The property market in South Florida continues to demonstrate resilience. This is largely due to wealthy North Americans continuing to relocate south, even as the rest of the country's market faces challenges such as rising interest rates. Experts explained this at the South Florida Capital & Development Forum, hosted by Commercial Observer, which took place on 15th October at Don Peebles' Bath Club in Miami Beach.
Gil Dezer, President of Dezer Development, who is developing the Bentley Condotower in Sunny Isles Beach, noted that "unaffordable flats" are being sold. Genghis Hadi, co-founder and managing partner of Nahla Capital, which is redeveloping the oceanfront Raleigh Hotel in Miami Beach, added that a new billionaire emerges in San Francisco weekly who wishes to move to Miami. Isaac Toledano of BH Group, who is developing a skyscraper nearby, confirmed this, reporting that multiple term sheets had been received for financing, which makes the situation appear encouraging.
Changes in Buyer Structure and Funding Landscape
Erika Cajigas, Vice President of Residential Sales and Marketing at Swire Properties, informed attendees that her company commenced construction on a skyscraper on Brickell Key this month, having already secured over US$1.7 billion in pre-sales. Christine Martinez de Castro, Chief Sales and Marketing Officer of the CMC Group, which is developing the Four Seasons Condo in Coconut Grove, pointed to a shift in the buyer demographic. While domestic buyers maintain a strong presence, European buyers are gradually surpassing Latin American ones.
For this group of buyers, location is of paramount importance, as emphasised by Harvey Hernandez, CEO of Newgard Development Group, whose company is developing a Standard-branded tower on the Brickell waterfront. Amenities also remain crucial, according to Aaron Stolear, President of Development at 13th Floor Investments, who are realising Nobu-branded condos also on the Brickell waterfront. This 70-storey development will feature ten floors of amenities, focusing on dining and wellness. In the rental segment, tenants expressed similar desires, which is why Gevorg Shahbazyan, founder and CEO of the Starlife Group, integrated shuttle services into his multi-family properties in Hollywood, Florida.
New Capital Sources and Long-Term Perspectives
Despite strong demand, lending deals must still be carefully "put together", explained Greg Newman, Senior Managing Director of Originations at Bank OZK. Jordan Kornberg, Chief Investment Officer of Miami-based development firm Mast Capital, added that while capital is available, securing commitments is challenging due to constantly changing conditions. While some lenders exercise caution, new capital sources are emerging, including family offices. Adam Falk, Principal and Co-Portfolio Manager of BH3 Fund Advisors, highlighted that these wealthy families engage sophisticated advisors and typically adopt a long-term perspective, which can help close capital gaps.
Jonah Sonnenborn, Senior Managing Director and Head of Real Estate at Access Industries, billionaire Leonard Blavatnik's investment company, concurred, emphasising the importance of capital durability. Scott Wadler, Managing Director at Berkadia, added that the influence of cash on the capital market remains unchanged. There is no substitute for cash in the capital structure, as many attempt to develop or acquire assets without the necessary equity.
- —Zack Simkins, Managing Director at Vaster, sees opportunities in over-financed properties.
- —Aaron Kurlansky, co-founder of Sheridan Capital, perceives the current market situation as fundamentally different from 2008.
- —Morris Betesh of Arrow Real Estate Advisors urges caution, highlighting the danger of unexpected events.
- —Forum experts reported weekly announcements of large office leases, reflecting the dynamism in the office market too.
