It’s almost showtime! The Real Deal’s South Florida Real Estate Showcase & Forum is fast approaching and we have a stellar line-up of panelists and new developments coming your way.

Use the limited discount code OCTSUBS to get 50% off General Admission, Silver and Gold level tickets to the Oct. 25 event here. Please note: If the email address you use when purchasing tickets does not match a subscriber account, your ticket will be voided.

We have five featured panels, including our all-star broker roundtable bringing together executives from the top residential brokerage firms: Compass’ Robert Reffkin, Douglas Elliman’s Howard Lorber, Corcoran Group’s Pam Liebman, The Agency’s Mauricio Umansky and Sotheby’s International Realty’s Julie Leonhardt LaTorre.

We’re also excited to welcome Turnberry’s Jackie Soffer, Dacra’s Craig Robins, the Trump Group’s Jules Trump, JDS’s Michael Sterns, Swires’ Kieran Bowers and several other prestigious panelists as we go deep into the world of both residential and commercial development in South Florida.

And, be sure not to miss our exclusive one-on-one interview with Brightline president Patrick Goddard.

For information on sponsorship options, please email forum@TheRealDeal.com.

Realogy’s Ryan Schneider (Credit: iStock)

It’s not the greatest time to be a Realogy shareholder.

Thanks to a convergence of factors — from the slowing U.S. housing market to heightened brokerage competition — shares of the company’s stock closed at $19.73 on Oct. 5. That’s down 41.2 percent year-over-year, even as the S&P 500 rose 13.39 percent during the same time.

Put another way: The New Jersey behemoth that operates the Corcoran Group and Coldwell Banker has lost more than $2 billion in market value in the last 12 months.

“It’s been a perfect storm for Realogy, honestly,” said John Campbell, an analyst at Stephens Inc. “The way the stock is acting is that it’s essentially what Blockbuster was to Netflix and RadioShack to Apple… People view it as the dinosaur.”

Realogy executives aren’t taking things lightly. During an Aug. 3 earnings call, the word “change” was uttered more than 30 times — with regard to right-sizing its office footprint and curtailing agent payouts.

“We’re focused on moving quickly,” CEO Ryan Schneider said. “I know shareholders expect better results.”

Below are four headwinds Schneider and his lieutenants are facing.

1. Housing slowdown

The U.S. housing market propped up Realogy for several years, but rising interest rates, higher sale prices and fewer new homes have been a drag on its performance. “Unit sales have slowed,” said Jason Deleeuw of Piper Jaffray & Co. The company is more vulnerable than its peers, he said, because its NRT division — which operates Corcoran, Citi Habitats and Sotheby’s International Realty — is so concentrated in high-end markets like California, New York and Florida.

2. Commission payouts

In order to retain top agents, Realogy (like other traditional brokerage firms) has been steadily offering agents higher splits. Realogy’s splits aren’t out of line with what everyone else is paying, but rising payouts have eaten into the bottom line. Three years ago, for example, the average split was 68 percent, according to Campbell’s research. Today, it’s close to 73 percent. (Last year, Realogy shelled out $53 million in commissions during a single quarter.)

“People are questioning, when does that stop,” Campbell said. He believes Realogy will generate $749 million in EBITDA (earnings before interest, taxes, depreciation and amortization) this year; but he said the number would be $250 million to $300 million higher if splits were at 2015 levels.

3. Too many offices

Thanks to online portals and mobile technology, agents can close deals from the road, their car or even Starbucks. But Realogy’s balance sheet is still weighed down with office leases. In its most recent annual report, the company said it has 1,021 leases nationwide totaling 4.9 million square feet. (Rent was $192 million in 2017, up from $186 million in 2016, according to company financials.)

During the Aug. 3 earnings call, CFO Tony Hull said Realogy averages 66 agents per office, up from 63 agents a year ago. But Campbell estimated that if the offices were 80 percent occupied, Realogy would see another $130 million in EBIDTA. “It’s a big number,” he said.

4. Pressure on traditional brokerage model

From 30,000 feet, investors see Realogy as a proxy for the traditional brokerage model — which is under fire.

Anthony Paolone of JPMorgan Chase cited the “enormous” amount of private capital being thrown at new brokerage concepts like Compass. “Astute competitors have that capital behind them [and] are competing for the long-term,” Paolone said.

Some investors think Realogy underestimated Compass early on; the company is now valued at $4.4 billion, after a $400 million round last month led by SoftBank and Qatar Investment Authority. Campbell put it this way: “People are fearful that a competitor that’s been a thorn in the side of Realogy is getting larger and more dangerous.”

Phil Gutman, David Brecher and Aaron Kurlansky (Credit: iamNigelMorris via Flickr)

Brown Harris Stevens Miami is forming an alliance with commercial and residential lenders.

BHS Miami is partnering with Hollywood-based FM Capital and New York-based FM Home Loans, president Phil Gutman said. The deal gives the brokerage’s six South Florida offices and more than 200 agents access and support for residential and commercial lending. Gutman plans to roll out the partnership through seminars with his agents.

The brokerage decided to partner with lenders now because interest rates are still low and financing is still available, Gutman said, although rates have been increasing. The Federal Reserve raised interest rates in September 0.25 percent, marking the third increase so far this year.

As part of the move to become “one-stop shops,” a number of South Florida brokerages are now offering mortgage lending services. Firms like the Keyes Company, EWM Realty International and Coldwell Banker offer similar ancillary services. Last year, Fortune International Group launched a bridge lending firm with Rialto Capital Management. Daniel de la Vega of One Sotheby’s, and lenders Joel Eidelstein and Matthew Eidelstein also recently launched a new mortgage lending company based in Miami called CapHouse Financial.

