Construction costs worry developers in South Florida

Miami /
Oct.October 24, 2014 09:45 AM

Property prices aren’t likely to level off any time soon. But rising construction costs could dampen the market, according to several high-profile developers who sized up the latest boom in Miami during a panel discussion at The Real Deal’s annual South Florida Real Estate Forum & Showcase.

“The cost of construction is the 800-pound gorilla in the room no one likes to talk about,” said Stephen Owens, president of Swire Properties, which is developing Brickell City Centre. “The challenge today is finding qualified contractors at a reasonable price.”

Owens, one of six developers who spoke at the event, said the cost of construction in Miami is seeing double-digit increases. “We lost about 30,000 construction workers during the recession,” Owens added.

Don Peebles, who broke into the Miami market in the 1990s by developing the first African-American-owned hotel in Miami Beach, agreed. “It’s difficult getting people to honor their commitment to build at the price they originally quoted,” Peebles said

Peebles did tell moderator Peter Zalweski, founder of Cranespotters.com, that he doesn’t see real estate prices in Miami peaking anytime soon. He noted that buyers are paying up to $3,000-a-square-foot for ultra-luxury units at his Miami Beach condominium project, Bath Club Estates. “The buyers setting the prices are New Yorkers,” he said. “They are not bargain shoppers.”

New York developer Richard LeFrak, whom Peebles described as the “Warren Buffett of real estate,” told the standing room only crowd he’s been bullish in south Florida since 2009, when he and a group of investors bought BankUnited and all of its real estate assets. The Manhattan real estate mogul also picked up the former Gannsevort Hotel at 2399 Collins Avenue in March and has rechristened it 1 Hotel & Homes South Beach.

LeFrak feels strongly enough about 1 Hotel & Homes – and Miami Beach in general – that he is keeping one of the penthouse units for either himself or his children.

“What woke me up is when I saw the aggressive behavior of foreign buyers in Miami,” he said. “I saw an opportunity to pick up additional assets.”


Related Articles

arrow_forward_ios
(The Real Deal illustration with Getty Images)
As Hurricane Ian approaches, builders secure Florida sites
As Hurricane Ian approaches, builders secure Florida sites
Vladislav Doronin of OKO Group (Illustration by The Real Deal with Getty)
Vlad Doronin denied business in Russia. Court filings suggest otherwise
Vlad Doronin denied business in Russia. Court filings suggest otherwise
Reid J. Boren, James W. Harpel, Taylor Collins, and Brad Meltzer (Two Roads Development)
Two Roads hires Plaza Construction’s Brad Meltzer
Two Roads hires Plaza Construction’s Brad Meltzer
From left: Edgardo Defortuna, Ana Gomez, Alicia Cervera Lamadrid, and Craig Studnicky (LinkedIn, Cervera, iStock)
“Get your money out now”: Miami brokers target Colombian buyers after leftist’s election
“Get your money out now”: Miami brokers target Colombian buyers after leftist’s election
Tate Capitals' Jimmy Tate and 801 Seabreeze Boulevard in Fort Lauderdale (Tate Capital, Google Maps)
Developer Jimmy Tate’s proposed Bahia Mar project faces more controversy with filing of new lawsuit
Developer Jimmy Tate’s proposed Bahia Mar project faces more controversy with filing of new lawsuit
Jules Trump and Suffolk CEO and chairman John Fish with a rendering of the Estates at Acqualina (Getty, Suffolk, Avra)
Trump Group, Suffolk Construction sue each other over Estates at Acqualina
Trump Group, Suffolk Construction sue each other over Estates at Acqualina
Vlad Doronin (Getty / Photo illustration by Priyanka Modi)
Developer Vlad Doronin distances himself from Russia’s war on Ukraine
Developer Vlad Doronin distances himself from Russia’s war on Ukraine
The $125 million Grove Central project going up next to the Coconut Grove Metrorail Station (RSM Design)
Top 10 development projects in Miami-Dade in 2021
Top 10 development projects in Miami-Dade in 2021
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...