,” Cayre said. “You’re looking at billions of dollars in future development. It made sense for us to bring in fresh capital for that. We wanted to make sure Midtown is positioned to grow and thrive.”

Vadia declined to disclose any information about the investors in Midtown Opportunities, although at least part of the funds are believed to be coming from outside the country. The same group spent $8.35 million in January 2010 for the property at 1300 South Miami Avenue, originally planned as a mixed-use condo project. The site is being developed for the short-term as Brickell Bier Garden and Akashi Japanese restaurant.

The Midtown site that Vadia’s group purchased is between Notheast 36th and 29th Streets, then bordered by East Coast Avenue to the east and Buena Vista Avenue to the west. The adjacent parcel, the old Chiquita Banana distribution site used as Midtown sales center, is located on the other side of the railroad tracks at Northeast 29th Street and Second Avenue.

“We see it as a development that has traction,” Vadia said. “We’re evaluating anything that will enhance the community.”

FOR THE MOST PART, Las Vegas, Phoenix, and Miami really have nothing in common but sand.

Just look at their histories: Vegas, the most modern of the three cities, was founded in 1905 and was mostly notable as an atomic bomb testing site for the Manhattan Project until mobsters built it into an oasis of gambling. Phoenix, so named because it was built on the ruins of a Native American civilization abandoned in 1450, was founded by a Confederate veteran who wanted to name it “Stonewall.” And Miami was the only major U.S. city conceived by a woman—Julia Tuttle, a citrus growing entrepreneur, who owned all of Miami’s land but gave nearly half of it to a railroad magnate to attract a train line to South Florida.

Yet in recent years, these three metros have all been linked in a tragic way—as the poster children for multifamily distress. All three markets reached dizzying heights in the run-up to the recession, then plunged to terrifying lows in 2008 and 2009. And market watchers and investors have been incredibly wary of whether any of the trio would ever be as strong as they were before the crash.

The forecasts are mixed: Vegas is the laggard, the only one of the three still truly distressed, though Phoenix continues to nurse a heavy hangover from overheated valuations. Miami is the healthiest of the three, confidently climbing out of a towering shadow of condos.

“This is just what happens in Phoenix and Miami every 10 to 15 years, and then it comes back to the surface. For Vegas, this is probably only their second boom/bust,” says Ben Thypin, a senior market analyst for New York–based market research firm Real Capital Analytics (RCA). “When you’re investing in Phoenix and Miami, you can price in some rent growth or, at the least, population growth. Whereas in Vegas, the economic outlook is just so uncertain."

LAS VEGAS

Sin City is still trying to atone for the excesses of the housing boom. The market is struggling to absorb a wave of overbuilding that came on line throughout the credit crisis. Five years ago, the vacancy rate in Vegas was a healthy 4.6 percent, but as builders exuberantly broke ground, fundamentals took a nosedive.

From 2003 to 2007, home builders and condo developers scooped up available buildable land at prices the apartment guys just couldn’t aff ord. Then, at the beginning of 2007, forsale builders stopped pulling permits and, suddenly, apartment builders had an opportunity to buy land again. An average of about 3,200 units was delivered annually from 2007 to 2009, and by 2010, the vacancy rate reached a high of 11.8 percent. Simultaneously, the job market tanked, dropping nearly 15 percent from 2008 to 2010. This year, however, employment has stabilized—it’s the first year without net job losses since 2007, according to New York–based market research firm Reis.

“To start healing, you first have to stop bleeding— Vegas has finally stopped bleeding, and the healing process might take a little while,” says Christopher Bentley, a Las Vegas–based principal for brokerage firm Apartment Realty Advisors. “We think we’re a year or 18 months behind Phoenix in our recovery."

Indeed, Vegas is late to the comeback party. In the third quarter, rent growth was seen in 81 of the 82 markets that Reis tracks—only Las Vegas was left out. And a look at the recent transaction market confirms the reality. There have been 21 sales this year through early October of $2.8 million or more, and of those deals, a lender or servicer was the seller in 12.

