Eddie Murphy (Credit DeCaro Auctions International, Getty Images)

A California home once owned by funny man Eddie Murphy has sold for $5.5 million, almost half of its original asking price — and that’s not a joke.

The Granite Bay home sold through auction to an unidentified buyer, the Los Angeles Times reported. It listed on the Multiple Listings Service in May for $10 million.

Located at Vista De Lago Court, in Northern California, the mansion spans 12,600 square feet, complete with 10 bedrooms and 10 bathrooms. There’s also a 5,200-square-foot guest house, gym, swimming pool and sports court on the property.

Amenities include a game room, movie theater and “Shrek”-themed bedroom.

Murphy, an actor and comedian, lived in the 2.5-acre estate with his ex-wife, Nicole Mitchell Murphy. They sold the home in 2007 for $6.1 million, property records show.

Another home owned by Murphy — and pop icon Cher — is also being shopped around. The Beverly Hills mansion re-listed for $69 million in January, down from its original ask of $85 million in 2016. The compound includes a 20,000-square-foot main house and 7,000-square-foot guest house.

The comedian is best known for his roles in “Saturday Night Life,” “The Nutty Professor,” “Shrek” and “Trading Places.” [LAT] – Natalie Hoberman

SLS Marina Beach rendering and Related Group founder Jorge Pérez (Credit: The Related Group)

Related Group launched pre-construction sales of units at a beachfront condominium development in Mexico.

Miami-based Related is developing SLS Marina Beach in Cancun in a partnership with hospitality company SBE and local developers U-Calli and Immoblia.

Expected to open for occupancy in December 2021, the 20-story condominium will have 104 units with two-, three-, four- and five-bedroom floor plans priced from $500,000 to $1.5 million.

Prices for three penthouses with private rooftop terraces range from $1.9 million to $2.2 million.

Buyers will have private-elevator access to all the units at SLS Marina Beach. Each unit will have floor-to-ceiling windows and glass walls, walk-in closets, marble floors, kitchens equipped with Italkraft appliances, and bathrooms with imported-stone vanity tops and European cabinetry. New York-based Meyer Davis designed the interiors.

Common-area amenities include a fitness center, catering services, a theater room, a play room for kids and a business center.

The development site of SLS Marina Beach is in a gated community called Novo Cancun, where residents have access to tennis courts, swimming pools and a marina. Novo Cancun is next to a shopping center that opened in 2017 and an 18-hole, par-72 golf course designed by Tom Weiskopf.

The site is near two other condominiums that Related and SBE have developed: SLS Hotel & Residences Cancun, where 99 percent of the units have been sold, and SLS Harbour Beach, which is 80 percent sold out.

Residents of SLS Marina Beach will have access to Ciel Spa at the neighboring SLS Hotel & Residences Cancun.

Related and SBE have worked together on 10 developments in the United States, Mexico and Argentina, including two in Miami that opened this year: SLS LUX Brickell and Hyde Midtown. [Forbes] –  Mike Seemuth

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More than three quarters of U.S. homes on the market will sell below the asking price in the first quarter of 2019, according to a national forecast by Knock, a company that helps people sell and buy homes.

Knock predicts that 77 percent of all U.S. homes will sell below the asking price in January, February and March, compared to 62 percent so far in 2018.

In Miami, for example, the average home will sell 6.8 percent below the original asking price in the first three months of 2019, according to Knock’s forecast.

Knock’s national forecast is based on its analysis of 483,843 active listings in 45 metropolitan areas during November, and the company says long-duration listings often result in sale prices below asking prices.

According to the analysis, among all U.S. homes sold in November, 92 percent of those listed for more than two months sold at prices below the original asking price.

Miami homes last year were on the market an average of 85.08 days and sold at prices that were, on average, 4.37 percent below the asking price – the longest average listing duration and biggest average discount from the asking price among all 45 metropolitan areas that Knock analyzed.

Knock may benefit from its own forecast. Customers pay the company a fee to “trade in” one home for another, so research showing that most homes sell below the asking price may encourage more homeowners to sell through Knock rather than listing their property with a real estate agent. [Inman] – Mike Seemuth

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If you want to make an offer for a home, you are less likely to face a competing bid than a year ago, according to Seattle-based brokerage firm Redfin.

Homes listed for sale in some metropolitan areas still attract multiple competing bids, but a cool-down in the housing market has reduced competition for listed homes in most parts of the nation, Redfin reports.

The brokerage firm says 32 percent of its offers to buy U.S. homes on behalf of clients faced one or more competing bids during November, down from 45 percent during the same month last year.

In Miami, for example, 19.8 percent of Redfin’s offers to buy homes faced at least one competitive bid in November, down from 31.4 percent in November 2017.

