The Real Deal South Florida April 2014 by The Real Deal

S O U T H F L O R I D A M A R K E T R E P O R T APRIL 2014

A DEVELOPING DOWNTOWN BEACH A LOOK AT MIAMI’S NEW URBAN MENTALITY

P24

BEHEMOTH INSIDE BUILDER ALAN FAENA’S MASSIVE MIAMI BEACH PROJECT P40

PAYING TOP DOLLAR STICKER SHOCK FOR SOUTH FLORIDA CONDO PRICES P64

HOT FOR HOTELS

MORE INVESTORS REHAB OLD PROPERTIES P56

The Faena House condominiums, part of a project to transform a six-block section of Miami Beach

INTRODUCING COCONUT GROVE’S NEWEST BAYFRONT RESIDENCES

SALES GALLERY OPENING SPRING �� BY APPOINTMENT ONLY

DEVELOPMENT PARTNERS

EXCLUSIVE MARKETING AND SALES BY DOUGLAS ELLIMAN DEVELOPMENT MARKETING

Broker participation welcome. Oral representation cannot be relied upon as correctly stating the presentation of the Developer, for correct representation, make reference to the documents required by section 718.503 Florida Statutes, to be furnished by the Developer or Buyer or Lessee. Not an offer where prohibited by State Statutes. Plans, features and amenities subject to change without notice. All illustrations and plans are artist conceptual renderings and are subject to change without notice. This advertisement does not constitute an offer in the states of NY or NJ or any jurisdiction where prior registration or other qualification is required. Equal Housing Opportunity.

MANHATTAN

B R O O K LY N

QUEENS

LONG

ISLAND

THE

HAMPTONS

© 2014 Douglas Elliman Real Estate. All material presented herein is intended for information purposes only. While, this information is believed to be correct, it is represented subject to errors, omissions, changes or withdrawal without notice. All property information, including, but not limited to square footage, room count, number of bedrooms and the school district in property listings are deemed reliable, but should be verified by your own attorney, architect or zoning expert. Equal Housing Opportunity.

THE DUCK POINT ESTATE WITH OCEAN VIEWS Remsenburg | $9,950,000 | Classic, well-appointed, one-of-a-kind, the adjectives never end for this 6,000 sf waterfront Estate located on 1.3 acres with a heated Gunite pool, sizeable boat dock, terraced gardens, and bulk-heading on scenic Duck Point overlooking Moriches Bay. Web# H54354. Enzo Morabito Team 631.537.6519

4+ ACRE ESTATE FAMILY COMPOUND Water Mill | $20,999,000 | This pristine, secluded 8-bedroom, 10-bath family compound sits behind automated gates and has a main house, pool, pool house, tennis and guest cottage. Sited on 4 subdividable acres, this parcel is exceptional and unique. Web# H10581. Carol Nobbs 631.204.2714

CHARMING WATERFRONT COMPOUND Shelter Island Heights | Price Upon Request Traditional home with guest house on 5.5 acres with 350 ft of sandy beach with deep water dock. Main house has double-height entrance, living room, family room with fireplaces, formal dining and chef’s eat-in kitchen. Web# H43485. Paul Brennan 631.537.4144

A SECLUDED ACRE IN THE VILLAGE East Hampton | $2,795,000 | Down a peaceful driveway, this 2,850 sf home sits in the heart of East Hampton Village. Featuring an open living room, 4 bedrooms, 4.5 baths, 2 fireplaces, dining room, kitchen and room for pool. Web# H28398. Barbara Blumberg 631.267.7322

VILLAGE NEW CONSTRUCTION Southampton | $5,500,000 | Near ocean, shops and restaurants, this brand new, 2.5-story, 7-bedroom, 8.5-bath home has all the right touches. There is a heated pool, pool house, garage and a completely peaceful backyard on .31 acres. Web# H53806. Paula I. Hathaway 631.204.2712

GATED 1.90 ACRE IMPRESSIVE TRADITIONAL Southampton Village | $8,495,000 | Sited behind electric gates on almost 2 acres, this Traditional features 7 bedrooms, 8.5 baths and has everything including a media room, gym, pool, pool house, office, den and first and second floor mirror master bedrooms. Web# H31025. Carol Nobbs 631.204.2714

GREAT VALUE ON ONE-OF-A-KIND CONDO Southampton | $1,695,000 | This 4-bedroom, 4.5-bath Townhouse is near shops, restaurants and only 1 mile to the ocean. Featuring top-of-the-line appliances, high ceilings, two large patios, pool/pool house. Web# H32471. Paula I. Hathaway 631.204.2712

SPACIOUS HOME WITH TENNIS Sag Harbor | $1,799,000 | This bright Contemporary is great for summer entertaining and relaxing. Offers tennis court, pool and hottub/sauna room. Featuring 5 bedrooms, 4 baths, central air, and hardwood floors. Lynda Ireland 631.537.6439

SOUTH OF HIGHWAY ESTATE Water Mill | $2,995,000 | Features an open floor plan with high ceilings and skylights throughout. Master suite features a walk-in closet. Guest suite, 2 additional bedrooms, 4 full baths, heated pool and tennis. Web# H56519. Maryanne Horwath 631.204.2720

FROM SOUTH FLORIDA TO SOUTHAMPTON. EVERYWHERE YOU ARE, WE ARE. FOR COMPLETE LISTINGS AND INSIGHT, ASKELLIMAN.COM.

THE

NORTH

FORK

RIVERDALE

WESTCHESTER/PUTNAM

LOS

ANGELES

FLORIDA

HIGHEST ELEVATION ON THE LAKE 748 Hi-Mount Road | Palm Beach | $18,990,000 Gottfried built, this elegant regency offers breathtaking panoramic views and the utmost in privacy. Recently reduced, this 6 bedroom estate is the pinnacle of luxurious comfort and elegance. Web# RX-9990303. Pamela Gottfried 561.371.5700

DIRECT INTRACOASTAL 3140 Washington Road | West Palm Beach $4,999,000 | Casa Del Lago is a classic, graceful hacienda with captivating charm and ambiance situated on approximately an acre and a half of aesthetic direct Intracoastal Waterway. Web# RX-3316633. Ashley McIntosh 561.685.0861

MURANO GRANDE 400 Alton Road, 1201 | Miami Beach | $2,550,000 This turn-key 2,003 sf condo offers one of the largest 2 bedroom, 2.5 bathroom layouts with striking views of Biscayne Bay, Fisher Island and Downtown Miami. Web# A1892401. Adriana Pinto-Torres and Tracy Ferrer, The APT Team 786.493.1388

WATERFRONT BEAUTY 1020 Stillwater Drive | Miami Beach | $2,500,000 This furnished 4 bedroom, 3 bathroom, 2,115 sf home is located in gated Stillwater of Miami Beach. Close to the beach and Bal Harbour. Also rents at $9,000. Inquire short term rates. Web# A1916113. Adriana PintoTorres and Tracy Ferrer, The APT Team 786.493.1388

CUSTOM BUILD YOUR DREAM RESIDENCE 8375 Del Prado Drive | Delray Beach | $1,695,000 Brand new Tuscan Harvey estate in Mizner Country Club. Call for new renderings, plans & dimensions by builder and architect. Golf Equity Membership included with purchase. Web# RX-10010906. Tracy Roddy 954.383.7555

PENTHOUSE AT JADE BEACH 17001 Collins Avenue, PH-4704 | Sunny Isles $50,000/mo | Magnificent hidden diamond and unique 5,500 sf two-level penthouse. Unobstructed 180 degree views of the Atlantic Ocean and Intracoastal. This penthouse is situated on the Southeast corner at Jade Beach. Web# A1926938. Janet Ben Zvi 305.494.5100

ABOVE THE ATLANTIC Montauk | $8,200,000 | This stunning oceanfront home sit an impressive 55 ft above sea level, very difficult to find anywhere else on the East Coast between New York and Florida. Sweet, warm, 3-bedroom Contemporary boasts remarkable ocean views. A few hundred feet from your personal stairway you will find an extensive stretch of beach with a phenomenal surf break. This is one of just two properties currently on the market that is not situated on a through street, as the cul-de-sac leads solely to a hundred acre nature reserve. Should you choose to build, the site is even higher; it will afford 360 degree views, featuring sunsets over Fort Pond Bay and Block Island Sound. Business district is 2,500 ft from your gate. Web# H15016. Raymond G. Lord III 607.760.6925 | Chris Chapin 631.902.5986

L IVE M I A MI A truly international city offering endless world-class entertainment, fine dining, and ideal weather year round. Debuting 80 condo towers with over 20,000 units — an iconic city not just to play but to stay — Miami is on the rise.

How many luxury square feet does $1M buy? *

“Demand for prime Miami property remains strong and price growth is set to keep pace with the key East and West Coast markets in 2014.”

MIAMI

- Jonathan Miller, Property Analyst

SHANGHAI

497

“Miami’s high-end condo market has proved especially vibrant, and has gone hand in hand with new luxury shopping destinations in Brickell and the Design District.” - Conor Dougherty, Wall Street Journal

701 MOSCOW

463

PARIS

449

443

square feet

NEW YORK

LONDON

HONG KONG

MONACO

433

271

222

161

square feet

*2013 Global Market Report, Knight Frank (Miami range based on South Beach value)

MIAMI AS A GLOBAL MARKET W H E R E A R E B U Y E R S C O M I N G F R O M?**

Top National Markets 1. California 2. Georgia 3. Texas 4. New York 5. Illinois

SYDNEY

6. Michigan 7. Pennsylvania 8. Virginia 9. New Jersey 10. North Carolina

** Miami International Council

Top International Markets 1. Brazil 2. Colombia 3. Canada 4. India 5. Argentina

6. Venezuela 7. Bolivia 8. France 9. United Kingdom 10. Russia

O NLY WI TH O N E The top brokerage firm for luxury condo sales over $1M in Miami Supported by a global brand with over 650 offices worldwide, ONE | Sotheby’s International Realty is poised to make Miami your second home. Our brokerage is comprised of more than realtors: Global Real Estate Advisors, ready to expertly guide an international audience through the South Florida market.

View from one of our exclusive developments, One Thousand Museum.

For immediate assistance with your real estate transaction, please call 888.998.5560.

ONESOTHEBYSREALTY.COM ©MMXIV ONE Sotheby’s International Realty, licensed real estate broker. Equal Housing Opportunity. Each Office Independently Owned And Operated.

S O U T H F L O R I D A M A R K E T R E P O R T APRIL 2014

EDITOR’S NOTE o much is happening in MIAMI these days, it’s easy to forget how young the city is compared to other major U.S. metropolitan areas. Miami was incorporated in 1896, long after cities like New York, Chicago and San Francisco. Its youth continues to provide opportunities for real estate developers and investors, however. As The Real Deal’s latest South Florida Market Report details, Miami is in the midst of a growth spurt that could help it gain significant ground on its older counterparts. Condo builders are again flocking to Miami’s key urban markets, from Brickell Avenue – the city’s “Wall Street” – to the evolving Midtown neighborhood. Our cover story examines what is driving the latest construction boom, with a particular focus on the differences between this cycle and last decade’s dramatic bust. Beyond Miami’s urban core, luxury condo developers in coastal markets like Miami Beach, Sunny Isles Beach and Hollywood are going after the wealthy elite with smaller luxe buildings. We profile one of those developers, Alan Faena, whose 47-unit Faena House seems to be popular with New York billionaires. The building is part of Faena’s massive plan to transform an entire section of Miami Beach. This issue also includes in-depth reports on the residential resale, hotel, industrial, office, retail and distressed sectors, as well as a story on the increasing importance of interior design in marketing new condos. Lastly, Condo Vultures founder Peter Zalewski returns with his back-page column. He examines how South Florida buyers are willing to pay eye-opening figures for condos today. We hope the issue is as fun to read as it was to put together. Enjoy the issue.

ERIC KALIS, South Florida Bureau Chief

6 | APRIL 2014 WWW.THEREALDEAL.COM

24 INSIDE

CONDO CONFIDENCE New urban mentality seen as key to sustaining Miami’s Downtown development boom

FAENA’S FANTASY Developer Alan Faena assembles a group of all-star collaborators to build a massive new Miami Beach project

UGO COLOMBO Q&A Developer weighs in on the latest boom

ROARING RESALES While new condos grab the attention, prices rise for existing homes in South Florida too

DESIGNER DIGS Prominent interior designers are being hired to help condo projects stand out amid competition

RACING FOR RETAIL A shortage of urban store offerings has builders dashing to create new space

SHELTERS OF THE STARS The rich and famous buy and sell, including “The Rock”

48 COST OF DIRT

Surging land values in South Florida are keeping many developers and investors on the sidelines

DEFAULT DEALS DOWN Less opportunities to buy troubled assets, and fewer discounts

Q&A WITH ALICIA CERVERA LAMADRID Broker says local buyers are getting locked out of market

52 CAUTION OVER CANAL

Industrial sector sees limited SPACE INVADERS Ofﬁce market growth despite Panama draws more new ﬁrms Canal expansion project

46 BY THE NUMBERS

A look at South Florida’s growth spurt

56 HUNTING FOR HOTELS

DEEP POCKETS REQUIRED Columnist Peter Zalewski on Investors are agressively repositioning older properties luxury condo prices today

MODERN DISTINCTIVE LIVING

NOW SELLING

One, Two & Three Bedroom Luxury Residences starting at $300k FOR MORE INFORMATION CALL 786.463.4001 OR VISIT US AT BRICKELLTEN.COM

These drawings are conceptual only and are for the convenience of reference. They should not be relied upon as representations, express or implied, of the final detail of the residences. Units shown are examples of unit types and may not depict actual units. Stated square footages are ranges for a particular unit type and are measured to the exterior boundaries of the exterior walls and the centerline of interior demising walls and in fact vary from the area that would be determined by using the description and definition of the “Unit” set forth in the Declaration (which generally only includes the interior airspace between the perimeter walls and excludes interior structural components).