The lowest recorded cap rate this year was 5.2 percent, when the 341-unit Acapella, built in 2007, was bought for $41.2 million by Birmingham, Ala.–based REIT Colonial Properties Trust in March. But that was an outlier, a cap rate that caught everyone by surprise, Bentley says, and a buyer profile that is far from typical. “Vegas is typically a private capital market; it always has been. We just don’t have a lot of institutions here,” Bentley says. “A lot of today’s buyers are the ones that missed out on the opportunity in 2003, and we’re also seeing a lot of buyers come from Phoenix because they’re being priced out of the market there."

There are a couple of reasons that large institutions generally avoid Vegas. It’s a small market of just 160,000 units, so it’s difficult for an institutional buyer to build economies of scale. It’s also a longterm hold market (for more than a decade, for example), especially now, and many REITs don’t have that business model. But the volume of distressed apartment properties in Vegas is huge relative to overall supply. There’s more than $2.1 billion in distressed apartment communities (either delinquent, in default, or REO) across 116 assets in Vegas, according to RCA. In terms of troubled volume, that places the market third behind only the nation’s largest apartment market, Manhattan, and Phoenix.

In May, there was a sliver of hope that the transaction market would start to clear up. More than $1 billion in distressed Nevada assets—mostly located in Vegas—were being sold on Auction.com by special servicer LNR, including seven multifamily assets. “We all thought that was going to open up the floodgates,” Bentley says, “but it really hasn’t."

Phoenix-based Alliance Residential bid on four of those assets and ended up with one—a $50 million non-performing note that it bought for $32.5 million on the 524-unit Fountains at Flamingo. It was a great discount for a brand-new development and is yielding 8 percent out of the box, a return that would be difficult to find anywhere else. “I suspect in Phoenix, it would have been $115,000 a door,” says Jay Hiemenz, Alliance’s CFO. “But Vegas continues to have job losses, and it’s still out of favor, so there is still a big dislocation in values."

In general, the best Class A assets are trading just under 6 percent, while the better B product is trading in the low–6 percent range. C product has been hardest- hit—what sold for $65,000 a door in 2006 is today selling for $20,000 a door. The average cap rate in the market across all classes is 7.3 percent over the past year, according to RCA; in Phoenix, by comparison, the average cap rate across all classes was 6.09 percent over the past year.

Unfortunately, the pipeline is still robust. More than 1,000 units came on line this year; another 1,500 units will be on the market next year; and there will be more than 2,000 units added annually from 2013 to 2015, Reis projects. With a vacancy rate currently in the 8 percent range, that influx of supply could be too much for the market to handle. “On a five- to seven-year horizon, Vegas is going to be fine,” Bentley says. “The question is, what’s going to happen in the short term? We just don’t think there’s going to be a significant change in the next two years. We expect some job growth, but we’re not expecting miracles."

MARKET METER: Still struggling.

Las Vegas is a solid long-term bet for local and regional investors, but the next few years will see continued supply excesses, troubled fundamentals, and fire sales of assets.

PHOENIX

The Phoenix apartment market has truly risen from the ashes despite being one of the biggest casualties of the downturn. From the beginning of 2008 to the end of 2010, the metro area lost 232,400 jobs—about 12 percent of its total workforce. But job growth stabilized this year; the vacancy rate fell about 200 basis points, to 7.5 percent; and rent growth returned to the tune of nearly 4 percent, according to Reis.

And the proof of the recovery resides in the transaction market. The Phoenix area had seen 87 sales of more than $4 million year-todate as of mid-October. In all, Phoenix has recorded $1.4 billion in transaction volume over the past year, with an average cap rate of 6.09 percent, according to RCA.