Meanwhile, some big banks are pulling back on consumer mortgage lending, including Wells Fargo and JP Morgan, both of which recently announced significant layoffs in their consumer mortgage divisions.

In South Florida, FM Home Loans and FM Capital aim to lend about $500 million, each, by the end of this year, FM Capital principal Aaron Kurlansky said. On the commercial side, FM Capital will lend to mostly multifamily properties, as well as for other commercial deals under $25 million.

Both the commercial and lending arms are looking to increase their footprints in South Florida, Kurlansky added.

Aerial of Hidden Valley Golf Course, developer Brian Tuttle and new 27-home site plan

Developer Brian Tuttle is suing the city of Boca Raton, alleging that a review by city staff was inconsistent with state law and led the city council to deny his entity’s application to build more than 100 homes on a shuttered golf course.

Two companies tied to the developer filed suit last week in Palm Beach County Circuit Court.

The lawsuit’s roots date back to January, when the city council shot down a zoning amendment that would have allowed the developer to build a residential community on the former Hidden Valley Golf Course. The project called for 101 homes on about 55 acres of vacant land at 7601 East Country Club Boulevard.

Tuttle is now seeking at least $18 million in damages, which he says is the appraised value of the land had it been re-zoned to allow for his proposed development.

According to Tuttle’s suit, his application fully conformed to city regulations and the council members’ denial was influenced by a “bad review” from city staff. “City staff did not follow state law when reviewing our application,” Tuttle said.

The city of Boca Raton did not immediately respond to comment.

The city staff’s review outlined concerns about traffic along Northwest Second Avenue, and the impact the project would have on infrastructure used to buffer potential flooding.

In the complaint, Tuttle said he proposed a $250,000 contribution to fund traffic improvements that would have addressed traffic concerns, but the city said the donation was inadequate. Tuttle alleges that the city’s opposition to the donation is “inconsistent” with Florida law.

In addition, Tuttle alleges that the location is not in a floodplain and that the city needs to update its Federal Emergency Management Agency flood maps.

Tuttle said that instead of 101 homes, he now intends to build 27 single-family homes and a 65,000-square-foot YMCA facility, which do not require rezoning. The total project cost would be about $50 million. He added that the project could potentially triple the amount of the traffic in the area.

“This is a fight,” Tuttle said, “and I intend to fight this ’till the end.”

Richard Meier (Credit: Getty Images)

Richard Meier, the founder and managing partner of his eponymous architecture firm, is stepping down.

The announcement comes seven months after five women accused the Pritzker Prize winner of sexual harassment in a report published by The New York Times. Meier, who founded Richard Meier & Partners in 1963, took a six-leave of absence from the firm after the allegations were made public.

Meier will continue to be “available to colleagues and clients who seek his vast experience and counsel,” however the firm will now be led by managing principal Bernhard Karpf, the firm announced Tuesday.

“It is an honor to lead this talented team as we build upon the body of work we have created over a half-century,” Karpf said in a statement. “Richard’s vision has produced a unique architectural design language that is instantly recognizable and internationally celebrated. I am committed to support both the New York and Los Angeles offices as we continue to evolve and grow.”

Partner and principal designer Michael Palladino will continue to lead the firm’s West Coast projects from the firm’s Los Angeles office with Jim Crawford.

When Meier’s leave of absence began, his firm was at work on at least two new major projects: Sheldon Solow’s condominium at 685 First Avenue and a tower for GID Development as part of its three-condo project, One Waterline Square. Both projects used Meier’s name and image in marketing efforts, evoking his lengthy career and reputation as a prolific architect and Pritzker Prize laureate.

A spokesperson for the firm declined to comment.

Meier apologized to the women who accused of him of a longstanding pattern of sexual misconduct, which included attempts of forcible kissing, groping, exposing himself, and requests that they undress in front of him. “I am deeply troubled and embarrassed by the accounts of several women who were offended by my words and actions,” he told the Times in March. “While our recollections may differ, I sincerely apologize to anyone who was offended by my behavior.”

The 275-room Biltmore Hotel in Coral Gables recently began a $25 million dollar renovation.

The historic Biltmore Hotel in Coral Gables has never lacked for luxury. A stroll through the property’s resplendent hallways and alongside its swimming pool — once the largest in the world — serves as a testament to the old-school elegance of a property that came of age during Florida’s original land boom of the 1920s. But with more than 10 years passed since the property overhauled its 275 guest rooms, management decided this year that it was time for a refresh.

In June, the Biltmore commenced a $25 million renovation, which will include a refurbishment of all guest rooms as well as enhancements to the golf course, among other items. The work is scheduled for completion in December.

“There is immense competition at all the various levels of hospitality,” Biltmore General Manager Matthias Kammerer said. “A lot of new and renovated product. And it was time for us to be serious about renovating the most impactful areas of our guest experience.”

Indeed, around South Florida’s tri-county area, competition is intense as older properties fight to maintain market share against the plethora of new properties that have come online over the past handful of years. Still, although more than 10,000 keys are in the pipeline over the next two years in Miami-Dade County alone, experts say growth has begun to slow as lenders tighten the reins.

The pipeline slowdown

Over 2016 and 2017, a total of 42 lodging properties opened in the Miami, Fort Lauderdale and Palm Beach areas, adding more than 6,000 units of inventory, according to global hotel real estate consultant Lodging Econometrics. But the growth has since begun to taper off.

Two years ago, Miami had 87 projects and 15,701 rooms in the hotel construction pipeline, trailing only New York among the top 25 U.S. markets in terms of the size of the hotel pipeline as a percentage of hotel supply, Lodging Econometrics data shows. By the end of this year’s second quarter, the Miami pipeline had shrunk to 69 projects and 12,238 keys, proportionally the fifth-largest pipeline among those 25 major markets.