SALES & MARKETING

RESIDENTIAL

Roaring resales

South Florida Market Report

While new condos grab the attention, prices jump for existing homes in South Florida too

BY CHRISTOPHER CAMERON

s developers again race to erect shimmering luxury condo towers throughout Miami, South Florida’s resale market is also booming, buoyed by full-time residents, instead of cosmopolitan investors. In February, the average sale price of an existing home in South Florida increased 17.5 percent year-over-year to $423,511, from $360,430, according to Condo Vultures. Palm Beach County, known for its stately homes, saw the largest increase from February 2013. The average price of a resale home in Palm Beach soared 25 percent, to $507,769 from $406,039. Miami-Dade County’s existing home prices jumped 13 percent in the 12-month period, while Broward County homes rose 12.8 percent. To be sure, high-end sales tend to skew the average prices, but data show price appreciation across all markets. The median list price for existing homes in February in Miami was $290,000, up 5.5 percent from a year ago, according to the National Association of Realtors. In West Palm BeachBoca Raton, the median list price leaped 14.2 percent, to $265,000, NAR data show. In Fort Lauderdale, the median listing rose 8.4 percent over the year, to $189,777. “The market is being driven by really basic fundamentals of supply and demand,” Douglas Elliman Florida CEO Jay Parker

At $25.5 million, 120 Jungle Road in Palm Beach was the priciest resale in all of South Florida through February.

said. “There is simply not a lot of inventory and sellers are being aggressive.” While the inventory of existing homes across South Florida did actually increase 17.8 percent year-over-year in the last week of February, according to Condo Vultures, it’s still low historically and brokers report demand outpaces the supply growth. “I think we are seeing a strong and sustainable market,” Parker said. Brokers also noted a difference in buyer demographics. New construction buyers tend to be international investors purchasing a vacation property, who are able to wait

SOUTH FLORIDA’S PRICIEST RESALES IN 2014 SO FAR Broward

2550 Del Lago Dr., Ft. Lauderdale

Miami-Dade

$8.35 million 720 S. Mashta Dr., Key Biscayne

10 Harborage Isle Dr., Ft. Lauderdale $6.5 million

6455 Pinetree Dr., Miami Beach

while the building goes up. Existing homebuyers, especially those purchasing singlefamily properties, tend to be domestic fulltime South Florida residents. “New construction inventory, generally speaking, requires a 50 percent deposit, and that is a year and a half before you can take occupancy of the property,” said Alicia Cervera Lamadrid, managing partner of Cervera Real Estate. “So for a lot of domestic buyers that is not palatable and many times it is not viable. If they are going to put that much money down, then they need to move into the property.”

Palm Beach

$9.8 million

120 Jungle Road, Palm Beach

$25.5 million

$7 million

4 El Bravo Way, Palm Beach

$19.8 million

10 South Lake Trail, Palm Beach

$13.4 million

224 Royal Palm Dr., Ft. Lauderdale

$5.3 million

101 Cape Florida Dr., Key Biscayne $6.4 million

501 Coral Way, Ft. Lauderdale

$4.2 million

6975 Sunrise Terr., Coral Gables

$5 million

5545 Arbor Lane, Coral Gables

$4.99 million 490 Mariner Dr., Jupiter

3131 NE 27th Ave., Lighthouse Point $3.6 million

Source: Condo Vultures and The Real Deal research; data through mid-February

8 | APRIL 2014 WWW.THEREALDEAL.COM

12411 Hautree Ct., Palm Beach Gardens $9 million $6.75 million

RESIDENTIAL South Florida Market Report

West Palm Beach office of law firm Gunster as the company’s mailing address. The three-story, six-bedroom home was built in 1926 and saw substantial renovations in the last decade. It was listed by Corcoran brokers Paulette and Dana Koch, with an original asking price of $30 million. Miami-Dade ranked second in dollar volume, despite a year-over-year decline. The top five deals in the county this February totaled about $33 million, down from $37.5 million in February 2013. Shelton and Stewart’s Tracey Spiegelman had Miami-Dade’s top resale in February at 720 South Mashta Drive, a 6,328-square-foot single-family home that sold The 6,328-square-foot single-family home at 720 South Mashta Drive in Key Biscayne sold for $9.8 million, the priciest resale deal for $9.8 million. in Miami-Dade through February. Finally, Broward County saw an increase to $27.9 Parker said many domestic buyers are million in total dollar volume of its priciest five home sales, from $26.4 million in moving from high-tax states, like New York. “With the ability today to work from alFebruay 2013. The largest resale deal of most anywhere, we are seeing more and February was for $8.35 million at 2550 more buyers from New York flock to South Del Lago Drive in Fort Lauderdale. The Florida,” Parker said. 12,147-square-foot, seven-bedroom, sin“New Yorkers are used to paying gle-family home sits along the Cordelia $3,000-to-$4,000 per square foot, and for River. Joy Triglia of Patton & Co. Realty them to come here and pick something up had the listing. for $2,000, or even $3,000 on the luxury end, it’s a bargain,” he maintained.

“I think a lot of people who were sitting on the sidelines are now thinking, ‘If I don’t buy now, I’ll get priced out of the market.’” —Jay Parker, Douglas Elliman Florida “I think a lot of people who were sitting on the sidelines and saying, ‘Let’s see where the market goes. I don’t have to buy now,’ are now thinking, ‘If I don’t buy now, I’ll get priced out of the market,’” Parker said. “I see values continuing to rise,” he added. “There is not a lot of developable land in South Florida, which is making our market robust, opportunistic and more stable than it has ever been.” TRD

TOP EXISTING HOME SALES

In February, Palm Beach County also dominated South Florida in terms of the priciest existing home sales, with the top five sales totaling about $74.5 million, compared with $60.4 million last year. The largest resale deal in Palm Beach County, and all of South Florida, through the end of February was the $25.5 million trade of 120 Jungle Road. The 18,000-square foot mansion was sold by Silver Lady Palm Beach of Dublin, Ohio, which had Mark Brentlinger identified as its managing member on the deed. The purchaser, Jungle Road LLC, listed the

At $8.35 million, this 12,147-square-foot, seven-bedroom, single-family home on the Cordelia River in Fort Lauderdale was the top sale through February in Broward County. WWW.THEREALDEAL.COM APRIL 2014 | 9

PARAISO BAY

Luxury WATERFRONT Residences

On-site Sales Gallery Open Daily 600 NE 31st Street, Miami, FL 33137 (where NE 31st Street meets Biscayne Bay) T: 305.521.1164 PARAISOBAY.COM Sales by RELATED REALTY in collaboration with FORTUNE DEVELOPMENT SALES

ACRES OF GARDENS

AND PARK EXCLUSIVE BEACH CLUB, MARINA AND WATERFRONT RESTAURANT

Obtain the property report required by federal law and read it before signing anything. No federal agency has judged the merits or value, if any, of this property.

Oral representations cannot be relied upon as correctly stating the representations of the Developer. For correct representations, reference should be made to the documents required by section 718.503, Florida Statutes, to be furnished by a Developer to a buyer or lessee. This offering is made only by the prospectus for the condominium and no statement should be relied upon if not made in the prospectus. This is not an offer to sell, or solicitation of offers to buy, the condominium units in states where such offer or solicitation cannot be made. Prices, plans and speciﬁcations are subject to change without notice. The Developer is PRH NE 31st Street LLC (“DEVELOPER”) which has a license to use the trademarked names and logos of The Related Group pursuant to a licensing agreement. The graphics and text reﬂected are the copyrighted property of Developer. The renderings illustrate and depict a lifestyle; however amenities and attractions are subject to change. While there are water views at the property, views may vary. The marina and restaurant are all subject to the Developer obtaining all necessary and appropriate permits, none of which have been obtained. Any restaurant is intended to be privately operated by a third party operator from a commercial space.

MIAMIâ&#x20AC;&#x2122;S NEW CENTER

FITNESS LIFESTYLE BY

BRICKELLHEIGHTS.COM

T 305.521.1710

SALES CENTER 75 SE 6TH STREET SUITE 101 MIAMI, FL 33131 SALES BY RELATED REALTY IN COLLABORATION WITH FORTUNE DEVELOPMENT SALES

Obtain the property report required by federal law and read it before signing anything. No federal agency has judged the merits or value, if any, of this property. Oral representations cannot be relied upon as correctly stating the representations of the developer. For correct representations, make reference to this brochure and to the documents required by section 718.503, Florida statutes, to be furnished by a developer to a buyer or lessee.

INTERIORS BY

GLAMOROUS LOBBY

EXCLUSIVE POOL TERRACE

ROOFTOP POOL DECK WITH AMAZING CITY VIEWS

ENTERTAINMENT ROOM

VISIONARY ARCHITECTURE | WORLD CLASS RESTAURANTS | LUXURY DESIGNER RESIDENCES

This is not intended to be an offer to sell, or solicitation of an offer to buy, condominium units to residents of CT, ID, NY, NJ and OR, unless registered or exemptions are available, or in any other jurisdiction where prohibited by law, and your eligibility for purchase will depend upon your state of residency. This offering is made only by the prospectus for the condominium and no statement should be relied upon if not made in the prospectus. The Developer (as is defined below) reserves the right to modify, revise, or withdraw any proposed unit finishes, designs, materials, plans, specifications, terms, conditions, statements, managing entities, fitness facilities, amenities, restaurants , or all of same, in its sole discretion and without prior notice. This Condominium is being developed by 9SMA, LLC (“Developer”). EQUINOX® is a registered trademark of Equinox Holdings, Inc. Soul Cycle is a registered trademark of Soul Cycle, LLC. The project graphics, renderings, photographs, and text herein are owned by the Developer unless otherwise noted or credited to another. © 2013, 9SMA, LLC with all rights reserved unless otherwise credited to another.

HYDEHOLLYWOODBEACH.COM

T 954.416.2857

Sales by RELATED REALTY in collaboration with FORTUNE DEVELOPMENT SALES

LUXURY DESIGNER RESORT CONDOMINIUMS HYDE HOTEL SOUL-INSPIRED SPA FULL SERVICE BEACHCLUB STATE-OF-THE-ART GYM OCEANFRONT RESTAURANT

Obtain the property report required by federal law and read it before signing anything. No federal agency has judged the merits or value, if any, of this property.

Oral representations cannot be relied upon as correctly stating the representations of the Developer. For correct representations, make reference to the documents required by section 718.503, Florida Statute, to be furnished by a developer to a buyer or lessee. This is not intended to be an offer to sell, or solicitation to buy, condominium units to residents of CT, ID, NJ, NY and OR, unless registered or exemptions are available, or in any other jurisdiction where prohibited by law, and your eligibility for purchase will depend upon your state of residency. This offering is made only by the prospectus for the condominium and no statement should be relied upon if not made in the prospectus. Prices, plans and specifications are subject to change without notice. The Related Group is not the project developer. Hyde Hollywood is being developed by 4111 SOUTH OCEAN DRIVE, LLC (“Developer”), which has a limited right to use the trademarked names and logos of The Related Group pursuant to a license and marketing agreement with The Related Group. Any and all statements, disclosures and/or representations shall be deemed made by Developer and not by The Related Group. The sketches, renderings, pictures, illustrations, and statements are proposed only, and the Developer reserves the right to modify, revise or withdraw any or all of same in its sole discretion. All prices are subject to change at any time and without notice, and do not include optional features or premiums for upgraded units.

ONE-ON-ONE South Florida Market Report

Ugo stakes his claim

Longtime developer Ugo Colombo discusses South Florida’s latest condo boom, his projects in Brickell and Miami Beach, and drawing inspiration from Italy

BY MARK MAURER

s the Miami skyline constantly evolves, developer Ugo Colombo remains a towering presence. A native of Italy, he arrived in the U.S. in 1983 to attend the University of Miami. Four years later, he founded the CMC Group and soon became immersed in the local real estate scene. His projects, Bristol Tower and Santa Maria on Brickell Avenue, are credited with shaping the style of condominium towers that is dominating today’s building boom.

Have the condo boom and current market prices aﬀected how you do business at the moment? I backed out from new developments before the market went down and I hedged my risk with the properties I had under construction. Now I see great opportunities on the horizon, especially with interior pockets of land. Do you think another housing bubble is underway? The last cycle of condominium sales was highly speculative, with buyers purchasing blocks of units in a building with less than 10 percent

“Should too many projects come to market in Miami, we might see a slowdown in presales.” —Ugo Colombo Despite a string of hurdles, Colombo stays busy. In recent months, he secured a $74 million refinancing for high-end car dealership The Collection in Coral Gables, recruited Douglas Elliman Florida’s former CEO Vanessa Grout to handle CMC’s sales and marketing, and kicked off sales at Miami Beach oceanfront project Beach House 8. Colombo also won a $2 million lawsuit against the Craig Robins-led Dacra Development, which he had accused of withholding maintenance fees on a private jet they owned together. The CMC chief talked with The Real Deal about recovering from a failed Miami Beach Convention Center bid, a potential market slowdown and how Italy has influenced his work. How much has Miami changed since you ﬁrst looked at projects in the 1980s? Miami has steadily grown since the 1980s. As we all know, we went through an excess in growth that resulted in a market correction, along with a ﬁnancial crisis. Miami has recovered in record time, faster than any other city. 16 | APRIL 2014 WWW.THEREALDEAL.COM

down. When the market turned, buyers simply walked away from the problem. Now buyers are putting down up to 50 percent for a preconstruction condominium. Miami is gaining in popularity. Should too many projects come to the market, we might see a slowdown of presales, which could result in a slowdown in development. Do you see any parallels between the South Florida real estate game and the market in Italy? I try to bring the quality and design of Italy to Miami. Much of our products like kitchens, bathrooms, doors and ﬁxtures are sourced from there.

What do you think will make Beach House 8 stand out on Collins Avenue? What is the status of that project? This is one of the only luxury boutique projects with direct ocean views for every residence. The objective is that each full ﬂoor residence will feel like a private home on the beach. We hired Italian architect Michele Bonan, who also designed JK Place in Capri and locally, Grovenor House and Casa Tua. We’re scheduled to break ground in May. You bought the Baru Urbano site in Brickell last year for $21 million. What are your plans for it? Yes, this is the Flatiron site. We plan to build a tall condo tower with a retail and restaurant component. We’re in the planning stages now. It’s an interesting piece of land. The curvature of the bay actually creates water views from all sides of the building. Do you prefer to be hands-on with your architects’ design proposals? I enjoy being involved in nearly every aspect of my projects. I believe the process with my architects should be a collaborative one. This is really my favorite part of the project. I feel I have a handle on what people want. What’s next for you? We actually have several projects coming to market soon. These projects will be equal in quality to what I’ve done in the past. Each project will have a unique story with superior designers and architects. TRD

CMC lost the bid to develop the Miami Beach Convention Center last year. You were cleared of wrongdoing in the bid-rigging probe, and city commissioners scrapped the project in January. In retrospect, what are your thoughts on that whole experience? Yes, we were cleared of all wrongdoing. It was a great learning experience to do business in a different arena than what I was familiar with. Colombo’s Beach House 8 project in Miami Beach

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Oral representations cannot be relied upon as correctly stating representations of the developer. For correct representations, make reference to the documents required by section 718.503, Florida statutes, to be furnished by the developer to a buyer or lessee. Obtain the property report required by federal law and read it before signing anything. No federal agency has judged the merits or value, if any, of this property. We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing because of race, color, sex, religion, handicap, familial status or national origin. This ad does not constitute an offer to sell or a solicitation of an offer to buy a unit in the condominium. No solicitation, offer or sale of a unit in the condominium will be made in any jurisdiction in which such activity would be unlawful prior to any required registration therein.