The market has now seen two consecutive years with 100 or more multifamily trades—though about half of all trades are considered distressed. “Cap rates have moved lower, price per unit has moved up, and there might not be as many off ers in Phoenix now because it’s starting to reach the price point of, where do we go from here?” says Rocco Mandala, a Phoenix-based executive vice president at broker CBRE Capital Markets. “In the stronger submarkets, you’re not buying below replacement cost anymore, and it’s starting to make more sense to develop."

The lowest cap rate recorded this year was 4.2 percent when Arroyo Villas purchased the 196-unit Maryland Lakes Apartments for $5.15 million, sold through the U.S. Bankruptcy Court. The property last traded in 1999—for $7.1 million. Several higher- priced deals feature cap rates of 5.5 percent or lower, including the $33.9 million purchase of the 332-unit San Cierra in Glendale, Ariz., by Belkorp Industries (5 percent) and the $16 million purchase of the 205-unit Arete in Phoenix by Weidner Apartment Homes (5.5 percent).

Weidner—which has purchased more than 6,000 units in the Phoenix and Tucson areas over the past two years—was also responsible for the market’s largest trade. The Kirkland, Wash.–based company paid $76 million for the 724-unit Trillium Pinnacle Peak, constructed in 2009.

In fact, there have been 22 sales of more than $20 million in Phoenix this year. “Phoenix valuations have already recovered; they’ve already factored in the recovery,” Hiemenz says. “Concessions have almost gone down to zero on the in-town stuff , though the suburban stuff is still a little softer in places."

Alliance has definitely sold into that strength. In July, the company disposed of the 280-unit Broadstone Canyon Crossroads, built in 2008, for $32.3 million (it was bought by Baron Properties). That same month, it also sold the 240-unit Level at Sixteenth, which came on line last year, for $40 million to Hartford, Conn.–based Cornerstone Real Estate Advisors.

While high-quality product is trading at healthy prices, the overhang of distressed properties remains significant. The overall market has $2.2 billion in distressed volume among 168 properties that are either delinquent, in default, or lenderowned, according to RCA. But most market watchers say the distress in Phoenix has more to do with overheated valuations than overbuilding in the last cycle. Vacancies are still high, but only because the employment market is still struggling to recover.

“The return of high-priced acquisitions in Phoenix over the past year and a half supports the thesis that it was a valuation issue more than oversupply,” Thypin says. “Properties are trading again at competitive prices, whereas if there was a huge supply, they would trade at higher yields."

Indeed, 2011 was the year that Phoenix reversed its skid, posting the first year of job growth since 2007, at 1.5 percent, which should accelerate to 2 percent in 2012, and then reach around 3.3 percent through 2014. “We had a large construction employment base, so when the construction stopped, we needed to correct to continue to grow,” Mandala says. “We got hit pretty hard pretty fast, but we corrected as fast as any market in the country."

MARKET METER: On the upswing.

Phoenix has a strong story of multifamily fundamentals, so local and institutional buyers are interested. If another cycle of overvaluation is avoided, and the jobs outlook stays strong, this Arizona hotbed could be a formidable market in a few years.

MIAMI

Unlike Vegas, Miami has largely rebounded. Long dogged by condo overbuilding, the market’s fundamentals today are incredibly healthy, and investors are quickly clearing the oversupply.

The swift pace of recovery has surprised many local dealmakers who see a mountain of equity chasing multifamily in Florida, with all-cash buyers paying at or above brokers’ valuations, banking on significant rent growth as a scarcity of product drives up prices. “There’s a lot of frothiness in the multifamily space here—when you have a property and you put REO or short sale or distress on it, the sharks are out,” says T. Sean Lance, managing director of broker NAI-Tampa Bay. “It’s not uncommon to get 40 or 50 off ers. We’ve done over $100 million in deals this year, and not one of them had financing attached to it."

Lance is also president of NAI’s Troubled Asset Optimization business line in Florida. The program, which off ers valuation, property management, receivership, and disposition services, has done more business this year than any year since its genesis in 2007. The company has also sold more than 1,300 bulk condo units in Florida in the past 15 months. “We think the window for those kind of opportunities is closing rapidly and by the end of this year, most projects will have been picked through,” Lance says. “The ones that are out there are going under contract or being actively marketed, and we just don’t see too much inventory being available after the end of this year."