Philadelphia was the only U.S. metropolitan area where a significantly larger percentage of Redfin offers faced competition in November (36.5 percent) than in November 2017 (30 percent).

The 32 percent share of Redfin offers that faced competition in November was the lowest percentage since the brokerage firm began analyzing bidding competition in 2011.

But some areas of the nation are still hotbeds for bidding battles over listed homes.

The zip codes with the most competitive bidding for listed homes are 94602 in Oakland, California; 20000 in Washington, D.C., and 92870 in Orange County, California. At least 85 percent of Redfin offers in these zip codes faced competition in the three-month period that ended in November. [Redfin.com] – Mike Seemuth

A family business with ties to President Trump listed a spec home about two miles from Trump’s Mar-A-Lago Club in Palm Beach with a $44.5 million asking price.

Chris Deitz of William Raveis Real Estate is the listing agent for the island home that Columbus Ohio-based Schottenstein Real Estate Group is building without a buyer.

Schottenstein Real Estate paid $12.15 million in 2016 for the home-construction site at 520 Island Drive on Everglades Island, located in the Intracoastal Waterway just off the main island of Palm Beach.

Corey Schottenstein, a partner of Schottenstein Real Estate, told the Wall Street Journal that proximity to the president’s Mar-A-Lago resort may be “an extra attraction” to the 13,100-square-foot home, the largest ever built on Everglades Island.

Schottenstein also told the Journal that he and his brother Brian served during the 2016 presidential election as electors from the state of Ohio at the request of the Trump campaign. Schottenstein said his family knows President Trump personally and his parents are club members at Mar-A-Lago.

Schottenstein Real Estate is still in the construction phase of its six-bedroom spec home project on about an acre of land spanning Everglades Island, with docks planned on each side.

The home will feature a temperature-controlled wine room, a gym with a wall made of living moss, a terrace on the roof and a swimming pool that curves around the rear of the house.

The new-home project advanced after three attempts to win approval from the Palm Beach town government’s Architectural Commission.

Modern homes built on speculation are rare in Palm Beach, Schottenstein said in an interview with the Journal, and for buyers in that market, his company has wanted to be “one of the only games in town.” [Wall Street Journal] – Mike Seemuth  

Rendering of 285-unit Boynton Beach senior housing development that Trez Forman is financing.

Trez Forman Capital Group loaned $4.9 million for the acquisition of a site for senior housing development in Boynton Beach.

The developer will use the loan to finance acquisition of a 15-acre site on the northwest corner of Flavor Pict Road and Jog Road in Boynton Beach, according to a press release by Trez Forman.

The Palm Beach County Planning Department and the county’s Zoning and Building Department recently approved the developer’s plan to build a 285-unit facility there.

The facility would have 192 independent-living units, 53 assisted-living units and 40 memory-care units.

“The senior housing category continues to perform well and attract significant investor interest,” Brett Forman, president and CEO of Trez Forman said in a prepared statement. “The demand should remain strong thanks to an aging baby boomer population and solid housing market.”

Trez Forman is a joint venture formed in 2016 by Palm Beach-based Forman Capital and Trez Capital Group, a leading Canadian commercial mortgage lender based in Vancouver. – Mike Seemuth

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At the Montage Kapalua development in Maui, prospective buyers can arrange four-night stays — complete with private dinners and spa treatments — before deciding to take the plunge on a million-dollar (or more) house.

Amid the market slowdown, these trial runs are becoming more common among those shopping for a second home — or a site to build their dream abode, Bloomberg reported. Sellers are hoping the lavish sojourns will convince buyers to stay for good.

“For this crowd, time is precious,” Tina Necrason, vice president for residential at the hotel management company Montage International, told Bloomberg. “We feel that if they can make this commitment of time, they are serious about buying.”

Jeff Heilbrun — director of sales at the Snake River Sporting Club in Jackson, Wyoming — said about about 20 percent of the buyers stayed before they bought homes or homesites. Prices in the development range from $800,000 to $3.25 million.

Before the housing crisis, wealthy buyers often bought second homes sight unseen, the report said. But now, as they have more choices and have started to think of resort homes as long-term investments for their families, prospective buyers are taking their time.

But, given sellers’ targeted buyer pool of high-net-worth individuals, the short stays can cost potential buyers thousands.

The Montage program, for example, charges between $500 to $2,000 per night, while a “guest visit” at Timbers Resorts’ Kiawah Island in South Carolina costs $1,200 a night. Sales teams said they charge hefty fees to ensure prospects are legitimate.

“If you don’t charge anything and you don’t vet, you get what we call ‘speeders’—since they speed right past the sales gallery,” said Greg Spencer, CEO of Timbers. [Bloomberg] — Meenal Vamburkar

Millennial homeowners want big houses with easy-access showers and loads of technology, making them not that different from baby boomers.