While that isn’t a small amount of inventory on the way, analyst Boaz Ashbel, managing director at Aztec Group, a Miami-based firm that invests in and brokers hotel projects, said that lenders have become reluctant to finance South Florida hotel projects. Labor shortages are also making project delivery more difficult and expensive.

“Lenders have pretty much reached their capacity for goals in the hotel space and aren’t going to give out additional loans,” said Ashbel, who added that what opportunity remains at present is mainly for midrange properties. Lenders will only look at borrowers with a long history of development experience, he added.

Ali Lehson, a partner in the real estate group of the Miami-based law firm Bilzin Sumberg, agreed that lenders are reserving the best terms for only the most promising projects, but she’s still seen plenty of loans issued. “We’ve done a considerable amount of funding in the last couple of years and with strong borrowers. We’ve gotten good terms,” Lehson said.

She added that hotel development opportunities remain in growing urban centers, such as the downtowns of Delray Beach, West Palm Beach and even hotel-dense downtown Miami. There’s also untapped demand in the millennial markets, Lehson said, citing the fact that Latin American upscale hostel brand Selina has chosen Little Havana’s old Tower Hotel as its first U.S. location. Selina will be joined in Miami’s emerging micro-hotel and upscale hostel market by citizenM, a newly announced 348-key project that will be part of the sprawling Miami Worldcenter development downtown.

“I think you are seeing the market create more and more diversity,” said Nitin Motwani, managing principal of Miami Worldcenter Associates. The Netherlands-based citizenM chain caters to millennial travelers by offering technologically advanced hotels with extensive public spaces. Its project will fill an unmet need in the downtown hotel landscape, Motwani said.

Similarly, Ronny Finvarb, principal of the Finvarb Group, said that the key for South Florida hotel developers going forward will be to carefully fill unmet needs in the market. The Finvarb Group announced this summer that it would make a 150-room Thompson Hotel its newest project because the brand — a luxury boutique hotel outfit catering to a high-end clientele in New York, Seattle, Nashville, Chicago and soon Los Angeles — has been absent from Miami Beach since 2016, when Hyatt bought the former midbeach Thompson property in order to convert it into the Confidante Miami Beach.

“We felt that it was a brand niche that needed to be filled again,” Finvarb said.

Checking in on room rates

Amid the influx of inventory, revenue per available room (RevPAR) suffered for South Florida hoteliers in 2016 and 2017, especially in Miami-Dade.

But even in this increasingly inventory-rich landscape, room rates are inching up in 2018. In Miami-Dade County, RevPAR was up 11.4 percent year over year through July, according to the lodging industry analytics company STR. Broward County hoteliers, meanwhile, enjoyed a 7.3 percent year-over-year RevPAR increase, and RevPAR in Palm Beach County was up 8.2 percent.

Analysts and industry representatives cite a number of reasons for the market strength the tri-county area hotel industry experienced in the first half of the year. Like others, Stacy Ritter, CEO of the Greater Fort Lauderdale Convention & Visitors Bureau, cited hotel closures in the Keys and in Caribbean destinations that were devastated by Hurricane Irma as one factor that has boosted room rates this year. But she said that the increasing diversity of Broward’s hotel offerings, as well as the growing appeal of the off-beach Fort Lauderdale and Broward County markets, have been more important.

“I don’t see RevPAR going down when Puerto Rico and the Keys get back to full force,” Ritter said. “We have a whole group of people who found us, and they are going to stick with us.”

Soon to open

While the overall South Florida hotel room pipeline is smaller than it was two years ago, new properties are continuing to come online in rapid succession in Miami-Dade and Broward counties. Through August, 11 properties accounting for more than 1,200 rooms had opened this year in the two counties, according to Lodging Econometrics.

Downtown Miami this year saw the opening of the 208-unit Hyatt Centric Brickell Miami as well as the SLS Lux Brickell Hotel & Residences, a mixed-used development under the sbe brand that includes 70 hotel-condominium units.

Prominent openings slated for Miami in the coming months include the 190-room EVEN Hotel Miami Airport — an InterContinental Hotels (IHG) wellness brand — opening in November; the boutique 92-room Greystone Hotel on Miami Beach’s Collins Avenue in December; and the 140-room Hotel Indigo Miami Brickell, another IHG brand, also in December.

In Broward, openings this year have included the 111-room CIRC Hotel, part of a mixed-use development in downtown Hollywood, and the 150-room TRYP Maritime by Wyndham on Fort Lauderdale’s Marina Mile, which caters to yachters.

Among the properties slated to open this fall is a 25-story luxury product, the Dalmar, in downtown Fort Lauderdale, which will house 209 rooms and suites. The 307-room Costa Hollywood Beach Resort is also scheduled for a fall opening.

To the future

Further down the line, plenty of noteworthy projects are expected to be completed before the end of 2020. Among them are the 164-room Boca Raton Mandarin Oriental and the 130-room Four Seasons on Fort Lauderdale Beach, which will also have 90 private residences. In Miami, a variety of midmarket branded hotels, such as Holiday Inn Expresses and Hilton Garden Inns, are among the products in the pipeline. In addition, the Seminole Hard Rock Hotel & Casino in Hollywood expects to complete a $1.5 billion, 806-room expansion next year. And MDM Group expects to break ground this fall on the 1,700-room Marriott Marquis at Miami Worldcenter, with an anticipated completion date of 2021.

In the midst of these completions, the fate of a potential major project is yet to be decided. In November, Miami Beach voters will have their say on a proposed 800-room Miami Beach Convention Center hotel, which would augment the nearly complete $620 million expansion of the convention center itself (see TRD’s ballot guide on page 19). The plan is modified from a version that voters rejected in 2016. The 2018 proposal calls for a structure that would rise to only 185 feet, rather than the 288 feet included in the 2016 proposal.