Despite this positive momentum, the volume of distress in Miami is still significant—RCA estimates $1.5 billion in distress among 78 apartment assets. But it’s not as bad as it could’ve been, for two reasons. “The value in the rental space has returned so fast that it has prevented a lot of the lender foreclosures," says Charles Foschini, vice chairman of South Florida markets for brokerage firm CBRE Capital Markets.

But an even more significant factor is Florida’s borrower-friendly approach to foreclosures—it’s a lien state, not a judicial foreclosure state. “It can take up to two years to go through a foreclosure, even when uncontested,” Foschini says. “It’s very difficult for a bank or lender to get assets back."

In addition to the local uptick, interest in Miami real estate is high among foreign investors, who have been extraordinarily active in the distress arena over the past year. The bids for a B asset or greater will typically include a significant amount of South and Central American buyers, as well as investors from Europe and the Caribbean. And high-quality assets are commanding some healthy cap rates. “It’s not unusual to get into the 5 percents on a pro forma income for B and A assets in South Florida, purely based on the expected increase in rental values, as well as potentially a historic gap between supply and demand,” Foschini says. “There’s a lack of tradable inventory, and strong institutional interest in Florida as a whole, and that is driving down cap rates."

The falling cap rates and healthy fundamentals—Miami’s vacancy rate is just 4.7 percent, and rents grew 4 percent last year and another 2.5 percent this year—have hastened a lot of new development activity. In the Miami area, more than 60 new rental projects have been announced this year, though only a fraction of them are breaking ground: The expected pipeline for 2012 is 1,073 units, according to Reis. “Very few groups are able to execute on that—they’re having a very difficult time getting their equity and debt lined up,” Lance says. “But if you don’t get your project out of the ground next year, you’re going to be way behind the cycle again."

Still, South Florida’s volatility isn’t for everybody. Rochester, N.Y.– based REIT Home Properties is looking to exit Florida and is marketing a portfolio of two assets comprising 836 units in North Lauderdale. The company bought the assets in 2004 with the intention of building the region into a hub, but the condo conversion craze drove prices way too high, and the credit crunch that followed drove rents way too low. “It became clear to us that Florida is more boom/bust, more volatile than our typical markets," says David Gardner, Home’s CFO. “It’s probably around the corner where we’ll see some positive rental growth, and we’re trying to sell into that strength. We’re pretty confident that we’re going to be able to sell for a pretty good amount."

MARKET METER: Coming back strong.

Miami’s longtime ties to foreign investors and its constrained supply have the market poised for great returns in the near and long terms.

During Art Basel, a week of spectacular, contemplative art and design, Elle Decor brings its own kind of public installation.

As an official satellite of Design Miami — the international marketplace of limited edition furnishings and design forum — the magazine presents a showhouse of inspired spaces in a 47-story waterfront condo tower. The inaugural showhouse was held in San Francisco last year.

A group of marquee interior and landscape designers picked by Elle Decor are tasked with transforming a blank 10,000-square-foot penthouse into a wow space with a view. The penthouse is on the 43rd floor of Paramount Bay, at 2020 N. Bayshore Drive in Miami.

The roster of designers, most of whom are based in South Florida, includes Juan Carlos Arcila-Duque, Vincenzo Avanzato, Lars Bolander, Tamzin Greenhill, Wade Allyn Hallock, Larry Laslo, Lynda Murray, Mario Nievera & Keith Williams, James Wall and Deborah Wecselman. Each is assigned to a specific room or terrace.

Earlier this year, rock star Lenny Kravitz was tapped to create the artistic vision at Paramount Bay, which is expected to be completed early next year. His design firm, which also worked on the Florida Room at the Delano, is charged with designing the look of the residential property, including all public spaces and outdoors areas.

