Miami residents worry about rising property values and losing their community's character due to climate change.

• When an area undergoes gentrification, it results in a significant increase in average incomes and rents, leading to a rise in the white population and the displacement of people of color.
• In certain regions of the U.S., the acceleration of climate change is leading to a phenomenon known as "climate gentrification."
• The fear of the future is prevalent among longtime residents in Miami neighborhoods such as Allapattah, Liberty City, Little Haiti, Overtown, and West Grove.

In the plaza of the historic Lyric Theater, Nicole Crooks shielded herself from the midday sun with a royal blue hat, baked Miami.

The theater in Overtown, a cultural hub for the Black community, hosted iconic performances by James Brown, Sam Cooke, Ray Charles, Aretha Franklin, and Ella Fitzgerald. Notable audience members included Jackie Robinson and Joe Louis.

On that day in mid-March, a towering shell of a future high-rise development and a pair of yellow construction cranes stood over the cultural landmark, serving as a visual reminder of the changing face of the neighborhood and the rising costs for longtime residents.

Overtown, situated inland and away from sought-after beachfront properties, was previously disregarded by developers and affluent homeowners, according to Crooks, a community engagement manager at Catalyst Miami, a nonprofit that concentrates on fairness and justice.

As Miami faces the brunt of climate change, Overtown has emerged as a popular destination for developers seeking to escape the rising seas and flood risks, according to climate experts and community advocates.

Overtown, like other districts such as Allapattah, Liberty City, Little Haiti, and parts of Coconut Grove, is situated on the Miami Rock Ridge, an elevated limestone spine that is approximately nine feet above sea level, around three feet higher than Miami's average elevation.

The revitalization of these areas is transforming the appearance of historically African American communities and increasing property values, according to longtime residents, resulting in a phenomenon referred to as "climate gentrification."

Despite the climate risk, people are moving to Miami and building there. Here's how to buy renewable energy from your electric utility.

Climate change is causing gentrification in other parts of the U.S., which disproportionately affects people of color.

According to Crooks, the encroachment of luxury developments in Overtown is primarily about economics. She has lived in the area since 2011 and recognizes that what was once prime real estate on the coast is no longer as valuable due to rising seas.

Overtown and other historically Black neighborhoods in Miami are "ground zero of ground zero" for climate gentrification, according to Crooks.

Why the wealthy 'have an upper hand'

The rapid increase in rents, average incomes, and education levels in a neighborhood is a common occurrence when it gentrifies, according to Carl Gershenson, director of the Princeton University Eviction Lab.

As a result of the correlation between those elements, the white population tends to increase while people of color are pushed out, according to him.

Gentrification is "inevitable" in Miami due to the large influx of people, particularly wealthy ones, moving to the area, according to Gershenson.

Gentrification will be influenced by climate change, he stated.

A recent analysis by Moody's real estate experts reveals that climate gentrification has worsened a "pronounced housing affordability crisis" in Miami, particularly affecting immigrants and low-income residents.

The average rent per unit in the past four years has increased by 32.2%, which is higher than the U.S. average growth of 19.3% and the average rent per unit of $1,825.

Miami is the least affordable metro area in the U.S., with the typical renter spending about 43% of their income on rent, according to May data from Zillow.

Due to Miami's transformation into a finance and technology hub, housing demand has surged, causing prices to rise, according to Moody's.

Wealthy individuals are increasingly drawn to historically low-income neighborhoods like Little Haiti, Overtown, and Liberty City due to the rising seas and more frequent and intense flooding, according to Moody's.

Since they have the financial means to relocate away from intensifying climate hazards, the rich have an upper hand.

According to Moody's, previously overlooked areas with higher elevation away from flood-prone zones are now valued and face development pressure.

The displacement of established residents and the inflation of property values and taxes are consequences of the accelerating shifts in migration patterns, which contribute to the widening of the socio-economic divide.

Since 2000, real estate in Miami-Dade County's higher elevations has appreciated at a faster rate than in other areas of the county, as stated in a 2018 paper by Harvard University researchers.

According to a 2015 analysis by Florida International University, only 26% of homes in Little Haiti are owned by their residents.

A 17-acre mixed-use development is being built in the Magic City Innovation District of Little Haiti, which is in its early stages of construction.

Robert Zangrillo, founder, chairman, and CEO of Dragon Global, one of the Magic City investors, stated that the development will "uplift" and "empower" the neighborhood instead of "gentrifying" it.

