Why Is Miami One of the Most Active Construction Markets in the Country?
Miami's construction market ranks among the most active in the United States, fueled by billions of dollars in development across every property type. From luxury condominium towers in Brickell to industrial distribution centers in Doral, the sheer volume of ground-up construction activity in South Florida creates enormous demand for construction loans and makes Miami a priority market for development lenders.
The scale of construction activity is staggering. Over 26,000 multifamily units are currently under construction, with Miami-Dade alone adding approximately 23.8% to its existing apartment inventory through new development. The $6 billion Miami Worldcenter, the second-largest urban development in the United States after Hudson Yards, continues to expand with multiple towers in various stages of construction. Major construction financing deals include $465 million for JEM Private Residences (67 stories), $413 million for One Twenty Brickell, $513 million for two riverfront projects by Newgard and Two Roads, and $220 million for North Development's Brickell project.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
Miami's construction boom is driven by structural demand factors that give lenders confidence in the long-term viability of new development. Florida's lack of a state income tax continues to attract businesses and residents from high-tax states. The city's role as the gateway to Latin America generates international demand for commercial and residential space. The tech and finance migration from New York has created a new class of high-earning residents demanding premium product. And tourism, with over 26 million annual visitors, sustains demand for hospitality and mixed-use development.
However, Miami's construction environment also presents unique challenges. Hurricane building codes in Miami-Dade County are among the most stringent in the nation, adding 10% to 20% to construction costs compared to non-coastal markets. Insurance during construction (builder's risk, windstorm) adds significant carrying costs. And South Florida's tight labor market, competing with the volume of active projects, creates scheduling and cost pressures that borrowers must plan for.
For developers exploring construction financing options, Clear House Lending connects Miami borrowers with a network of over 6,000 commercial lenders, including specialized construction lenders who understand South Florida's unique development dynamics.
What Construction Loan Programs Are Available in Miami?
Miami's construction lending market offers several financing structures, each suited to different project types, developer profiles, and risk levels.
Bank Construction Loans represent the most common financing for Miami development projects valued between $2 million and $50 million. Local and regional banks offer rates between 7.0% and 9.5% (typically Prime or SOFR plus a spread), 18 to 36 month terms, and loan-to-cost (LTC) ratios up to 65% to 75%. Banks require detailed architectural plans, general contractor agreements, Phase I environmental assessments, and developer equity of 25% to 40% funded before the first draw. South Florida banks including City National, Valley National, and Ocean Bank are active construction lenders.
Debt Fund Construction Loans serve projects that may not meet traditional bank criteria, including spec development, borrowers with limited track records, or projects requiring higher leverage. Rates range from 9.0% to 13.0% with LTC up to 80% to 85% of total project cost. These lenders are more flexible but more expensive, making them suitable for developers who can command premium pricing for their finished product.
C-PACE (Commercial Property Assessed Clean Energy) Financing has become a major capital source for Miami construction projects. C-PACE provides supplemental financing for energy-efficient and hurricane-resilient building components, with the debt repaid through property tax assessments. North Development's $180 million C-PACE financing for its Brickell project represents the largest C-PACE deal in program history. C-PACE rates typically run 7.0% to 9.0% with 20 to 30 year amortization, and the capital can effectively increase total leverage when combined with a senior construction loan.
SBA 504 Construction Loans finance owner-occupied commercial construction projects. The program offers 10% down, fixed rates around 6.0% on the CDC portion, and terms up to 25 years. SBA 504 is popular for Miami businesses constructing their own office, warehouse, or mixed-use facilities, particularly in Doral, Hialeah, and suburban corridors.
Mezzanine and Preferred Equity provide gap financing between the senior construction loan and the developer's equity. Rates range from 12% to 18% for mezzanine debt and 15% to 22% for preferred equity. These structures allow developers to reduce their cash equity requirement, which is particularly valuable in Miami where land costs and construction expenses can consume enormous capital.
HUD/FHA 221(d)(4) Construction Loans finance ground-up multifamily construction with up to 87% LTV and fully amortizing 40-year terms at fixed rates starting around 5.75%. The program's generous terms come with extensive processing requirements (6 to 12 months) and Davis-Bacon prevailing wage requirements that add to construction costs. The HUD program works best for large-scale multifamily projects (100+ units) where the favorable permanent financing terms justify the longer approval timeline.
How Do Miami Construction Loan Draw Schedules Work?
Construction loans are disbursed through a draw schedule, releasing funds as construction milestones are achieved. Understanding this process is essential for Miami developers managing project cash flow.
Miami construction loans typically fund 60% to 75% of total project costs, with the developer's equity contribution funded first. The lender's proceeds are then drawn in stages, verified by a third-party inspector who confirms that work has been completed according to the approved plans and budget.