Walk-in showers are popular with both age groups, as they make bathrooms look appealing and accessible, and both groups are also interested in smart home technology, according to MarketWatch.

Size is the main difference between the two age groups, as millennials are hoping to land larger homes to accommodate children and growing families, while baby boomers are starting to downsize their living quarters.

Other features both groups look for include large kitchens and big backyards. Although millennials seem to be buying homes at a slower rate than prior generations, they are still influencing the market. In 2017, millennials were responsible for injecting about $514 billion into the U.S. housing market. [MarketWatch] – Eddie Small

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Greenville, South Carolina, wants to be the next Portland, Oregon, aka the capital of the cool and artsy.

The southern town began attracting artists in 2005, with the introduction of an annual, three-day festival called Artisphere. The arrival of well-established artists in the former milltown coincided with a gradual growth in real estate prices, with the average price of homes sold since 2015 increasing by 21 percent, the Wall Street Journal reported. According to the Greater Greenville Multiple Listing Service, the number of homes with a price tag of at least $1 million has tripled during that time.

But home prices haven’t reached the levels seen in cities like Boston and San Francisco. The most expensive house currently listed is a five-bedroom, 12,558-square-foot mansion for $6.75 million. Still, a lack of inventory has also led to frequent bidding wars. According to the local MLS, 36 percent of all homes on the market are either new or haven’t been built yet.

“Agents are trying to keep listings in-house in their own offices before others hear about them,” said Lisa DeLuca Alexander, owner of Del-co Realty Group. “Buyers have to come in over asking [price].” [WSJ] — Kathryn Brenzel

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Home sales nationwide fell in November at the fastest rate in two years while the number of homes listed for sale increased at the fastest rate in three years, according to a report by Seattle-based brokerage firm Redfin.

“The tide has turned. Sellers are now competing for buyers, but they haven’t all realized it yet,” Redfin chief economist Daryl Fairweather said in prepared remarks.

“Sellers holding out for high prices are contributing to declining home sales and growing inventories,” he said. “We see few signs that buyers are likely to reward their patience.”

Home sales in November dropped 8.3 percent from November 2017 while the number of homes listed for sale last month increased year over year by 4.9 percent, Redfin reported.

Interest rates for mortgage loans were 4.9 percent last month, compared to an average of 3.9 percent from 2012 to 2017, and the higher cost of borrowing may be weighing on home sales and sale prices.

Redfin reported that the median sale price of U.S. homes sales rose to $298,800 in November, up 3.3 percent from November 2017 – the third consecutive month of annual median-price growth under 4 percent following 77 consecutive months of growth over 4 percent. [Redfin.com] – Mike Seemuth

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Paris-based LVMH, a luxury products company that owns the Louis Vuitton and Christian Dior fashion labels, agreed to acquire London-based Belmond and its portfolio of high-end hotels.

The deal reflects a belief at LVMH that “the future of luxury is in luxury goods and luxury experiences,” Jean-Jacques Guiony, the finance chief of LVMH, told stock analysts during a conference call.

LVMH, which acquired the Bvlgari hotel group in 2011, agreed to pay $3.2 billion for Belmond.

Belmond is the owner, co-owner or manager of 46 luxury hotels, restaurants, and train- and river-cruise properties. Among its best known hotels is the Belmond Cipriani Hotel in Venice, Italy.

Belmond’s properties also include the only hotel within the Machu Picchu citadel in Peru, the Cococabana Palace in Rio de Janeiro and Hotel Spendido in Portofino, a seaside village in northern Italy.

In a research note, analysts at Berenberg Capital Markets said the LVMH acquisition of Belmond would be “consistent with its long-term strategy focused on offering the consumer a full spectrum of luxury experience.”

LVMH agreed to pay $25 per share for Belmond, or 40 percent more than Belmond’s closing price on Thursday. The acquisition is expected to close in the first half of 2019.

The price LVMH agreed to pay is 22.9 times recent earnings from operations at Belmond, according to analysts at RBC Capital Markets.

Although the price is “optically high,” RBC reported, “Belmond owns a unique portfolio of trophy real estate assets that will allow LVMH to increase its exposure to experiential luxury.” [Reuters] – Mike Seemuth

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The First Presbyterian Church of Miami faces a $7.1 million tax bill because the Miami-Dade County Property Appraiser claims the church forfeited its religious exemption by leasing part of its property to a for-profit school.

Attorneys for First Presbyterian Church filed two lawsuits alleging the county property appraiser has challenged the church’s religious exemption from property tax because of the high assessed value of its property.

The church is located on a 3.4-acre waterfront parcel at 609 Brickell Avenue. The county property appraiser assessed the 2018 value of the church property at $66.3 million and estimated its market value at $85 million.

