Developers behind three of the biggest real estate projects in Broward County are wary of a possible slowdown, but expect the brisk pace of construction in Broward will prove persistent.
“It has some legs,” said Jimmy Tate, president of Tate Capital in North Miami Beach, citing slower land price appreciation in Broward than in Miami-Dade County and Palm Beach County.
“It really hasn’t followed suit with Palm Beach and Miami-Dade County,” Tate said. As a result, “we’re witnessing a little bit of land rush [in Broward] right now.”
Tate and the other developers spoke publicly Thursday night at a meeting of the real estate division of the Jewish Federation of Broward County.
Lon Tabatchnick, vice president of construction at Lojeta Group, developer of the Margaritaville Hollywood Beach Resort, said subcontractor prices have spiked amid heightened construction activity.
“The subs are maxed out. We don’t have enough subcontractors in the market to meet the current demand,” Tabatchnick said. Infrastructure upgrades at Fort Lauderdale-Hollywood International Airport, Port Everglades and Interstate 595 have been a magnet for new development, he said. “We just have to take care …. Hopefully, we don’t overbuild.”
Broward is neither in the early nor late stages of a real estate development cycle, said Terry Salzman, principal of Salzman Real Estate Advisors. “I think we’re still in the middle part of the game,” he said. “For now, I don’t see anything really clouding the water for us.”
The developers also provided updates of their projects: the 349-room, 17-story Margaritaville hotel under construction in Hollywood; the Bahia Mar hotel on Fort Lauderdale Beach, which Tate Capital plans to upgrade; and Dania Point, a mixed-use development in Dania Beach on 102 acres next to Interstate 95, where a highly visible wooden roller coaster no longer operates.
“The roller coaster is officially closed,” Salzman said. He and his partner Bob Shapiro, in partnership with Kimco Realty Corp., are developing the 102-acre site, assembled since 2007 in acquisitions from “eight different property owners.” Underground infrastructure work will be underway for the rest of the year at the Dania Point development, which eventually will include office space, retail stores, multifamily residential buildings with as many as 1,000 units or more and “a couple of hotels,” Salzman said.
The Margaritaville Hollywood Beach Resort has begun taking room reservations for the month of October, Tabatchnick said, and the property is expected to be certified for occupancy sometime around Labor Day, September 7, later than the original planned opening in July.
“We went live with reservations last week,” he said, and average daily rates [ADRs] for rooms are exceeding expectations. “Our ADRs are well over what our pro forma was.”
Tabatchnick also said Margaritaville is attracting price-sensitive organizations because “group bookings … are getting priced out of South Beach.”
Tate said the Bahia Mar is an “underutilized” 16-story hotel with almost 300 rooms and a marina that serves as the home of the annual Fort Lauderdale International Boat Show. His investment group plans a “phased” redevelopment of the Bahia Mar hotel that “will take seven to 10 years” to complete.
“We’re committed to putting $40 million into the hotel on day-one,” Tate said. The project would add two condominium towers flanking the hotel, four waterfront restaurants and an indoor home for the Fort Lauderdale International Boat Show spanning 200,000 square, which would double as a parking garage when the show isn’t being held.
Tate said the first condo tower will have 256 units priced at $1 million to $2 million each. “We are very excited about what we are going to bring to the city” for approval, he said.
Higher interest rates in the United States could hurt the condo market, however, by lowering the value of foreign currencies relative to the U.S. dollar, which could sap the buying power of foreign nationals shopping for South Florida condos.
The risk is if “the dollar goes much higher and it cuts off all that foreign money from coming in,” Tabatchnick said.