FINANCED BY

INTERIORS

Design Stars

South Florida Market Report

Residential developments rely on prominent interior designers to help condo projects stand out amid increasing competition

BY ERIC KALIS

teven Gurowitz insists he doesn’t chase South Florida developers for business. But the CEO of Interiors by Steven G. understands if it might seem that way. The company is involved in more than a dozen residential developments in MiamiDade, Broward and Palm Beach counties and is in talks about taking on at least five more projects. That’s a 50 percent increase in residential projects from the last real estate cycle, and reflects a major trend in the current boom. “We’re always busy,” said Gurowitz, a 40-year veteran of the design industry. “There are many developers that push design and many that don’t. Many present a proposed design and deliver something different.” South Florida condo buyers have myriad options, from oceanfront penthouses in Sunny Isles Beach to New York-style apartments in downtown Miami. With that in mind, South Florida developers are not simply hiring brand-name interior designers. They are positioning those

designers as the face of their projects for added marketing heft. Examples include Yves Béhar, who recently got a late night TV shout-out from Kanye West for helping the musician with his nascent fashion line. Béhar is making his first foray into condo design with Newgard Development Group’s loft-style Centro project in downtown Miami. Meanwhile, Rilea Group brought in Mexico City-based Loguer Design, an industry fixture for more than 70 years, for the company’s the Bond at Brickell development. Getting extra promotional clout from a famous designer is especially important for builders who are venturing into markets outside of Miami’s urban core and high-end beachfront areas. In Little Havana, the Astor Cos. hired Interiors by Steven G. to design the sales gallery and certain fully-furnished units at its planned InTown project. While InTown condos are not being offered at high-end prices (units range from $190,000 to more than $300,000), Astor is attempting to brand the twotower development a luxury option in a non-luxury market. “Our idea behind InTown was to bring luxury residences, upscale amenities and contemporary designs abundantly found in high-rise towers all over Brickell and downtown Miami to the Little Havana neighborhood,” said Astor vice president Thom Filicia is on board to design Biscayne Beach in Edgewater. Peter Torres.

18 | APRIL 2014 WWW.THEREALDEAL.COM

A completed room featured on the website of design veteran Steven Gurowitz, above.

“We wanted someone who could envision that luxurious lifestyle set against the backdrop of Little Havana’s culturally-rich and colorful lifestyle, authentic cuisines and pulsating nightlife,” he added. In the region’s most active development markets, like Miami’s Edgewater area, a notable designer can potentially set a project apart. Eastview Development and GTIS Partners hired Thom Filicia, best known for his stint as a “Queer Eye for the Straight Guy” cast member, to design the common areas and private beach club at the 51-story Biscayne Beach, one of nearly 10 condo developments proposed or under construction in the 20-block Edgewater neighborhood. Biscayne Beach is by far the largest Miami project taken on by the New York-based Filicia, who grew up traveling to the area frequently to visit family in Bal Harbour. The Miami of Filicia’s childhood was dramatically different from today’s bustling city. That is reflected in the development community’s approach to the current cycle. “Miami has reinvented itself quite recently, which is exciting,” Filicia said. “It is not just a beach town; it is an interesting cultural hub. That’s what really influenced a lot of people who are bringing in designers to raise the bar on what they are doing.” CONTINUED ON PG 20

INTERIORS South Florida Market Report CONTINUED FROM PG 18

Filicia also had a hand in naming the project Biscayne Beach. Edgewater sits between downtown Miami and evolving areas like Wynwood and the Design District. It is also Miami’s only urban neighborhood with numerous developable properties fronting Biscayne Bay. “The common areas and sales center have a nice sophisticated beach-meetscity-meets-Miami feel,” he said. “To me, it felt like we could really play up the idea that you could be on a paddleboard behind your apartment and sitting by the pool with your feet in the sand or ride your bicycle to the Design District. That’s a pretty cool mix, and not something people have played up.”

POWERFUL PARTNERS

The Related Group, one of South Florida’s most prolific builders, is also signing on notable interior designers. Related recently completed construction of the colorful MyBrickell, the first condo building in Miami’s financial district to reach the finish line since the recession. When planning MyBrickell three years ago, Related decided the building’s interiors and common areas needed the design vision of a big industry name who could also serve as the public face of the project. Condo chief Carlos Rosso and CEO Jorge Perez were soon on the phone with New York-based Karim Rashid. “We made a deal to brand the building after my name and started immediately,” said Rashid, whose roots are in product and industrial design but is now involved in real estate projects in 10 countries.

10 Venetian Way Penthouse 4

The company since applied the formula to other projects, including Brickell Heights. For the twin-tower, 690unit development, Related brought in designer David Rockwell, who most recently was at the helm of the green room for last month’s Academy Awards. And with its planned Doral View rental apartment project, Related put tennis legend and V Star Interiors owner Venus interior shot of MyBrickell, where design is being handled by Karim Williams front and center An Rashid. Inset: Karim Rashid (second from left) with Jorge Perez, Sonia during promotional events Figueroa and Carlos Rosso from Related Group. and in marketing materials. While the role of designers has unects they buy into, said real estate attorney doubtedly increased during the latest Daniel Novela, whose clients include boom, one of the industry’s busiest in Brazil’s high-end kitchen and closet manuSouth Florida is the first to question the facturer and retailer ORNARE, which is true impact a design star has on a projhaving a record year in Miami, and furniture specialist Adriana Hoyos. ect’s viability. “It might sound a little bizarre, but 95 Prominent architect and designer Rene percent of the buyers don’t know who the Gonzalez has incorporated ORNARE prodarchitects or designers are when they hear ucts into the Glass luxury condo project in Miami Beach. the names,” Gurowitz said. “Developers use it as a marketing tool “The market is adjusting to the influx of foreign buyers,” Novela said. regardless, which is not a bad thing at all,” “And what I’m hearing from my highhe continued. “At the end of the day, peoend clients in Miami Beach is that only ple are purchasing a location and price [a few] existing buildings are currentthat fits their pocketbook. That’s why sales ly meeting the level of sophistication are off the charts.” Like everything else in the current that’s expected.” market, part of the trend is being fueled “Developers really need to up their by foreign investors, who are becoming game,” he added. TRD much more discerning about what proj-

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DEVELOPMENT

Condo confidence

South Florida Market Report

New urban mentality seen as key to sustaining Miami’s Downtown development boom BY ERIC KALIS

his time, it’s different. That’s the mantra from developers, brokers and other real estate professionals about the development flurry in Miami’s urban core. Skeptics point to last decade’s devastating bust after an unprecedented wave of residential construction, and predict a similar result a few years down the line. The memory of thousands of condos sitting unsold from Brickell Avenue, the home of Miami’s financial district, to Midtown, a neighborhood inspired by New York’s SoHo, still lingers for some. About 50 new condo towers housing nearly 14,000 units are proposed or under construction in a 60-block stretch from Brickell’s entrance to the Julia Tuttle Causeway connecting Midtown to Miami Beach, according to Condo Vultures. That represents more than 65 percent of the construction pipeline for South Florida’s entire tri-county area. Anyone hung up on the last cycle might point to that statistic as a harbinger of trouble.

Construction on BrickellHouse 24 | APRIL 2014 WWW.THEREALDEAL.COM

Proponents counter with a list of critical distinctions between the two eras. Most notable is the present deposit structure, which requires condo buyers to fork over as much as 50 percent of the purchase price before closing. That is expected to eliminate most of the flippers who wreaked havoc on the market between 2003 and 2007, as long as developers don’t start lowering deposit thresholds. It also allows condo builders to avoid over-leveraging. Such deposits are common in South America, where a large chunk of the early buyers in this cycle are from. But brokers and developers say more Europeans, and even a smattering of domestic A rendering of Brickell Heights buyers from the New Through the end of January, a mere 400 York area, are getting comfortable with the model. units were left from the last boom, according to Condo Vultures. Instead of large bank loans, builders are Miami still offers an extreme discount to using these deposits to finance condo construction. That approach, as Miami attorcomparable condos in major cities like New York, Los Angeles, Hong Kong and Lonney Thomas Lehman puts it, “is the equivadon. The $1,200-per-square-foot average lent of crowdfunding.” Another key talking point for the optipreconstruction price at the Zaha Hadidmists is how quickly the overhang of more designed One Thousand Museum in downtown Miami, for example, is a fraction of the than 25,000 unsold condos was gobbled price for a luxury unit in Manhattan. And up during the recession. Those units were that’s a historically expensive price for the supposed to take up to 10 years to be abGreater Downtown Miami market. sorbed; by the end of 2011 only about 35 percent of the condos remained unsold. CONTINUED ON PAGE 26

DEVELOPMENT South Florida Market Report

CONDO PROJECTS PLANNED OR UNDER CONSTRUCTION IN GREATER DOWNTOWN MIAMI Project Name

Neighborhood

Towers

Floors

Units

Developer

Brickell CityCentre (Phase 1 & 2)

Brickell

129

1,174

Swire Properties

One Brickell

Brickell

n/a

800

Related Group

SLS Hotel and Residences

Brickell

453

Related Group/sbe

Villa Magna

Brickell

n/a

400

Florida East Coast Realty

Nine at Mary Brickell Village

Brickell

390

LYND/Starwood Capital Group

1010 Brickell

Brickell

387

Key International

1100 Millecento Residences

Brickell

382

Related Group

BrickellHouse

Brickell

374

Newgard Development Group

Bond at Brickell

Brickell

328

Rilea Group

One Brickell City Centre

Brickell

256

Swire Properties

Residences at Brickell Key

Brickell

n/a

218

Swire Properties

Habitat III

Brickell

n/a

190

Habitat Developer LLC

Echo Brickell

Brickell

180

Property Markets Group

Brickell Ten

Brickell

155

IBCorp/Waterstone Capital

Palm Court

Design District

n/a

Dacra/L Real Estate

Le Parc at Brickell

Brickell

128

AXA Developers/Strategic Properties Group

Edge on Brickell

Brickell

130

The Edge on Brickell LLC

Palm Court

Design District

n/a

Dacra/L Real Estate

Resorts World Miami

Downtown Miami

130

1,000

Genting

One Bayfront Plaza

Downtown Miami

640

Florida East Coast Realty

1400 Biscayne Boulevard

Downtown Miami

428

Espacio USA

Centro

Downtown Miami

352

Newgard Development Group

Chelsea Tower

Downtown Miami

222

Mallory Kauderer

One Thousand Museum

Downtown Miami

Gregg Covin/Louis Birdman

600 Biscayne Boulevard

Downtown Miami

n/a

Chateau Group

700 Biscayne Boulevard

Downtown Miami

n/a

Chateau Group

Paraiso Bay

Edgewater

165

1,000

Related Group

Biscayne Beach

Edgewater

399

Eastview Development/GTIS Partners

Icon Bay

Edgewater

300

Related Group

Satori Hotel Residences

Edgewater

n/a

207

Exclusive Trust

Bay House

Edgewater

165

Melo Group

Mbay

Edgewater

n/a

129

Hyperion Development Group

Crimson Residences

Edgewater

mckafka Development Group

Hyde Midtown

Midtown

400

Related Group/sbe

Six Midtown Miami

Midtown

398

Midtown Opportunities

250 Wynwood

Wynwood

n/a

David Polinsky/Bradley Carlson

Brickell Heights

Brickell

n/a

1,215

Related Group

Source: CraneSpotters.com, news reports and The Real Deal research; data as of March 2014; “floors” indicates total floors in the project, which may be spread over multiple towers. WWW.THEREALDEAL.COM APRIL 2014 | 25

DEVELOPMENT South Florida Market Report CONTINUED FROM PAGE 24

The recently opened Perez Art Museum Miami, part of a spate of new cultural offerings in the area

‘WE HAD NO CITY’

Perhaps the most important difference between the booms is unrelated to how the developments are being funded or supply and demand trends. Proponents say that unlike the last cycle, urban Miami is ready for the influx of new residents. “The first time around, we had no city,” Zilbert International Realty president and CEO Mark Zilbert said. “The vast majority of investors in the first cycle were amateur investors who were all about making a quick buck. What is happening now is, Miami is rapidly moving toward the status of a world-class city. There are more people around and more infrastructure for condo boom 2.0.” The world appears to be taking notice of Miami’s evolution. In London-based Knight Frank’s 2014 “Wealth Report,”

Miami ranked eighth on the list of “cities that matter” to wealthy investors worldwide. It was the only U.S. city to make the list besides New York, which ranked second to London. Brokers like Zilbert can take a prospective client to South Miami Avenue in the Brickell area on a Friday night and show how the block is now an urban version of South Beach’s Lincoln Road, one of the nation’s busiest retail and restaurant streets. South Miami Avenue has a pipeline of at least 14 projects, which will bring about 4,700 units to a one-mile stretch, including the Jorge Perez-led Related Group’s 1100 Millecento Residences, one of the first projects in the current cycle. Greater Downtown Miami is also earnings its cultural chops, thanks to the Adrienne Arsht Center for the Perform-

The 328-unit Bond at Brickell, the first condo project of the current cycle located directly on Brickell Avenue

ing Arts and the recently opened Perez Art Museum Miami near American Airlines Arena, home of the Miami Heat. A new science museum is also on the way. Additionally, Steven Owens, massive retail proj- president of ects like Brickell Swire Properties CityCentre, which is under construction in the financial district by developer Swire Properties, and Miami Worldcenter, (a project by Forbes Company and Taubman Centers still in planning stages that has already landed Bloomingdale’s and Macy’s as anchor tenants), will bring much-needed shopping space to the city. “The last cycle was really just condos with no restraint,” said Rilea Group vice president Diego Ojeda. Rilea is currently building the 328-unit Bond at Brickell, the first condo project of the current cycle located directly on Brickell Avenue. “Now it’s about a city coming together.”