Convention center hotel advocates might take umbrage over the fact that voters in the Miami area have already given one victory to the hotel industry this year. In August, City of Miami residents gave the go-ahead for ESJ Capital Partners, which owns Jungle Island, to build a 300-room eco-themed hotel on
city-owned Watson Island. The company now has up to 10 years to build the project.

HNA Group Chairman Chen Feng and 850 Third Avenue (Credit: Wikipedia and 850 Third Avenue)

Troubled Chinese conglomerate HNA Group is selling off another $11 billion in assets in its latest move to steady the ship.

Included is New York’s 850 Third Avenue, though most of the 80 total are in China, according to Reuters.

HNA bought the office building in 2016 for $463 million and secured a $342 million refinancing loan for it in June.

The buildings for sale were listed in two documents sent to prospective investors in August, and it’s not clear how many have already been sold. One set of documents listed 23 of the buildings with targeted sales in 2019.

The selloff is a result of mounting pressure from creditors and Chinese regulators. HNA has already sold or agreed to sell around $20 billion in assets since January. The company’s debt was listed at $95 billion through June, which was down 10.7 percent from the end of 2017, according to Reuters.

Earlier this year, HNA sold off a stake in Deutsche Bank and listed a stake in Hilton spinoff Park Hotels & resorts. In September, HNA gave up 80,000 square feet of prime Hong Kong office space that it never moved into but rented for $1.5 million a month.

HNA is led by chairman Chen Feng and has a highly diversified business. [Reuters] — Dennis Lynch 

Photos of the five properties

South Florida’s five biggest office sales in September occurred outside of Miami, in Broward and Palm Beach counties.

September lacked any large trophy office sales, but data compiled by The Real Deal suggest that there is still a lot of activity in South Florida’s broader office market. It also speaks to the continued strength of the Class B office market in Broward County.

Three Broward medical office buildings – Millennium Management | $41M

The largest office deal of the month involved three medical office properties in Tamarac and Lauderhill, just outside of Fort Lauderdale. Millennium Management paid $41.3 million for three properties at 5901 Northwest 79th Avenue, 6931 West Sunrise Boulevard, and 2599 Northwest 55th Avenue.

Toledo-based real estate investment firm Welltower sold the Manorcare Health Services facility at 6931 West Sunrise Boulevard in Plantation for $14.2 million, and the Heartland of Tamarac nursing home at 5901 Northwest 79th Avenue for $15.4 million.

Miami-based Millennium operates nursing homes in South Florida and across the United States. In 2016, the company paid $15 million for a psychiatric campus in Hialeah.

Waterway Shoppes, Coral Springs — Asuman G. Polat | $28.6M

Ross Realty Investments sold three commercial office buildings in Coral Springs for $28.6 million.

The buildings are located just off the Sawgrass Expressway on Coral Ridge Drive and consist of a mix of retail and office properties totaling 130,985 square feet, which breaks down to about $330 per square foot.

The buyer of the properties was an LLC led by private investor Asuman G. Polat, who also recently sold a property at 41 West 57th Street in Manhattan.

Tiktin Real Estate Investment Services’ Adam J. Tiktin and Alejandro Snyder represented the sellers.

Tiktin said Ross Realty spent about $14 million assembling the lots and developed the properties between 2006 and 2008. The office portfolio is leased to a number of medical tenants including Memorial Healthcare Systems and All Source Recruiting Group.

Sawgrass International Corporate Park, Sunrise — Starwood Capital Group | $27.25 million

A Starwood Capital Group affiliated company sold an office building within Sawgrass International Corporate Park in Sunrise for $27.25 million. 

Starwood sold the property to a joint venture between Barron Collier Cos. and Vanderbilt Office Properties, property records show.

The group financed the deal with a $13.55 million loan from Wells Fargo Bank. The 95,800-square-foot, three-story building is home to Ford Motor Co. and Performant Financial Corp

The property last sold for $20 million in 2015.

Barron Collier Companies operates commercial real estate, residential properties, oil exploration, agri-business and golf courses in Florida. Collier County in southwest Florida is named after the company’s founder, Barron Collier.

220 Congress Park Drive, Delray Beach — TMT Properties | $11.4 million

TMT Properties paid $11.4 million for an office building in Delray Beach.

The 54,000-square-foot property at 220 Congress Park Drive was part of a 1031 exchange. The deal equates to $210 per square foot.

The seller is a company tied to the Canadian investment firm ICM Realty Group. ICM Realty Group paid $8 million for the nearly 4-acre property in 2014, records show. It was built in 1984.

TMT financed the deal with an $8.6 million loan from Grove Bank & Trust.

The building is 100 percent leased and its tenants include WMPH Vacations and Specialized Healthcare Partners. The offices are also leased to a number of government tenants like the Florida Auditor General and the Florida Department of Juvenile Justice, Maas said.

800 Northwest 33rd Street, Pompano Beach — Mapletree Investments | $5.4 million

Mapletree Investments bought an office building at 800 Northwest 33rd Street in Pompano Beach for $5.4 million. 

The Pompano Beach building at 800 Northwest 33rd Street is leased to the South Florida Regional Transportation Authority, which oversees transportation projects in Broward, Miami-Dade and Palm Beach counties.

The deal is part of a much larger portfolio deal that included properties in the U.S. and abroad, with a total value of about $1.1 billion.

CEO of Performance Food Group George Holm

Louis G. Piancone, the founder of the Italian food wholesale distributor Roma Foods, just won a plate of dough – but this time it’s not food-related.

