After spending much of the recession helping developers in Russia, Neil Fairman is now focusing on attracting South Florida condo buyers and boating enthusiasts to his company’s Marina Palms Yacht Club & Residences development in North Miami Beach.
Fairman is owner and president of the Plaza Group, which has historically concentrated on luxury waterfront condo projects in Broward County. Plaza’s development history includes the 240-unit Ocean Palms on Hollywood Beach and the 196-unit The Palms on Fort Lauderdale Beach.
For Marina Palms, Plaza is partnering with DevStar Group on the two-tower, 468-unit project at Northeast 172nd Street and Biscayne Boulevard. Plans call for a full-service marina with 112 boat slips. Construction of the north tower, which is already sold out, began in September. South tower unit sales launched in November.
A Montreal native who got his start in real estate in Quebec, Fairman relocated to South Florida in 1988 to pursue a market where he saw significant growth potential
Fairman spoke with The Real Deal about Marina Palms, the South Florida condo market and his love of high-speed Ferrari racing. The interview has been edited for length and clarity.
Is South Florida’s condo market undersupplied? At what point would the market get overheated again?
We are undersupplied today, with less than a couple thousand units left that were produced during the last cycle. South Florida basically consumes somewhere between 4,500 and 6,500 units a year, depending on the economy. That leaves less than six months of supply. There are three or four projects that have just been completed, but those were almost completely sold out. That doesn’t leave any inventory. There are about 40-to-50 projects currently under construction, but most of those projects will not even be finished in 2014. They are going to be finished in 2015 and 2016, and most of them are at least 75 percent sold with a minimum of 40 percent deposits. Those units are spoken for.
What remains to be seen is how quickly the balance of the units being marketed today will start to be built and whether more projects will join the group being marketed today. It is interesting that we have not seen the baby boomers from the Northeast and Midwest in South Florida buying. They are not used to buying with this high deposit structure. When they come back into the market, they will probably end up buying some of the inventory bought in the predevelopment stage by the foreigners who are purchasing now. That could lead to another buying spree from the foreigners who profited from speculation.
As for product types, waterfront will always been undersupplied, whether it’s oceanfront or well-placed Intracoastal locations. Where you run into a possible oversupply is when it seems like you can move farther and farther west from Brickell and continue to build. There seems to be an endless amount of development sites in Edgewater and the Midtown area that could be developed also. If they are not cautious, you might end up with too many inexperienced developers developing [lower] quality sites. Then you have oversupply.
You seem to have a knack for finishing South Florida developments right before a market downturn or economic calamity. Is there a secret to this?
We usually try to get into markets early and try to be a leader in that market. That way, you can buy a property at the [lowest] pricing and be able to offer value and compete in that area very effectively. When we came to Fort Lauderdale, there was nothing on the beach being developed. When we came to Hollywood, no one was developing there. When we came to North Miami Beach this time, no one was developing there. We bought properties at the right price, so we can sell them at an attractive price.
The secret is not starting projects at the end of a cycle. We had two properties in 2006 with an option for development and did not move forward with the projects, even though the market was quite strong. With the kind of inventory coming to the market then, we felt it was oversupplied.
How did you get involved with European projects during the recession?
I was involved in the planning of a large project in the Republic of Georgia, a multi-use project that had been stopped because of the war in Georgia. After that, the partners in the project asked me to come to St. Petersburg and organize their real estate portfolio. I had met them through a mutual friend when I was [auto] racing. They were the largest pulp and paper producers in Russia and had amassed some real estate in St. Petersburg. I spent 18 months traveling to St. Petersburg and organizing a luxury hotel, waterfront multifamily complex and a golf community, the first course in St. Petersburg. Some has moved forward, some has not. I was involved in all the predevelopment and planning and did it on a fee basis. When I felt the market was turning, it was time to come home.
How did you come up with the vision for Marina Palms? What value does the yacht club component add to the project?
Marina Palms was planned in 2004 and met with community opposition. It ended up in litigation until 2006. Once [the previous owners] began marketing it in 2006, it got caught in the downturn. I approached the lender to buy the property and eventually ended up in a joint venture with them [DevStar Group].
The vision was that many people just look at the water [from their condos] but don’t really have a waterfront or oceanfront lifestyle. We felt there could be a boating or marina lifestyle, where you can live in a community, go down the elevator to your boat and have a concierge be able to bring you what you need. We are seeing that people are very drawn to the marina aspect. People seem to be spending less time in the sun lying on the beach than the previous generation. They are more active and want to be involved in outdoor activities. That’s why the urban lifestyle in Miami for people who have second or third homes is very inviting. The golf club generation doesn’t appeal to younger buyers. Our buyers are in their late 30s to 50s. We have a lot of families because of our larger unit size, with our average unit over 2,000 square feet.
What drew you to auto racing and your other athletic pursuits?
I raced in the Ferrari Challenge series for about 15 years. It’s a non-professional racing series in which many of the people who raced in it went on to semi-pro racing or more competitive racing series. It’s basically designed for business people who don’t have time to build a racing team and spend half their lives on the circuit, a way to get out three days at a time, six or seven times a year. I started in 1995 in Florida. [Developer] Ugo Colombo, who owned The Collection dealership at the time, was racing and I bought a Ferrari race car through the dealership. I started racing on his Collection team. I also have been skiing for years all over the world and spend a lot of time during summers in Europe boating.