South Florida Development and Investment Forum Full of Frank Talk

As South Florida’s pandemic-fueled growth has slowed, the region is now going through growing pains, concluded the panelists at Commercial Observer’s annual South Florida development and investment forum, held Oct. 23 at the Bath Club in Miami Beach.

Still, no one was panicked: The region is only in its first inning of growth. “We have redefined ourselves as a world-class city,” said Camilo Miguel Jr., founder and CEO of Mast Capital, referring to the city’s namesake.  

Adi Chugh, founder and CEO of Tyko Capital, who orchestrated several blockbuster financing deals in Miami this year, agreed: “There are many hockey sticks ahead,” referring to the graph curve shape. 

One great example is the transformation of Miami Worldcenter, a 27-acre development in Downtown Miami, spearheaded by Nitin Motwani, managing partner of Miami Worldcenter Associates and Merrimac Ventures (not to mention the son of keynote speaker Ramola Motwani, chairwoman of Merrimac Ventures, who also spoke during a panel moderated by Al Dotson, managing partner of law firm Bilzin Sumberg).

Nitin Motwani reminded his fellow panelist — Allie Eichner, president of the Continuum Company — that he couldn’t convince Eichner’s dad Ian Bruce Eichner to develop at Miami Worldcenter during the early days of the master development. 

Today, nearly all the parcels are taken by high-profile developers, such as Witkoff Group. “We equate it to buying 5 acres next to Grand Central Station,” said co-CEO Alex Witkoff, in a firechat moderated by Simon Ziff, president of capital advisory firm Ackman-Ziff. 

To remain successful as the rush of development continues, developers need to look beyond just their buildings — and think about the neighborhood as a whole. Alan Kennedy, managing director of Hines, and Joe Furst, founder and managing principal of Place Projects, are working on district-wide developments: Nora in West Palm Beach and FATVillage in Fort Lauderdale, respectively. 

It’s important “to have curatorial control,” noted Furst in a panel alongside Pranav Bhakta, vice president of investment operations at Driftwood Capital, and moderator Gillian Kessler, a partner at law firm Morrison Cohen. 

To elevate Wynwood, Goldman Properties looked for great local operators, such as Zak the Baker and Panther Coffee — not national names like Starbucks. “What works in Wynwood isn’t going to work in Atlanta,” said Jessica Goldman Srebnick, Goldman Properties’ co-chair. 

Still, challenges remain for South Florida to sustain its growth. “The most sought-after commodity is not a Lamborghini or a Ferrari, but private school slots,” Donahue Peebles III, executive vice president of The Peebles Corporation, said in a discussion moderated by Erick Araneda, a partner at accounting firm Citrin Cooperman.

On the office front, Miami hasn’t quite leveled up. It’s “not a market that routinely signs 200,000-square-foot office leases. It’s not like New York City or Chicago,” said Arnaud Karsenti, managing principal of 13th Floor Investments. “A big lease in Miami is 40,000 square feet.”

Like everywhere else in the country, construction costs have skyrocketed. “Concrete used to be at $80 a cubic yard. Today that’s around $160, $180. There are limited suppliers in the market,” David Martin, CEO of Terra, said during his keynote interview. “I’m hopeful that capitalism, entrepreneurship and new players start developing more market efficiencies.”

But some of these challenges are not all bad. “We have been huge beneficiaries of inflation. It’s easy to complain about struggling to develop or acquire assets, but we’ve also been fortunate,” Dan Kaplan, managing partner of Property Markets Group, said in a panel, moderated by Danielle Garaicoechea, chief operating officer of consultancy American Venture Solutions. 

“I would talk about deals at $3,000 a square foot for projects and be locked out of the Miami River area. It was crazy,” Kaplan said. “Today, you probably can’t get anything for less than $4,000 a square foot.”

His fellow panelist, Matt Adler, agreed, thanks to his purview as the chief investment officer of Zom Living, a national multifamily developer and investor: “South Florida has been far and away the strongest market since 2020 — now that we’re post-pandemic and there are still more people still who want to come here.” 

Condos have remained a top-notch asset class, and finding the correct brand to adorn a development is key to attract purchasers. Two weeks ago, a buyer bought a multimillion-dollar unit at the St. Regis project in Brickell just because Michelin-starred chef Fabio Trabocchi would be running the food and beverage offerings, Nelson Stabile, a principal at St Regis co-developer Integra Investments, divulged during a panel moderated by Suzanne M. Amaducci, chair of real estate and finance at Bilzin Sumberg.

Even without a sales gallery and marketing materials ready, the Four Seasons condo project in Coconut Grove garnered strong pre-sales this summer. “That’s what happens when you marry a strong developer with a strong brand and the correct location,” said Christine Martinez de Castro, vice president of sales and marketing at CMC Group, a partner on the project. 

Luxury buyers love hospitality brands because of the services and amenities they provide, “but they still want privacy,” said Brad Meltzer, partner and president of Two Roads Development. 

Erika Cajigas, vice president of sales and marketing at Swire Properties, agreed. For the company’s next project, the Mandarin Oriental-branded condo and hotel on Brickell Key, it will create two separate entrances: one for residents and another for hotel guests. 

Still, with all these luxury brands coming to town, it’s increased the cost of housing, pushing out longtime locals — and some new transplants, too. “The people who came down weren’t just those who could buy $50 million homes. It was everyone — teachers, firefighters,” Andrew Till, chief operating officer and principal at Baron Property Group, said in a panel alongside James Kohnstamm, Miami-Dade County’s director of economic development. The panel was moderated by Manuel Crespo, a partner at law firm Greenspoon Marder.

To meet the demand, MG Developer has launched residential projects in Hialeah, an industrial city in the outer corner of Miami-Dade County, said Giovanni Insignares, the company’s vice president of marketing. 

Unlike New York or California, Florida has the right tools to spur workforce housing construction. Last year, the Florida legislature passed the Live Local Act, which grants developers tax breaks if they price at least 40 percent of apartments at 120 percent of an area’s median income. “That’s a real benefit” to getting projects underwritten, said Brian Heide, a senior vice president at Bank of America. “We’re always looking for every source to leverage when building a tax credit affordable property,” the lender added in a panel moderated by Matthew Scott, a Greenspoon Marder partner.

Thanks to the Live Local Act, “it doesn’t take much to get to 120 percent,” according to Asi Cymbal, chairman of Cymbal DLT Companies. The developer has already delivered one project, where all 341 units are priced at 120 percent in Miami Gardens, and is already looking for new workforce housing opportunities.

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