Property records show Piancone, trustee of a trust in his name, and his wife Teri Piancone, sold their 2.5-acre estate at 9274 Hawk Shadow Lane, within the Stone Creek Ranch residential neighborhood just west of Delray Beach, for $6.45 million.

The buyers are also in the food wholesale and distribution industry. Records show George L. Holm and his wife Paula Holm bought the six-bedroom, eight-bathroom home. The deal for the 10,670-square-foot mansion breaks down to about $600 per square foot.

George Holm is the CEO of Performance Food Group, which was acquired by Wellspring Capital Management and Blackstone Group for $1.3 billion in 2008. Shortly after, Roma Foods merged into PFG. The Goochland County, Virginia-based company went public in 2015.

Records show the home previously sold for $6.7 million in 2008.

Stone Creek Ranch has been home to H. Wayne Huizenga Jr., the son of the late billionaire Wayne Huizenga, who co-founded Waste Management Inc. and led the Blockbuster video rental company in the 1990s. He also owned the Miami Marlins, the Miami Dolphins and the Florida Panthers.

Last year, Huizenga Jr. sold the five-acre property (the largest lot in the residential community) for $6.7 million.

Delray Beach has attracted high-profile sales. In 2016, actor and comedian Kevin James sold his Delray Beach estate at 502 North Ocean Boulevard for $26 million, and William Powers, the Strand Partners hedge-fund manager, recently sold his Delray Beach manse for $26.75 million.

Caroline Wozniacki, David Lee, 7081 Fisher Island Drive

UPDATED Oct. 10, 2:30 p.m.: Talk about a power serve.

Danish tennis star Caroline Wozniacki and her new fiance, former NBA player David Lee, just paid $13.5 million for a condo at Palazzo Del Sol on Fisher Island.

Wozniacki and Lee purchased the 7,302-square-foot unit at the luxury development at 7081 Fisher Island Drive for $1,848 per square foot, property records show. The couple bought the condo from Palazzo Del Sol’s development entity, PDS Development, which is led Heinrich Von Hanau.

The waterfront condo has five bedrooms and five-and-a-half bathrooms.

Wozniacki was formerly the no. 1 tennis player in the world and has also won the Grand Slam — winning all four major tournaments. Earlier this year, Wozniacki and Lee got engaged. Lee most recently played for the NBA’s San Antonio Spurs and was part of the Golden State Warriors team that won the championship in 2015.

The property was listed by Dora Puig of Fisher Island Real Estate. The buyer was represented by Daniel Pansky and Maria Kuzina of Miami Luxury RE LLC.

Palazzo Del Sol was completed in 2016 as the first condominium project to be built on exclusive Fisher Island since 2007. The 10-story building has 47 units and six cabanas. The tower was designed by Kobi Karp, with landscaping by Enzo Enea.

PDS plans to complete construction of Palazzo del Sol’s sister 50-unit condominium, Palazzo Della Luna, next summer.

Buyers at Palazzo del Sol include former Formula One driver Enrique Bernoldi, Hasbro billionaire Alan Hassenfeld, attorney Jim Ferraro, Azerbaijani billionaire Aras Agalarov and Yard House founder and CEO Steele Platt.

Fisher Island was created in 1906 when the U.S. government dredged the island away from the barrier island of Miami Beach in order to build deep water docks connecting Miami with the Atlantic Ocean. The island has the most expensive zip code in the United States and can only be accessed by a ferry or boat.

Softbank CEO Masayoshi Son and WeWork CEO Adam Neumann (Credit: Getty Images)

SoftBank is in discussions to take a majority stake in Adam Neumann’s co-working firm WeWork, which could amount to an investment as high as $20 billion, a new report claims.

If a deal were to materialize, the money would reportedly come from SoftBank’s Vision Fund, according to the Wall Street Journal. SoftBank, an almost $100 billion fund backed by Saudi Arabia and Abu Dhabi sovereign wealth funds, has invested over $5 billion in WeWork so far, propelling it to the top of the co-working heap.

Its stake in WeWork, already nearly 20 percent, has helped boost the coworking giant’s valuation to over $20 billion, since it opened its first office space at 154 Grand Street in 2010. In eight years, WeWork has grown to a workspace company with more than 265,000 desks in 287 building across the globe.

Last month, WeWork became the largest office leaseholder in Manhattan, surpassing JPMorgan Chase with 5.3 million square feet leased. As of the time of the announcement, the co-working giant had 60 locations in New York City, with 50 in Manhattan.

SoftBank and WeWork held discussions earlier this summer that would have valued the company at up to $40 billion, according to a June report in the Journal.

CEO Adam Neumann, who has the largerst stake in the company, has long marketed WeWork as a tech firm with a real estate bend, claiming its real value is in integrating people and businesses into sustainable communities.

Despite its high valuation, skeptics point to WeWork’s growing losses — and exposure to relatively volatile industries like real estate — as cause for concern. In the first six months of the year, WeWork posted losses of $723 million, though revenue doubled during that time to $763 million. Beyond co-working, WeWork has also launched kindergartens, gyms, co-living businesses and brokerage advisory services. [WSJ] — David Jeans

Lee Feldman and downtown Fort Lauderdale

Fort Lauderdale commissioners on Tuesday fired City Manager Lee Feldman – a move in line with the commission’s new hard stance toward development in the rapidly growing city.

Mayor Dean Trantalis, Vice Mayor Ben Sorensen and commissioner Steve Glassman voted in favor of Feldman leaving by year’s end, according to the Sun Sentinel.

The three newly elected city commissioners ran “smart growth” campaigns favoring less overdevelopment, and have been critical of Feldman and his casual approach toward the city’s troublesome infrastructure problems, including some faulty sewer pipes.

The same three also fired the city attorney in March. A couple of months later they voted to shoot down Trammell Crow Residential’s proposed 21-story Alexan-Tarpon River residential tower in downtown Fort Lauderdale.

