The Real Deal Miami

Two South Beach hotel projects move forward

By Erik Bojnansky | April 07, 2009 01:54PM

Is there a market for new boutique hotels in South Beach, despite the recession, credit woes and a drop in tourism?

“Hopefully there is,” said attorney Monika Entin. Entin and her law firm partner, former Miami Beach Mayor Harold Rosen, represented two property owners who sought variances that will enable them to build two new hotels in two different parts of South Beach. Both clients of Rosen Switkes & Entin got the go-ahead on their projects from Miami Beach’s zoning board of adjustment last week, but the bureaucratic hurdle is likely only the first one for the developers to vault.

Michael and Philip Muskat want to build a six-story, 38-room hotel at 1255 West Avenue, and Michele Haim of Phantom MHI LLC plans to renovate a hotel at 2216 Park Avenue. Neither of them have names as yet, but the developers are thinking big.

Michael Y. Cannon, executive director of Integra Realty Resources-Miami, thinks the battered real estate market won’t forgive mistakes with hotel development, especially in Miami Beach.

“Well, our occupancy is down from the peak periods,” he said.

The average room rate in Miami Beach is still $179 a night, Cannon acknowledges, though he adds that prices are “all over the place,” depending on the location and the popularity of the hotel. 

“You can still find rooms for $75 and $80 a night,” Cannon said. “If you go to the Delano you can spend $2,000 for a night.”

The Muskats are trying to adapt. In 2007, the brothers got permission to demolish two single-family homes and a two-story apartment building at 1255 West Avenue and replace them with a six-story, 30-unit condominium. They now want to build a six-story, 38-unit hotel with underground parking and an automatic car loader.

Although the hotel project received 61 comments in favor of it, compared to 22 against (prompting Zoning Board of Adjustment member Alex Annunziato to say, “ACORN has got nothing on you guys”), Phillip Muskat declined to give any details, including the name of the hotel. “I’d rather not have the publicity, to tell you the truth.”

Cannon doubts a hotel will succeed on West Avenue, several blocks away from bustling club streets like Washington Avenue, Collins Avenue and Ocean Drive. West Avenue is dominated by apartments and condominiums. “I don’t see that location to be a hotel location,” he said.

But luxury single family home developer Todd Glazer disagrees. “West Avenue is hot right now because of the Mondrian,” he said, referring to the condo-hotel developed by Crescent Heights and managed by the Morgans Hotel Group that opened up in 2008 at 1100 West Avenue. 

Haim, of Phantom MHI, plans to renovate a hotel at 2216 Park Avenue that was constructed back in 1934. Haim, who bought the vacant structure for $2.85 million in March 2007, said he needs to cram more than 30 rooms into the two-story, 14,979-square-foot building or else risk losing his bank loan and “lead to cancellation of the project.” Hence why he asked for a variance that will allow him to build rooms between 213 and 272 square feet in size–which is 65 to 117 square feet less than what the city’s code allows. 

“This is my first hotel building,” Haim told the board. When asked what he planned to call the hotel, Haim replied that he didn’t know. 

After the vote, Glazer, who is building a townhouse next door to 2216 Park Avenue, chased Haim down and gave him his card. He might be interested in doing a joint project with Haim, Glazer said. “The new wave is going to be extended stays,” he said.