Clevelander Hotel Wants to Add Affordable Housing to Miami Beach’s Ocean Drive

The percentage of units is just enough to bypass local building restrictions thanks to the newly enacted Live Local Act, a measure meant to boost the construction of affordable units in Florida that was approved after housing costs skyrocketed during the pandemic.

The state legislation, which went into effect in July, requires local governments to approve multifamily developments in areas zoned for commercial or mixed uses if at least 40 percent of units are designated as affordable housing.

So far, developers have mostly used the provision to make plans to add housing in suburban areas that are filled with languishing malls. Jesta’s proposal would be located along one of South Florida’s most famous streets, which is also a hub for nightlife tourism. 

In recent years, though, Ocean Drive’s tawdry party image has faced pushback from locals. In 2021, at the urging of Miami Beach Mayor Dan Gelber, city residents voted to move up the last call for alcohol from 5 a.m. to 2 a.m. The measure took aim at noisy bars, including the one at The Clevelander, a five-story hotel.  

In response, Jesta, a Canadian investor, sued the city. While the hotel owner won an injunction, allowing the Clevelander bar to serve alcohol until 5 a.m., the city launched a similar crackdown in the neighboring South of Fifth district. Now the Clevelander owner is saying that converting the building into a residential property is the best solution financially. 

“Since purchasing the Clevelander Hotel and Bar a few years ago, we have been proud to operate this legendary and iconic establishment in South Beach.  Although we are happy to continue operating as we have, some have expressed a desire that we change our business model at the property,” Anthony O’Brien, senior managing director of Jesta Group, said in a statement. 

“With the Live Local Act, we now have a unique opportunity to do that. The act allows us to redevelop the Clevelander and Essex House sites with enough density and square footage to justify the shift in our business model while providing an important public service in the form of affordable housing,” the executive added. 

The Clevelander redevelopment project would be built on the sites of the Clevelander and adjoining Essex House hotels, Art Deco properties that were completed in the late 1930s. The redevelopment would house 137 units in total, of which 60 percent would be market-rate condos. Jesta plans to keep the Art Deco facades, open what it calls a “high-end” restaurant on the ground floor, and move the Clevelander’s bar to another location, said a spokesperson for the developer.

The maximum height allowed at the sites of the hotels, which cover just under an acre, is approximately 30 stories, which Jesta wants to utilize, though it plans to discuss the size of the project with Miami Beach officials. The hotel would close once construction would begin, which is expected in 2025.

Julia Echikson can be reached at jechikson@commercialobserver.com. 

Correction: A previous version of this article incorrectly stated that a judge had cleared the way for the last-call rollback on Ocean Drive. That judgment was for the South of Fifth neighborhood.