The location of Magic City was influenced by several factors, including elevation, train and highway access, proximity to schools, and views.

""We're the highest point in Miami, which eliminates flooding," he said."

Effects of high costs 'simply heartbreaking'

It is challenging to obtain comprehensive real estate data that is divided according to specific neighborhood boundaries. While ZIP-code data provides a general estimate, it may include information from multiple neighborhoods, as per analysts.

The average annual property tax bills in the northwest Miami ZIP code 33127 have increased by 60% between 2019 and 2023, reaching $3,636, according to ATTOM, a real estate data tracking company. This ZIP code covers parts of Allapattah, Liberty City, and Little Haiti and is adjacent to Overtown.

The growth rate of that figure surpasses the average growth rate of 37.4% for Miami-Dade County and 14.1% for the U.S., as per ATTOM.

Higher property values and city services are often associated with higher property taxes, as developers improve properties and wealthy homeowners demand more services.

According to CoreLogic data, the average rents in that specific ZIP code have surpassed the rents in the surrounding area.

Since the first quarter of 2021, the rent for one-bedroom apartments increased by 50%, while the rent for two-bedroom apartments increased by 52%, according to CoreLogic.

In comparison to the broader Miami metro area, one-bedroom rents in Miami-Miami Beach-Kendall grew by approximately 37% to 39%, while two-bedroom units saw rents increase by roughly 45% to 46%. CoreLogic provides data for two Miami metro divisions: Miami-Miami Beach-Kendall and West Palm Beach-Boca Raton-Delray Beach.

"The sight of elders being pushed out and single mothers resorting to living in their cars with their children due to financial constraints is heartbreaking for me," Crooks stated.

'Canaries in the coal mine'

Gershenson from Princeton stated that climate gentrification isn't exclusive to Miami; it's occurring in "high-risk, high-amenity areas" throughout the U.S.

As Andrew Rumbach, senior fellow at the Urban Institute, stated, Honolulu is a notable instance of development capital encroaching on previously undesirable inland areas. This trend is likely to intensify in other parts of the country as the effects of climate change become more severe.

He stated that Miami and Honolulu are the "canaries in the coal mine."

Climate gentrification can manifest in various ways, including when natural disasters decrease the availability of housing, resulting in increased prices.

In the year following the 2021 Marshall Fire in Colorado, a quarter of renters in affected communities experienced a rent increase of over 10%, according to survey data collected by Rumbach and other researchers. This was more than double the region-wide average of 4%, he stated.

Repaired and rebuilt supplies typically come at a higher cost, which tends to benefit wealthier homeowners, according to research.

Recent research by the Georgia Institute of Technology and the Brookings Institution reveals that high-climate-risk areas in the U.S. experience an average of 12% higher rents due to the frequency of disasters.

According to Rumbach, housing costs typically rise following disasters due to supply and demand principles.

'My whole neighborhood is changing'

Fredericka Brown, 92, has lived in Coconut Grove all her life.

Her neighborhood has undergone significant changes, affecting its character and attractiveness, she stated.

The Macedonia Missionary Baptist Church, founded in 1895 and located in Coconut Grove Village West, is undergoing significant changes in the neighborhood, as stated by Brown while seated at a long table in the church's basement.

In the 1870s, some Black settlers from the Bahamas established themselves in the West Grove district.

"Single-family houses are no longer being constructed here," Brown stated. Instead, she noted that building heights are increasing.

Carolyn Donaldson, seated beside her, concurred. West Grove, situated at the highest point in the broader Coconut Grove region, was stated by Donaldson, a resident and vice chair of Grove Rights and Community Equity.

If rising seas swallow up surrounding lower-lying areas in the future, the area may become "waterfront property," said Donaldson. It's important for developers to be "forward-thinking," she added.

Rising property taxes have been a financial burden for longtime residents due to development, she stated.

"Suddenly, the house you paid for years ago and planned to pass down to your family for generations, you may or may not be able to afford it," Donaldson stated.

Why elevation matters for developers

Developers have been active in the City of Miami.

Over the past decade, the number of newly constructed apartment units in multifamily buildings in the City of Miami has grown by 155%, compared to 44% in the broader Miami metro area and 25% in the U.S., according to Moody's data. The geographical area includes gentrifying neighborhoods and others such as the downtown area.

Elevation is not typically the primary driver of investment theses for developers in Miami, but it is still a significant factor, according to David Arditi, a founding partner of Aria Development Group. Aria, a residential real estate developer, primarily focuses on the downtown and Brickell neighborhoods of Miami and not those being discussed in this article.