Proceeds from the showhouse will benefit Miami’s Design and Architecture Senior High (DASH).

“Elle Decor is delighted to debut our second showhouse, especially as the proceeds benefit the next generation of designers and architects,” said Michael Boodro, Elle Decor’s editor-in-chief. “We’re excited to join forces with Paramount Bay and look forward to seeing the space transformed by such a talented array of designers.”

With the Omni neighborhood’s recent transformation from run-down and seedy to vibrant and hip — highlighted by skyscraping condos, bustling parks and popular restaurants — some politicians are questioning the continued need for targeted tax assistance afforded the area.

For several decades, a small rectangular patch in the city’s center anchored by the former Omni Mall and including parts of poverty-stricken Overtown has been designated as a redevelopment area. The label allows nearly all the property taxes collected within a blighted neighborhood to be held in a separate pot that is earmarked for economic development only in that area.

It’s worked well for the Omni area, where the tax dollars have helped attract private investment and fueled enough development to more-than support neighborhood services.

Now, with Malaysian casino giant Genting Resorts World Miami’s plan to build a destination resort on The Miami Herald site, there is growing sentiment to dissolve the Omni redevelopment district — and share more widely the tens of millions in new property tax dollars the resort would generate.

“I think you can say at a certain point of time that slum and blight has been cleaned up. I think pockets of the Omni have done very well,” said Miami Commissioner Marc Sarnoff, who chairs the Omni Community Redevelopment Agency. “And if Genting invests, then I think it’s conceivable” that it’s time to dissolve the agency.

The belief rings even louder from fellow Miami commissioners who have struggled through years of budget battles.

“In all fairness,” said Miami Commissioner Frank Carollo, “we’ve had a tough couple of years, and we need to start bringing some of that money back to the general fund.”

Rather than dismantling the CRA, Miami Commissioner Francis Suarez would like to make it smaller. That would allow new tax-paying property owners like Genting to send their dollars to the city’s general fund.

“We’re a city that’s struggling financially,” Suarez said.

Signs of the Omni region’s renaissance are apparent throughout the neighborhood.

South from Bicentennial Park, north to Northeast 20th Street, east and west from Biscayne Bay to Northeast First Place, the neighborhood is thriving — thanks in part to redevelopment money.

Long-neglected Bicentennial Park will soon be home to museums and a new park. Margaret Pace Park, where drug needles were once in greater abundance than people, now thrives day and night with condo dwellers walking dogs, throwing frisbees and eating at restaurants. Between those two sites a $1 billion tunnel to the Port of Miami is under construction.

On a recent sun-drenched afternoon, Joan Mirande, 54, of Princeton, N.J., lazily walked her two miniature Italian greyhounds through Margaret Pace Park, the blue bay to the east, towering condos hovering overhead. Mirande and her husband bought a vacation condo adjacent to the park six years ago — when the neighborhood was a far cry from what it offers today.

“My husband was assuring me this would be better,’’ she said. “There were just a bunch of bums around. I would say its 180 degrees different. It’s unbelievable.”

Along Biscayne Boulevard, restaurants and retailers are filling formerly empty real estate, and a Publix is under construction. Slightly further west auto magnate Norman Braman continues to add to his showroom collection.

The city is working on building a $10 million production facility along Northeast 14th Street, which has already benefitted from a $1.5 million CRA-funded facelift. And money from Omni CRA property taxes is also paying off an enormous construction debt that could reach $400 million for the Adrienne Arsht Center for the Performing Arts. This year’s payment was $4.1 million.

Still, as Genting pushes its plan forward – casino or not – there is no shortage of hands reaching out for a piece of the new pie.

Miami-Dade Commission Chairman Joe Martinez is concerned about the vast county services that would be required to enable Genting’s project. He says getting rid of, or decreasing the size of, the Omni redevelopment agency “has to be part of our debate with the city of Miami to even consider a casino.”

