MIAMI—What a difference a year makes. The mood at last year’s University of Miami (UM) Real Estate Impact Conference was hopeful. This year, commercial real estate developers and capital markets gurus were downright bullish on Miami and beyond.
Set against the backdrop of the newly-minted Perez Art Museum, one of the latest developments in the move to revitalize the Magic City, about 200 people attended UM’s third annual event. UM President Donna Shalala moderated a keynote session with Starwood Capital Group CEO Barry Sternlicht, but that was merely the finale of a day that left event-goers walking away perhaps more bullish than they came in.
Although the panels were national in scope, Miami was a prime example again and again, from discussions on mixed-use development and walkability in a panel called “The Invisible Asset Class Initiative” to subsequent panels focusing on creativity in the commercial real estate sector and the power of residential real estate to change a city’s future.
“There is a benefit to developing mixed-use assets,” said Mark L. Troen, managing partner and principal of The Winnmark Group, in a panel discussing the move to have the industry recognize walkable, transit-oriented, mixed-use development as an asset class. “Mixed-use properties, which are often perceived as more difficult to develop typically perform as well or better as other asset classes.”
In a panel called “Think Differently: Innovation, Entrepreneurship and Leadership in Commercial Real Estate,” Jodie W. McLean, president and Chief Investment Officer of EDENS, the retail guru explained how her company’s business model has evolved to find more ways to engage with communities. “We’ve completely shifted our mindset,” she said, noting that communities have lost a central sense of place. EDENS is moving to reclaim and rebuild places that give communities gathering places where people can slow down in a convenient, safe, and vibrant atmosphere.
Jorge Perez, CEO of The Related Group, made his voice heard in a panel entitled, “The Power of the Residential Real Estate Market to Change a City’s Future.” “South Florida has become, as opposed to just being fun in the sun, a serious city, a great city,” Perez said. “In terms of problems in South Florida, we still don’t have the local buyers for our private properties we’re building.”
Perez pointed to rising construction costs as one issue to beware of on the condo development front while Stuart Muller, CEO of Lennar Corp., said critical in the single rising construction costs weren’t as critical in the single-family home market due to stable land costs and rising home prices.
Keith Oden, president of Camden Property Trust, called South Florida the fifth-best-performing market in the U.S. Only Atlanta and three Texas markets rate higher for his company, which owns 70,000 multifamily units in 15 U.S. markets. Camden is building multifamily in Planation and Boca Raton in 2014, signaling a 5% growth rate in its South Florida portfolio this year.
“We love this market,” Oden said. “We think there is a lot of underlying strength here, and 2014 looks to be another strong year.”
The keynote focused on issues ranging from the future of hotel branding to the economy to education. Sternlicht pointed to Miami’s red hot hotel market, which he said was arguably the best in the nation. He also likes Florida’s low tax structure, including no income tax, and predict Northeasterners would begin moving to the Sunshine State if tax structures in New York, Massachusetts, and Connecticut did not change.
“Everyone wants to come here,” he said. “Also, you have really low taxes. We’ve noticed. My generation, which is the tail end of baby boomers, we’re coming. We’re changing our addresses and we’re coming to low-tax states.”