David Martin’s $1.2 billion purchase of a residential complex in downtown Miami is expected to have a knock-on effect on the land sales market, boosting investor confidence despite the many challenges that remain.
Martin and his Coconut Grove-based company Terra lead SmartCity Miami, where an undisclosed group of investors purchased the 15.5-acre Genting Group Officially listed for sale end of last year. The waterfront property in Miami’s arts and entertainment district is expected to be the most expensive urban land sale in Florida and one of the most expensive in the country when it closes later this year for $1.225 billion.
It follows hedge fund billionaire Ken Griffin’s $363 million acquisition A waterfront site in Brickell set a record last year. The site is planned for Griffin’s Citadel mixed-use office tower. Unlike Genting, the property’s seller, Florida East Coast Realty, isn’t looking to sell.
Mika Mattingly, a commercial broker with Colliers South Florida, said many developers and investors have “put their pens down” and are waiting for market headwinds to subside.
“It’s not just the interest rate. It’s the insurance. It’s the construction fee. It’s all at the same time,” Mattingly said. “Now people don’t know when interest rates [hikes] Will stop or when banks will start lending again. ”
However, Mattingly said land sales and construction of new projects were moving forward, although both were now more “struggling”.
Martin isn’t the only one interested in the property.his group is one of five offers Bids for the property exceeded $1 billion, one of nine bids, according to the property’s marketer, Avison Young.
Empty for years, the downtown Miami venue has been dubbed “the hole in the donut.” It is located north of the Kaseya Center, the Miami Perez Art Museum and the adjacent Phillip & Patricia Frost Science Museum, and south of Edgewater.
The portfolio includes the former Miami Herald headquarters and will accommodate approximately 8,000 units. Height will be limited by Federal Aviation Administration regulations, and may be as high as 649 feet. It has 800 feet of frontage along the bay.
Brokers and attorneys agree that the impending sale could add to or create momentum for other deals in nearby areas and throughout South Florida. By the time Martin and his partners finalize their plans and begin construction, the cost will likely be lower.
“Three years later, it’s a completely different world,” Mattingly said. “Developers all seem to work in the same cycle, so once you start seeing other people developing, you lose the fear factor a little bit.”
Genting did not respond to a request for comment. Genting’s law firm Terra and Bilzin Sumberg declined to comment.
Avison Young agent Mike Fay, who listed the site along with his colleague John Crotty and other team members, declined to comment on the deal. But Fay said he is listening to and/or working with buyers of other sites for sites worth between $150 million and $500 million.
Developer Jerry Hollo, whose company FECR sold the Brickell site to Citadel last year, said he and his partners were preparing to develop the property when Citadel made an unsolicited offer. Hollo also said FECR has “consistently” received offers for Panorama Tower, a nearby luxury condominium mixed-use building that is not currently on the market.
Saul Ewing’s attorney, Anthony Kang, agreed the Genting deal was “another affirmation” for Miami. He said few developers had to work with just one seller to develop a waterfront site, rather than assembling the land or even successfully completing complex apartment buyouts. That could make it more attractive to potential buyers.
As SmartCity Miami, which Martin leads, moves forward, developers will likely conduct environmental testing as part of their due diligence. This may include archaeological research.
“I wouldn’t be surprised if a lot of hard work [period] It’s figuring out what kind of approvals they can get and what projects they can build,” Kang said.
Zoning allows for multiple uses. Martin is expected to develop a mixed-use project, and since part of the site is waterfront, he may develop luxury residences. Others cite significant opportunities in retail. Whatever is built will require a significant investment in infrastructure, similar to other larger developments such as Miami Worldcenter and Downtown Brickell.
Marty Arrivo, retail broker and founder of Acre Commercial Real Estate, said Swire’s Brickell City Center and the Craig Robins-led Miami Design District development are “proofs of concept” that show downtown multi-block projects can be successful in Miami. Arrivo said the retail vacancy rate was just over 3%, an all-time low in Miami-Dade County.
“The market has more room to grow,” he said, even if there is a correction.
Genting, a Kuala Lumpur, Malaysia-based conglomerate with stakes in casinos, hotels, biotechnology and property development, has sought unsuccessfully to gamble on the site for years.
Terra has said nothing about its development plans, but the company has become increasingly active over the past few years and is in talks to buy an aging apartment building in Miami Beach $500 million.
Many expect developers to build less densely than the Genting site will allow, as Terra has done with other waterfront developments. Terra may also hire a well-known architect. The company has worked with Bjarke Engels, Renzo Piano and others. Engels designed Terra’s Grove at Grand Bay, a pair of sinuous apartment buildings overlooking the bay in Coconut Grove, while Piano designed the luxury apartment complex Eighty Seven Parkwhich was built next to the Surfside apartment complex that later collapsed.
Along with the I-395 landmark bridge under construction, the Gulf project could spur construction nearby. It is located in the rapid transit area, next to the Adrienne Arsht Center underground station.
considering”We are in the toughest debt market since 2008. ”
“We’re seeing strong buyers,” Mattingly said. “Maybe you don’t see them flocking, but they’re still there, they’re still buying in Miami, they’re still buying trophy properties.”