A rendering of Resorts World Miami 26 | APRIL 2014 WWW.THEREALDEAL.COM

CONTINUED ON PAGE 60

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DEVELOPMENT South Florida Market Report

Miami Beach goes boutique Small luxe projects abound; rest of coastal Miami-Dade sees boom in tall towers

BY ERIC KALIS

ike Greater Downtown Miami, the high-end coastal markets in MiamiDade County are booming once again. In Miami Beach, condo developers are targeting luxury buyers who seek exclusivity and easy ocean access. Many of the area’s new boutique projects have between 10 and 60 units in low-rise buildings. One South Beach development, Ugo Colombo and Valerio Morabito’s Beach House 8, is designed with an individual condo on each floor of the eight-unit building. Even Related Group, which has much larger projects in other areas, tailored its 30-unit Marea and 50-unit One Ocean projects to meet market demand. Miami Beach currently has a pipeline of 21 condo towers totaling nearly

1,500 units, according to Condo Vultures and TRD research. Wealthy buyers who prefer high-rise oceanfront buildings can head north to Sunny Isles Beach, which currently has eight projOne Ocean, a 50-unit condo in Miami Beach ects with at least 35 stories. The unit counts at these developments vary widely, from the Other coastal markets getting atten39-unit Regalia to the 329-condo Parque tion include Bal Harbour, where Argentine Towers. If Gil Dezer and Related stick with firm Consultatio plans the 240-unit Oceana their original plan for the Armani ResidencBal Harbour; and Surfside, the home of the Chateau Ocean and Surf Club Four Seasons es, they would bring another 500 units to developments. TRD Sunny Isles.

Broward, PB gain traction

Increased development in Hollywood, Fort Lauderdale and West Palm Beach

BY ERIC KALIS

iami gets most of the real estate headlines, but there is plenty of condo development happening in Broward and Palm Beach counties as well. Some builders, like Dennis Eisinger, shun Miami altogether for markets like Fort Lauderdale. Eisinger and partner Jean Francois Roy are developing Aqualuna, AquaVita Las Olas and 1800 Las Olas in the city. Overall, downtown Fort Lauderdale and Fort Lauderdale Beach have a pipeline of nine proposed towers totaling 293 units. Elsewhere in Broward County, Hollywood is increasingly coveted by developers looking to build luxury oceanfront condos. Major players like Related Group and Property Markets Group have current projects in the city. Related’s Jorge Perez felt strongly

28 | APRIL 2014 WWW.THEREALDEAL.COM

enough about his company’s recently completed Apogee Beach to spend $2.1 million on a penthouse there. PMG is developing the two-tower, 24-unit Sage Beach in Hollywood. Related also plans to build six condo towers totaling 1,059 units in West Palm Beach, through a partnership with Wayne Huizenga’s holding company. City commissioners are expected to vote on the proposed Icon Palm Beach this spring. Another five towers totaling nearly 1,000 units are in the works in West Palm Beach. Broward and Palm Beach counties are already popular with domestic and Canadian buyers. Developers hope to also gain traction with some of the international investors who predominantly focus on Miami. TRD

The recently completed Apogee Beach in Hollywood

DEVELOPMENT South Florida Market Report

CONDO PROJECTS PLANNED OR UNDER CONSTRUCTION IN PALM BEACH, BROWARD AND MIAMI-DADE* PROJECT NAME MIAMI BEACH

Ritz-Carlton Residences

NEIGHBORHOOD

TOWERS

FLOORS

UNITS

DEVELOPER

Mid-Beach

126

Lionheart Capital

Joseph Chetrit

Ian Schrager

412

Deauville Associates LLC

n/a

Don Peebles

Newgard Development

Related Group

Domus Group

Aria Development Group

MIAMI-DADE COUNT Y 1

Mid-Beach

n/a

Mid-Beach

North Beach

TBA (South Shore Beach project) North Beach

North Beach

South Beach

n/a

South Beach

n/a

South Beach

n/a

South Beach

Aventura

n/a

Aventura

TBA (3501 Sunny Isles Boulevard) North Miami Beach

n/a

North Miami Beach

4000 Alton Versailles on the Ocean Faena House Miami Beach EDITION Atlantiqua Deauville Hotel Beach Resort Peloro Miami Beach Mimosa Bath Club Estates

500-700 Alton Road TBA (Terminal Island project) Vintro II Hotel Condo One Ocean Palau Sunset Harbor 1215 on West Marea South Beach 321 Ocean Glass Beach House 8

AVENTURA AND NORTH MIAMI BEACH Puerto Aventura Echo Aventura Prive Aventura Place Aventura Condominium Marina Palms Yacht Club (North)

Marina Palms Yacht Club (South)

BAL HARBOUR, BAY HARBOR ISLANDS, SUNNY ISLES BEACH AND SURFSIDE Oceana Bal Harbour Island House Royal House Kai at Bay Harbor Bay View 102 Club at Bay Harbor Edgewater Apartments Ivory Condo La Boutique Bay Harbor 1 Harbour Park 1120 Bay Breeze 1150 Condominium

Bal Harbour

Bay Harbor Islands

BH3

Alan Faena

Atlantiqua LLC

113

SMG Management

n/a

210

Crescent Heights/Related Group

n/a

SMG Management

Related Group

Terra Group

Ugo Colombo/Valerio Morabito

205

MG3/Chateau Group

160

BH3/Gary Cohen affiliate

n/a

234

The Plaza Group/Devstar Group

190

PMG/JDS Development Group

n/a

600

Dezer Development

234

The Plaza Group/Devstar Group

240

Consultatio

n/a

Art + Tec Development

n/a

Art + Tec Development

n/a

BH Developers

n/a

Source: *This chart doesn’t include Greater Dowtown Miami - see chart on page 25 for that area. Data from CraneSpotters.com, news reports and The Real Deal research as of March 2014; “floors” indicates total floors in the project, which may be spread over multiple towers.

CONTINUED ON PAGE 30

WWW.THEREALDEAL.COM APRIL 2014 | 29

DEVELOPMENT South Florida Market Report CONTINUED FROM PAGE 29

PROJECT NAME

NEIGHBORHOOD TOWERS FLOORS UNITS M I A M I - DA D E C O U N T Y ( C O N T. ) BAL HARBOUR, BAY HARBOR ISLANDS, SUNNY ISLES BEACH AND SURFSIDE (CONT.)

DEVELOPER

Armani Residences

Sunny Isles Beach

n/a

500

Dezer Development/Related Group

400 Sunny Isles

Sunny Isles Beach

230

Key International

Parque Towers

Jade Signature

Porsche Design Tower Chateau Beach

Mansions at Acqualina Muse

Regalia

Surf Club Four Seasons Chateau Ocean

Sunny Isles Beach

Surfside

53 57

46 42

44 12

329 192 132 84 79

68 39

285 85

J. Milton and Associates Fortune International Dezer Development Chateau Group Trump Group

Property Markets Group

Kevin Venger/Lou Montello Fort Capital Management Chateau Group

BROWARD COUNT Y FORT LAUDERDALE Riva

Downtown Ft. Lauderdale - Beach

n/a

100

Premier Developers

Aquavita Las Olas

Downtown Ft. Lauderdale - Beach

Dennis Eisinger/Jean Francois Roy

Aqualuna

Downtown Ft. Lauderdale - Beach

Paramount Ft. Lauderdale Beach Downtown Ft. Lauderdale - Beach Privage

Adagio on the Bay Vela Vista

Cymbrinas Cay 1800 Las Olas

HOLLYWOOD/HALLANDALE

Downtown Ft. Lauderdale - Beach

18 11 0

n/a

22 16 12

10 8

Encore Housing Opportunity Grand Birch LLC

Dennis Eisinger/Jean Francois Roy Grupo Alco International Oak Construction n/a

Dennis Eisinger/Jean Francois Roy

Gulfstream Park Tower

Hallandale Beach

n/a

1,500

Stronach Group

TBA (2000 South Ocean Drive)

Hallandale Beach

n/a

GBP Regency

BeachWalk

Hyde Resort and Residences Costa Hollywood H3

Sage Beach

Positano Beach La Riviera

Sky Harbor

Hallandale Beach Hollywood

Hollywood

Tower One Fifty Five

Boca Raton

TBA (3200 S. Ocean Boulevard)

Highland Beach

Atlantic Crossing Bay Colony

TBA (2801 NW 3rd Avenue)

Water Club of North Palm Beach Icon Palm Beach Transit Village

Isis Downtown

President Country Club Eighty Points West

TBA (First Baptist Church site)

30 | APRIL 2014 WWW.THEREALDEAL.COM

Delray Beach Juno Beach

North Palm Beach

North Palm Beach West Palm Beach

West Palm Beach

31 41

12 14

10 7

PA LM B E ACH COU NT Y

300 407

307 247 24 17 8

Related Group

Moses Bensusan

Team Real Estate Development Property Markets Group Lon Tabatchnick n/a

Waterside Hollywood LLC

192

Jim Comparato

3200 S. Ocean Blvd LLC

18 28

n/a 36 41

n/a

n/a 20

n/a

121

264 166

1,059 300 213

200 170 75

Edwards Cos.

Groundstone Inc. n/a

Kolter Group

Related Group/Huizenga Holdings Michael Masanoff Kolter Group n/a

T-Rex Capital Al Adelson

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232 East 63rd Street | Upper East Side, New York | $25,000,000 | This absolutely magnificent Upper East Side mansion is defined by its elaborate design, exquisite detailing, superior finishes and state-of-the-art technology, private garage and is unlike any ultra-luxury home you’ve ever seen. Web# 1365255

RECENTLY SOLD Time Warner Center | 25 Columbus Circle | listed for $16,500,000

Trump Tower | 721 Fifth Avenue, 38FGH | listed for $16,500,000

150 Columbus Circle | listed for $16,500,000

Trump Place | 240 Riverside Boulevard, 8A | listed for $5,990,000

102 Prince Street | listed for $13,800,000

224 West 18th Street, 9A | listed for $7,390,000

WHITE-GLOVE SERVICE, INGENIOUS MARKETING STRATEGIES, RECORD-BREAKING SALES.

THE SHERRY NETHERLAND

NEW YORK CITY TO MIAMI

URBAN SUBTROPICAL MODERN BEACH HOUSE

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JADE OCEAN CORNER RESIDENCE

17007 Collins avenue | Miami Beach | $2,800,000 | Exquisite corner residence. 3 bedroom, 3.5 baths, featuring private elevator entry and wraparound terrace. Sweeping ocean, city and Intracoastal views.

BEACH HOUSE

5875 Collins Avenue | Miami Beach | $4,000,000 | Stunning oceanfront residence. One-ofa-kind dream home featuring up to 20 ft high ceilings, private elevator, rooftop terrace, and unobstructed ocean views from every room.

RECENTLY SOLD Sunset III | 1826 W 23rd Street | listed for $6,000,000

5637 La Groce | Listed for $1,050,000

Jade Ocean | 17121 Collins Avenue | listed for $9,450,000

Faena House | 3315 Collins Avenue,6B | listed for $9,700,000

Murano Grande | 400 Alton Road | listed for $5,500,000

5101 Pine Tree Drive | listed for $5,250,000

Represented both the buyer and the seller in this transaction

OREN ALEXANDER, REALTOR ASSOCIATE | 305.479.0164 TAL ALEXANDER, REALTOR ASSOCIATE | 917.334.5501 www.thealexanderteam.elliman.com

STOREFRONTS

Racing for retail

South Florida Market Report

A shortage of urban retail has developers dashing to build new space

BY CHRISTOPHER CAMERON

he South Florida real estate industry’s favorite cliché is that Miami is a “global city.” Like New York, London, Paris and Tokyo, the word “Miami” can now be found in gilt letters below luxury brand names from around the world. Hackneyed or not, it is precisely Miami’s ever-growing appeal to international investors and pleasure seekers that is breathing new life into the area’s retail sector. “To quote another saying, Miami’s best attribute is that it is so close the United States,” said Louise Bendix, an office and retail broker at ComReal Miami. “It is really servicing the South American market. Every holiday, I see South Americans heading home with planeloads worth of merchandise.” While South Florida’s retail market remained relatively stable from 2012 to 2013, the hundreds of thousands of square feet currently being developed tell the real story of the region’s rebounding economy. There are seven projects totaling over 1.5 million square feet of retail space already under construction in Miami. And that does not include multiple planned developments, expected to add another 2 million square feet to the market, according to CBRE’s Miami Retail MarketView, published in late 2013. As new businesses eager to serve Miami’s

“What we are going to see in the next year or two is that the majority of the new retail development in South Florida will be urban.” —Paco Diaz, CBRE

growing population enter the market, retail brokers are reporting a shortage of quality retail space throughout the county. The market has a 4.3 percent vacancy rate, a 1 percent decline from the 2012 fourth quarter, according to CBRE. Developers are stepping up with a wave of new construction, including expansions at Turnberry Associates’ and Simon Property Group’s Aventura Mall — soon to be the second largest shopping center in the nation — and Whitman Family Development’s Bal Harbour Shops. The expansions will add a combined 490,000 square feet of retail to the market. And in the coming years, two massive downtown projects are slated to bring more than 1 million square feet of new re-

tail space to the heart of Miami. Construction is scheduled to begin at the end of the year on the largest project, Miami Worldcenter, a mixed-use development planned by the Forbes Company and Taubman Centers. Worldcenter designs include 750,000 square feet of retail. Anchor tenants Macy’s and Bloomingdale’s have already inked leases at the development.

RETAIL UNDER CONSTRUCTION IN THE MIAMI AREA Name

Location

Size (sf)

Developer

Brickell CityCentre

Downtown

615,000

Swire Properties

Aventura Mall

Aventura

250,000

Turnberry Associates and Simon Property Group

Bal Harbour Shops

Bal Harbour

240,000

Whitman Family Development

All Aboard Florida

Downtown

175,000

Florida East Coast Industries

Design District project

Design District

160,000

Dacra and L Real Estate

Miami Worldcenter

Downtown

750,000

Forbes Company and Taubman Centers

Luxury retail is targeting the Design District.