The church’s parking lot along Biscayne Bay, which measures almost two acres, is zoned for a building as tall as 48 stories.

The church’s $7.1 million property tax bill includes a current bill of $509,526 for 2018 and $6.5 million, including interest and fines, for the years from 2009 to 2017.

Florida Statute 196.196 allows exemptions from property tax if a property is used mainly for charitable, literary, religious or scientific purposes.

The church has leased part of its property for Key Point Christian Academy since 2008. The school is operated by a five-year-old company called International School of Brickell LLC.

According to the website of Private School Review, Key Point Christian Academy has 45 teachers and 178 students in kindergarten through eighth grade, and annual tuition ranges from $15,850 to $16,185.

A spokesperson for the Miami-Dade Property Appraiser said the appraiser’s investigation of the church started after an anonymous tip was submitted via the county’s website.

Founded in 1896, the First Presbyterian Church of Miami is the city’s oldest organized congregation. Industrialist Henry Flagler paid for construction of the church at its original location, the corner of Flagler Street and Southeast Third Avenue in Miami.

The church was built at its current location on Brickell Avenue in 1949 with some of the original stained-glass windows and pews. In 2003, the municipal government of Miami designated the church as a historic site, which prevents demolition or relocation of the building. [Miami Herald] – Mike Seemuth

Edgardo Defortuna(Credit: Ocean Drive Magazine)

Developer Edgardo Defortuna faces three lawsuits alleging he cheated small sources of project financing and advanced a condo development by blocking the sale of an adjacent property.

Unless Defortuna settles first, a Miami-Dade Circuit Court judge will decide on Monday whether to order an immediate trial in a case brought by three plaintiffs.

Capital Building, Florida Beach Investment and Spartan Lending allege that Defortuna lied when he claimed a big loss on his Jade Ocean condo development in Sunny Isles Beach while paying fat fees to corporate affiliates under his control.

In an email statement to the Miami Herald, Defortuna said this lawsuit “is completely without merit, and I look forward to the date that the court dismisses these false and unsubstantiated claims, once and for all.”

Capital Building and Spartan Lending each loaned $250,000 to the Jade Ocean project, and Florida Beach made a $500,000 equity investment. But they claim they were told that Jade Ocean was unprofitable, and they never recovered the money they put into the project. Each plaintiff seeks three times the money they put into Jade Ocean as damages, plus accrued interest.

In their lawsuit, the three plaintiffs allege that Defortuna made “preferential” payments of interest and principal to companies controlled by his Fortune International Group. For example, Fortune paid one of its affiliates the principal amount of a $7 million loan to the Jade Ocean project plus “substantial interest.” Fortune also paid “inflated” fees and commissions to an affiliated management agency and sales group for their work on the Jade Ocean project.

The three plaintiffs also claim that Coral Gables-based accounting firm HLB Gravier produced a misleading audit and fake financial reports showing that the Jade Ocean project lost about $63 million. The plaintiffs’ own analysis shows the project generated a $100 million profit, close to the developer’s projected profit of $105.7 million in a prospectus.

In a separate lawsuit, another lender to the Jade Ocean project, Iver Invest and Trade, claims that Defortuna defaulted on a $2 million loan with an unpaid balance of $1.5 million, plus accrued interest.

Fortune International Group’s law firm Coffey Burlington has filed a motion to dismiss Iver’s lawsuit, claiming the lender waited too long to sue. A hearing on the motion is scheduled for January.

In a third lawsuit, the owners association at the Tropicana Condo in Sunny Isles Beach alleges that Defortuna and a partner blocked a sale of all 48 units at the Tropicana to advance their development of a taller condominium on an adjacent site.

According to the lawsuit, Defortuna formed a partnership with two other defendants, Chateau Group and its principal Manuel Grosskopf, to build a 52-story condominium under the Ritz-Carlton brand next to the nine-story Tropicana Condo.

The lawsuit alleges that the developers arranged for straw buyers to acquire five of the 48 units at the Tropicana Condo, just enough to vote against and block a deal to sell the entire Tropicana building for $115 million.

Glen Waldman, an attorney for the Tropicana Condo owners association, told the Miami Herald that Defortuna and Grosskopf arranged for the unit purchases by straw buyers because they were promising potential buyers of units on the upper floors of the Ritz-Carlton condominium that they would have unimpeded views of the ocean and beach to the south, where the shorter Tropicana building is located.

While acquiring condos through straw buyers is legal, Waldman said the inability of Tropicana owners to sell their units to a developer prevented them from collecting about $2 million each. [Miami Herald] – Mike Seemuth

Boynton Beach Mall (Credit: Sun-Sentinel)

A rezoning of the Boynton Beach Mall could lead to a mixed-use redevelopment of the property, where a Sears store is scheduled to close after the December holiday season.