Heather Moraitis, the fourth new commissioner, and Robert McKinzie voted not to fire Feldman, who took over the helm of Fort Lauderdale’s city affairs in 2011.

“I think we’ve made a lot of good progress in building up a professional organization that has attained both statewide and national recognition in lots of areas,” Feldman said, according to the publication. [Sun Sentinel] – Amanda Rabines

From left to right: Jorge Perez, David Martin, Masoud Shojee, Jim Carr, Armando Codina in front of the Downtown Doral

Doral is still officially a young city, incorporated only 15 years ago. But Doral’s roots date back to the 1950s, when Doris and Alfred Kaskel scooped up 2,400 acres of swampland for $49,000 on which they built a grand hotel, country club and golf resort nearly a decade later. The Kaskels, apartment developers from New York City who also built a pair of Art Deco hotels in Miami Beach, named their new resort after themselves — and Doral was born.

Today, the Kaskel’s resort lives on. And it’s new owner is none other than President Trump, who picked up the property at auction in 2011 for $170 million and renamed it the Trump National Doral Golf Club. Between the time the Kaskels owned the massive site and Trump took over, Doral has become one of Miami-Dade’s most significant industrial office markets. More than 28 national and global corporations, including the Miami Herald, Univision and Carnival Cruise Line, to name a few, are headquartered in Doral. According to a 2017 Florida International University study, Doral is home 775 firms that do manufacturing, pharmaceuticals, energy development and global logistics and trade; employing 11 percent of the city’s population and generating more than $2 billion in annual sales.

Doral’s economic drivers have fueled mostly office and industrial projects with some gated community residential developments. Among the first housing projects was Doral Park, a joint venture between Lennar Homes and the Kaskel’s grandson Bill.

Signs of Change

In 2013, Codina Partners broke ground on Downtown Doral, an ambitious mixed-use project that the developer claims will create a true urban center for the young city. The master planned community opened about three years later and ushered in a new wave of retail and food and beverage options typically seen in neighborhoods east of I-95 such as Aventura or Brickell. Among the trendy tenants are women’s fashion retailer Cattiva Boutique and the Japanese themed Dragonfly Izakaya and Fish Market.

The retail district is meant to serve residents who will be occupying 2,840 residential units — including condos, townhouses and rental apartments — Codina has planned for Downtown Doral. The first tower, 5252 Paseo, was completed in early 2016 and sold out, as did the second tower, 5300 Paseo.

Codina and longtime partner Jim Carr have also teamed up to build Canarias, a luxury custom home development adjacent to Downtown Doral. Canarias features 343 single-family homes and 52 townhomes.

Carr said Downtown Doral represented a huge risk for Codina because of the city’s long history as an industrial and office market powerhouse, but had no real track record with ambitious mixed-use projects. “It was a pretty gutsy move to demolish 120 acres of office buildings and do a new downtown,” Carr said. “What we are seeing with Canarias are families who want to work in Doral and want to be able to walk to restaurants and shops.”

Residential take

“We’re seeing more local South American buyers that have been here for 10-plus years selling their previous properties to upgrade to newer construction that offers amenities for their families. Doral is very attractive to families due to the schools, gated communities and amenities the city offers,” said Elizabeth “Eli” Santurio, the Keyes Company.

Commercial take

“The demand for office space in Doral has really pushed demand on the residential side, which has created a need for more goods and services in the area. That has led to development of a robust retail infrastructure with brand new shopping centers,” said Joe Abood, Avision Young.

Demographics

Population: 53,426

Median age: 35

Median income: $72,623

Average household net worth: $401,311

Most expensive residential sale

$1.5 million on Aug. 16 for a three-bedroom, four-bathroom house totaling 4,320 square feet at 115 Northwest 128th Avenue.

Least expensive residential sale

$175,000 on Sept. 5 for a two-bedroom, two-bathroom condo totaling 992 square feet at 8160 Geneva Court.

Most expensive home on the market

$6.7 million for a 10-bedroom, 10-bathroom estate totaling 11,676 square feet at 9464 Northwest 52nd Doral Lane.

Price trends

Median sales price per square foot: $232, 7% more than Miami-Dade average.

Increase in average rent over the last year: 10% to $2,400 a month.

New developments

Around the same time Downtown Doral was completed, the Related Group and Shoma Homes put the finishing touches on CityPlace Doral.

The $800 million, 55-acre mixed-use project features 250,000 square feet of retail including northwest Miami-Dade’s first Fresh Market, a CineBistro-Cobb Theatre and 20 restaurants and bars. The project will have a total of 1,000 housing units broken up into 150 single-family homes, 700 rental apartments and 320 condos.

Closer to the Florida Turnpike sit several new residential developments that target buyers looking to buy large single-family homes. For instance, Terra has finished most of its new community, Modern Doral, where houses are fetching between $860,000 to $1.5 million. The homes feature four-to-six bedrooms, two-to-three car garages, and 12-foot high ceilings that take up between 3,100 square feet to 4,500 square feet.

The project is located next to Doral Commons, a retail center anchored by Publix and TJ Maxx developed by Terra in 2016 and recently sold to Jamestown for $71.6 million. Terra is also building Doral Square, another retail center on a 3.9-acre parking lot near the Trump National. The company plans to develop 81,000 square feet of retail and restaurants.

Meanwhile, Century Homebuilders Group and Devtov are developing Mansions at Doral, a luxury single-family home community on Northwest 107th Avenue. Preconstruction prices at Mansions start at $1.2 million.

And Lennar and CC Homes have plans to build 2,209 residential units, 30,000 square feet of retail space and 150,000 square feet of office space on the site of a former 130-acre golf course.