Elevation is crucial in mitigating flood risk, as lower-lying areas with higher flood risk can lead to higher insurance rates, which are already expensive, according to Arditi. Aria evaluates flood maps from the Federal Emergency Management Agency and selects areas with lower relative risk for construction, as stated by Arditi.

If you're in a more favorable flood zone versus not, there's a significant economic impact to it, as the insurance market has quadrupled or quintupled in the past few years, resulting in higher premiums.

The study by University of Miami researchers in 2022 revealed that insurance rates, rather than the physical danger of increasing sea levels, are the main factor that influences homebuyers' choice to relocate to higher ground.

According to Han Li and Richard J. Grant, climate gentrification in Miami is driven by economic investment rather than sea-level rise.

Balancing development with addressing Miami's housing crunch is necessary, said Donaldson.

She stated that they are striving to preserve as much of the neighborhood's history as possible while also leaving a lasting legacy and history in the community.

The Florida International University Institute of Environment's director, Todd Crowl, stated that replacing old homes with new ones can enhance a community's resilience against climate-related disasters.

The influx of wealthier individuals into majority South American and Caribbean neighborhoods can disrupt the cultural diversity and lead to homogenization, according to Crowl, a science advisor for the mayor of Miami-Dade County.

"Crowl stated that the social injustice aspect of climate change is a significant issue and it is difficult to comprehend."

Paulette Richards, a Liberty City resident since 1977, stated that her friends have family members who are sleeping on couches or air mattresses due to the unaffordable housing costs.

"Richards, a community activist known for coining the term "climate gentrification," stated that the high rent is unaffordable for the community."

Around 2010, Richards, the founder of Women in Leadership Miami and Liberty City Climate & Me, noticed an increase in interest from "predatory" real estate developers in higher-elevation communities.

She stated that she has no issue with development in Liberty City, but she wants the neighborhood to look good only for her own satisfaction.

It's 'about fiscal opportunity'

Carl Juste's roots in Little Haiti run deep.

Since the early 1970s, the photojournalist has resided in the neighborhood situated north of downtown Miami.

A mural of Viter and Maria Juste, the parents of Little Haiti, greets visitors outside their son's studio on Northeast 2nd Avenue, a significant cultural hub for the Haitian Diaspora.

Juste stated that anyone who visits Little Haiti will inevitably stop in front of the mural and take photographs.

In the vicinity, work has commenced on the Magic City Innovation District.

According to Dragon Global's webpage, the development in Magic City is planned to include eight 25-story apartment buildings, six 20-story office towers, a 420-room hotel, retail space, and public areas. One of the properties is Sixty Uptown Magic City, which is marketed as a luxury residential complex.

"Now there's this encroachment of developers," Juste said.

He stated that the only direction one can move is upward due to the increasing water levels. In terms of development, he emphasized its connection to financial prospects.

Neither Plaza Equity Partners nor Lune Rouge Real Estate responded to CNBC's requests for comment.

The development, as stated by company officials, will positively impact the region.

In 2021, Neil Fairman, founder and chairman of Plaza Equity Partners, stated that the Magic City project would result in more jobs, economic prosperity, and the preservation of Little Haiti's vibrant culture.

According to a 2018 economic impact assessment by Lambert Advisory, Magic City developers anticipate creating more than 11,680 full-time jobs and infusing $188 million of extra annual spending into the local economy. Similarly, Miami-Dade County estimated that a multimillion-dollar initiative launched in 2015 to revitalize part of Liberty City with new mixed-income developments would create 2,290 jobs.

The City of Miami established the Little Haiti Revitalization Trust, which received $31 million in investments from Magic City investors to aid in community revitalization efforts in Little Haiti.

Developers prioritize affordable housing and homeownership, local small business development, community beautification projects, and the creation and improvement of public parks, they said.

Zangrillo, the Dragon Global founder, believes that the investment in Little Haiti should go beyond the usual to ensure that the community benefits from the development rather than being gentrified. He also contributed a $100,000 donation to build a technology innovation center at the Notre Dame d'Haiti Catholic Church.

Zangrillo stated that developers did not evict residents since they purchased vacant land and derelict warehouses to construct Magic City.

The development in Little Haiti has led to unsustainable inflation for many longtime residents, and it also causes other, less quantifiable issues such as the destruction of the neighborhood's feel and identity, said Juste.

""Exactly what attracts people here is what makes gentrification so dangerous," he stated."