Also, for the first time, the county commission is pushing for a seat at the table. Now, the city’s three CRAs are composed solely of Miami’s five commissioners. The county — which authorizes municipal CRAs — would like to add at least one county commissioner to each city board.

Dismantling the Omni redevelopment agency wouldn’t generate a straight-up financial windfall for Miami’s general fund. If the city wants to share in the wealth, it would have to continue paying the agency’s debts. Dissolving the CRA also would require a rearrangement of contracts with Miami-Dade County, which receives a small share of Omni property taxes that are reinvested back into county services to the region.

In some instances, the county would have to find other funding sources — like tourist tax dollars — to cover its Omni-area financial obligations.

Not everyone agrees it’s time to break up the Omni redevelopment agency.

The neighborhood’s largest land owner, auto dealer Braman — whose business as recently as last week was aided with Omni CRA funds — said he’d rather see the redevelopment district expand further west to more destitute areas where rundown industrial sections and seedy low-income housing still exist.

“Spend time going through those neighborhoods; it’s appalling,” he said.

Lawyer Frank Schnidman, director of the Center for Urban Redevelopment Education at Florida Atlantic University, contends that Genting’s plan demands the CRA remain intact. He calls the county’s cries to re-tool the CRA or change its boundaries “advance envy,’’ as elected leaders envision millions of property tax dollars flow from the Genting property.

Though the county property appraiser has yet to weigh in on any Genting property tax windfall, Schnidman has said it could be as high as $25 million a year.

Yet, with all the extra policing and support services the Genting development would demand, Schnidman says “it would be crazy to quash the CRA if Genting comes.”

More than a decade and a half after breathing new life into South Beach, the Delano is getting its own rebirth.

With cosmetic enhancements throughout the property, a new restaurant and a relaunched nightlife venue all set to debut by late January, the hotel at 1685 Collins Ave. will get about $10 million in upgrades.

“It’s really about taking something that’s classic and reinvigorating it,” said Michael Gross, CEO of Delano owner Morgans Hotel Group. “This has been a phenomenal year for the property and it continues to perform very well. So it’s really about trying to take the Delano to the next level both in terms of the overall quality of the guest experience within the rooms, but also in the food and beverage and nightlife components, which were always so critical to what made the property so unique.”

During the quarter that ended Sept. 30, the Delano was a key contributor to a company-wide increase in per-room revenue, Morgans Hotel Group said in its most recent earnings release. During the typically slow summer season, the hotel commanded average daily rates of $380 and revenue per available room of $224 — both double-digit increases over 2010. During the recent Art Basel week, the Delano sold out with daily rates of about $1,025.

The iconic boutique hotel sparked a transformation in South Beach when it reopened in 1995 following a makeover from hotelier Ian Schrager and designer Philippe Starck.

These days, the trendsetter has a lot of company: The SLS Hotel South Beach is under construction a stone’s throw from the Delano on Collins Avenue. The W South Beach up the road, open since 2009, draws dependably hip crowds. And the nearby Surfcomber Hotel was recently folded into the boutique Kimpton collection after a renovation.

“There’s a ton of investment,” said Gregory Rumpel, managing director of Jones Lang LaSalle Hotels in Miami. “I think it’s part of keeping up with the programming. The Delano’s been the epicenter since the mid ’90s. It’s had a long run at the top of the heap. I think they need to be doing something to stay current and fresh.”

In store: refurbished bungalows, an extended pool deck and new outdoor furniture, carpeting in the hallways, furniture in suites and flooring in elevators. Every room will have an iPad, and bathrooms in suites and bungalows will include TV sets floating in the mirrors. The hotel will also add three new board rooms to attract small groups and meetings by mid-March.

The biggest change, however, will come to the Blue Door Fish restaurant, which will become Bianca, an Italian restaurant with a focus on organic and locally sourced food. More than the menu will change; the restaurant will be less closed off than it is now with more light and “eye appeal,” said Morgans Hotel Group regional vice president JP Oliver, describing the new space as “a place to see and be seen.”

