Going long on the human economy
What keeps that permanent smile on the face of Ryan Shear? Some might say it’s his low-key upbringing in Miami’s Coconut Grove. But it could also be the collection of humble beginnings and a focused awareness of current trends that has helped him become a leading real estate developer in South Florida at the age of 33.
Shear’s early career path paralleled the fundamentals of developing a property from scratch. After graduating from Emory University’s Goizueta Business School in Atlanta, the Florida native started from the ground up as an analyst for the real estate services firm Robert Charles Lesser Company. There he provided consulting to individuals, corporations and government agencies using a company-trusted formula. However, Shear soon found that in a market where trends shift rapidly, compiling data over a 10-year period was an antiquated approach to deciphering whether properties would be successful or not, he said.
In 2006, he moved over to Property Markets Group, where he works under Kevin Maloney, the company’s founder. In his first role at PMG, he assisted in the analysis, development and management of several South Florida properties. Yet, as Shear had discovered in his previous endeavors, markets can turn in the blink of the eye, and after a prosperous beginning, he had to endure the largest housing crash in history, which subsequently caused the worst American recession since the early 1980s.
“So the world ended,” he told The Real Deal from his office in Miami. “Developers didn’t know what to do with themselves, and at that point in time, all bets were off.”
Trying his hand in the home-restoration business, Shear ventured up north to Chicago’s South Side, where PMG purchased, restored and sold between 300 and 400 homes from 2009 to 2011. The process was an erratic one, as a multitude of buyers would make blind bids on homes through local court houses, and only upon winning a bid would they be able to walk through and see what type of property they had purchased.
“People used to steal copper pipes and the basements would be flooded,” Shear said. “Talk about an experience. Every day was filled with a different type of intensity compared to the luxury market in South Florida.”
Shear now manages a growing real estate portfolio worth more than $2 billion dollars, which includes the recently completed and ongoing projects Muse Residences, co-sponsored by S2 Development; Echo Aventura, PMG’s largest condominium development in South Florida; and the company’s forthcoming millennial-focused rental tower Vice.
Considering the tumultuous market you’ve witnessed over the past decade, what are some of the biggest hurdles with developing new projects in South Florida?
Convincing lenders. They have this fear of Florida because of the losses we took down here. I tell people, “There was never a good time, from a lender’s stance, to write a loan in Florida for the last five years.” It was either ‘You guys are crazy. How are you building condos in 2012? The world just ended.’ Or in 2015 they were like, ‘Cycle’s over, we missed the boat.’ But there was this window sometime in 2014 where everybody believed Florida was back. Now, there is zero construction financing for condominiums down here. Everybody will tell you the cycle is over.
How much has South Florida changed over the years in your view?
When I grew up, you could only go out in Coconut Grove and South Beach. There was no Brickell, Midtown, Downtown, Design District, Sunny Isles — none of these neighborhoods existed. Miami has totally flipped itself on its head in the past 10 years. People now say Miami is a real city, where 10 years ago they would joke it’s a vacation town. You can see it in all facets, from real estate to entertainment to just everything, you feel it.
PMG put together a team of millennials to spearhead the 464-unit “Vice” rental apartment tower. How would you describe the desires and needs of the young professional?
We do focus groups and focus groups with friends. What I do is take 20 of the youngest people in the office and 20 of their friends. I want a study of 300 people living in Miami ripping apart our plans. Which parts they like and where the problems are. It’s as real-time data as you can get. We try to involve and listen to what is current and recognize that on a weekly basis this stuff is evolving. For example, we think millennials care less about the size of their apartment and care more about the type of the building, common space, price and location.
When is the Vice tower due to hit the market?
We break ground in the end of April. It’s a two-year build and we start pre-leasing in the first quarter of 2018.
How much are you expecting those rental units to go for?
Our one-bedrooms start at $1,800. We underwrote what current rents are for a unit that size. Another company just opened a building down here. Their one-beds start at $2,400.
Do people get angry when you undercut the market value?
I hope they get angry, that’s part of the competition, right? It goes with the personality of our firm. We think the world is drastically changing. We want to stay ahead of the curve. The way people share offices and the way people live. If you’re not catering to it, we think you’re out of the mix.
Echo Aventura opened in January. How many of those 190 condo units are left?