Source: CBRE’s Miami Retail MarketView for 2013 fourth quarter

34 | APRIL 2014 WWW.THEREALDEAL.COM

CONTINUED ON PAGE 36

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ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THE DOCUMENTS REQUIRED BY SECTION 718.503,FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. THIS OFFERING IS MADE ONLY BY THE PROSPECTUS FOR THE CONDOMINIUM AND NO STATEMENT SHOULD BE RELIED UPON IF NOT MADE IN THE PROSPECTUS. THIS IS NOT AN OFFER TO SELL, OR SOLICITATION OF OFFERS TO BUY, THE CONDOMINIUM UNITS IN ANY JURISDICTION WHERE PROHIBITED BY LAW, AND YOUR ELIGIBILITY FOR PURCHASE WILL DEPEND UPON YOUR STATE OF RESIDENCY. PRICES, PLANS AND SPECIFICATIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE. ACTUAL IMPROVEMENTS MAY VARY FROM ARTISTS RENDERINGS WHICH ARE USED SOLELY FOR ILLUSTRATIVE PURPOSES, AND ARE SUBJECT TO CHANGE WITHOUTNOTICE. ACTUAL VIEWS MAY VARY AND MAY NOT BE AVAILABLE IN ALL UNITS. VIEWS CANNOT BE RELIED UPON AS THE ACTUAL VIEW FROM ANY PARTICULAR UNIT WITHIN THE CONDOMINIUM. THE DEVELOPER DOES NOT GUARANTEE THE FUTURE VIEW FROM THE PROPERTY, OR FROM A SPECIFIC UNIT, AND MAKES NO REPRESENTATION AS TO THE CURRENT OR FUTURE USE OF ANY ADJACENT PROPERTY. WE ARE PLEDGED TO THE LETTER AND SPIRIT OF THE U.S. POLICY FOR ACHIEVEMENT OF EQUAL HOUSING OPPORTUNITY THROUGHOUT THE NATION. WE ENCOURAGE AND SUPPORT AN AFFIRMATIVE ADVERTISING AND MARKETING PROGRAM IN WHICH THERE ARE NO BARRIERS TO OBTAINING HOUSING BECAUSE OF RACE, COLOR, RELIGION, SEX, HANDICAP, FAMILIAL STATUS OR NATIONAL ORIGIN. EQUAL HOUSING

OPPORTUNITY

STOREFRONTS South Florida Market Report CONTINUED FROM PAGE 34

Nearby, the 5.4 million-square-foot mixed-use Brickell CityCentre is already under construction. The Swire Properties project is slated to include 615,000 square feet of retail, with the project spanning 9.1 acres in Miami’s financial district. It is scheduled to wrap up construction in May 2015. On the smaller end of the development spectrum, Florida East Coast Industries is planning to build its Downtown Miami station for All Aboard Florida, a $1 billion passenger rail service connecting Miami to Orlando, blocks away from Worldcenter. The project is expected to include about 175,000 square feet of new retail space and is slated to open in 2016. In addition, Miami’s up-and-coming Design District is set to see a $312 million redevelopment, through a partnership between Dacra and L Real Estate, that includes some 160,000 square feet of new retail. “What we are going to see in the next year or two is that the majority of the new [retail] development in South Florida will be urban,” CBRE senior vice president Paco Diaz said. “There are major retail centers being developed right now in the suburbs, but the focus going forward will be on the urban market.” Attracting luxury brands is a common denominator for the new developments. Worldcenter, for example, is dedicating 30,000-to-40,000 square feet to luxury retail. But the broader Miami market is seeing interest from retailers of all kinds, according to Diaz. “Miami is not specializing,” he said. “It is attracting absolutely everybody.” The area’s appeal is reflected in current pricing. Average asking retail rents in Miami climbed to $37.61 per square foot in the 2013 fourth quarter, a $5.77 per square foot increase from the year before. In Miami Beach, average asking rates jumped by $30.53 to $155 per square foot, the largest increase in South Florida, according to CBRE. Premier retail spaces along Lincoln Road are fetching as much as $300 per square foot. “The economy is stronger nationwide,” Diaz said. “That means that people aren’t simply parking their money in condos; they are also establishing businesses.” TRD

Brickell CityCentre is one of seven projects underway that will bring over 1.5 million square feet of retail to Miami.

Miami Worldcenter already inked anchor tenants Macy’s and Bloomingdales, prior to construction. 36 | APRIL 2014 WWW.THEREALDEAL.COM

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VIP DIGS South Florida Market Report

Celeb crib exchange

Rich and famous celebs including ‘The Rock’ seek privacy, waterfront access; A-Rod, Matt Damon and others look to unload pricey South Florida pads

BY ERIC KALIS

rom sports stars to Hollywood hunks, celebrities continue to drop serious cash on dream homes and condos in South Florida. Privacy and waterfront access were pivotal for stars making expensive home purchases during the last few months of 2013 and the beginning of 2014. Former Chicago Cub Sammy Sosa accomplished both objectives when he picked up an oceanfront estate in one

of Miami’s most exclusive communities. Actor Dwayne “The Rock” Johnson sought out a quiet neighborhood in Broward County to buy a spec mansion, while Serena Williams took a break from winning Grand Slams and grabbed a future home site in northern Palm Beach County. Some celebrities felt the time was right to test the market. Matt Damon, Scottie Pippen and Alex

Rodriguez put their luxury homes and condos up for sale. And music mogul Timbaland successfully unloaded his home in Miami Beach. Others, like billionaire developer Jeffrey Soffer and his supermodel wife Elle Macpherson, took advantage of their relationships with lenders to obtain fresh financing. Below are some of the most notable local residential deals since last winter.

DREAM HOME BUYS

Philadelphia Eagles owner and Oscar-winning movie producer Jeffrey Lurie paid $28.5 million for a six-bedroom Palm Beach manse. Built in 2008 on nearly two acres, the 17,000-square-foot home at 1275 South Ocean Boulevard includes an elevator, swimming pool and boat dockage.

Retired baseball slugger Sammy Sosa bought an oceanfront home in Miami’s secluded Golden Beach community for $7.6 million. The two-story, seven-bedroom estate at 667 Ocean Boulevard totals 7,273 square feet in size.

Movie star and wrestler Dwayne “The Rock” Johnson dropped $4.5 million on a 13,700-square-foot spec mansion at 16715 Berkshire Court in the Landmark Ranch Estates neighborhood of Southwest Ranches in Broward County. His ex-wife, Dany Garcia, also lives in the neighborhood.

Tennis great Serena Williams set the stage for a move to Jack Nicklaus’ golf-pro development The Bear’s Club in Jupiter. She picked up a 2.4-acre home site at 152 Bear’s Club Drive for $4.1 million.

National Hockey League commissioner Gary Bettman added a second condo at Toscana South in Highland Beach for $3.1 million. Bettman and his wife Michelle now own units 1610 and 1703 at 3740 South Ocean Boulevard.

Celebrity DJ and music producer David Guetta, basketball star Manu Ginobili and tennis legend Arantxa Sanchez Vicario are early buyers at the Related Group’s condo Paraiso Bay in Miami’s Edgewater neighborhood.

38 | APRIL 2014 WWW.THEREALDEAL.COM

VIP DIGS South Florida Market Report

I WANT OUT

Music mogul Timbaland took a break from producing for Justin Timberlake, Nelly Furtado and other stars to sell his Miami Beach condo at the Murano Grande for $4.8 million. The three-bedroom unit at 400 Alton Road totals nearly 4,000 square feet.

Academy-award winning actor Matt Damon can’t seem to find a buyer for his waterfront manse on the exclusive North Bay Road in Miami Beach. Damon shaved $1 million off the asking price for the 12,700-square-foot home to about $19 million.

While fighting a losing battle to overturn a season-long suspension for using performance enhancing drugs, Alex Rodriguez of the New York Yankees listed his 11th-floor condo at the Asian-themed Mei building in Miami Beach. The asking price of the 5875 Collins Avenue unit: $3.1 million.

Former Super Bowl hero Plaxico Burress took a $2 million loss on the short sale of his Lighthouse Point home. The 6,872-square-foot home at 2249 Northeast 26th Street sold for $2 million this time around.

Basketball Hall of Famer Scottie Pippen again put his Fort Lauderdale mansion on the market, this time for $11.8 million. The former Chicago Bull first listed the 10,000-square-foot Harbor Beach home and its custom-built basketball court for $16 million three years ago.

PRICEY LOANS

Billionaire developer Jeffrey Soffer and his supermodel wife Elle Macpherson landed an $18 million loan for their Indian Creek mansion. JPMorgan Chase Bank gave the couple the mortgage for the ninebedroom, 24,000-square-foot home, one of the largest residences in Miami-Dade County.

New Orleans rapper Lil Wayne beefed up the mortgage on two of his Miami Beach homes. He obtained a $2 million advance with Fifth Third Bank to add to the $7.9 million loan he already had. “Weezy” owns a 15,101-squarefoot waterfront mansion at 94 La Gorce Circle and a 1,316-square-foot condo at the Setai at 2001 Collins Avenue. TRD WWW.THEREALDEAL.COM APRIL 2014 | 39

PROFILE South Florida Market Report

A beach behemoth Developer Alan Faena assembles a group of all-star collaborators to build a massive new Miami Beach project BY ERIC KALIS

lan Faena has no interest in joining the pack of condo and hotel builders racing to construct multiple projects in Miami while this development cycle is hot. Instead, the former fashion mogul from Argentina and his billionaire partner Len Blavatnik are putting all of their energy into one massive development, Faena Miami Beach. The $1 billion mixed-use project is designed to transform a six-block section of Collins Avenue into a premier residential, hospitality, entertainment and cultural destination.

“This is about smart minds coming together to create a different way to enhance people’s lives. This will be the heart of the city.” —Alan Faena

The Faena House condominium project will have 47 units, including this penthouse. It is just a small part of Faena Miami Beach.

40 | APRIL 2014 WWW.THEREALDEAL.COM

PROFILE South Florida Market Report

Faena and Blavatnik pulled it off before, with the redevelopment of 420 acres in the Puerto Madero district of Buenos Aires over a 12-year span. The mixed-use Faena District is now home to some of Latin America’s most expensive real estate. The duo envisions a similar future at Faena Miami Beach. “This is the perfect time,” Faena said during a recent tour of his Faena Collaboratory, which includes the sales center for the 47-unit Faena House, designed by Pritzker prize-winning architect Norman Foster’s Foster + Partners firm, and under construction since February 2013. Faena is quick to point out the aleros, or sweeping balconies, that wrap around each unit. The inspiration for those came from the dream house he built for himself on a beach in Punta Del Este, Uruguay. “We’re lucky to be here working with the best minds in the world,” Faena said. “This is about smart minds coming together to create a different way to enhance people’s lives. This will be the heart of the city.” The early returns for Faena House are strong. Nearly all of the units are under contract, with initial buyers reportedly including Goldman Sachs Group CEO Lloyd Blankfein and Apollo Global Management co-founder Leon Black. Through the end of 2013, Faena House contracts totaled nearly $334 million. Not including five sponsor sales, the contract price averaged $2,607 per square foot. Another $111 million in Faena House contracts were secured during the first two months of 2014. That progress seemed to boost the confidence of Faena’s lenders. In early January, a group of lenders led by HSBC Bank USA provided a $300 million refinancing – including $128 million in fresh capital – for the project’s Faena House and hotel.

HEAVY HITTERS

Blavatnik planted the seeds for Faena Miami Beach with the $102 million purchase of the former Saxony Hotel site in 2007. About two years ago, he recruited his Buenos Aires partner to conjure up a similar blueprint for that and other properties pulled together in the mid-Beach section. “I thought the development had to be something never seen before, a spectacular project with an exciting legacy,” Blavatnik said. “And that is Alan.”

A rendering of Faena Miami Beach, which is set to transform a six-block section of Collins Avenue

Construction of Faena House, the first building in the complex, began in February 2013.

Always clad in white, including his signature toquilla hat, Faena’s eyes light up when talking about the talented individuals who are helping him build Faena Miami Beach. “That’s the juicy part, the interesting thing,” he said. “We are all creators with different specialties.” The team includes “The Great Gatsby” director Baz Luhrmann and his wife Catherine Martin, winner of four Academy Awards for costume, set and production design. The couple worked on the designs that will transform the Saxony, which was one of the first luxury hotels on Miami Beach when it opened in 1948 (and the first with air conditioning). Luhrmann even directed and appeared in a short promotional video for the project. Another Pritzker-prize winning architect, Rem Koolhaas, designed three additional Faena Miami Beach buildings: an arts center, retail bazaar and a car park.

Director Baz Luhrmann and wife Catherine Martin worked on designs for Faena Miami Beach. Luhrmann also directed a promotional video. CONTINUED ON PAGE 42 WWW.THEREALDEAL.COM APRIL 2014 | 41

PROFILE South Florida Market Report CONTINUED FROM PAGE 41

British architect Sir Norman Foster designed Faena House.

Renowned landscape architect Raymond Jungles is contributing the “Faena Gardens” adjacent to Faena House. To Faena, there’s no project component that doesn’t require the best and brightest in their field.

Pritzker prize-winning architect Rem Koolhaas, who designed three buildings for the project

The emphasis on detail is something Faena cultivated since he launched Via Vai, Latin America’s largest fashion company, before selling it nearly two decades ago. A few years later, he brought that focus to Buenos Aires. Puerto Madero was a thriving industrial district during the first half of the 20th century, as Argentina’s economy strengthened, but then languished for nearly four decades amid political instability. 42 | APRIL 2014 WWW.THEREALDEAL.COM

With Faena Miami Beach well into construction, the face of the project said he and his partners are evaluating potential opportunities in New York. About 90 percent of the tower’s buyers are from the New York area, according to Faena. That gives him coveted brand recognition, should he decide to venture north. But Faena has more to do in mid-Beach before moving on. He said he relocated to Miami so he could devote his complete attention to the development. In his mind, the job isn’t finished when the buildings top off. Alan Faena with Len Blavatnik (right), his billionaire partner in “Creation is my life; it’s my Faena Miami Beach passion,” Faena said. “We cre“Buenos Aires was created as a utopian ate buildings, and we also create the contents city,” Faena said. “What we did in Buenos Aiinside of the buildings: every room, every res was transform an abandoned area into restaurant, every museum, every artistic exa new way of living. We said we would crehibition. That’s what I love.” TRD ate the most sophisticated place the city had seen and bring the world to Buenos Aires, and also have a place where Buenos Aires could interact with the world.” For that project, Faena recruited famed French designer Philippe Starck to design a five-star hotel, which was created by gutting an historic building. Faena Hotel has since become a popular spot for celebrities and other high-profile guests visiting Buenos Aires. The Faena District also includes multiple luxury residential buildings and Faena Arts Center, a converted factory. Foster, who was part of the team for both the Buenos Aires and Miami Beach projects, says Faena “insists on a cultural anchor” for such developments. “Not just culture in the visual arts, but in blurring the edges between arts and leisure, between the resident community and the visiting energy of the hotel,” Foster said. “It unites the concepts of public space, civic space and also of optimum urban density. If you join all these dots together, you get something that is socially very responsible Faena on-site during the construction of Faena House and architecturally very exciting.”