Last month, Morgans Hotel Group closed on its purchase of a 90 percent interest in Las Vegas nightlife company The Light Group, which will oversee the new restaurant and nightlife space. The company operates several nightclubs, restaurants, pool lounges and bars for MGM Resorts International, but it has some local expertise as well: working as a consultant for The Light Group is South Beach nightlife veteran Chris Paciello.

In addition to the Delano, Morgans Hotel Group also owns, has ownership in or manages a dozen other hotels around the world, including the Shore Club and Mondrian in Miami Beach. Over the past year, the company has sold several of its properties in a move to become “asset-light” and focus instead on developing and managing hotels. Still to come are Delano hotels planned for Turkey and Cabo San Lucas, Mexico and Mondrian hotels in Nassau and Doha, Qatar.

“It’s a cornerstone of not just our Miami presence, but our company overall,” Gross said. “And part of our strategy going forward is to really focus on a couple of core brands. Clearly the Delano is at the heart of that global initiative going forward of building out the Morgans Hotel Group management business.”

Miami Beach’s Sunset Harbour is saying goodbye to neighborhood establishments like Mark’s Quality Cleaners and Riverside Gordon Funeral Home as it prepares to welcome a shiny new condo tower, a “starchitect”-designed parking garage and new restaurants, shops and grocery stores.

It’s part of a neighborhood makeover that business owners hope will turn the area into South Beach’s newest live-eat-play destination.

“In the next five years, you’ll probably see a nice enclave of restaurants and retail, more like what you see on Lincoln Road,” said Alan Waserstein, who owns Miami Lakes-based. LeaseFlorida. Earlier this month, Waserstein sold a plot of land on 20th Street to a condo developer for $4.3 million, doubling his investment from last year.

Sunset Harbour — bordered by Alton Road, Dade Boulevard, 20th Street and Biscayne Bay — is one of the few sections of South Beach zoned as an industrial district, a designation that has kept it from becoming a big player in retail, restaurants and entertainment. The Venetian Causeway leads drivers directly into the bayfront neighborhood, which sits on the northwest corner of South Beach, but most cars pass right through to the more lively Alton or Lincoln roads.

That’s likely to change, as investors and small business owners have aggressively bought up old buildings and land to repurpose the neighborhood as a shopping and dining hub. The city of Miami Beach is getting in on the action as well, launching a new high-end parking garage and planning to move its property management division across the street.

The area, mostly known for its yacht-shaped Publix and a 60-year-old neighborhood dry cleaner’s, has attracted tens of millions of dollars in new investment in the past year, with more on the way.

Ellen Friedman, who owns Mark’s Quality Cleaners with her husband, sold the building on 20th Street to a condo developer earlier this month. The company will relocate its operations in January, while the developer — the same entity that bought Waserstein’s 20th Street land — erects a new mixed-use condo tower, she said.

“They’re putting in an extraordinary complex,” Friedman said. “It’s going to be retail on the bottom and very posh condos on the top.” She added the project could be completed within two years, when Mark’s would return to the location as a retail tenant.

The developer, listed as Boca Raton-based Palau Sunset Harbor, has not officially filed plans with the city, and could not be reached for comment.

The city of Miami Beach also sees Sunset Harbour as a neighborhood ripe for development. The city is building a flashy parking garage with about 450 spaces on Purdy Avenue and commissioned star-architectural firm Arquitectonica to design it. The high-end garage is slated to have 30,000 square feet of retail space on the ground floor.

“More parking will help bring interest from the private sector to help redevelopment of the area,” said Assistant City Manager Jorge Gomez. “Also, the commercial component of the parking garage will help draw interest to the area.”

To help ease the flow of traffic in the burgeoning neighborhood, the city is considering building a bridge over the Collins Canal. City officials have authorized a $639,000 feasibility study for the proposed bridge, on West Avenue between 17th and 18th streets, and plan to hold an up-or-down vote next year.

