“We have to work a lot harder to make a little bit less money”: Top developers discuss Miami’s post-boom market at TRD forum

Developers are tapping new markets for buyers and launching fewer projects

Miami /
Oct.October 26, 2017 06:00 PM

As Miami’s condo market lags, developers are working hard to sell their remaining inventories and looking long term when it comes to completing major projects like Miami Worldcenter.

In 2010, “there was a lot of need and a lot of demand and we all thought it was going to last for a long time,” Edgardo Defortuna, president and CEO of Fortune International Group, said at The Real Deal’s Fourth Annual Miami Real Estate Showcase & Forum on Thursday.

Fifty percent deposits coupled with a lack of financing forced developers to lower their leverage. Projects under construction now are mostly 60, 70 and 80 percent sold, Defortuna said during the development panel. Fewer projects have launched since the beginning of 2016.

“We’re controlling our supply better,” said David Martin, president of Terra. Martin said the restrictive zoning in Miami Beach is protecting his land from competition. The Coconut Grove developer is building Eighty Seven Park, a luxury condo tower in Miami Beach.

Art Falcone, co-founder and managing principal of Encore Capital Management, said the key to developing a major mixed-use project like Miami Worldcenter is that he doesn’t use debt to finance land acquisitions. “I’m in my 14th year, before we make our first dollar we will be in our 16th year,” he said.

Finding construction financing for Paramount, the luxury condo component of Worldcenter, was especially challenging.

“There’s never a bad real estate cycle as long as you have time and no debt,” Falcone joked.

The slowdown has sent developers to other foreign markets in search of buyers, like Turkey, Europe and China. Latin Americans still consider Miami a safe haven for investment, but “the perception today is the urgency is not that much anymore,” Defortuna said.

Among Fortune’s increased sales efforts is participating in international real estate fairs. “We have to work a lot harder to make a little bit less money,” he added.

During the residential slowdown, other sectors like industrial and multifamily have picked up. Policy changes like potentially reducing the number of H-1B visas could have a detrimental impact on Miami real estate, Martin said.

The beauty of Miami, Defortuna said, is that “anyone [moving] here can feel like home.”


Related Articles

arrow_forward_ios
Jorge, Jon Paul and Nick Pérez (Photos by Studio Scrivo)
Related Group’s condo kings expand their realm
Related Group’s condo kings expand their realm
Developers David Martin, Russell Galbut and renderings of the project.
David Martin and Russell Galbut start sales of Five Park condo tower in South Beach
David Martin and Russell Galbut start sales of Five Park condo tower in South Beach
Terra’s David Martin and the site now at 1177 Kane Concourse, Bay Harbor Islands (Google Maps)
Terra puts Bay Harbor Islands mixed-use dev site under contract
Terra puts Bay Harbor Islands mixed-use dev site under contract
Related's Jorge Perez, Metro's Daniel Hughes and Terra's David Martin with Two Park Grove
Commercial brokerage chief buys PH at Two Park Grove for $10M
Commercial brokerage chief buys PH at Two Park Grove for $10M
Jacques Barbera and 800 South Pointe Drive (Google Maps)
Bar Invest Group chief sells Apogee condo in South Beach for $8M
Bar Invest Group chief sells Apogee condo in South Beach for $8M
Shahab Karmely, Edgardo Defortuna and Kieran Bowers with Reach and Rise (Getty)
Shahab Karmely, Edgardo Defortuna team up on bulk condo buy at Brickell City Centre
Shahab Karmely, Edgardo Defortuna team up on bulk condo buy at Brickell City Centre
Renderings of the Sunset Harbour project with Marc Rowan and Deco Capital Group's Bradley Colmer (Linkedin, Getty)
Deco Capital moves forward with new version of long-planned Sunset Harbour mixed-use development
Deco Capital moves forward with new version of long-planned Sunset Harbour mixed-use development
Related Group’s Jorge Pérez and his Apogee Beach penthouse. (Related, Douglas Elliman)
Jorge Pérez sells Hollywood penthouse for $6M
Jorge Pérez sells Hollywood penthouse for $6M
arrow_forward_ios

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

Loading...