“Uncontrollable expenses”: Lissette Calderon, Jenny Bernell talk multifamily market challenges at TRD Forum

South Florida multifamily developer Lissette Calderon’s insurance costs have surged 30 percent — all while she is dealing with higher interest rates on construction debt and skittish lenders. 

“There’s no question that it’s definitely a different lending environment than it was in 2021 and 2022,” Calderon, founder and CEO of Neology Life Development Group, said at The Real Deal South Florida Showcase and Forum on Thursday. Now, “the capital stack would look different. Your leverage would be different, and you would have to put more cash in the deal.” 

Calderon and her co-panelist, Jenny Bernell, founder of Clearline Real Estate, each approach the issue differently. 

Neology creates wiggle room in its projects’ budgets through tech-empowered efficiencies, and Clearline is building in non-waterfront neighborhoods that are less susceptible to skyrocketing insurance. She also already completed equity fundraising. 

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“I think so many of us, you know, my previous employers would often have to wait until the very 11th hour to place the full capital stack,” Bernell said during the panel, called “Multifamily mania: Developing South Florida’s hottest asset class,” moderated by TRD Residential Bureau Chief Katherine Kallergis. The “environment right now proves that that can be a bit unwise.” 

For a recent financing deal, Calderon said she went through “more scrutiny” than ever before, but ultimately closed it. Though debt woes, coupled with higher construction costs and insurance “are uncontrollable expenses,” projects in South Florida also benefit from the region’s population growth. 

“There are a lot of moving parts to it,” Calderon said. But “I mean who doesn’t want to be in Miami?”

Calderon and Bernell also touched on South Florida’s varying multifamily landscape, including calmer rental growth compared with 2021 and early last year; a hefty apartment development pipeline; and the tri-county region’s pressing issue of affordable housing. 

“My general concept coming into Miami is to really build apartments that are affordable, with a lowercase “a,” for a young professional demographic,” said Bernell, a former EVP of development at Kushner Companies in New York. 

Clearline’s 1,200-unit pipeline includes plans for a 12-story, 310-unit apartment building at 2000 North Miami Avenue in Wynwood, as well as a 427-unit rental project at 1550 Northeast Miami Place in the Arts & Entertainment District.  

Clearline, based in Miami and New York, also is partnering with Ironstate Development and Brookfield Properties on an Urby-branded project on the former Art by God store site in Wynwood, between Northeast 26th and 27th streets, on the east side of the Florida East Coast Railway. 

The Live Local Act, a state law passed this year to incentivize affordable housing development, so far hasn’t proven helpful to Clearline’s mission to build attainably priced housing, Bernell said. The legislation allows developers to build taller projects than allowed by local regulations, in exchange for including below-market rate units. But taller also means more expensive, which isn’t exactly easy in the current lending environment, Bernell said. Plus, some of her sites have development limits that the law doesn’t address. 

“It’s a great concept, but I think it needs to get married to local regulations,” she said. 

Instead, Clearline’s projects would allow some rent reprieve by compressing the unit size, Bernell said. 

The Live Local Act is an opportunity for developers and governments to partner on the affordable housing crisis, Calderon said. 

Coconut Grove-based Neology is focused on Miami’s Allapattah, completing the 13-story, 192-unit No. 17 Residences at 1569 Northwest 17th Avenue in 2021. The firm is developing the 14-story, 323-unit The Julia at 1625 Northwest 20th Street, and the two-building, 237-unit Fourteen Residences Allapattah at 1470 Northwest 36th Street.

Calderon, who earned the moniker “Queen of the Miami River” for pioneering riverfront development in the early 2000s, now plans a four-building, 1,360-unit apartment complex at 2301 Northwest 33rd Avenue in Palmer Lake along the west riverbank. 

At some of her projects, the average asking monthly rent is nearly $2,000 for one-bedroom apartments, and roughly $2,400 for two-bedroom units, Calderon said, though she didn’t identify the developments. 

South Florida’s rents have stabilized this year, following “outlier” growth in 2021 and last year, she said. 

The region led the nation with a 58 percent rate increase from March 2020 to March of last year, according to Realtor.com. Vacancies dwindled to 3 percent in the second quarter of last year, a Berkadia report shows. 

Rents won’t drop to pre-pandemic lows, and vacancies won’t continue to decline, Calderon said. Demand is now fueled by would-be homebuyers who continue to rent due to roughly 8 percent mortgage rates. 

During the panel, Kallergis also noted “something kind of obvious:” Calderon and Bernell are female multifamily developers in the predominantly male-dominated real estate arena. 

Both panelists said being a woman is an “opportunity,” including to disprove the expectations others in the profession may have of the two developers. 

“When I walk in the room, I think there’s expectations as to what I’m going to be, based on what I look like, based on the accent I have, based on my background,” Calderon said. “The fact is that I am just as good, and deserve to be there just as much as the guy next to me.”

Bernell has always been drawn to the challenge of taking on seemingly impossible endeavors. 

“When I was 17, I got a job at NASA because I was interested in being an engineer. … Then, I went to architecture school and [worked] to break into the industry,” she said.  “It’s just about putting your head down and kind of plowing forward and being results-oriented.”

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For Calderon, it’s also about learning to hold her ground. 

“I have no problem telling someone. ‘Stop.’” I am the one who writes the checks, and that’s why,” Calderon said. “That’s not to say that I haven’t been told to be quiet, that I haven’t been told how cute I am, how I remind them of their granddaughter and everything else.”

And, it’s about inspiring young women. Hopefully next year, she said, five female panelists will be sitting on the stage.