The bridge could help alleviate traffic congestion on Alton Road and make it easier for drivers and pedestrians to travel between Sunset Harbour and the rest of South Beach.

With promises of better parking and potentially a smoother flow of traffic in Sunset Harbour, restaurateurs, grocers and retail companies are flocking to the sleepy neighborhood.

Fresh Market selected the neighborhood for its first Miami Beach location. The popular produce market is set to open its newly built 24,000 square-foot location, at 1800 West Ave., on Wednesday morning.

A handful of restaurants—including Morgan’s, Barceloneta and Pubbelly’s Sushi—have opened in the past six months. Catering mostly to a local crowd, the restaurants have found a loyal niche during dinnertime.

“These property owners look upon this as a chance to almost create another Lincoln Road,” said Frank Kruszewski, president of the Sunset Harbour Neighborhood Association. “Once the garage is built, you’ll have the ability to park your car and go to a couple different places.”

Earlier this year, Rosinella Restaurant purchased the property that has housed Riverside Gordon Funeral Home for decades. The family-owned Italian restaurant, with a popular outpost on Lincoln Road, is planning to build a restaurant, bakery and coffee shop at the 1920 Alton Rd. site. Construction could begin in the next few weeks, said co-owner Tonino Doino.

The company expects more restaurants and businesses to follow suit and move into the area in the coming years.

“It’s going to be a nice area,” Doino said. “It’s a completely new area and I think it’s a great neighborhood, especially for local people.”

Downtown Miami is skewing younger, emerging as an attractive location for young professionals seeking a more urban lifestyle, with incomes exceeding that of the city of Miami and Miami-Dade County, according to a new study.

The Miami Downtown Development Authority    Miami Downtown Development Authority Latest from The Business Journals Metropolitan Miami to house Whole Foods MarketReal Estate Journal-Miami-Dade County projectsGenting: We can bring 5,000 jobs to Omni by fall 2012 Follow this company ’s Population & Demographic Profile Study indicates that 57 percent of residents were age 20 to 44 and had a per capita income that is higher than both Miami and the county.

The study also shows the number of households has increased 93 percent since 2000.

There were 23,000 new residential units delivered in Miami between 2003 and 2010. The area’s population stands at about 72,000 people as of midyear, representing a 9 percent increase, year-over-year, and outpacing the 6.8 percent growth rate experienced during the previous decade, according to the DDA.

The area’s per capita income grew by 39 percent from 2000, and far exceeded that of the city of Miami and Miami-Dade County. Additionally, more than 65 percent of employed downtown residents work as professionals, with an average household income of $43,992.

“The influx of new residents is transforming the area into a 24-7 urban community and is having a ripple effect by attracting additional investments to the area,” DDA Executive Director Alyce Robertson said in a statement.

According to the report, downtown Miami's rapidly expanding population is generating growing demand for retail, restaurants, entertainment and cultural facilities, as well as enhancing the area’s drawing power as an international destination for business and tourism. As a result of this population growth, retail has flourished, with more than 200 new restaurants and shops opening since 2005, with many catering to the younger demographic.

Major mixed-use projects such as Genting Group’s Resorts World Miami, Swire Properties' Brickell CitiCentre and Espacio USA’s 1400 Biscayne Center project are examples of international developers betting big on downtown Miami’s future. The $3.8 billion Resorts Worth Miami might include gambling if the Florida Legislature approves it.

New residential condominiums are also in the works, with both Newgard Development Group and The Related Group    The Related Group Latest from The Business Journals Commercial Real Estate RoundupRelated plans second tower at MyBrickell, Edgewater towerResorts World Miami announces management team Follow this company planning towers.

“Downtown Miami’s vibrancy is unheralded considering the general state of the U.S. economic recovery,” said report co-author Craig Werley, of Focus Real Estate Advisors, in a statement. “This report confirms the district’s long-term viability and role as Florida’s most critical economic engine.”