Fake buyers, canceled projects, secret backers and heaps of broker drama made South Florida’s real estate market a hotbed of intrigue in 2017.
Top condo developers were forced to reckon with a stuttering high-end residential market, exacerbated by Hurricane Irma, a tighter lending environment and growing buyer clout. Some, like Shahab Karmely and Vlad Doronin, forged ahead on developments despite slow or stagnant sales, while others like HFZ Capital Group and the Related Group canceled condo projects, shifting their attention – and money – elsewhere.
The not-so-secret secret to building without buyers is cash. In Karmely’s case, The Real Deal revealed that his backer is Daniel Loeb, a billionaire investor who runs one of the world’s most dominant activist hedge funds.
Condo builders looking for a Plan B opted to either jump to new markets, as Related did with its expansion to Dallas and Phoenix, or ramped up their commercial-side activity, as Terra Group did.
Read on for a look at some of the biggest stories to drop in 2017.
Top developers mix it up
As the market got shakier, the biggest condo builders in South Florida began to flinch. This year, a few brave developers launched new condo buildings, some broke ground, and others stayed mum on sales – or lack thereof – at their projects. Others switched gears to multifamily and other commercial development.
In June, the Verzasca Group announced plans to build a luxury apartment tower on an Edgewater site originally intended for condos. The Melo Group also focused on rental buildings — nine of its 12 projects this cycle are multifamily. Property Markets Group didn’t say much about condo plans for its 300 Biscayne Boulevard site in downtown Miami, but continued to charge ahead on its Vice apartment tower on the same property. Miami-based Terra Group has ramped up its commercial development in Coconut Grove, Pembroke Pines, Doral and other suburban neighborhoods while holding back from any new condo launches.
Jorge Pérez’s Related Group, billed Miami’s “condo king,” was quick to act on non-condo fronts, including affordable housing, mixed-use projects, rentals and more. Related, which with over 9,500 condo units in the pipeline grabbed the top spot in TRD’s most recent ranking, broke ground on two Wynwood rental projects, completed CityPlace Doral and opened a new satellite office in Dallas.
Two major projects get the axe: Related’s Auberge Miami and HFZ’s Shore Club redevelopment
News of Related shutting down its Auberge Residences & Spa Miami project and returning buyers’ deposits rippled through the market. The development, ill-timed, had already been put on hold in late 2015.
But Related, with more than a dozen buildings underway this cycle, is expected to eventually relaunch the project, a three-tower complex at 1440 Biscayne Boulevard, sources said.
Ziel Feldman’s HFZ Capital Group is also expected to revive plans for a luxury condo project at the Shore Club in Miami Beach. The New York developer canceled Fasano Residences Miami Beach, a 67-unit luxury condo, in November. Sources said it was only between 40 and 45 percent presold, which came out about 25 to 30 units.
One of the whispers about the project was that the Brazilian hospitality company Fasano would no longer brand the development, and that HFZ was increasingly difficult to reach and would not provide a timeline.
“The market for construction financing has been very challenging”, and buyers were getting antsy, Douglas Elliman Florida CEO Jay Parker said. “We urged them to do the right thing and give the buyers the option to terminate their contracts. Rather than delay, they wanted to reposition the project.”
American Dream Miami forges ahead
In January, after a long and contentious Miami-Dade County Commission meeting, Triple Five Group finally secured approval for the biggest proposed mall and theme park in North America.
The commission approved a comprehensive master plan amendment, changing the designation for the 194.5-acre development site sandwiched between Interstate 75 and the Florida Turnpike from “industrial office” to “business office.”
Triple Five, whose principals developed and own the Mall of America in Minnesota, is proposing to build 6.2 million square feet of shopping and entertainment space, including several amusement parks, along with 2,000 hotel rooms. The project could cost up to $4 billion.
But the developer isn’t ready to build yet. It still has to go before the county for final approval, and there’s plenty of opposition to counter. Critics say the mall will create a traffic nightmare in an already heavily congested area.
