Presented By: Terra
Miami Market Stands Resilient Against a Backdrop of Market Volatility
Terra CEO David Martin Discusses Why He’s Betting on Sustained Growth for South Florida
In a recent Power Profile interview with Commercial Observer’s Cathy Cunningham, David Martin, CEO of Miami-based development firm Terra, stated that if he had to sum up the South Florida market in one word, it would be “resilient.”
Martin underscored the changes that owners and developers have faced nationwide, noting that the last 18 months have been a very different environment for the commercial real estate industry. Interest rate movement, underwriting criteria, yields, debt to risk coverage ratios, and all the important elements that make leverage possible have shifted, forcing owners and developers to get creative in adapting underwriting criteria to move projects forward and optimize equity returns.
Despite these market shifts, Martin said he understands the market is efficient and he’s taking a long-term perspective.
“Next year there is going to be a little pause and we’re going to see certain capital stacks and financial engineering that needs to get fixed and cured,” Martin said. “But overall, as long as we continue to see the demand and the migration here from all over, that’s going to really make Miami strong in the long run.”
In discussing Martin’s long-term perspective, Cunningham asked what his vision is for the “next Miami” and what projects he’s working on that are particularly profound and important to realizing that vision.
Martin stated that the team at Terra “has taken a very strong neighborhood strategy.” Terra leverages a diversified portfolio spanning all asset classes and approaches new projects by identifying the void in the neighborhoods they’re entering. From residential high-rise developments complementing Coconut Grove’s urban walkability, to the transit-oriented Grove Central development, community development takes center stage in Terra’s strategy.
“We look to solve issues that are happening in the community,” Martin elaborated. Pointing to the Five Park residential development in Miami Beach, Martin stated that Terra is looking to “protect the environment [and] mitigate the impacts and challenges with climate and resiliency, and we’re also looking to beautify and create great architecture and great homes.”
Another priority Martin emphasized when discussing the new Miami was creating supply and combating scarcity and affordability for different income levels amidst rising construction costs and interest rates. Martin stated that the solution is not building towers, but the middle row housing like row houses and garden apartments that can reduce construction costs to create housing that is affordable.
Climate change and storm mitigation are also key priorities and focuses in Terra’s long-term planning for this market that is positioned along the coast. Martin explained that financing climate resilience is difficult as it requires ideas to be tested to demonstrate cost savings benefits. That hasn’t slowed them down on being laser-focused on advancing Miami by taking on partnerships and initiatives surrounding big capital improvement projects.
“The industry has to lead. Medium and long-term planning is where I’m spending a lot of my time and I’m really excited about where we’re going.”