Russell the relentless
When Miamians and tourists drive eastbound on the MacArthur Causeway, past Star, Palm and Hibiscus islands, past the cruise ships with passengers waving as they exit the port, the first building that’ll catch their eye will be a veritable skyscraper.
A 44-story, 519-foot-tall luxury residential building dubbed Park on Fifth is set to rise at 500 Alton Road, right at the entrance to South Beach. The project on the site of the former South Shore Hospital rattled the neighborhood and required the developer, Crescent Heights, to go through more than 100 meetings with city and state officials and the community. The head of the firm, Russell Galbut, has faced personal vitriol with critics deeming him deceitful, greedy and willing to break the law.
But it’s precisely this — fighting in the trenches to pull off hairy, city-defining deals — that Galbut lives for.
“When you see a project like 500 Alton get approved, that’s because people have a brain finally,” Galbut said during an interview at his Miami Beach office, replete with dark wood, renderings on poster boards and a “Make America Great Again” hat atop a pile of books. The mayor and commission knew what was “right for the community,” he added, and advocated for it “regardless of the crazies.”
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Galbut’s firm says it has built over 150 projects nationwide valued at about $12 billion and is now making serious plays in Miami — along with 500 Alton, it’s developing a massive mixed-use project on Biscayne Boulevard and at least two Airbnb-branded apartment complexes. And over the years, Galbut has earned a reputation of someone who doesn’t back down. Even among the iron-willed cadre of those who fancy themselves as South Florida developers, he stands out.
“In animal terms, he is a pit bull who hasn’t eaten in a month, who will grab onto your leg,” said Philip Levine, mayor of Miami Beach between 2013 to 2017. “No matter what you do, he will not let go of your leg.”
School of soft power
Being a developer requires capital and chutzpah, of course, but it also requires a keen understanding of power: how to cultivate relationships and trade favors at all levels.
Galbut, now 65, had a masterclass at his disposal since childhood: His grandparents, Abraham and Bessie Galbut, operated a 24-hour drugstore-restaurant at Fifth Street and Washington Avenue that was a magnet for those who mattered in Miami.
“The restaurant was the center of the universe,” Galbut told Miami New Times in 1994. “The mayor, commissioners, the police chief, all went there.”
Galbut is a political kingmaker, giving over $260,000 to mostly Republican candidates and political action committees on the state and federal level since the 1990s, a review of campaign finance records shows. This includes thousands of dollars to former Rep. Carlos Curbelo, then-governor and now Sen. Rick Scott, and Sens. Chuck Grassley, Mitch McConnell and Marco Rubio. In Florida elections, Galbut has funded campaigns on both sides of the aisle, including those of Miami Beach Mayor Dan Gelber, Florida State Senate candidate Andrew Korge, current Miami Beach Commissioner Michael Góngora, and a PAC benefiting Jeanette Núñez, now lieutenant governor of Florida
He’s active on the city level too, with $18,000 to Vote Yes for Miami Beach, which pushed for a $439 million municipal bond to fund infrastructure in the area. He has also given $10,000 to Miami Mayor Francis Suarez, $9,000 to former North Miami Beach Mayor Myron Rosner, $5,000 to county commission candidate Zoraida Barreiro, and $4,000 to Miami Commissioner Manuel “Manolo” Reyes.
Knowing the right people, and knowing how to work them, has come in handy. In November, Crescent Heights won approval to build a tower of up to 571,000 square feet at 500 Alton, far taller than the five to seven stories previous zoning allowed for. Crescent brought David Martin’s Terra Group on board as a 50-50 partner after reaching an agreement with the city.
The city will vacate the Sixth Street right-of-way between Alton and West Avenue and receive an easement for utilities and public access. Per the agreement approved late last year, the city and developer are finalizing plans for a pedestrian bridge across Fifth Street. Construction of the bridge will be built using funds from the $439 million bond voters approved in November -— and that Galbut advocated for with his donation.
Crescent Heights bought the hospital site in 2004 for $35 million and promised to redevelop it as a state-of-the-art hospital. But the hospital went bankrupt and closed in 2006, and the partners imploded the property this April. In its place, they will build a 410-unit tower, with luxury condos on the higher floors, apartments on the lower floors, up to 15,000 square feet of retail space and an additional private park for residents.