A typical Miami construction draw schedule includes the following stages. The initial draw (10% to 15% of loan) covers sitework, foundation, and preliminary infrastructure. This is typically the first disbursement after the developer's equity has been fully deployed. Vertical construction draws (60% to 70% of loan) cover the structural, mechanical, electrical, and plumbing (MEP) work as the building rises. In Miami, concrete construction is predominant for mid-rise and high-rise projects due to hurricane code requirements, adding time and cost compared to wood-frame construction common in other markets. Finish draws (15% to 25% of loan) cover interior finishes, landscaping, common areas, and punchlist items. The final draw covers completion items and releases the last of the loan proceeds, typically after a certificate of occupancy is obtained.
Miami-specific factors that affect the draw process include hurricane season (June through November), which can cause construction delays and trigger builder's risk insurance claims; Miami-Dade County permitting timelines, which can be longer than developers accustomed to other markets may expect; and the requirement for impact-rated windows and doors, specialized roofing, and reinforced concrete that are more expensive and sometimes have longer lead times.
Interest is typically charged only on drawn funds (interest reserve), which helps manage carrying costs during construction. Lenders include an interest reserve in the loan proceeds to cover interest payments during the construction period, typically 12 to 24 months.
What Types of Construction Projects Are Miami Lenders Financing?
Miami construction lenders are actively financing across multiple property types, though appetite varies based on market conditions, pre-sales/pre-leasing, and developer experience.
Luxury Condominium Towers represent the highest-profile segment of Miami construction lending. Lenders typically require 50% or more of units to be pre-sold before funding, developer equity of 30% to 40%, and experienced development teams. Recent headline deals include the $465 million JEM Private Residences financing and the $413 million One Twenty Brickell construction loan. Brickell, Edgewater, and Downtown are the primary locations for condo tower construction.
Multifamily Rental Developments attract construction financing from banks, debt funds, and HUD/FHA programs. While the supply pipeline is active, lenders remain comfortable with Miami multifamily construction due to the metro's strong population growth and rental demand. The key underwriting factor is the project's proximity to transit, employment centers, and retail amenities. Projects in Doral, Coral Gables, and infill urban locations receive the strongest lender interest.
Industrial and Warehouse Construction in Doral, Medley, and Airport West attracts competitive construction financing due to the sector's strong fundamentals. Speculative industrial development is financeable in Miami's tight market, though lenders prefer build-to-suit projects with pre-committed tenants. Construction costs for modern industrial facilities (concrete tilt-up with 32+ foot clear heights) run approximately $80 to $120 per square foot in South Florida.
Mixed-Use Development in Wynwood, Edgewater, and Downtown attracts construction financing from sophisticated lenders comfortable with the complexity of mixed-use underwriting. Projects combining residential, office, and retail components require larger development teams and more detailed pro formas but can achieve premium valuations in Miami's urban neighborhoods.
Hospitality Construction in Miami Beach, Downtown, and Brickell attracts specialized hotel construction lenders. The city's world-class tourism demand (26 million annual visitors) supports new hotel development, though lenders require experienced hospitality operators and typically advance lower LTC (55% to 65%) than for other property types.
What Does It Cost to Build in Miami Compared to Other Markets?
Miami construction costs run significantly above national averages due to hurricane building codes, labor market constraints, and material logistics. Developers must build these premiums into their project budgets and financing requests.
Miami-Dade County's building code, one of the most stringent in the nation, requires impact-rated windows and doors, reinforced concrete construction for mid-rise and high-rise buildings, specific roof anchoring and uplift resistance, and flood-proofing measures for properties in vulnerable areas. These requirements add approximately 10% to 20% to base construction costs compared to non-hurricane-code jurisdictions.
Labor costs in South Florida have escalated due to the volume of competing construction projects, the tight overall labor market, and the complexity of hurricane-code construction that requires specialized trades. Skilled labor shortages in concrete, glass, and roofing can create scheduling delays and cost overruns.
Soft costs (architecture, engineering, permitting, legal, insurance) in Miami typically represent 20% to 30% of total project costs, somewhat higher than the 15% to 20% typical in less regulated markets. Builder's risk insurance and windstorm coverage during construction are significant line items unique to coastal Florida development.
Developers should plan for a 15% to 20% contingency above initial budgets to account for South Florida's construction cost volatility. Lenders underwriting Miami construction loans typically require this contingency as a standard condition.
How Do Lenders Evaluate Miami Construction Loan Applications?
Miami construction loan underwriting is among the most rigorous in commercial lending. Understanding what lenders evaluate helps developers prepare compelling applications.
Developer experience is the single most important factor. Lenders require a documented track record of successfully completing similar projects in South Florida or comparable markets. First-time developers typically need an experienced development partner, a strong general contractor with a proven Miami track record, and additional equity (30% to 40% versus 25% to 30% for experienced developers).