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COMMERCIAL

Space invaders

South Florida Market Report

South Florida office space draws more companies from up north

BY MARK MAURER

ith asking rents well below those in New York and other northern cities, plus the subtropical climate and diversified workforce, South Florida office buildings continue to draw businesses from all over. “New-to-market, high-profile companies are making strong commitments,” said Ken Krasnow, managing director at CBRE in Broward and Palm Beach counties. For example, global law firm Jones Day signed a 21,363-square-foot lease in August for a full floor at 600 Brickell, a 40-story tower developed by Foram Group and known in the market as Brickell World Plaza. Krasnow represented the tenant in that deal, while Noel Steinfeld, senior vice president of Jones Lang LaSalle Capital Markets Group, repKen Krasnow, resented the landlord. managing director at CBRE Jones Day is not alone. Law firms and financial services providers are among the most notable businesses scooping up sizable spaces. In one of the last large office leases completed in 2013, law firm Shutts & Bowen signed a 69,000-square-foot deal at Southeast Financial Center in downtown Miami. Another law firm, White & Case, renewed its 58,000-square-foot lease at the building.

Steinfeld said she is seeing a significant uptick in tenants coming from up north, including some that are moving their headquarters to South Florida. Among them, Cancer Treatment Centers of America, a privately held network of hospitals, which said in January it will to relocate its corporate base to Boca Raton from Schaumburg, Ill. Local companies are also making significant commitments. TotalBank signed a 55,000-square-foot deal to move its headquarters to Downtown’s iconic Miami Tower, which becomes TotalBank Tower next month. The bank was based at 2720 Coral Way since its inception in 1974. And Office Depot, which merged last year with Illinois-based OfficeMax, opted not to vacate its 600,000-square-foot Boca Raton headquarters. Such tenants signify the market’s strength, said Krasnow. “Those are the needle movers.” The Boca Corporate Center and Campus in Boca Raton also inked a few major deals last year.

LARGEST NEW SOUTH FLORIDA OFFICE LEASES

The iconic Miami Tower, soon to become TotalBank Tower

Address

Sq. Ft.

Tenant

Landlord

Landlord Broker

1501 Biscayne Boulevard, Miami

75,000

Genting Group

Steve Hurwitz, Continental Real Estate

200 South Biscayne Boulevard, Miami

69,155

Shutts & Bowen

Hines

Nicole Vassilaros, Jones Lang LaSalle

200 East Broward Boulevard, Ft. Lauderdale 64,964

Greenspoon Marder Invesco Real Estate

Sandra Anderson, Jones Lang LaSalle

100 Southeast 2nd Street, Miami

55,006

TotalBank

LaSalle Investment Management Rashid Siahpoosh, Transwestern Commercial

750 Park of Commerce Drive, Boca Raton

50,107

NewsMax

750 Park of Commerce Drive LLC Tom Hotz, Butters Realty

Source: CBRE; includes only new deals and not renewals; covers August 2013 to February 2014.

44 | APRIL 2014 WWW.THEREALDEAL.COM

COMMERCIAL South Florida Market Report

Brickell World Plaza at 600 Brickell Avenue, where law ﬁrm Jones Day took a ﬂoor

Tyco International subsidiary Tyco Integrated Security, a business security provider, signed for 72,000 square feet (the deal happened earlier than the date cutoff for the top deals chart below), and health care services firm Conifer Revenue Cycle renewed for 98,000 square feet in the building. Office vacancies in Miami-Dade County dropped to 16.5 percent by the end of 2013, the lowest rate since early 2012, according to CBRE’s latest quarterly report. At $38.61 per foot, Brickell had the highest average asking rent in the county during the fourth quarter. “The Coral Gables office market is recovering, but the Brickell Class A sector is running away with it,” Steinfeld said.

Brickell also leads in office space under construction, with nearly 129,000 square feet on the way. Brickell City Centre is slated to include 30 floors of office space in its proposed 1,049-foot tower, making it the tallest outside of New York City and Chicago if the project is approved. Behind Brickell, Aventura had an average asking rent of $36.20 per square foot during the fourth quarter. Palm Beach, located in its namesake county, topped all other South Florida office submarkets with rents averaging $40.72 per square foot in the final three months of 2013. Boca Raton and West Palm Beach were the most active last year in Palm Beach County, respectively posting nearly 100,000 square feet and nearly 92,000 square feet in newly occupied space, according to CBRE. Class A buildings in Broward County had the highest occupancy rates. Broward’s central business district saw its vacancy rate fall 3.8 percent year-over-year. “The market is definitely improving,” Krasnow said. “Rental rates, with the exception of the core urban markets, will likely hold steady.” TRD

Southeast Financial Center, where law ﬁrm Shutts & Bowen inked a 69,000 square foot deal

“The Coral Gables office market is recovering, but the Brickell Class A sector is running away with it.” —Noel Steinfeld, Jones Lang LaSalle Capital Markets Group

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OBTAIN THE PROPERTY REPORT REQUIRED BY FEDERAL LAW AND READ IT BEFORE SIGNING ANYTHING. NO FEDERAL AGENCY HAS JUDGED THE MERITS OR VALUE, IF ANY, OF THIS PROPERTY. ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. THIS OFFERING IS MADE ONLY BY THE OFFERING DOCUMENTS FOR THE CONDOMINIUM AND NO STATEMENT SHOULD BE RELIED UPON IF NOT MADE IN THE OFFERING DOCUMENTS. THIS IS NOT AN OFFER TO SELL, OR SOLICITATION OF OFFERS TO BUY, THE CONDOMINIUM UNITS IN STATES WHERE SUCH OFFER OR SOLICITATION CANNOT BE MADE. PRICES, PLANS AND SPECIFICATIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE.

BY THE NUMBERS South Florida Market Report

SoFla’s growth spurt S

outh Florida’s growth is about much more than condos. An unprecedented construction wave and consistent population growth means that the region has major infrastructure, commercial real estate and cultural needs. Below are numbers that show how that demand will be met. Perhaps it’s not surprising that Florida is expected to pass New York as the third most populous state in the nation by the end of this year.

50,000

New Yorkers who relocate to Florida each year

$22 BILLION

1.52 MILLION

Approximate combined value of new development (residential, commercial and infrastructure) in Brickell, Downtown Miami, Edgewater, Doral and Fort Lauderdale

Combined retail square footage of major developments Brickell City Centre and Miami Worldcenter and the Bal Harbour Shops expansion

Miami’s Museum of Science construction

Rendering of Miami Worldcenter

Florida’s projected position in state population rankings at year’s end, when it is expected to surpass New York for the ﬁrst time

25,000

$1.01 BILLION

Combined cost of Miami’s Museum of Science, Perez Art Museum Miami, Adrienne Arsht Center for the Peforming Arts and New World Symphony projects

100

New retail stores included in Dacra and L Real Estate’s mixed-use development in Miami’s Design District

Floridians who annually move to New York

10,329

Inventory (in units) of new condo construction in Miami-Dade and Broward coastal markets between January 2012 and February 2014

235

Miles in South Florida covered by All Aboard Florida’s high-speed rail system slated to launch in 2015

3 MILLION

Number of cars All Aboard Florida projects it will take off the road to help reduce congestion

Rendering of Dacra and L Real Estate’s project

10,302

South Florida foreclosure ﬁlings at the start of 2014

All Aboard Florida train

4,615

Average annual absorption of condo units over the last decade

6,065

Developer units sold in those markets since January 2012

45,000 $1.2 BILLION

Vehicles that use Biscayne Boulevard in downtown Miami each day

Cost of the ongoing I-595 Fort Lauderdale-area expansion, Florida’s largestever road project

Decrease in foreclosure ﬁlings compared to early 2013

Sources: Census Bureau; All Aboard Florida; I-595.com; Port Everglades; PortMiami; Florida Department of Transportation; ISG Miami Report – The New Miami 2020; Condo Vultures

46 | APRIL 2014 WWW.THEREALDEAL.COM

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South Florida Market Report

Surging land values in South Florida are keeping many developers and investors on the sidelines

BY MARK MAURER

scalating land prices have transformed the face of South Florida real estate, tightening the race for vacant turf and locking some developers and investors into a wait-and-see mode. As an investor, Aztec Group CEO Ezra Katz says he’s struggled to launch a selectservice hotel project while competing with condominium developers for plots in urban Miami neighborhoods. “The cost of land has risen so dramatically that we may be at an impasse,” Katz said. “We’re finding we can’t buy more land at the price we want. I try to take it in stride and move on.” Aztec, a merchant banking firm and an affiliate of Miami-based Mayan Properties, secured a $15 million construction loan for the in-the-works Hyatt Place hotel near Miami International Airport. Hyatt Place broke ground in October. “We are land-constrained,” Katz said. “We can only look west of the airport and north toward Broward County and Palm Beach County.” Developer Neil Fairman, owner of the Plaza Group, said the cost to acquire developable condo land in Miami has doubled in 18 months. Oceanfront land sites range from $50 million to $200 million in Miami, Miami Beach and Bal Harbour, he said. The Plaza

Kevin Maloney, Plaza’s Neil Fairman Property Markets Group

Nitin Motwani, managing director of Group focuses on high-end waterfront conEncore Housing Opportunity Fund and do projects in Broward County. “I expect the principal of the 25-acre Miami Worldcensale price of condos will moderate soon, after reaching a nosebleed level,” Fairman said. ter project, said it’s essential to exercise creThe level of property appreciation is sigativity in the types of deals he is chasing. nificant. New York-based developer Prop“We tend to focus on deals that have erty Markets Group, led by Kevin Maloney, more hair on them,” he said. and partner S2 Development of Aventura Motwani is one of the developers tied to paid more than $30 million for a 0.85-acre construction of an 18-story condo known as the Paramount Fort Lauderdale Beach waterfront parcel in Sunny Isles Beach. Seller Palmero Beach LLC netted a 50-peron the site of the former Howard Johnson’s cent return on the $20 million it paid hotel, which saw damage from Hurricane 18 months earlier. Wilma in 2005. An equity financing In February, Miami-based HypCor700 approach to the project will require consold a 58-unit apartment complex in the do buyers to pay a mere 30 percent deEdgewater neighborhood to Russian bilposit. “This market demands experienced developers,” he said. TRD lionaire Oleg Baybakov for $21.5 million, after picking it up for $9.9 million in 2012. The Bond at Brickell, a 44-story condo tower, is another project born amid rising property values. Spanish investment group MDR Toledo bought the 1-acre site in 2012 for $17.4 million from Rilea Group, which paid $9.5 million six Property Markets Group paid $30.8 million for a development site in years earlier. Sunny Isles (left) on which the Muse condo (right) will soon rise.

THE PRICIEST LAND DEALS IN SOUTH FLORIDA Address

Name

Buyer

Seller

Price

Brokerage

444 Brickell Avenue in Miami

Future One Brickell site

Related Group and GTIS Partners

CW Capital Asset Management

$104 M

n/a

15795 Collins Avenue in North Miami Beach

Former Ocean Palm Motel

Fortune International

Chateau Group

$40 M

n/a

17141 Collins Avenue in North Miami Beach

Former Unique condominiums

Property Markets Group

Palermo Beach LLC

$30.8 M

Engel & Volkers

Donald Ross Road and Interstate n/a 95 in Jupiter

Kolter Group

Families of Richard & Robert Thall, Paul Briger, $127.5 M Patricia & Howard Lester and David Minkin

Source: Real Capital Analytics. Sales prices verified from news reports. Covers August 2013 to February 2014.

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The family business

South Florida Market Report

Broker Alicia Cervera Lamadrid discusses her parents’ start in real estate after fleeing Cuba, partnering up and being prepared for the latest development cycle

BY ERIC KALIS

hen residential power broker Alicia Cervera Lamadrid was growing up during the 1960s, what is now Miami’s bustling financial district was lined with single-family homes. Cervera’s Lamadrid ’s family, led by matriarch Alicia Cervera, played a major role in the area’s transformation from quiet residential neighborhood to metropolis filled with commercial skyscrapers and condo towers. By the time she joined her mother’s

As a result of this dramatic change, my mom, who had never worked a day in her life, had to find work to support her two small children. Thankfully, both my parents arrived with an education and knew English. Very quickly, my mom and dad got involved in real estate. They found out that the city planned to rezone Brickell Avenue from single-family to multifamily. My mom got on the phone and was able to negotiate a purchase of a site there. It’s a great story to hear her tell about scrounging up money to be able to close that transaction, every-

“Local buyers are locked out of the condo market because many can’t afford to put down a 50% deposit.” —Alicia Cervera Lamadrid

firm, Cervera Real Estate, in the early 1980s, the company was known for specializing in developer sales. In 2000, Cervera Lamadrid formed a second company with the Jorge Perez-led Related Group and sold more than 14,600 units totaling nearly $7 billion over 10 years. With no new projects to market after that, the business wound down, and in 2011, Cervera Lamadrid was named managing partner of Cervera Real Estate. Her firm is ramping up as the latest South Florida development boom unfolds, serving as the exclusive sales agent for more than a dozen condo projects in the tri-county area. She recently sat down for a talk with The Real Deal about her career and the market today.

thing from borrowing money from parents to hawking silver to our nanny lending her $500. Buying a site, getting it rezoned and selling it afterwards helped them get out of the initial shock of arriving in the country with little money in their pockets. Was there pressure to join the family business? Every time I tried to do something else, my mother would look at me and say ‘Do you know how much help I need? Do you know how hard it is to find talent?’ Education was very paramount in my family, but my mother was not shy in saying she needed help from me. I didn’t fully appreciate how my mother felt until my daughter went to college and decided to get a real estate degree. When she came back to Miami, I said, “I hope she comes to work for me.”

