Neil Fairman, president and founder of the Plaza Group, seems to have a connection to palm trees and race cars. Fairman celebrated the topping off of his third Palms project, the Marina Palms Yacht Club and Residences, last week. The development is the first in 20 years to have a full-service marina and yacht club in Miami-Dade.
We sat down with Fairman before the first tower’s topping off ceremony to talk about how he stayed busy during the recession — which involved a monthly commute to Russia, who he’s targeting with Marina Palms and what he drives to work.
You got your start in real estate in Montreal. How did you end up in South Florida?
I was in the heavy equipment business in Canada and we outgrew our premises. I built a new factory facility and really enjoyed the building aspect of it and started to invest in real estate. Eventually, I took a more active role and built residential, condo, condo and hotel, multi-family. Quebec, over the years, has wanted its independence from Canada. Every time the economy would go north, our real estate values would start to rise and there would be a referendum. That referendum would invariably have 10,000 Canadians leave and property values drop. Our business is cyclical enough that I wanted to take that other deviation out of the equation.
I did my research and there were three areas — Texas, California and South Florida — that were good candidates. My brother lived in San Diego. I went out there to look at properties and the sticker shock for a boy from Montreal just seemed a little overwhelming. The business culture there wasn’t what I was used to in Canada. Florida, which I’d been coming to since I was young, just seemed like the right fit. Prices were very moderate at the end of the 80s. It seemed like there was opportunity. I started building retail and office and eventually went back to multi-family and condos.
How did you handle the recession?
I had built the Ocean Palms and two other properties that I had let go. At the beginning of 2007, I could see that the market was not stable and I decided not to go forward with those two projects.
In the downturn, from 2009 to 2010, I was approached by the ex-prime minister of the Republic of Georgia to work on a project there. When Georgia went to war with Russia, it was stalled. But, the Russian partners owed quite a bit of real estate that they wanted to develop. I went in on a partnership basis with them and did the pre-development work on a hotel property, a condo property, a golf course and single-family home community and a multi-family community.
I was there almost two years, commuting about 10 days a month.
What do you say to those who are optimistic about the market in 2015?
I think that the optimism is appropriate. If we talk round numbers, there are about 12,000 units under construction. 9,000 have been sold — they have 40 to 70 percent deposits. Leaving about 3,000 units for sale, South Florida absorbs 5,000 units a year. Those units will be delivered from now to 2017. Let’s say we have a demand for somewhere between 10,000 and 12,000 units, and we have 3,000 available. There’s still a shortfall and there will be a shortfall until we can have a consistent 5,000 units a year being built.
There was a lot of exuberance two years ago where people were buying units that were discounted because of the previous downturn. Those units are gone.
I think the banks are being very conservative about lending. As long as there’s this discipline, I think we’ll be fine. South Florida has entered into a different phase from where it was seven to 10 years ago. You have an equal chance of someone speaking Portuguese, French, Spanish, Italian as you do someone speaking English as you’re walking through Lincoln Road.
There’s a perception that it’s the Magic City. It’s come back. It’s a tax haven. It’s going to build on the affluent population. We already see hedge funds moving offices down here for tax reasons and because of the proximity to South American money.
Miami is the seventh most important city in the world to people of a high net worth. It’s also the second most important city to those people after New York.
How have sales been for Marina Palms?
We have 100 units left of 468. This is our third year selling. We’re starting the second tower this month. We’ll be sold out prior to completion for the second building in December 2016.
Sunny Isles is selling at $1,200 per square foot and we’re selling at $500 per square foot, and we’re offering the same finishes. You’re getting the same quality construction with the same facilities, but you also have a marina.
The largest proportion of buyers are from Brazil. The balance of the buyers are equally split between other South American countries and the U.S.
Brazilians seem to have an affinity for wanting to have a boat and a marina. The driving factor was for most was that they could get a luxury condo at a great price and be able to have their boat parked in front of their door. They’ll be able to walk up to their apartment, have their boat taken care of, go back to Brazil if they want to and come back at any time. It’s a pretty compelling purchase and there’s not very much competition.
Why so many palms?
I was always attracted to the Palms. It says a lot about Florida. It’s an image of a strong tree that withstands adversity and is beautiful. And I live on Palm Island.
I heard you like to race cars. How do you spend your free time?
I still race but I spend more time involved in my 15-year-old son’s racing than I do in mine. He’s an avid go kart racer and won the championship at Homestead this past fall. I have a daughter who’s going to be 18. I’ll be skiing for a week in Aspen. I’m not a golfer; it’s a little slow for me.
What do you drive?
I drive a Maserati Quattroporte to work. On the race track? A Ferrari GT.