Faced with “millions of dollars” in repairs needed to cure “numerous code violations,” the owners of the nearly 60-year-old Deauville Hotel in Miami Beach have voted to terminate the historic oceanfront condo-hotel and sell off the property’s 538 units.
It is unclear whether the termination – which occurred Nov. 25 with the filing of a “plan of termination” with Miami-Dade County – is related to an application submitted back in November 2012 to the city of Miami Beach seeking to build a new 21-story tower with more than 400 condo-hotel units on existing retail space located on the southern portion of the resort at 6701 Collins Avenue.
News of the termination of the Deauville Hotel comes at a time when the North Beach neighborhood of Miami Beach is experiencing increased development activity with at least nine new towers and nearly 700 units – including a new Deauville tower – proposed for an area stretching from 63rd Street north to 88th Street on the barrier island, according to the preconstruction condo projects website CraneSpotters.com. (For disclosure, my firm operates the website.)
Immediately north of the Deauville Hotel, developer Don Peebles plans to build a 16-story luxury condo tower with 13 units called the Bath Club Estates. Prices start at more than $2,040 per square foot, according to the CraneSpotters.com Developers Price Survey for December.
A block to the west of the Deauville Hotel, an investment group tied to the Roy E. Disney investment company is constructing the planned seven-story Peloro Miami Beach condo project with 114 units. The project – where prices started at more than $500 per square foot – is said to be sold out, according to the survey.
The Roy E. Disney company is also planning a second North Beach condo tower – dubbed the L’Atelier – in the 6900 block of Collins Avenue. The project is slated to stand 18 stories and feature 20 units on an oceanfront site that at one time during the previous real estate cycle was to be part of the Canyon Ranch Miami Beach complex.
Overall in Miami Beach, developers have announced 32 new condo towers with nearly 1,450 condo units as of Monday.
Built in 1957, the Deauville Beach Resort designed by star architect Melvin Grossman was a “favorite” of celebrities including Frank Sinatra, Dean Martin and Sammy Davis Jr. The expansive resort – with some 700 linear feet of oceanfront – made international headlines in 1964 when its Napoleon Ballroom hosted a taping of “The Ed Sullivan Show” that featured a performance by The Beatles.
In September 1986, the 16-story hotel – located on the north side of the property – was converted into a condominium to permit individuals to own units.
In the nearly three decades since becoming a condo-hotel, the Deauville Hotel has struggled to match its glory days of the 1950s and 1960s despite being “considered to be a historic resource by the city of Miami Beach,” according to the termination plan filed with Miami-Dade County.
Following various violations related to the “physical condition of the structural systems and life-safety issues” of the resort, three investment groups – with “common members” – representing nearly 93 percent of the units decided to terminate the condominium in an attempt to expedite the restoration of the resort.
“These repairs are estimated to cost in the millions of dollars and take many months to complete and may result in closure of the hotel while the work is underway,” the termination plan stated. “Consequently, terminating the condominium association will allow the required upgrading process to be completed in the least amount of time and expense.”
The Deauville Hotel’s termination plan calls for a trustee to be put in place and granted sole control to oversee the ultimate sale of the project’s condo-hotel units. Former unit owners become “beneficiaries” who are entitled to a portion of the proceeds generated from the trustee’s potential sale of the property, according to government records.
A possible suitor that “has expressed an interest in acquiring the property” is a Florida corporation, Deauville Hotel Holdings LLC, that had owned 137 condo-hotels, representing about 25 percent of the total units in the former Deauville Hotel condo-hotel, according to the plan.
The unanswered question going forward is whether the Deauville Hotel’s termination will trigger the long sought after renaissance for the North Beach neighborhood of Miami Beach that city officials have been seeking for years.
Peter Zalewski is a real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.