The municipal Planning and Development Board in Boynton Beach will consider a rezoning of the 108.3-acre mall property on Monday.

The rezoning proposal, initiated by city staff, would allow the owners to redevelop the mall property for a mix of uses including entertainment, hospitality, office and residential.

Washington Prime Group controls Boynton Beach Mall LLC, which owns most of the 1.15 million square feet of leasable space at the mall. Washington Prime Group didn’t respond immediately to a request for comment from the South Florida Business Journal.

Other owners of property at the mall include Christ Fellowship Church, Dillards, Istar Florida 2015 Cinemas, Macy’s and Regional Enterprises.

A report by city staff noted that the Palm Beach County Property Appraiser cut the appraised value of the Boynton Beach Mall LLC from $46.3 million in 2016 to $33.5 million in 20717 “as the mall’s anchors JC Penney and Sears continued to suffer declining sales.” [South Florida Business Journal] — Mike Seemuth

The Real Deal’s Winter 2018 issue

The Real Deal’s latest quarterly issue is live, and digital subscribers to TRD are getting the first look at what’s inside.

Subscribers now have access to stories including:

– What South Florida’s oversupply of condos could mean for multifamily rents and development
– How the area’s independent brokerages left are holding up and holding out
– The brokerage scene in Boca Raton
– A ranking of Miami-Dade’s top co-working firms
– A look at Miami Beach preservation board drama

Subscribe now to stay one step ahead of the South Florida real estate game.

Non-subscribers will get access to TRD’s magazine stories on Dec. 22.

Country Club Center, rendering of Miramar Tech Center and Lake’s Edge Commercial Park

Wells Fargo and IPD Analytics ink leases at Country Club Center in Aventura

Wells Fargo Advisors and IPD Analytics just inked new leases at the Country Club Center office building in Aventura.

Wells Fargo renewed its lease and relocated to a 14,095-square-foot space on the ninth floor. The full-floor office layout includes balconies.

IPD Analytics is moving into Wells Fargo’s previous space. The company plans to relocate from its headquarters in Bay Harbor Islands and move into the 15,460-square-foot space in the summer. The tenant was represented by Mark Goldstein of Jasper Realty Advisors.

Barrett Wolf of Wolf Co. Real Estate represented the landlord, a partnership between Turnberry Associates and the family-owned Mexican development company Cababie Developers.

The 68,825-square-foot office building at 19950 West Country Club Drive is 100 percent occupied, Wolf said. The landlord intends to renovate the common areas next summer, he said.

SES Networks and UF sign lease deals at Miramar Tech Center

SES Networks subsidiary 03b Networks and the University of Florida’s Warrington’s College of Business are the first to lease space at the recently completed Miramar Tech Center in Broward County.

The 56,710-square-foot, three-story office building saw a total of 13,536 square feet of lease deals, with 03b Networks signing a 7,011-square-foot lease and the business school inking a lease for 6,525 square feet.

Juan Jaramillo of FGI Realty represented 03b Networks and Franklin Street’s Tom Farmer represented the university. Blanca Commercial Real Estate represented the landlord 2995 Monarch Lakes LLC, which is tied to United Data Technologies.

In 2015, the company paid $2.1 million for the 3.7-acre site at 2900 Monarch Lakes Boulevard. It recently relocated out of its headquarters in Doral and moved into a 21,155-square-foot space within the building.

Christ Fellowship inks 24,500 sf lease at Lake’s Edge Commercial Park

Christ Fellowship just inked a 24,563-square-foot office lease at Lake’s Edge Commercial Park in Doral.

The 80,470 flex center at 9000 Northwest 15th Street is 100 percent occupied, according to Stephen Smith of ComReal Companies, which represented the landlord, Lake’s Edge Commercial Properties. Smith also owns an interest in the center.

Christ Fellowship will be replacing a previous tenant, also a worship center. DiGiacomo Group’s Patricia Marquez represented the tenant. The space features a sanctuary, reception area, audio and video mixing room and up to 80 parking spots.

(Illustration by Maciej Frolow)

Tour the Panorama Tower overlooking Biscayne Bay, with its “porte cochere,” poolside cafe, wine tasting rooms, pet spa and home theaters, and you might think that you’re sampling Miami’s latest glitzy condominium offering.

Rising nearly 900 feet, Florida East Coast Realty’s project is the tallest building in the state. But unlike many of the other towers that dot Brickell, the Hollo family’s development firm decided to build rentals. It even tapped Fortune Development Sales, a top condo sales and marketing firm, for the leasing assignment, and targeted trendy and hip Miamians — “Brickellistas.”