Howard Cohen, CEO of Atlantic Pacific Communities and Marian Towers

An Atlantic | Pacific Communities partnership just paid $22.6 million for a waterfront affordable senior housing complex in Sunny Isles Beach.

The 220-unit property at 17505 North Bay Road, known as the Marian Towers, will now be co-owned by the Bal Harbour-based developer in partnership with the previous owner, Catholic Health Services. Atlantic | Pacific will own 49 percent and Catholic Health Services will own 51 percent, according to a spokesperson for Atlantic | Pacific Communities. The building is 153,169 square feet, according to property records, which equates to a price of $147 per square foot.

Catholic Health Services’ affiliate, Catholic Housing Management, will continue to manage the property, according to a statement from Atlantic | Pacific Communities. The partnership will spend more than $60,000 per unit in rehabilitation costs and plans to keep the property as affordable housing, the statement said.

The property was built in 1971 and stands out from other nearby glitzy, luxury condo towers in Sunny Isles such as Porsche Design and Acqualina Resort & Spa. It is located on the Intracoastal and the property totals 222,710 square feet.

Catholic Health Services is part of the Archdiocese of Miami and operates 38 facilities in Broward and Miami-Dade counties.

Atlantic | Pacific Communities, led by Howard Cohen, recently won a bid to develop a $172.8 million mixed-use project with a total of 600 residential units on a 90,000-square-foot parking lot at 152 Northwest Eighth Street in downtown Miami.

Blackstone’s Kathleen McCarthy and Ken Caplan with a map and photo of the industrial property (Credit: Blackstone and Gramercy Property Trust)

The Blackstone Group closed on the $7.6 billion acquisition of industrial real estate investment trust Gramercy Property Trust, the companies announced Wednesday.

Blackstone is paying $27.50 per share, which is 15-percent above Gramercy’s closing price the day before news of the deal broke. The Financial Times first reported the deal in May.

Gramercy owns 81 million square feet of real estate, mostly single-tenant industrial buildings. It has holdings across the country, including in New York, New Jersey, South Florida, Los Angeles and Chicago.

Blackstone, which is buying the REIT with its Real Estate Partners VIII fund, recently launched a new, $18 billion distressed real estate fund.

Sears CEO Edward Lampert and a Sears store (Credit: Phillip Pesar via Flickr and Getty Images)

Sears Holdings is preparing for a possible bankruptcy even as CEO Edward Lampert continues his push to shrink the once-dominant retailer back to profitability.

Sears has hired advisers to prepare a possible bankruptcy filing that could come as early as this week, according to the Wall Street Journal. The move comes as the struggling chain faces a Monday deadline to make a $134 million debt payment.

Lampert’s efforts to keep Sears out of bankruptcy have included shedding hundreds of unprofitable stores: Sears and Kmart had some 3,500 locations when they merged under Lampert in 2005; now there are about 900 nationwide.

Last month he proposed a last-ditch effort to avoid bankruptcy by shaving more than $1 billion from Sears’ $5.5 billion debt load, in part by selling another $1.5 billion in real estate. The strategy worked before. In August, Sears made $2.7 billion selling more than 200 stores to Seritage Growth Properties, a real estate investment trust that was formed to convert former Sears and Kmart stores.

Sears has endured more than $11 billion in losses since 2011, and its annual sales have dropped nearly 60 percent in that period, to $16.7 billion. Analysts say it needs to raise more than $1 billion a year to stay afloat. [WSJ] — John O’Brien

Park Central Business Park and Marcus & Millichap’s Douglas Mandel and Tyler Kuhlman

KEI Properties just sold three industrial buildings within the Park Central Business Park campus in Pompano Beach for $15 million.

Berkeley Partners bought the roughly 114,400-square-foot industrial portfolio at 3600-3665, 3700-3790 and 3800-3890 Park Central Boulevard North for about $130 per square foot.

Its most recent purchase marks the company’s third acquisition in South Florida this year. The San Francisco-based investment firm focuses on acquiring light industrial facilities throughout the United States, according to its website.

Records show KEI Properties bought the three buildings in 2016 from Duke Realty, as part of a larger six-building portfolio sale totaling $14.5 million.

In the most recent sale, Marcus & Millichap’s Douglas Mandel and Tyler Kuhlman represented the seller, and advised the buyer. The three-building portfolio sold 100 percent occupied with asking rents averaging at about $15 per square foot, Mandel said.

Park Central Business Park is a 976,000-square foot, mixed-use development located between Sample Road and Copans Road, just west of the North Andrews Avenue extension.

Bridge Development Partners is also active in Pompano Beach. The firm is close to completing Bridge Point Powerline Road, a 468,000-square-foot industrial park at 1951 North Powerline Road.

Quiet has become the new status quo in the condo market.

Miami-Dade County is facing a supply of 58 months, or nearly five years, of condos priced at $5 million and up. That figure is based on the market average of about six units selling per month with 350 units on the market, according to MLS data compiled by EWM Realty International.

Of the units priced at $5 million and up that sold over the past year, 96 percent closed for less than their original asking prices. However, sellers are typically reducing their pricing by only 5 percent, the report found.

The drop in preconstruction inventory as a growing number of projects have been canceled or put on hold since the cycle began in 2011 — including the recent cancellations of Naranza at Edgewater; Spark, also in Edgewater; Fasano Residences in Miami Beach; and the Diplomat project in Hallandale Beach — is a sign that the market is correcting itself.

Announcements of new projects have been few and far between. The handful of recently launched developments are priced more affordably and located in Greater Downtown Miami, a market where lower listing prices will fare better as the glut of luxury condo supply totals more than five years, according to data from Peter Zalewski’s Condo Vultures Realty, a brokerage that specializes in buying and selling bulk condo deals. The excess inventory Condo Vultures tracked doesn’t even include the preconstruction market.