Porsche Design Tower is a flipper’s paradise
Though it opened just a year ago, buyers at Gil Dezer’s Porsche Design Tower are already raring to turn profits on their luxury condos.
A TRD analysis revealed that 22 percent of owners, or 29 units, had their digs on the market, shooting for big gains.
The most ambitious was the owner of unit 1503, listed by Piquet Realty. The buyer closed on the condo in February for $3.95 million, and listed it for $7.3 million – a markup of 85 percent.
The 132-unit, 60-story building at 18555 Collins Avenue is known for its “Dezervator,” a patented car elevator that takes residents up to their units in their cars. Amenities include balcony plunge pools and racing and golf simulators. During Hurricane Irma, the tower served as a refuge for the city’s exotic-car collection.
“I don’t look at it as flipping,” Dezer said about the flurry of Porsche Design listings on the market. “I look at it as, these people bought when we started selling in 2011 or 2012 and values have gone up.”
Dan Loeb revealed as Shahab Karmely’s secret backer
After making all-cash, multimillion-dollar deals along the Miami River, in Hallandale and Wynwood, many wondered just where Shahab Karmely’s money was coming from.
Earlier this year, TRD solved the mystery, as sources revealed Karmely’s silent partner was Daniel Loeb, whose net worth Forbes pegs at $2.9 billion. Loeb’s firm, Third Point LLC, has $15 billion in assets under management and stakes in companies like Bank of America, Apple and Sotheby’s.
In all, Karmely’s KAR Properties, with Loeb’s financial muscle behind it, has picked up at least six parcels in South Florida totaling more than $113 million.
Fortune International agent accused of bringing fake buyers and more
Say the name Alex Daguer to Miami Beach’s top residential agents, and you’re likely to be greeted with off-the-record tales of his alleged shady behavior, a “no comment” and a quick move to distance themselves from him.
The Fortune International Realty agent became infamous this year for allegedly bringing false buyers to the table in a bid to burnish his reputation and score valuable listings.
In an ethics complaint filed in October, Daguer was accused of negligence for his alleged role in a real estate scam. In a separate incident, he was facing a lawsuit alleging he cut another agent out of listings in Miami Beach.
Top agents in Miami Beach said Daguer has an established M.O. They claim that he approaches the owners of high-end properties with buyers, often with above-market offers, gets the owners to agree to add him as a co-listing agent, and when the deal doesn’t work out, stays on as a listing agent until it eventually sells.
Daguer has denied all the allegations. The agents who make those claims, he said, are threatened by his success.
Andrea Greenberg dies at 53
Miami’s new development marketing community mourned the death of Andrea Greenberg, a Fortune International Group veteran who died in October at the age of 53.
Greenberg worked at Fortune for more than 16 years and rose through the ranks to become the firm’s vice president of marketing. Greenberg left Fortune in summer of 2016, and joined Douglas Elliman Florida as chief marketing officer in November. She left about three months later and started her own consulting firm.
North Miami plans Chinatown
In November, a North Miami community agency approved the city’s master plan for a Chinatown geared at increasing investment in the area.
The Chinatown Cultural Arts and Innovation District calls for the city of North Miami to spend $5 million on infrastructure, streetscape and business grants in the new Chinatown district, which runs from 119th Street to 135th Street on Northwest Seventh Avenue. The master plan, prepared by urban designer Keith & Schnars and completed in July, features two gateways to the district on the north and south.
South Miami goes solar
South Miami became the first city in Florida to mandate new solar panels on all new homes – with exceptions.
The legislation, which also applies to existing properties whose owners increase their square footage by 75 percent or more, faced heated (no pun intended) opposition from builders and property owners who didn’t want to be forced to install solar panels. Some also claimed the cost would make it more challenging to develop affordable housing in South Miami.
In addition to being the first in Florida, the city is also only the fourth in the U.S. to mandate solar panels on new homes. The others? San Francisco and two other California cities, of course.