Banking on the city’s population growth, its hunger for big corporate tenants and homeownership’s diminishing prominence in the American Dream, FECR and other developers have bet that Miami, like New York, will become a city of renters. They’re building top-shelf product and wooing the prosperous with a playbook they’ve adapted from their condo-building counterparts. But their approach could directly threaten condo investors, who are increasingly looking to generate income by putting their units on the rental market. In Miami-Dade County, nearly 2,200 leases have been signed on the so-called “shadow rental market” so far this year, data from Integra Realty Resources show, up from fewer than 100 shadow rentals in 2014.

In the face of increased competition from rental developers with newer product, a central tenet of buying a unit for investment — renting it out — is being challenged. And while large rental landlords are able to adjust prices in the event of oversupply or a downturn, individual condo owners, dealing with a myriad of fees and taxes, have less wiggle room on pricing, meaning they could be shut out.

“Owning a condo and renting it,” said Manny de Zárraga, the Miami-based co-head of HFF’s National Investment Advisory Group, “is not a great business.”

Apartment therapy

So far, developers’ big bet on luxury multifamily projects seems to be paying off. Panorama is leasing out at rents that range from $2,500 a month for a one-bedroom to over $6,700 for a three-bedroom. More than half its 821 units are leased out, according to Jerome Hollo, president of FECR.

Comparable properties have also done well. Recently built Class A apartments in Miami-Dade saw net operating income grow 74 percent between 2015 and 2017, according to The Real Deal’s analysis of county figures.

That the sector is posting such numbers despite a large supply bump says a lot. Since 2014, more than 20,000 Class A apartment units have come to market in Miami, according to a TRD analysis of data from Integra, which creates residential reports for the Miami Downtown Development Authority. Yet asking rents have only climbed.

“When we went through the last real estate crash, the sales prices of residences went down,” said Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach. “But rentals never did.”

All that supply, however, is expected to eventually push rents down. That’s especially true for Miami because, unlike other cities in the Southeast such as Charlotte or Atlanta, it still lacks giant corporations with their well-heeled workers — RIP Amazon HQ2 — to anchor its rental market. Couple that with foreign and out-of-state condo investors who are now dumping their units on the rental market, and some experts sense that something’s got to give.

Calixto García-Vélez, who oversees FirstBank Florida, said he is barely doing any new construction lending for Class A Miami apartment buildings. On top of the new product coming to the market, the banker said, condo rentals will flood the renter pool, which will temporarily drive down rents. The market will be fine in the long term, he thinks, but as rents drop, so will the bank’s lending activity to this asset class.

“Condos that were for sale are now being put in rental pools,” García-Vélez added.

New data provides a look at just how pronounced this trend is. So far this year, 2,175 shadow rental leases — contracts between a condo owner and tenant — have been signed in Miami-Dade, up 60 percent year over year, according to Integra. The number of condos on the shadow market today would then represent about a fifth of the total units delivered this cycle — nearly 11,200, according to an analysis by ISG Miami of the condo development hotbeds in Miami-Dade east of I-95, Fort Lauderdale, Hollywood and Hallandale Beach.

This could be bad news for condo owners because there are a lot more apartments to compete with these days, said Anthony Graziano, a principal at Integra. In Greater Downtown Miami alone, of the more than 24,000 multifamily units in the pipeline this cycle, roughly 11,000 units have been delivered or are under construction, he said.

And while major rental landlords generally have a fair bit of flexibility built into their pricing and can adjust rents in the face of a spike in supply or other challenges, condo owners — burdened with property taxes, homeowners’ association fees and special assessments — can’t be as nimble, putting them at risk of losing the price-conscious renter.

Condos are clearly more expensive. A conventional apartment is renting out for $2.07 a foot, while a condo rental is leasing at $3.28 a foot, according to MLS and CoStar data compiled by Integra.

For a luxury condo market that reportedly already has a years-long oversupply of inventory, this could produce a mass selloff, some skeptics say, or — at the very least — a steep drop in prices.

“It’s a day of reckoning for [condo] owners,” said Peter Zalewski, a principal with the Miami real estate consultancy Condo Vultures and an investor in the bulk-condo market.

Deal flow

Depending on pricing, demand and ability to build, investors and developers will often toggle between the multifamily and condo asset classes.

While some bankers like FirstBank Florida’s García-Vélez have become more skeptical about funding new Class A-rental projects, developers have found themselves with plenty of options ever since the Federal Reserve relaxed rules on commercial lending this year. Apartments generally cost less to build than condos, allowing for potentially healthier profit margins, said Brett Forman, CEO of Trez Forman Capital Group, a commercial mortgage lender.

