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The scientific community estimates that the first financial effects of rising sea levels will be felt in a matter of two decades. Some highly regarded scientists project an earlier date, around one decade from now. Either way there is one harsh truth, no area in the country will feel more of an impact from rising sea levels than South Florida and much of that financial impact will come from real estate.

Storm a comin'

“Even a six-inch rise would cost the area much of its acreage.”

A three-foot rise in sea levels would change South Florida as we know it, leaving a large part of the region under water, but even a six-inch rise would cost the area much of its acreage. The timetable for when such a rise would occur is not completely reliable, but the most widely used projection is that of the Army Corps of Engineers. This group projects that South Florida will see a three- to seven-inch rise in sea levels by 2030. A sea level rise of nine to 24 inches could be expected by 2060.

According to a group formed by the Miami-Dade, Broward, Palm Beach and Monroe Counties called the Southeast Florida Regional Climate Change Compact, the region would lose up to $4 billion in taxable real estate from even a one-foot rise in sea levels. A three-foot rise would cost around $31 billion or more.

Professionals are beginning to wonder when the devaluation of waterfront property in South Florida will begin. Most likely, this process will occur as flooding in the area begins to increase. Along with the inconvenience of constantly flooded streets, buyers will grow wearisome of rising premiums for flood insurance. Most climate change experts expect this to begin occurring a decade from now.

However, there is hope for normalcy in the future of South Florida real estate as many entities have already started planning for these events. For example, the City of Miami Beach has dedicated $200 million to stop flooding in South Beach over the next 20 years. The real estate industry itself is also preparing. Many urban planning groups are taking rising sea levels into consideration when discussing projects with developers.

These are all strong first steps, but more work will need to be done to prepare for drastic changes in regards to waterfront properties or perhaps to attempt to prevent some of this damage from being done. Over the next decade, South Florida should be a melting pot of interesting and revolutionary ideas that will help the real estate industry overcome rising sea levels.

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“A planned passenger rail service would be an ideal way to link the nation’s most visited city with Florida’s gateway city for business and leisure travel.”

This is the sales pitch to citizens that can be found on the website for All Aboard Florida, the new railway project that hopes to create an Orlando-to-Miami passenger train service. The train would provide the vital mass transit that so many have longed for in this large state. Stops would include Miami, Fort Lauderdale, West Palm and, of course, Orlando.

The project would create tens of thousands of jobs, not only in the railway industry, but by connecting major cities and granting Floridians more flexibility to travel to work. However, another industry that would benefit greatly from All Aboard Florida is commercial real estate.

all-board-florida

Rendering of All Aboard Florida train

All Aboard Florida is currently in negotiations with Miami’s Community Redevelopment Agency to acquire land in downtown Miami to build a large transportation hub. As a matter of fact, a compromise was reached yesterday and is currently awaiting approval from the county. The transportation hub would include restaurants, retail, office space, and residential apartments.

Commercial real estate is extremely important to revenues for All Aboard Florida. The project will dedicate $325 million to develop about 1 million square feet of commercial real estate. They are expecting a yield of around $35 million in rent.

The money being put into the $2.4 billion project by All Aboard Florida will amount to about $125 million, or around 5 percent of total costs. A large sum of the money will be provided by institutional investors, paying up to $600 million for a preferred investment. The organization is counting on the federal government to play a part in the development as well. All Aboard Florida is expecting a federal loan to aid them with the $1.5 billion in infrastructure costs.

The next step for All Aboard Florida would be the most important, bringing in revenues through ridership. All Aboard is currently projected to attract 4 million riders by 2018, a mark that took the Tri-Rail service about two decades to hit. If All Aboard Florida can achieve these numbers, it would yield a return of $785 million.