What did you learn from the partnership with Related Group? When Jorge and I shook hands I said, “I hope you become a billionaire so I can succeed right behind you.” He didn’t disappoint. Jorge has a lot of vision. This was a very entrepreneurial company. I was able to get creative and build a wonderful team. We were perhaps the first broker and developer to [form a company together] and to Jorge’s credit, he approached me and said he wanted to be my partner. Now I see different alliances being formed. As the city becomes larger, it becomes smaller in many ways. Sometimes very unlikely partners become good partners. Developers understand Miami is a global market and it takes more than a couple of people sitting in a sales center to effectively market a property. How is your company approaching the current development cycle? One of the interesting things we did at the end of the last cycle was double the size of the company when everyone was contracting. One of the reasons we did that was we wanted to be part of the solution, and keep the people who helped us succeed in the last cycle. We were lucky when the city recovered so quickly that we had held onto our talent and didn’t let go of any administrative staff. In addition to all of the developers we represent, we cover a lot of geography. We’re in Wynwood, Edgewater, Miami Beach, Coconut Grove. We have nine offices and locations in most of the buildings we’re selling. The good news is so much of the cycle is already funded with cash, so we’re starting from a much better place. But there is a problem with the high deposit structure [common today]: local buyers are locked out of the market because many can’t afford to put a 50 percent deposit down. There’s a lot of pressure on the marketplace from these people. TRD

What was it like growing up in a real estate family? It’s a very close family. Part of the reason for that is a family that works together stays together, or at least sees each other all the time. We came to Miami in 1961 as a result of losing our native country [Cuba] to communism. My mother is from Peru and my dad is Cuban. 50 | APRIL 2014 WWW.THEREALDEAL.COM

Three generations of Cervera women; Miami Beach’s 321 Ocean project being marketed by Cervera

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INDUSTRIAL South Florida Market Report

Caution over the canal Industrial sector sees limited growth despite Panama Canal expansion project

BY CHRISTOPHER CAMERON

iami’s industrial real estate market will soon be hit with colossal new mega-ships loaded with cargo arriving at PortMiami, coming through an expanded Panama Canal. The multi-billion dollar canal expansion project should allow vessels to carry three-to-four times more cargo to the East Coast, which, if all those ships were loaded up, could overwhelm Miami, due to an acute shortage of space to handle it. “The industrial space down here is full right now,” said Edward Easton, chairman and CEO of the Easton Group, a Doral-based firm that owns 7 million square feet of indusEdward Easton, trial real estate in CEO Easton Group South Florida. But just because there is the ability to ship more cargo, doesn’t mean there will be the demand for it at first. Easton estimated the expanded canal will increase shipping by less than 5 percent. “So the real impact of the canal will be on pricing,” Easton said. The industrial vacancy rate is about 4.8 percent throughout Miami-Dade County, according to CBRE data.

Port of Miami

“The question here is how much of the cargo is going to stay and service the residents of Miami, and how much of it is going to move elsewhere once it’s off the ship.” —Michael Silver

LARGEST INDUSTRIAL SPACES UNDER CONSTRUCTION Location

Size (in square feet)

Flagler Station business park (Building 32) 270,000

Developer

Miller Construction

Flagler Station business park (Building 34) 250,000

Miller Construction

Flagler Station business park (Building 31) 171,000

Miller Construction

Beacon Lakes (Building 21)

164,000

Prologis

Beacon Lakes (Building 22)

156,000

Prologis

Medley south of Okeechobee Rd project

147,000

Liberty Property Trust

Source: 4Q 2013 Miami Industrial Market Report by CBRE

52 | APRIL 2014 WWW.THEREALDEAL.COM

The county is spending about $2 billion, under the oversight of PortMiami director Bill Johnson, to dredge the port (currently 42 feet deep) to a depth of 50 feet to accommodate the mega-ships, build a tunnel to improve access to the seaport and install new cranes to prepare for the coming influx. But so far, the private sector is making comparatively little investment in new industrial space. “The industrial sector is encountering some limitations, because building a new building today costs about $140 per square CONTINUED ON PAGE 54

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foot and rents are only about $6.50 per square foot,” Easton said. “There’s no economics to building new, and there won’t be until rents go up.” When that rent increase might happen is uncertain, leaving Miami’s industrial market, which totals about 210 million square feet of space, in flux. The Panama Canal expansion, already a year behind schedule, is stalled, as Panama’s Canal Authority disputes more than $1.6 billion in cost overruns with the Spanish-led consortium handling the engineering. Known as the Grupo Unidos Por El Canal, the consortium includes Spanish builder Sacyr, Italy’s Salini Impregilo, Jan De Nul of Belgium and Panama’s Constructura Urbana. Negotiations are ongoing, but it is uncertain how long the impasse will drag on, with some fearing it could take years to restart work. Meanwhile, competition from ports in Fort Lauderdale, Jacksonville, Tampa and Charleston, S.C., means that even if rents rise to a level that would justify pricey new industrial developments, Miami — despite its position as the first port of call from Panama — could be undercut by cheaper facilities. In 2013, more than 1.6 million square feet of new industrial space came online in Miami. There is an additional 1.2 million square feet of industrial real estate under construction in Miami-Dade County, with 3.6 million square feet more in the pipeline. In a good year, however, the market typically absorbs about 3 million square feet of both new and existing space, according to CBRE data. That means little beyond what the market would ordinarily absorb is being built, despite anticipation of extra growth related to the canal expansion.

Prologis’ Beacon Lakes Business Park

54 | APRIL 2014 WWW.THEREALDEAL.COM

Flagler Station’s Building 31

“School is still out as to how much additional square footage of industrial real estate will be needed once the canal expansion is completed,” said CBRE’s Michael Silver, former president of the Commercial Industrial Association of South Florida. “The question here is how much of the cargo is going to stay and service the residents of Miami, and how much of it is going to move elsewhere once it’s off the ship.” Among the projects in the works are Fort Lauderdale-based Miller Construction’s Buildings 31, 32 and 34 at the Flagler Station business park in Miami-Dade County. Those buildings total about 171,000, 270,000 and 250,000 square feet, respectively. Also under construction in Miami-Dade are Buildings 21 and 22 at Beacon Lakes, an industrial park west of the Miami International Airport. Prologis, a global developer of industrial real estate with $48 billion of managed assets, will have a combined 320,000 square feet there when work is complete.

Finally, Liberty Property Trust, an $8 billion real estate investment trust with 103 million square feet of office and industrial space, is developing 126 acres in Medley into approximately 1.8 million square feet of industrial space over the next few years. Work on a 147,000-square-foot facility on the property is underway. “Because of the amount of uncertainty involved, the development of industrial space in Miami will occur gradually, as the demand presents itself,” Silver said. Despite the opportunities to capitalize on an historic trade expansion, Miami’s industrial sector appears content to hold its cards tight and take a conservative approach. “We need to be prudent about how the new industrial buildings are delivered to avoid a glut,” said Steven Medwin, managing director of JLL in South Florida. “But there are only going to be winners and bigger winners here.” TRD

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Hot for hotels

South Florida Market Report

With more guests willing to spend $1,000 a night, developers are agressively repositioning older properties

BY MARK MAURER

nstitutional investors and tourists are invading the South Florida hotel market — and for some of them, it’s more than a short-term stay. Among the signs of the region’s comeback since the recession is the demand for high-end hospitality. Miami ranks as one of the top hotel destinations in the U.S. in terms of revenue per available room and has an occupancy rate of more than 80 percent, according to Tennessee-based Smith Travel Research. “Miami is a global gateway city,” said Guy Trusty, president of Coral Gables investment advisory firm Lodging & Hospitality Realty. “Very few cities have reverted once they attained that status.” Opportunities to build ground-up hotel projects are increasingly scarce, so developers are repositioning older properties where possible. In Miami Beach alone, there are gut-level renovations underway at the iconic Shore Club hotel, the new Edition hotel and condo at the site of the old Seville Hotel, and the Metropolitan by COMO at the site of the shuttered Traymore Hotel. “Wherever there’s an opportunity to expand a footprint in the marketplace, there is a move to do that,” said Carter McDowell, partner at Miami-based law firm Bilzin Sumberg.

McDowell, whose firm represents developers including the Chetrit Group, Turnberry Associates and Invesco Real Estate in South Florida, said boutique hotel properties have been selling for more than $1 million per room in the past 12 months. More and more, Trusty said, hotel guests in South Florida are willing to spend $1,000 per night — and gains for owners are expected to continue. In Broward and Palm Beach counties, average hotel occupancy surged to 74.7 percent and 71.6 percent, respectively, in 2013, according to Smith Travel Research. Prices are rising, but that hasn’t deterred players from jumping into the game. The largest hotel deal recently was Al Rayyan Tourism Development Company’s acquisition of the St. Regis Bal Harbour Resort. The Qatar-based firm bought it from Related and Starwood Resorts & Hotels for $213 million. Starwood is staying on as property manager of the 27-story, 200-room resort. On the financing front, while Turnberry CEO Jeffrey Soffer fights an unrelated $100 million wrongful death lawsuit, he and his partners completed a $535 million refinancing on the 1,600-room Fontainebleau Miami Beach resort. Meanwhile, the Related Group paid $104 million for a waterfront Brickell Avenue site,

SOUTH FLORIDA’S PRICIEST HOTEL SALES Name

Address

Buyer

with plans to build a five-star, 200-room hotel as part of the One Brickell mixed-use development. Trusty considers the SLS Brickell condominium and hotel a key sign that condohotel projects are no longer a risky investment. The 450-unit, $300 million venture between the Related Group and the Los Angeles hotelier sbe is slated to open in 2016. Invesco, Starwood Capital and LeFrak Organization are also scheduled to open the $100 million 1 Hotel & Homes South Beach in the fall, launching a new hotel brand. The 161-condo-unit, 406-hotel-room resort will rise on the site of the former Gansevoort and Perry hotels. “Because rates are high enough,” Trusty said, “we’re back at a point where condo-hotels are making sense again.” TRD

The St. Regis Bal Harbour sold for a pricey $213 million.

Seller

Price

St. Regis Bal Harbour Resort

9703 Collins Avenue in Bal Harbour

Al Rayyan Tourism Development Company

Starwood and Related Companies $213 M

The Shore Club

1901 Collins Avenue in Miami Beach

HFZ Capital Group and Fortress Investment Group

Philips International, the Clark Fam- $175.3 M ily and Morgans Hotel Group

Former Trump International/Future Conrad Fort Lauderdale Beach

551 North Fort Lauderdale Beach Jose E. Cabanas Blvd in Fort Lauderdale

ST Residential and Federal Deposit Insurance Corporation

$115 M

Versailles Hotel and Condos

3425 Collins Avenue in Miami Beach

Access Industries and Faena Group

Chetrit Group

$109.5 M

Howard Johnson Plaza Dezerland Beach and Spa

8701 Collins Avenue in Miami Beach

Terra Group, Bizzi & Partners Devel- Dezer Properties opment and Vector Group

$65 M

Source: Real Capital Analytics. Sales prices verified from news reports. Covers August 2013 through February 2014. Chart includes existing hotel sales but not development sites.

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Default deals decline Competition to buy troubled assets hotter than ever, erasing discounts

BY CHRISTOPHER CAMERON

he dark days of the recession, when as many as 31,500 homeowners were defaulting on their mortgages each month, are behind South Florida. Miami’s luxury market is booming thanks to cosmopolitan millionaires, and prices throughout the region are steadily rising. But the area’s housing market continues to boast a less savory superlative: the highest foreclosure rate in the nation. In January, South Florida once again led the nation in mortgage defaults, with 10,302 foreclosure filings, according to RealtyTrac, an Irvine, Calif.-based data firm. While those foreclosures represent a massive 50 percent spike from December, it was also a nearly 5 percent year-over-year decline. And while the supply of distressed assets slowly dwindles as the economy improves, the steep discounts that many investors enjoyed during the recession have largely vanished. In fact, at the close of last year, home prices across South Florida were up 16.5 percent from the same time in 2012, giving buyers few advantages. “It’s funny, you hear about these [real estate owned properties] and foreclosures coming to market, but if you drive around South Florida, everything has been absorbed, from single-family to multi-family to commercial,” said Jimmy Tate, CEO of Tate Capital, which invests in distressed

multi-family and commercial assets. “There are no discounted distressed debts anymore. Everything is market rate.” Broken down by county, Miami-Dade saw the highest number of foreclosures, with 4,268 in January, a 10 percent decrease from January 2013. Broward followed with 3,837 defaults, a 24 percent year-over-year improvement. Finally, Palm Beach had the fewest foreclosure filings with a total of 2,197, a 26 percent improvement over January 2013, according to RealtyTrac, which defines foreclosures as a combination of new lawsuits, judgments and repossessions. While South Florida is gradually beginning to see fewer distressed assets, the state’s judicial foreclosure system is still weighed down with a massive backlog of more than 250,000 properties. On average, it took 918 days — two-and-a-half years — to move a foreclosure through the system in Florida in 2013, compared with 858 days in 2012. The state ranked third in foreclosure length behind New York and New Jersey. With so many distressed properties tied up in court, the inventory left in Miami’s increasingly robust housing market has dwindled. “Across the board, there is no question that the number of distressed properties available is few and far between,” said Warren Weiser, chairman of Coral Gables-

LARGEST DISTRESSED LOANS IN SOUTH FLORIDA Balance

Property

Address

based Continental Real Estate Companies. “Miami has bounced back very quickly. The condo inventory that we thought was going to last for 10 years lasted four years, and we are back to building new condo towers. Compared to the recession days, it is night and day.” Several factors will likely put a major dent in Florida’s shadow inventory in coming years: a recently passed foreclosure fast tracking law, lenders that are increasingly eager to remove bad debt from their books, and investors hoping to capitalize on growing property values. Current reports estimate it would only take another 42 months to completely clean out Florida’s mountain of mortgage debt.

COMMERCIAL ASSETS

The supply of distressed assets has also decreased significantly in South Florida’s commercial sector, with sources reporting relatively typical rates of foreclosure, heightened competition among property investors and tightening spreads that surpass even what is being seen in the residential market. “There are fewer distressed assets coming to market and those assets are being priced at a level that you wouldn’t have seen a few years ago,” said Weiser, who specializes in distressed commercial properties.

County

Delinquency Status

$43.59 million

Palm Beach Mall

1801 Palm Beach Lakes Boulevard, West Palm Beach

Palm Beach

REO

$41.09 million

Westin - Fort Lauderdale

400 Corporate Drive, Fort Lauderdale

Broward

Foreclosure

$38.59 million

Corporate Center

110 East Broward Boulevard, Fort Lauderdale

Broward

90+ Days

$37.50 million

Southern Center

10101 Southern Boulevard, West Palm Beach

Palm Beach

90+ Days

$30.75 million

Shoppes of Wellington Green

10500 Forest Hill Boulevard, Wellington

Palm Beach

REO

Source: Trepp, LLC, February 2014 Miami/South Florida distressed loan report

58 | APRIL 2014 WWW.THEREALDEAL.COM

INVESTMENT South Florida Market Report

“You hear about these foreclosures coming to market, but if you drive around South Florida, everything has been absorbed.” Jimmy Tate, CEO Tate Capital

In fact, the inventory of distressed commercial properties is now so sparse that some investors are speculating that lenders may be sitting on properties and introducing them into the market slowly to inflate values. (For a list of the top distressed commercial properties in South Florida, see the accompanying chart.) “With prices so good, it seems to me that [properties] are being strategically withheld and released onto the market,”

—Jimmy Tate

Tate said. “I have never seen the South Florida real estate market looking so strong. It is almost at the point where I am concerned again.” But with money coming from all directions — from international homebuyers, infrastructure investments ahead of the Panama Canal expansion and domestic tourists — South Florida’s distressed market isn’t going to cool off anytime soon.