“What people fail to realize is that the supply that is being delivered is catching up with demand,” said Peter Mekras of Aztec Group, a real estate investment and merchant banking firm. Mekras believes that much of the forthcoming product will compensate for the post-crisis slowdown in supply, which stemmed from developers’ inability to get financing.

But Jim Costello of Real Capital Analytics feels the Federal Reserve’s move came at the wrong time.

“Money may be coming in on the debt side,” Costello said, “but if the tax burden is so high on developers and it’s hard to find the labor, you can’t build a building with debt alone.”

Lenders on such deals tend to be large banks or insurance firms. In Miami-Dade, Wells Fargo ranked as the top multifamily lender this cycle, with over $500 million in deals since 2014, according to a TRD analysis of large loans.

On the condo side, things are quite different. It took Two Roads Development over a year to land a $138 million construction loan from JPMorgan for Elysee, a 57-story tower it’s building in Miami’s Edgewater neighborhood. Many condo developers beginning construction now are largely self-funding their projects, as is the case with Missoni Baia, an Edgewater project being built by Vlad Doronin’s OKO Group and Cain International, and Okan Group’s Okan Tower, a hotel and condo project planned for Miami’s Arts & Entertainment District. Others have looked to Bank OZK, an Arkansas-based bank that has become the Miami metropolitan area’s most aggressive condo lender, with more than $1.2 billion in construction loans from 2013 through 2017, according to the company’s annual reports. This represented over a quarter of the dollar volume of all condo construction loans made in the area during that time.

Gables Columbus Center is among the crop of rental buildings competing directly with the shadow market.

And while the luxury condo sales market is in a funk, Class A South Florida multifamily properties are still fetching top dollar in the investment-sales market. In July, Gables Residential sold a rental complex called Gables Aventura to an asset management arm of Deutsche Bank for $149 million, or $372,500 per unit. And Related Group hopes that Icon Las Olas, its luxury rental tower in downtown Fort Lauderdale, will fetch at least $500,000 a unit, or $136 million.

That may be because many of the bigger investors aren’t necessarily sprinting after fat returns. Institutional players, such as Mill Creek Residential or Greystar Real Estate Partners, tend to make decade-plus bets and aren’t as impacted by short-term fluctuations in rent.

“They will be patient,” said HFF’s de Zárraga.

A condo by any other name …

In 2013, Miami was experiencing a post-crisis development boom. Luxury condos were launching left and right, especially in Brickell, a corner of Miami that has become a U.S. hub for Latin American financial services companies. Top developers such as Ugo Colombo, Related Group and Swire Properties set their sights on the area for their trophy condo projects. By the end of 2016, Brickell had 17 condo projects with over 5,500 units in the pipeline, according to an ISG report. Many of these units were being sold to foreign investors, some of whom then sought to rent them out on the shadow market.

With condo developers like Jorge Pérez and Jeff Soffer rising to aristocratic status in a city that reveres builders, apartment developers wanted in.

Players such as FECR, ZOM Living and Property Markets Group believed that Miami would become a national economic hub that could command high rents. They sought to create amenity-rich product and corresponding services that would cater to this future market.

Gables Columbus Center, a 200-unit apartment building that was completed in downtown Coral Gables this year, offers a resort-style pool deck, 24/7 concierge, electric car charging station, business lounge and gym. Micah Conn, development director with Gables Residential, said the project, which is about 40 percent leased, is now competing with the shadow condo market.

“We have a professional staff trained at managing and leasing,” he said. “In Miami, there’s a very big investor profile. Getting your toilet fixed or your refrigerator repaired — these kinds of things might take weeks if your owner is out of the country.”

Alex Miranda of One Sotheby’s International Realty has been working and living in the Midtown Miami apartment complex since Joe Cayre’s Midtown Equities, the original developer, completed the first residential building there in 2007. Midtown 6, 7 and 8 (all separate projects) are underway and will add competing rental product to a market with a large condo supply. Consider, for example, that Related Group recently completed the four-tower Paraiso District in nearby Edgewater, bringing about 1,400 new condos to the area.

Inventory is “getting a little bit out of control,” Miranda said, adding that “it’s a lot easier to live as a renter in a rental building.”

The last time a condo building is updated is typically when the developer completes it. Once homeowners’ associations take over, “the first thing they cut is amenities” to keep costs low, Conn added.

“The age of the product gives us the advantage,” he said.

One-night stands

Where condo owners could have a leg up over apartments is in the short-term rental market. The rise of platforms like Airbnb, HomeAway and VRBO has led some investors to ditch traditional 12-month leases and focus on lucrative quickie deals.

Orlando-based ZOM completed Solitair Brickell this summer.

Some developers are emphasizing this opportunity. Aria Development Group and AQARAT are building YotelPad, a hotel and 208-unit condo building in downtown Miami with zero rental restrictions. Buyers there are free to rent their units out themselves, on websites like Airbnb or through the Yotel program. (If they do use the building’s management system, owners would have to commit to a set period of time.)