“Through Russell’s dogged determination, he has come together with something I believe will be great for everybody involved,” said Levine, the former mayor. “He understands there’re many no’s before you get to a yes — if you really want something, you better not be faint of heart.”
Critics of Galbut, however, say he planned all along to demolish the hospital. Last year, William Zubkoff, a former CEO of South Shore Hospital, wrote to Mayor Dan Gelber, saying that Galbut’s professed commitment to the community was “pure garbage” and a “smoke screen to cover up his greed and illegal exploitation of at least two not-for-profit organizations on Miami Beach serving the needs of senior citizens.”
But Galbut insists the hospital purchase was intended to be a charitable venture, “figuring we would never have to get involved in the redevelopment of the real estate.” He dismissed Zubkoff’s letter as “not worthy of a response.”
If he was in it for the lucre, he argued, “why wouldn’t I have shut [the hospital] down from day one?” He added that “Miami Beach zoning code does not allow replacement rights, and therefore, the shell had to be maintained to preserve the height on the site. The building was able to come down finally with the passage of the replacement ordinance.”
In another letter to Gelber, Frank Del Vecchio, a neighborhood activist, said Crescent Heights’ game plan “seems designed to evade city law, which prohibits lot aggregation for parcels of land that are separated by a public right-of-way.”
By getting the right-of-way and giving control of the street back to the city through an easement, Crescent Heights could combine the lots to increase density. A developer in North Beach is now trying a similar strategy to boost its floor area ratio.
“Such an action by the city amounts to a developer giveaway,” Del Vecchio added. “Residents would no longer be able to rely on limitations on zoning height and mass that were in effect when they bought their apartments. No neighborhood would be safe.”
Behind Galbut’s desk, among dozens of framed family photographs, is a cartoon Del Vecchio’s wife drew of the developer.
“It’s a very difficult thing to deal with in the sense that you work so hard with conviction and love of community, but you see a different vision than someone else,” Galbut said. “And clearly [Del Vecchio’s] vision is ‘We don’t want anything done on Miami Beach. We don’t want anyone on Miami Beach that doesn’t live on Miami Beach.’ And that’s a very narrow view.”
Galbut cannily credits the city and commission for coming up with the idea to boost the project’s height.
“What they did in Miami Beach -— you have to think about it — was so smart, was so intelligent,” he said. “They said, ‘Look, let’s take all this FAR that would have been spread across the largest assemblage of land… Let’s try to do something intelligent here. Let’s take the FAR and put it in a very slender tower to avoid blocking anybody’s views. Give real value to those floors, and let’s build a public park.’ In a very short period of time, we are witnessing major change.”
Though Galbut was born and raised in Miami, just about 5 percent of Crescent Heights’ portfolio is concentrated in the region. The company has built over 38,000 residential units across the country since it was founded in 1989 by Galbut, his cousin Bruce Menin and Israeli emigre Sonny Kahn. In Chicago, it’s developing a 76-story, 800-unit residential skyscraper at the south end of Grant Park which is slated to be the city’s tallest all-residential building. In Boston, it’s constructing a 22-story, 414-unit apartment complex in the Seaport District. And in Los Angeles, it built Ten Thousand, a 40-story, 283-unit project on Santa Monica Boulevard, which offers in-house Botox treatments and penthouses asking up to $65,000 a month.
Though it was a major player in New York in the 1990s and 2000s, the firm has taken a step back there. In April, it sold the residential portion of a property on Manhattan’s Upper East Side to CIM Group for $200 million. In 2015, Crescent Heights had paid a $1.7 million fine to settle allegations of tenant harassment at the property, 165 East 66th Street, which it wanted to convert to condos. At the time, the commissioner of the city consumer affairs department, which is tasked with consumer protection, was Julie Menin, wife of Bruce Menin.
“Why would anyone want to live in New York without getting deductions of New York state income tax, interest on their home, [and] freezing cold snow in the winter, when you could live in Miami Beach?” Galbut said of the firm’s pullback from the city. “It doesn’t make any sense.” He characterized the Amazon debacle, where the e-commerce giant pulled out of a plan to build a second headquarters in Queens, as a “terrible mistake” for New York City.
“Cities are built by their development communities,” he said, “and when leadership of a given community fail to understand this, that community will cease to thrive.”