We sold 166 units, so there are 24 units left. Everyone has closed. We’re happy with the building. It came out pretty well.
What’s the idea behind the “Live Different Campaign” at Echo Aventura?
We are trying to analyze all aspects of buying real estate to make it easier for the buyer. The first year of living in a building could be a nightmare of a process for people to manage. We deliver the building fully finished and build it into the price. We leave our construction crew on the job till the end of the year, just to serve the clientele. We want to build a relationship with all the buyers so they don’t think we just sold them a box in the sky. We sold them a lifestyle, and we’re here for them, in theory, forever.
In a similar vein, PMG commissioned Helidon Xhixha in 2014 to create a sculpture for each resident at Muse Residences in Sunny Isles Beach.
I’m the last to pine on the value of art, but apparently Helidon is a big, up-and-coming artist. These pieces are very expensive. He interviews you and based on the interview creates a piece of art that represents you. When you move in and come to close, the art is there waiting for you. The Muse building will be fully delivered in two years, so he’ll deliver them over a period of two years. We thought the art component married itself well with the type of property and clientele.
He created a violin for me. He says that I was full of music. I don’t know if he meant that I’m full of shit or full of personality, but either way he created a violin for me.
As someone who operates high-end condo and rental properties, what are your feelings about Airbnb and similar services?
I think it’s brilliant. They changed the game and I think it’s where the world is moving. They’re extending their reach from the individuals to a commercial level. They took the concept of subleasing, flipped it on its head and made a monster business out of it.
There has been recent talk about the luxury condo markets in New York and South Florida beginning to soften. Are you seeing any signs of that in early 2016?
Absolutely, it’s definitely slower. If anybody tells you the market is stronger than what it was a year ago, they’re not being completely candid. Most people say it’s direct correlation with the strength of the American dollar. The most common answer why someone can’t buy now is that it’s twice as expensive as a year ago. This goes hand and hand with the credit markets. If the credit markets are slow and the buyer’s market is slow, it just really equates to less buildings coming out of the dirt.
Florida experienced a lot of property losses over the past decade and has been experiencing a major development boom in recent years. Now it may be in a precarious spot again. What sparked the most recent change of tide?
I think the environment over the past five to six years, specifically in South American and Central American countries, has become extremely tumultuous. I think what’s happened is you’re looking at destabilization in other countries, and they’re coming in droves to South Florida. Our market is more than 80 percent bought from these countries. This is not a market like New York. Miami goes as the South American countries are going. There are two sides to the coin. Every time they get destabilized or something bad happens, there’s a flock to Miami. However, if the American dollar gets stronger it becomes harder to purchase here. We’re kind of in a weird spot right now, where the American dollar is strong and South American countries are not doing so well, but now it’s too tough to buy in Miami because it’s too expensive at this point.
Are you worried that Florida’s real estate market as a whole could be headed towards another serious downturn?
No, I’m not, and this isn’t me being an optimist, because I promise you I’m not an optimist at all. Last time, the issues that drove the real estate world into recession were far exceeding the strength of a dollar or slowdown of an economy. It had to do with a litany of other issues. I don’t think you’ll see this recession happen because I don’t think there will be that wave of defaults.
What is your biggest achievement since you joined the company?
We believe human capital is the crux of any company. Our staff is filled with quality, evolved, good people who understand the business. We had our company retreat this year, with more than 150 people, and the energy and intellect and power in that room, it took a decade to build. We call it the human capital growth, which is hard to create and even harder to maintain. The people in this office would walk through walls for the company. It’s a very loyal and dedicated environment.
All in all, what’s your favorite part of developing new projects in South Florida?
At the core of what you’re doing, you’re providing houses for people, so there is that basic function that’s pretty gratifying. Then there are other things you can’t fake. There are people in the development game that are in it for the money, the glory, the desire to build a building. Kevin Maloney is a true developer; he loves the sticks and the bricks, and I feel the same way. When picking the level of the finish on the drywall is an exciting concept, you know you’re not faking it. That part of the business is completely enthralling. Synthesizing your own information and making that bet is a rush. It’s a game in some places, so you marry that with the altruistic concept of actually delivering a good product. You’re smiling most of the day when you’re not upset about something.