Boutique South Beach hotels trade amid heightened demand
Properties with short-term rental friendly zoning a plus, brokers say
UPDATED, May 13, 9:18 a.m.: Two prominent buyers acquired boutique hotels in South Beach in separate deals, as demand for such properties continues to rise.
In the most recent of the two purchases, a company linked to the “vulture” hedge fund Alden Global Capital paid $6 million for the 17-suite Villa Paradiso at 1415 Collins Avenue, property records show. Miami Real Estate Investment Corp., led by Lisa and Pascal Nicolle, sold the hotel.
Susan Gale of One Sotheby’s International Realty represented the buyer and seller. Gale, who declined to comment on the buyer, said the property’s zoning made it very desirable. The two-story building, constructed in 1935, is in a mixed-use entertainment (MXE) district in Miami Beach where short-term rentals are allowed
The buyer lists the address of Twenty Lake Holdings, the real estate company affiliated with Alden Global Capital. It plans to renovate the building and operate it as short-term rentals, Gale said.
“These types of properties that have zoning for short-term rental are very difficult to find. I have a list of people who want to buy them. They’ll buy as many as I have,” Gale said. “It’s a coveted type of property, and it has to have the right kind of zoning.”
West Palm Beach-based Alden Global Capital owns more than 200 newspapers across the country, including the Sun Sentinel and the New York Daily News, and has been widely criticized for its cost-cutting methods after acquiring the publications. The multibillion-dollar hedge fund is led by Randall “Randy” Smith, and Heath Freeman. Smith and his wife, Barbara Stovall Smith, as well as Freeman, have all invested in South Florida real estate over the past two years.
The South Beach hotel previously traded for $790,000 in 1993.
Each room is a full suite with kitchens and dining rooms. The building has three one-bedroom suites and 14 studios. The property was operating as a hotel and was previously leased to a master operator, but the tenant left, Gale said.
Bidding wars for properties where short-term rentals are allowed has become common, and prices are “going up and up and up,” Gale added. She recently brokered the $17 million sale of a waterfront condo building that’s leased to a short-term rental operator in Bay Harbor Islands.
More boutique hotels in Miami Beach have been trading over the past year.
The Nakash family recently paid $6 million for the 10-room, three-villa property at 1350 Collins Avenue, near their Casa Casuarina hotel, which was previously known as the Versace Mansion, records show.
Carol Invest USA, led by Emanuela Verlicchi Marazzi, sold the 6,340-square-foot building at a loss compared to the $7.5 million it paid for the property in 2015.
Architect Wallace Tutt, who designed the Versace Mansion, also designed the 1350 Collins property, which is called the Orchid House Hotel. It was completed in 1930 and can operate as a private club or home, according to a press release about the deal. Short-term rentals are also allowed, said Lee & Associates broker Matthew Rotolante.
The Nakashes, who operate a global conglomerate that started with their fashion brand Jordache Jeans, also own the Setai Miami Beach, a 40-story condo hotel tower in Miami Beach that has recently been plagued with elevator issues.
The Orchid House Hotel, with a landscaped courtyard and a covered outdoor pool, sits on a 7,000-square-foot lot.
Rotolante said that he received a lot of interest in the property due to the location, but that the Nakash family was the “best buyer” for the hotel due to their nearby holdings. He said the buyer plans to renovate it into a “VIP” operation that complements Casa Casuarina.
Gale, who brokered the sale of Villa Paradiso, said demand for short-term rental friendly hotel properties existed before the pandemic, but has ramped up more recently as hotel rates have soared.
“We get non-stop calls all week long looking for this type of property,” she said. “It is such a lucrative business.”
An earlier version of this story incorrectly included a newspaper that Alden does not own.