A.CRE

Premier Suburb

The most prolific, popular or expensive suburb within a city or town.

Putting ‘Premier Suburb’ in Context

Scenario

GrovePoint Capital, a real estate investment manager specializing in Class A multifamily properties in core markets, is evaluating the acquisition of The Grove Residences. This is a newly developed, 125-unit luxury apartment community located in Coconut Grove, Miami, FL. Coconut Grove is widely regarded as one of Miami’s premier suburbs due to its high-end retail, waterfront parks, historic charm, and proximity to downtown Miami.

About the Property

The Grove Residences offers one-, two-, and three-bedroom units averaging 1,200 square feet. The property features top-tier amenities, including a rooftop pool with panoramic views of Biscayne Bay, a state-of-the-art fitness center, co-working spaces, and private parking. The property sits on a 2-acre site surrounded by lush tropical landscaping, consistent with the character of Coconut Grove.

Why Location Matters

As a premier suburb, Coconut Grove attracts affluent renters who value its proximity to Miami’s business districts while enjoying a suburban lifestyle. Its reputation for safety, vibrant cultural scene, and excellent schools also contribute to strong rental demand. This translates to premium rents for well-located properties like The Grove Residences. Current market data indicates that similar Class A properties in Coconut Grove achieve an average rent of $4.50 per square foot, which is 20% higher than comparable properties in non-premier suburbs of Miami.

Investment Metrics

GrovePoint Capital’s underwriting for The Grove Residences assumes a purchase price of $85 million, equating to $680,000 per unit. The property generates an annual Net Operating Income (NOI) of $4.25 million, resulting in a Year 1 cap rate of 5%. The projected cash-on-cash return in Year 1 is 6.5% based on a 60% loan-to-value acquisition financing with a 5% interest rate.

Key Takeaway

Investing in a premier suburb like Coconut Grove comes with higher upfront costs, but the location’s strong fundamentals—high demand, premium rents, and long-term appreciation—can justify the expense. The Grove Residences demonstrates how a property in a prestigious location can deliver steady cash flow and potential for appreciation, making it an attractive investment for a core acquisition strategy.

Frequently Asked Questions about Premier Suburbs in Real Estate Investment

A premier suburb is defined as the most prolific, popular, or expensive suburb within a city or town. These areas are often known for their amenities, prestige, safety, and proximity to key urban centers.

Premier suburbs offer strong fundamentals such as high demand, premium rental rates, and long-term appreciation. As seen in the case of Coconut Grove, investors benefit from steady cash flow and higher rents—20% above non-premier locations in Miami.

The example featured The Grove Residences, a 125-unit Class A luxury apartment community in Coconut Grove, Miami—highlighting multifamily investment in a premier suburban location.

GrovePoint Capital projected a 5% cap rate on a $4.25 million NOI and a Year 1 cash-on-cash return of 6.5%, supported by a 60% LTV loan at a 5% interest rate. The investment leveraged the location’s premium rent potential to justify a high per-unit cost.

Properties in premier suburbs like Coconut Grove command higher rents due to factors such as proximity to business centers, affluent demographics, desirable schools, and lifestyle amenities. In this example, average rents were $4.50 per square foot—20% higher than in other areas.

Top-tier amenities such as a rooftop pool with bay views, a high-end fitness center, co-working spaces, and private parking helped position The Grove Residences as a luxury asset aligned with the expectations of Coconut Grove renters.

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