Pre-sales or pre-leasing dramatically improve construction loan terms. Condominium projects with 50%+ pre-sales qualify for the most competitive financing. Multifamily and commercial projects with 30%+ pre-leasing receive preferential treatment. Fully speculative projects (no pre-commitment) are financeable but at higher rates and lower leverage.
General contractor qualification is thoroughly evaluated. Lenders require a guaranteed maximum price (GMP) contract, the contractor's financial statements, bonding capacity, insurance documentation, and references from recent Miami-Dade County projects. The contractor's experience with hurricane-code construction is essential.
Budget and timeline review involves detailed analysis of hard costs, soft costs, contingency, and interest reserves. Lenders compare the proposed budget against recent comparable projects and may require an independent cost analysis from a construction consultant. Miami-specific cost items (impact windows, reinforced concrete, extended permitting timelines) must be adequately budgeted.
Exit strategy evaluation considers the absorption rate for sales or lease-up, the competitive supply pipeline, and the developer's planned transition from construction financing to permanent financing or sales proceeds. Lenders want confidence that the project will generate sufficient revenue to repay the construction loan within the stated term.
What Are Current Construction Loan Rates and Terms in Miami?
Construction loan pricing in Miami reflects both the general interest rate environment and project-specific risk factors.
Bank construction loans for experienced developers with pre-sales or pre-leasing range from 7.0% to 9.0%, typically structured as SOFR plus 250 to 450 basis points. These floating-rate loans adjust with market rates, and borrowers should model rate sensitivity into their project budgets.
Debt fund construction loans for higher-leverage or riskier projects range from 9.0% to 13.0%, with origination fees of 1.5% to 3.0%. These lenders accept more risk but charge accordingly, and their flexibility on leverage (up to 80% to 85% LTC) can be valuable for developers seeking to minimize equity.
C-PACE supplemental financing offers rates of 7.0% to 9.0% with 20 to 30 year amortization, effectively reducing the blended cost of capital for qualifying construction projects. The long amortization and fixed-rate structure of C-PACE debt makes it particularly valuable for managing interest costs during and after construction.
HUD/FHA 221(d)(4) construction-to-permanent loans offer the most favorable terms at rates starting around 5.75% with 40-year fully amortizing terms. However, the 6 to 12 month processing timeline and Davis-Bacon wage requirements make this program best suited for large-scale, patient developers.
Mezzanine debt costs 12% to 18% and preferred equity costs 15% to 22%, adding to the blended cost of capital but reducing the developer's cash equity requirement.
Use the commercial mortgage calculator to estimate debt service on your Miami construction project.
What Insurance and Permitting Challenges Do Miami Construction Projects Face?
Miami's regulatory and insurance environment creates unique challenges for construction projects that directly impact financing costs and timelines.
Builder's risk insurance is mandatory for all Miami construction loans and covers damage to the project during construction. In South Florida, builder's risk premiums are significantly higher than non-coastal markets due to hurricane exposure. Annual premiums typically range from 0.75% to 2.0% of the total project value, compared to 0.25% to 0.50% in non-hurricane markets. Policies must be in place before the first construction draw.
Windstorm coverage during construction is often a separate requirement from standard builder's risk. The combined cost of builder's risk and windstorm coverage for a $50 million Miami construction project can range from $375,000 to $1 million annually, a material carrying cost that must be factored into the project budget and interest reserve.
Miami-Dade County permitting involves a multi-step review process that can take 3 to 6 months or longer for complex projects. Foundation permits, vertical construction permits, and trade permits each require separate review cycles. Expedited review services are available but add costs. Lenders typically require the building permit as a condition precedent to the first construction draw.
Impact fee requirements in Miami-Dade County include impact fees for schools, parks, transportation, and other public infrastructure. These fees vary by project type and location but can add $5,000 to $15,000 per residential unit and $2 to $5 per square foot for commercial space. Impact fees are typically included in the project's soft cost budget and funded as part of the construction loan.
Environmental compliance may require additional assessments for projects on former industrial sites, near waterways, or in areas with known contamination. Phase I and sometimes Phase II Environmental Site Assessments are standard requirements. Projects in the Wynwood or Edgewater corridors, which include former industrial uses, may face additional environmental review.
How Are Major Miami Development Corridors Attracting Construction Capital?
Miami's most active development corridors each present distinct opportunities and financing dynamics for construction projects.
Brickell continues to attract the largest construction loan packages in Miami. The financial district's transformation into a live-work-play destination, combined with Brickell's role as the preferred address for finance and tech firms, supports development of luxury residential, office, and mixed-use towers. Construction lending in Brickell benefits from strong pre-sales velocity and institutional-quality demand.