Galbut’s South Florida evangelism comes as Crescent Heights is gearing up for major moves here. At 3000 Biscayne Boulevard, it plans to build 800 residential units and over 600,000 square feet of retail and office space. The firm assembled the site over nearly two decades, paying over $40 million in multiple deals.
Earlier this year, Crescent Heights requested the city redraw the property lines at 3000 and 3050 Biscayne Boulevard, revealing plans for the site. (One of the buildings currently on the property is home to The Real Deal’s office.) The firm is also partnering with Harvey Hernandez, CEO of Niido Powered by Airbnb and head of Newgard Development Group, on Airbnb-branded apartment complexes in Miami where residents are encouraged to sublet their units on the home-sharing behemoth, as well as on another Niido project outside of Miami, and an apartment building at Miami Worldcenter.
The first Miami Niido will rise at a block-long site on Sixth Street between Northeast First and Second avenues owned by an affiliate of Crescent Heights. Galbut said he and Hernandez are working on a second in Edgewater.
The energizer bunny
Galbut moved to South Beach about two years ago, opting to live in a 17,000-square-foot triplex in South of Fifth, within walking distance of his grandparents’ drugstore. (It has the standard trappings of Miami uberwealth, such as a robotic parking garage and a rooftop waterfall.)
Hernandez and others who know Galbut described the developer as having — and demanding — an intense work ethic.
“With Russell, you have to be on the move starting at 6 a.m.,” Hernandez said. “On Saturday, Sunday, any day.”
Galbut is prone to superlatives — all his projects are “spectacular.” Bruce Menin, Galbut’s partner, called him “a super positive, super high-energy, optimistic, driven kind of partner to have.”
On Saturday mornings, Galbut leads a bicycling tour of Miami Beach.
“No one is ever quite sure who shows up, but everyone is invited,” he said. “We get to meet new friends all the time, and the conversations are most stimulating as we ride north through the community the seven miles of our special island. Miami Beach looks different from a bicycle at 7 a.m.”
Galbut has a myriad of other business interests. In 2015, Hebrew Homes, a skilled nursing facility that he chaired, agreed to pay $17 million to settle allegations of Medicare fraud. The Department of Justice said it was “the largest settlement involving alleged violations of the Anti-Kickback Statute by skilled nursing facilities in the United States.”
Galbut is also chairman of Norwegian Cruise Line Holdings, and his nephews, Keith Menin and Jared Galbut, run Menin Hospitality from the penthouse of a Crescent Heights-owned building less than 10 blocks north of its headquarters. Galbut said he has no ownership stake in Menin.
Galbut works on “multiple projects in multiple industries and knows about every deal all the time,” said Lyle Stern, president of Koniver Stern Group in Miami Beach, singling out the developer’s “unbounding enthusiasm.”
But Galbut said it’s the numbers rather than zeal that drive him.
“We believe buildings should be built with a paper and pen, not concrete and mortar,” he said. “If it doesn’t work on paper, it’s not going to work when built.”
Galbut’s latest big bet is on Opportunity Zones, the federal program that provides tax breaks for real-estate investors in designated areas. Of the more than 8,700 communities that have been designated as Opportunity Zones, 67 are in Miami-Dade County, including Crescent Heights’ Biscayne Boulevard assemblage.
“We’ve never seen anything like it in the tax code,” Galbut said of the program, calling it “some of the smartest legislation that has come out of Congress in a long time.”
“We’re buying properties in all markets in Opportunity Zones,” he added. “That is huge in asset planning and multigenerational thinking.”
But even as the federal government slashes back on business oversight and launches such programs, there’s been a wave of anti-capitalist sentiment in America’s biggest cities. It’s perhaps best exemplified by the rise of politicians such as Rep. Alexandria Ocasio-Cortez, who voters identified in a recent Siena College poll as the key “villain” responsible for Amazon’s pullout from Queens. Ocasio-Cortez and some of her colleagues have made developers a key target of their criticism, calling for a reckoning of their backroom deals and their outsized rewards.
But Galbut remains unabashed about his line of work and the riches it can reap.
“Don’t be afraid to say you’re a capitalist,” he said, deploying one of his pet aphorisms. “Capitalists made America.”
— Additional reporting by Haru Coryne.