Heading farther north to Broward and Palm Beach counties, the number of projects in the pipeline is lower, but some of the same issues are present in both areas.

The Conrad and W Fort Lauderdale, for example, still have a number of unsold units. According to a 2018 report by International Sales Group, the W — which the Related Companies purchased and renovated — is only 55 percent sold. And the Conrad, which the Heafey Group purchased, is under 50 percent sold.

Below is the pipeline of South Florida condo projects proposed, planned, under construction or completed since the beginning of this cycle. The data was compiled by Cranespotters, an entity connected to Condo Vultures Realty, which sourced data from public records, mainstream media news reports and private research. 

Broward

Miami-Dade

Palm Beach

Clockwise from left: Los Angeles, London, Hong Kong, and New York skylines (Credit: Wikipedia, Michael Vadon via Flickr, and iStock)

Total global commercial real estate investment reached $1.8 trillion over the past year, a record amount.

New York City once again led the way, with more money poured into real estate than any other city, according to a new Cushman & Wakefield global capital market report of the top 50 cities.

But other metro areas are catching up.

While New York saw $49.6 billion invested from June 2017 to June 2018, that was 3.4 percent below the previous year, according to the Cushman report: “Winning in Growth Cities.”

Los Angeles ranked second with $40.7 billion, which represented a 4.8 percent gain over the previous year.

L.A. was the strongest industrial market, according to the report. Roughly $9 billion was spent there, up 21.4 percent from the year before. The industrial market in L.A. is incredibly tight, thanks in part to its strong consumer base and access to the ports of Los Angeles and Long Beach, the two largest in the world.

Rounding out Cushman’s top five worldwide were: London ($35.4 billion, which was 12% higher), Paris ($34.6 billion, which was 42% higher) and Hong Kong ($32.5 billion, which was a whopping 67.9% higher).

The total amount of global investment excludes development sites.

New York’s retail sector actually grew nearly 31%, to $7.4 billion, according to the report. That tied it with L.A. for the second highest investment behind Hong Kong. But there are reasons why New York’s retail sector probably isn’t celebrating. A recent Douglas Elliman survey of Manhattan found that 20 percent of storefronts were vacant.

Chicago, meanwhile, camel in at No. 10 with $18.5 billion, representing a 7.2% increase from last year. That was helped by the sharp rise in industrial investment, up 41.4% to $4.8 billion. Retail investment dropped, however, by about 20% to $2.5 billion.

Miami, which came in at No. 20 with $11.3 billion, saw a 20.4% drop in total investment from the previous year.

L.A saw similar dollar figure investment in the retail sector, up 51 percent year-over-year, and a drop in office investment of 9.2 percent to $12 billion. All cities outside the U.S in the top 10 saw double digit percentage growth in investment. Investors spent $34.6 million on real estate in Paris and $32.5 million in Hong Kong — growth of 42 percent and 68 percent, respectively — putting them behind London at 4th and 5th in the world. Of all cities in the top 10, Hong Kong saw the most significant growth and one of the few to see growth across all major sectors of the market: retail, office, and industrial.

From left: 246 Spring Street, Felix Sater, and Donald Trump (Credit: The Dominick Hotel and Getty Images)

According to Felix Sater, who built the Trump Soho condominium tower in Lower Manhattan and partnered with President Trump on several other projects, Trump didn’t lose sleep over where the money to build his branded properties came from.

“I would show him a deal and he’d say ‘let’s go,’” recalled Sater, who once occupied an office down the hall from the future president in Trump Tower. “The due diligence part was kind of light.”

At a panel hosted by The New Yorker magazine on Saturday, where he shared the stage with attorney Michael Avenatti and journalists Adam Davidson, Ruth Marcus and David Barstow, Sater shared some insights into the president’s relationship with Russia.

Trump has been under scrutiny for his ties to Russia’s President Putin and for his lukewarm response to Russian government’s efforts to influence the 2016 U.S. presidential election. Sater acknowledged that Trump has an affinity for Russian investors, but according to him the reason is mundane. “Donald Trump loved Russian buyers for one very simple reason: their checks cleared, and quickly,” Sater said.

Wealthy Russians, meanwhile, were drawn to Trump properties because of their “opulence,” “over-the-top” design, and the president’s celebrity. Buying at a Trump property “became a status symbol: I have arrived,” Sater said.

Asked if money was laundered through Trump properties, Sater replied “yes and no,” pointing to his Trump Soho co-developer Tamir Sapir as an example. “He made his money, when the Soviet Union collapsed, in the oil business. Rightly, wrongly, stole it, deserved it, didn’t deserve it… he took all that money and invested it in New York real estate,” Sater said of the late Sapir. “By the time he invested with us — he put $300 million into the building — the concept of ‘was this money dirty or not’… If we go back the Roosevelts made all of their money in the drug business, in China, in opium. So I mean how far back do you go to look at the money?”

Sater’s Bayrock Group built Trump Soho in partnership with the Sapir Organization and leased the Trump name for the property. Trump hired him as a “senior adviser” in 2010 and gave him a Trump Organization business card. That year, the three companies were sued for allegedly lying about sales at trump SoHo. Sater tried to broker a Trump-branded real estate development in Moscow in 2015, while Trump was running for president.

A 2017 New Yorker investigation by Davidson unearthed evidence of potential money laundering at another Trump-name property, in Azerbaijan, but Sater dismissed the suggestion that the president was in on the game. “There were some pretty hairy characters involved. Did they use laundered money? I would guess yes,” Sater said. “Was Donald Trump involved with helping them launder the money? I don’t think he was involved, I think he just didn’t care.”