Miami Worldcenter/Downtown anchors the city's largest development zone. The 27-acre, $6 billion master plan has attracted construction financing from domestic and international banks, C-PACE providers, and institutional debt funds. Individual project financing within the Worldcenter district ranges from $50 million to $465 million, demonstrating the scale of capital flowing to this corridor.
Edgewater is emerging as a high-rise development frontier along Biscayne Bay. Multiple condominium and mixed-use towers are under construction or approved, with developers attracted by waterfront views, proximity to Downtown, and relatively lower land costs compared to Brickell. Construction lenders are increasingly active in Edgewater as the neighborhood's infrastructure improves.
Wynwood has transitioned from warehouse conversion and adaptive reuse to purpose-built mixed-use construction. Wynwood Plaza set the standard, and new developments combining creative office, retail, and residential are attracting construction financing from lenders who see the neighborhood's institutional maturation.
Doral attracts industrial construction financing for warehouse and distribution development. The submarket's proximity to MIA and tight vacancy support speculative and build-to-suit construction. Industrial construction costs in Doral are lower than high-rise residential, and the sector's strong fundamentals give lenders high confidence.
Contact Clear House Lending to discuss construction financing for your Miami development project.
Frequently Asked Questions About Construction Loans in Miami
What is the minimum equity required for a Miami construction loan?
Miami construction loans typically require developer equity of 25% to 40% of total project costs, funded before the first loan draw. Bank construction loans for experienced developers with pre-sales or pre-leasing may accept 25% to 30% equity. First-time developers, speculative projects, and higher-risk property types typically require 35% to 40%. Mezzanine financing and C-PACE can reduce the cash equity requirement, though total capital costs increase.
How long does it take to close a Miami construction loan?
Miami construction loan closings typically take 60 to 120 days from application to funding of the first draw. The timeline includes underwriting (2 to 4 weeks), appraisal and cost review (2 to 4 weeks), legal documentation (2 to 3 weeks), and satisfaction of closing conditions (permits, insurance, equity verification). HUD/FHA 221(d)(4) loans take 6 to 12 months or longer. Developers should begin the construction loan process 4 to 6 months before their planned construction start date.
What happens if construction costs exceed the budget in Miami?
Cost overruns are the developer's responsibility. Most Miami construction loans include a 10% to 15% contingency in the approved budget, but costs exceeding the total budget plus contingency must be covered by additional developer equity. Some lenders offer change order provisions that allow budget reallocation between line items without requiring additional equity, but material budget increases require formal loan modification. South Florida's construction cost volatility makes adequate contingency planning essential.
Can I get a construction loan for a speculative Miami project?
Yes, speculative (no pre-sales or pre-leasing) construction loans are available in Miami, though at higher rates and lower leverage than committed projects. Debt funds are the most common source for spec construction financing, offering rates of 9.0% to 13.0% with LTC of 60% to 70%. Industrial spec development in Doral and Medley receives the most favorable spec construction terms due to the sector's strong fundamentals. Spec luxury condo construction faces the most scrutiny and requires significant developer equity.
What is C-PACE financing and how does it work for Miami construction?
C-PACE (Commercial Property Assessed Clean Energy) provides supplemental financing for energy-efficient and resilient building components, repaid through property tax assessments. In Miami, C-PACE funds hurricane-resistant features (impact windows, reinforced roofing), energy-efficient HVAC systems, solar installations, and water conservation systems. C-PACE runs 7.0% to 9.0% with 20 to 30 year amortization, and can provide 10% to 30% of total project costs. When combined with a senior construction loan, C-PACE can increase total leverage to 80% to 90% LTC. North Development's $180 million Brickell C-PACE deal is the largest in program history.
What construction types are required by Miami-Dade building codes?
Miami-Dade County's building code, among the most stringent in the nation, requires impact-rated windows and doors capable of withstanding windborne debris, reinforced concrete construction for mid-rise (5+ stories) and all high-rise buildings, specific roof anchoring and wind uplift resistance rated for Miami-Dade wind speeds, and flood-proofing measures for properties in vulnerable areas. These requirements add approximately 10% to 20% to base construction costs but result in buildings that qualify for significantly lower long-term insurance premiums.
Moving Forward With Your Miami Construction Loan
Miami's development pipeline represents one of the most active construction markets in the United States, attracting billions in construction financing from domestic and international lenders. Whether you are developing a luxury condominium tower in Brickell, a multifamily community in Doral, an industrial distribution center near MIA, or a mixed-use project in Wynwood, understanding the construction lending landscape is essential to structuring a financeable project.
The key to securing competitive construction financing in Miami is demonstrating development experience, presenting realistic budgets that account for South Florida's cost premiums, and working with a lending partner who understands the city's unique regulatory, insurance, and market dynamics.
Contact Clear House Lending today to discuss your Miami construction project and get matched with the right lender from our network of over 6,000 commercial lending sources.