“Subject to any unforeseen major catastrophes, 2014 is going to be another strong year in South Florida,” Tate said. “You’ve got a lot of money on the street, and you’ve got a lot of economic drivers coming to Miami. The way I see it, Miami in 2014 is going to have a nice upward trend.” TRD

DEVELOPMENT South Florida Market Report CONTINUED FROM PAGE 26

Edgewater is attracting the most interest from developers and land investors. The stretch along Biscayne Bay from Northeast 17th to 37th streets has at least seven major conMartin Melo, do towers proposed Melo Group director for the area, and most —Zilbert International available sites have been gobbled up. “Edgewater was a place a couple of years Realty president and ago that no one thought about,” Ojeda said. CEO Mark Zilbert The neighborhood was the setting for the unofficial beginning of the current development cycle. In 2011, the family-run Melo The Related Group is also in EdgewaGroup introduced the now-popular 50 perter, constructing the 42-story Icon Bay and cent deposit structure for its 23 Biscayne planning the two-tower Paraiso Bay, which project. It sold out in eight months. is attracting celebrity buyers like basket“At the time, no banks were willing to ball star Manu Ginobili, musician David lend because of the crash in 2008 and 2009,” Guetta and former tennis champion Arantxa said company director Martin Melo. Sanchez Vicario. “My father had built 12,000 units in Argentina and we knew in all of South America, the idea of having to put that much cash in advance is normal. We brought that matrix to Miami.” Melo then pressed forward with additional residential projects in Edgewater. The company completed the 250-unit Skyview Luxury Residences, a rental building one block away from 23 Biscayne. Skyview was fully rented in 120 days. Now Melo is building Bay House, a 38-story, 165-unit condo building at 600 Northeast 27th Street. Edgewater has since attracted a herd of condo developers, including Eastview Development and mckafka Development Group. Eastview formed a joint venture with investment firm GTIS Partners for the 51-story, 399-unit Biscayne Beach luxury tower. To distinguish itself from neighboring developers building high-rise towers with between 150 and 300 condos, mckafka is constructing A rendering of Related Group’s Paraiso Bay in Edgewater the 20-story, 90-unit Crimson.

“The first time around, we had no city. There are more people around and more infrastructure for condo boom 2.0.”

The Melo Group is building Bay House, a 38-story condo building in Edgewater

EMERGING NEIGHBORHOODS

To the north of Brickell and downtown Miami, urban pockets with unique characteristics, like Wynwood, Midtown and the Design District, are also drawing attention. These neighborhoods will offer residents homes, workplaces and entertainment in the same general area. For a city with a history of congestion and paltry public transit offerings, this is an overdue trend. These new developments will draw suburban residents to relocate to urban Miami, said ONE Sotheby’s International Realty managing partner Daniel de la Vega. “You now have a vibrant nightlife where you can go out to dinner, have a nice time and walk back home, versus having to get in a car and drive around. People aren’t buying only to be in a building, they are buying into these new developments that are taking place in the center of new cultural venues. Whether it’s Brickell, Edgewater, downtown or the Design District, people are buying a lifestyle.” 60 | APRIL 2014 WWW.THEREALDEAL.COM

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ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, MAKE REFERENCE TO THIS BROCHURE AND TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. OBTAIN THE PROPERTY REPORT REQUIRED BY FEDERAL LAW AND READ IT BEFORE SIGNING ANYTHING. NO FEDERAL AGENCY HAS JUDGED THE MERITS OR VALUE, IF ANY, OF THIS PROPERTY. We are pledged to the letter and spirit of U.S. Policy for the achievement of equal housing throughout the Nation. We encourage and support an affirmative advertising, marketing and sales program in which there are no barriers to obtaining housing because of race, color, sex, religion, handicap, familial status or national origin. All images and designs depicted herein are artist’s conceptual renderings, which are based upon preliminary development plans, and are subject to change without notice in the manner provided in the offering documents. All such materials are not to scale and are shown solely for illustrative purposes. No guarantees or representations whatsoever are made that existing or future views of the project and surrounding areas depicted by artist’s conceptual renderings or otherwise described herein, will be provided or, if provided, will be as depicted or described herein. Any view from a unit or from other portions of the property may in the future be limited or eliminated by future development or forces of nature and the developer in no manner guarantees the continuing existence of any view. These materials are not intended to be an offer to sell, or solicitation to buy a unit in the condominium. Such an offering shall only be made pursuant to the prospectus (offering circular) for the condominium and no statements should be relied upon unless made in the prospectus or in the applicable purchase agreement. In no event shall any solicitation, offer or sale of a unit in the condominium be made in, or to residents of, any state or country in which such activity would be unlawful. This condominium is being developed by Parcel C2 Property, LLC, a Florida limited liability company (“Developer”), which has a limited right to use the trademarked names and logos of Codina Partners pursuant to a license and marketing agreement with Codina Partners. Neither Codina Partners, nor Armando Codina, is the developer of this condominium. Any and all statements, disclosures and/or representations contained herein shall be deemed made by the Developer and not by Codina Partners or Armando Codina and you agree to look solely to Developer (and not to Codina Partners, Armando Codina and/or any of their respective affiliates) with respect to any and all matters relating to the marketing and/or development of the Condominium and with respect to the sales of units in the Condominium.

Created by INNOVART.US

DOWNTOWN DORAL SALES CENTER 8500 NW 52ND Street, Doral FL 33166 T. 786.522.3658 www.downtowndoral.com

DEVELOPMENT South Florida Market Report CONTINUED FROM PAGE 60

Prominent developer David Edelstein, through a partnership that includes New York real estate heavyweight Robert Futterman, wants to build a mixed-use project with 264 units, possibly rentals, at 2801 Northwest Third Avenue. Don’t expect Wynwood to mirror South Miami Avenue or Edgewater, however. “What has limited development in Wynwood is the zoning, unlike Edgewater,” Cho said. “None of the stakeholders want aggressive upzoning. For the Greater Downtown area, it’s fine to concentrate there and allow other neighborhoods to develop organically.”

LOOMING CONCERNS

While most real estate observers say Miami is in a better position to handle thousands of new condos now, some still see One Thousand Museum, designed by starchitect Zaha Hadid potential problems. Lehman, the attorney, wonEven though Edgewater is getting crowddered how long condo buyers can be expected, Melo said his family has at least two more ed to keep funding the majority of the city’s developments through cash deposits. projects in the works, a condo and a rental. Immediately northwest, the Wynwood “The real question is what happens if a neighborhood stands out as one of two Mifew people drop out?” he asked. “The probami urban enclaves, along with the Design lem comes when there is no more demand District, that is not being saturated with for other units. People get cold feet about high-rise development. Over the last decade, the direction the market is going and everymany neglected industrial buildings in Wynthing comes to a halt. What happened in wood were purchased and repositioned as 2007 down here is the cost of construction art galleries, restaurants and mixed-use fawent out of sight, which hurt a lot of projects. cilities. That is making the neighborhood Inevitably it happens.” attractive to artists, retailers and creative enDevelopers like Rilea’s Ojeda note the detrepreneurs, according to Tony Cho, presposit structure is forcing buyers to “scrutiident and CEO of Metro 1 Properties, for nize the hell out of ” projects before making whom Wynwood is a primary focus. the commitment. Thus, they are less likely to “Interesting cities are comprised of walk away from a preconstruction purchase. unique and distinct neighborhoods,” “A 50 percent deposit is a big chunk of Cho said. “We are starting to see a lot of indechange,” Ojeda said. Buyers are asking tough pendent brands from New York coming here questions about developers and sales teams. and wanting to do business in these neigh“They won’t take a leap of faith on someone borhoods.” they don’t know.” That won’t stop inexperienced developBut residential developers are taking notice. Two rental projects and one coners, or developers with no track record in Mido building are in the works in Wynwood. ami, from trying to get a piece of the boom, 62 | APRIL 2014 WWW.THEREALDEAL.COM

Zilbert said. An influx of unfamiliar players could drag down the market. “I’m always a little leery of bringing clients to an unproven developer’s project,” he said. “We will see Tony Cho, a scattering of new CEO Metro 1 Properties projects look impressive, but never get built in Miami. Unfortunately it’s the buyer who suffers.” On a broader level, Miami still lacks reliable mass transit. Options are limited for commuters who live in the suburbs and work Downtown. And Downtown residents must drive or navigate a convoluted bus system to travel the short distance to Miami Beach. The local real estate sector is also trying to get its arms around the continued threat of climate change-induced sea level rise, which could have a devastating impact on property values in the future. “To me, the biggest problem is that the city is not willing to face the issue,” Miami attorney Hal Lewis said. Of course, providing residents with enough cultural, retail and entertainment options is another big goal. “If Miami is willing to dedicate itself to a proper urban core, then it can move toward being a world class city,” Lewis said. TRD

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THE LAST WORD South Florida Market Report

Deep pockets required

Buyers increasingly embrace paying top dollar for condos in South Florida

BY PETER ZALEWSKI

outh Florida culture is all about embracing the latest social trend, whether it’s automobiles, boats, fashion, sports or real estate. As the 2013-14 winter tourism season comes to an end, preconstruction condo projects designed by famous architects or offering must-have lifestyle upgrades are the latest craze for local residents and outof-town investors. Gone are the recent days of numberoriented cash buyers who scoured MiamiDade, Broward and Palm Beach counties in search of distressed condos to acquire at deep discounts, remodel on the cheap and resell at a premium. Distressed condos currently represent less than 15 percent of the 24,500 units on the resale market in South Florida, accounting for about 1,450 short sales and nearly 2,050 bank-owned units, according to the Southeast Florida MLXchange. As a result of the shrinking inventory, it is no longer trendy to be frugal when playing the South Florida real estate game. Given the improving U.S. economy and stock market, the current focus of many of today’s South Florida condo buyers is on big-ticket purchases that will impress the masses. Nearly 1,900 condos currently for sale in South Florida, some 8 percent of the overall available inventory, come with an asking price of at least $1 million. Of this pool of luxury resale units, nearly 750 units are priced for at least $2 million, about 185 units are priced for at least $5 million and nearly 50 units are on the market for at least $10 million. The distinction of the highest priced condo on the market is a tie at $50 million between two penthouses in projects under construction in Miami-Dade County. The proposed Mansions at Acqualina in Sunny Isles Beach is offering a seven-bedroom penthouse with nearly 17,500 square feet of living area at $2,860 per square foot.

64 | APRIL 2014 WWW.THEREALDEAL.COM

In Miami Beach, Faena House is marketing a nearly 8,300-square-foot penthouse for nearly $6,050 per square foot. The trend toward condo units that have one-ofa-kind features, such as a private automobile elevator that can deliver a car to the floor of its owner, or a single unit comprising an entire floor in a skyscraper, is triggering another condo boom in South Florida. Some 200 new condo towers are proposed east of I-95 in South Florida, from Greater Downtown Miami to Fort Lauderdale to West Palm Beach. The mean minimum asking price through March was about $725 per square foot, according to a survey conducted by the preconstruction condo projects website CraneSpotters. com (For disclosure purposes, my firm owns and operates the website.) Many of the proposed units in South Florida are slated to be delivered “designer ready,” meaning additional costs will be incurred to install floors, baseboards, light fixtures and other aesthetics. Industry watchers said it is reasonable to assume that the build out of these raw condo units could cost at least $25 per square foot. As buyers increasingly look at purchasing the more than 27,000 preconstruction condo units proposed for South Florida, it is worth noting the average asking price for a condo resale east of I-95 is less than $490 per square foot in Miami-Dade, less than $265 per square

foot in Broward and less than $200 per square foot in Palm Beach. The unanswered question is just how long big-ticket condo purchases will be trendy among buyers in the region. Peter Zalewski is a real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors. TRD

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Developer 4701 North Meridian, L.L.C. Address: 4218 NE 2nd Avenue, Miami, FL Premier Sales Group, Inc. a Licensed Real Estate Broker is the Exclusive Sales Agent. • ONE Sotheby’s International Realty, Global Marketing Partner. The Ritz-Carlton Residences, Miami Beach are not owned, developed or sold by The Ritz-Carlton Hotel Company, L.L.C. or its affiliates (“Ritz-Carlton”). 4701 North Meridian, L.L.C. uses The Ritz-Carlton marks under a license from Ritz-Carlton, which has not confirmed the accuracy of any of the statements or representations made herein. This graphic is an “artist’s rendering” and is for conceptual purposes only. THIS OFFERING IS MADE ONLY BY THE OFFERING DOCUMENTS FOR THE CONDOMINIUM AND NO STATEMENT SHOULD BE RELIED UPON IF NOT MADE IN THE OFFERING DOCUMENTS. THIS IS NOT AN OFFER TO SELL, OR SOLICITATION OF OFFERS TO BUY, THE CONDOMINIUM UNITS IN STATES WHERE SUCH OFFER OR SOLICITATION CANNOT BE MADE. PRICES, PLANS AND SPECIFICATIONS ARE SUBJECT TO CHANGE WITHOUT NOTICE. OBTAIN THE PROPERTY REPORT REQUIRED BY FEDERAL LAW AND READ IT BEFORE SIGNING ANYTHING. NO FEDERAL AGENCY HAS JUDGED THE MERITS OR VALUE, IF ANY, OF THIS PROPERTY. ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS CORRECTLY STATING THE REPRESENTATIONS OF THE DEVELOPER. FOR CORRECT REPRESENTATIONS, REFERENCE SHOULD BE MADE TO THE DOCUMENTS REQUIRED BY SECTION 718.503, FLORIDA STATUTES, TO BE FURNISHED BY A DEVELOPER TO A BUYER OR LESSEE. NEW YORK RESIDENTS This advertisement is not an offering. It is a solicitation of interest in the advertised property. No offering of the advertised units can be made and no deposits can be accepted, or reservations, binding or non-binding, can be made until an offering plan is filed with the New York State Department of Law. This advertisement is made pursuant to Cooperative Policy Statement No. 1, issued by the New York State Department of Law. CP14-0017

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Owned and Developed by Terra Group Representation ONE Sotheby’s International Realty Broker participation welcome. Oral representation cannot be relied upon as correctly stating the presentation of the Developer, for correct representation, make reference to the documents required by section 718.503 Florida Statutes, to be furnished by the Developer or Buyer or Lessee. Not an offer where prohibited by State Statutes. Plans, features and amenities subject to change without notice. All illustrations are artist conceptual renderings and are subject to change without notice. This advertisement does not constitute an offer in the states of NY or NJ or any jurisdiction where prior registration or other qualification is required. Equal Housing Opportunity. All plans and renderings are conceptual and are subject to change without notice.