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In the News
More high-quality private schools would electrify South Florida real estate
For many decades, South Florida was known as the playground for retirees, who overwhelmingly emigrated from the Northeast United States. These folks simply wanted low taxes and fun in the sun, and good schools didn’t matter to them so much. In the 1980s and ’90s, our region became defined by “Miami Vice” and South Beach (with Miami emerging as the unofficial capital of South America) and again, schools were not a big priority for new residents.
In recent years, South Florida has evolved into a global hub for business, art, technology, and luxury real estate. And while the quality of our public and private schools have improved dramatically, I believe that the low quantity of high-performing schools is quietly keeping our region from becoming a top-five player on the international stage.
A myriad of seemingly unrelated factors, which I will outline in this space, have made this so. Before proceeding, however, I should mention that I approach this topic with some degree of personal and professional experience. I formerly lived and worked in Beijing, and have been working in real estate for the past six years. Previously, I trained with an IMG sports academy to become a professional tennis player, and grew up in their boarding schools, while also obtaining a fine arts background and a minor in Chinese. Over the past few months, I have been in talks with several local municipalities about this very topic, and appreciate their attention and interest.
The new federal tax reforms signed into law last year set a deductions cap for income, sales and property taxes at $10,000. This new cap is leading more residents of states with high property values and state income tax to purchase properties in Florida, which has no state income tax and a pro-business tax structure.
In fact, some of these new Floridians are moving more than just themselves and their families. According to a recent Financial Times/CNBC article, Miami and Palm Beach are successfully recruiting hedge funds from states such as Connecticut, highlighting the absence of state income taxes in Florida. The only thing holding them back before this recent wave of relocations? The perception (real or not) that there weren’t enough high-quality schools for their own children, or for the purposes of properly educating future employees. A partner at a Greenwich-based recruitment firm (that finds staff for hedge fund managers) stated in the article, “…you couldn’t get the talent you needed, and that was partly because the school system wasn’t great for their kids . . . Harvard, UPenn [the University of Pennsylvania] and Columbia weren’t there yet.” He goes on to mention that “…the taxes have become so favorable that the hedge fund managers are starting to feel foolish for not giving Florida more consideration.” With so many hedge fund professionals finally seeing the proverbial light (but still on the proverbial fence), the need for high-performing schools to attract them has never been greater.
This new interest from the financial sector coincides with already high demand for Miami’s luxury single-family homes and office space. As a Miami Association of Realtors report states, luxury single family home (priced at $1 million and above) sales posted double-digit gains in March 2018, as median prices for all properties continued rising, and the Miami office market is outperforming Boston, Chicago, Atlanta, Houston, Washington, D.C., and other top-tier markets. We are even seeing great demand for office space in Broward and Palm Beach County’s urban cores. And as more Fortune 500 companies relocate or expand into South Florida, where will the children of these employees attend school? All of the top, well-established Miami private schools are already bursting at the seams, with huge waiting lists and limited room for expansion. (A friend told me privately he would be happy to pay upward of $50,000 a year or more in tuition for the right school.) This “perfect storm” of tax benefits and real estate demand is a clear opportunity for South Florida to market itself to the world’s top developers of globally known, high academic-performing schools.
Currently we are in negotiations with acclaimed international schools that meet the academic requirements and performance expectations for entry into such universities as Harvard, University of Pennsylvania and Columbia. Accomplishing this will take “re-thinking” the stereotype that high-caliber prep schools are only for well-to-do Northeasters — in fact, most schools of this level already seek to diversify their student populations. It is not about being elitist here: It is about getting Miami to the same (or higher) level of reputation as New York, Boston, and California with respect to education, and improving our chances of recruiting bigger and better companies.
The big question: Where to put these hypothetical new schools? It will take some visionary, risk-savvy investors to find underdeveloped areas of Miami, where new projects are being developed despite poor nearby school rankings and no private school competition. Miami has done an outstanding job of building high-end condos and hotels, but a wave of schools to “anchor” our new residents would bring us to the next level of success. The vision I am providing to these international schools includes a diverse array of affordable, high-caliber private schools on sprawling campuses featuring high-level athletics, entrepreneurship and technology studies, international language programs, “green” and resiliency studies, and arts appreciation and training.
BY JULIETTE MAVROLEON - RE/MAX Advance Realty