It’s been a tough time for our big cities.
Pick a major metro — New York, Chicago or especially Los Angeles and San Francisco on the West Coast — and you’ll hear a lot of grumbling about how their downtowns are doing these days. Office buildings are emptier in the central business districts, and the general vibe is a lot more seedy.
Miami has mostly been an outlier. Reaping the benefit of an influx of wealthy residents during Covid, its real estate market went gangbusters. There isn’t the same hesitancy about building new boutique office buildings in South Florida, and pessimism — about the political forces shaping development, about bureaucracy — is practically illegal.
But as the residential market has cooled in the last year in South Florida, cracks are starting to appear, from weaker condo development to the hype surrounding tech leasing to shady politics, as we detail in a series of stories.
As Katherine Kallergis writes, condo developers are tweaking their plans to wait for a better lending environment and more manageable construction costs. Of the 46 condo buildings that have been announced in South Florida since the pandemic began, only a dozen are under construction. See page 24.
There’s been a lot of buzz about Miami becoming the next Big Tech mecca, with the idea that it would be a kind of Ellis Island for companies fed up with West Coast red tape and taxation. But some digging by Lidia Dinkova shows much of the hype isn’t quite justified: Pre-Covid in 2019, tech leases represented 7 percent of office deals in South Florida. But instead of a leap, that percentage was lower in 2021, and dropped even more last year. See page 58.
There is also the issue of side hustles. Recently revealed court documents show that developer Rishi Kapoor was paying Miami Mayor Francis Suarez $10,000 a month as a consultant on one of his projects. The fact that the mayor is allowed to have outside employment is questionable in and of itself, but Suarez, a Republican making a run for the White House, did not disclose his side hustle on his annual financial statements, as required by Florida law.
Meanwhile, another ex-mayor (in Plantation) and one current mayor (in North Miami Beach) faced charges in unrelated cases last month. We look at the political shenanigans as well as Kapoor’s troubles in a story by Francisco Alvarado on page 20.
(Still, there are brighter spots for the Miami market, including soccer great Lionel Messi’s arrival and developer Damac’s plans for rebuilding on the Surfside collapse site — see pages 16 and 47.)
South Florida isn’t the only market seeing uncomfortable developer-politician entanglements.
Our cover story this month looks at the saga of developer Nate Paul, the former wonder boy of Austin development, who is facing an indictment and is at the heart of Texas’ biggest political scandal.
Joe Lovinger details how Paul, who amassed a portfolio of 9 million square feet in 16 states with the ambition of a national player — “he had the bombast of New York, the flair of Miami, the hustle of Hollywood and the self-assured persistence of a Texan,” Lovinger writes — found himself in a position to lose it all.
Last month, a grand jury indicted Paul on eight counts of lying to financial institutions. And after emerging at the center of bribery allegations against Texas Attorney General Ken Paxton, Paul might get the most politically resilient state AG in the nation thrown out of office by his own party. See page 26.
Elsewhere in the issue, Isabella Farr examines those big challenges facing Downtown Los Angeles in a story on page 56.
We’ve also got Related honcho Jeff Blau’s take on what’s happening in the big cities (“the demise of the cities is the progressive left”), part of his comments during TRD’s inaugural Salon Series event — see page 64. And we examine how the real estate industry was trounced at the end of the legislative session in Albany last month — see page 18.
But developer hope springs eternal. Whatever the market challenges or political obstacles, new buildings are going to come out of the ground like green shoots (or weeds, I guess, if you don’t like real estate). Check out our ranking of the most active developers in New York on page 50.
Enjoy the issue.