“It was definitely an intentional differentiating factor,” said David Arditi, a principal at Aria. “It’s something buyers find appealing.”

Sarah Elles Boggs, who works in condo sales at Douglas Elliman, said that end-user buyers are now dominant in the market, and they value the ability to move in quickly after closing. As a result, condos being used as traditional rentals have become trickier to sell.

“I’ve noticed a distinct increase in days on market if it’s a rental and it’s selling to an end user,” Boggs said.

Which is where short-term rentals could come in. At Canvas, a 513-unit condo set to begin closings in January, the market demanded the short-term rental option “from day one,” said Ron Gottesman, a principal at the developer, NR Investments.

NR is allowing furnished units to be rented for a minimum of 30 days at a time. Gottesman said that his main concern with allowing short-term rentals was that Canvas is one of a few dozen condo buildings in Miami to have Fannie Mae approval, and short-term rental activity could affect buyers’ ability to get home loans.

And now that the development is 90 percent sold, Gottesman is focusing on attracting end users, not investors.

“Buyers have their own thoughts about how short-term rentals are going to work,” he said. “They can make a lot of money. [But] I don’t think the buyers understand what it means; it’s intensive management,” he continued, adding that “when the end user is really buying, this is a healthy market.”

Telemundo’s HQ and AVR Realty owner Allan Rose

Telemundo’s new headquarters just sold for $239.1 million to AVR Realty, an investment and development firm based in Yonkers, New York.

Property records show TM Miami FL Landlord LLC sold the 476,000-square-foot headquarters for the Spanish language network, which is owned by Comcast’s NBCUniversal. The seller of the two-building campus at 1 Telemundo Way is controlled by SunTrust Bank’s SunTrust Equity Funding.

Three companies controlled by Allan Rose’s AVR Realty bought the property, which is within the Beacon Lakes industrial park in northwest Miami-Dade County. AVR took over a nearly $185 million loan from Wells Fargo.

Comcast said it would invest more than $250 million into the 21-acre project when it broke ground in February 2016.

The “30 Rock of the South” complex features 13 studios, two digital labs, virtual and augmented reality sets and has space for 1,200 employees with the potential for 1,500, according to the Hollywood Reporter. It opened in April, and houses more than 100,000 square feet of executive offices, the Telemundo Network’s news, sports and entertainment divisions, Telemundo Global Studios, Telemundo International, Universo, Digital Media operations and NBCUniversal International Latin American.

Comcast acquired a majority stake in NBCUniversal in 2011 for $6.5 billion. Telemundo is the second-largest Spanish-language network behind Univision.

Beacon Lakes spans 478 acres and is home to Ryder Logistics, Panalpina and Amazon, among other tenants. The Telemundo lease was among the most valuable leases in Miami-Dade history, Cushman & Wakefield said at the time, but declined to provide a value.

AVR Realty also owns the Marriott Courtyard Convention Center Hotel in downtown Miami and apartment complexes in Davie and Pembroke Pines, according to its website. Nearly a year ago, it paid $69 million for the Boca Raton Marriott at Boca Center.

From top left, clockwise: Christian Lee and Chris Riley, Vice Chairmen of CBRE Capital MarketsHellmann and Worldwide Logistics sells Doral HQ, Bob Chapman and SuperValu, SuperValu and Peter Briger of Fortress Investment Group, and Countyline Corporate Park and James B. Connor

Industrial properties in South Florida were in hot demand in 2018, with the top five industrial sales totaling $478 million, outperforming last year’s $401.5 million.

The increase stems in part from thriving e-commerce and the resulting need for more distribution centers. South Florida’s connection to international markets, like those in South America, in addition to the area’s lack of available land and growing population, are other factors that have helped set top-dollar prices and boost investor interest.

Notable big-ticket purchases came from buyers like Duke Realty, CenterPoint Properties and TA Realty. Here, The Real Deal breaks down the top five sales in South Florida, priced from $43.2 million to $180 million.

Duke Realty drops $180M at Hialeah industrial park

In 2018, Hialeah’s industrial market took center stage when Duke Realty dropped $180 million for Flagler Global Logistics’ 8 million-square-foot Countyline Corporate Park.

The industrial park is the future site of aircraft services company KLX Aerospace Solutions’ new headquarters. It sits on the northwest corner of Northwest 154th Street and and Northwest 97th Avenue.

Flagler assembled the 95-acre site in 2005 for a combined $38.3 million. It’s near the border of Miami-Dade and Broward counties.

Duke Realty bought the first three buildings as part of its first phase, which totals about nine buildings. In all, Duke Realty purchased 1.2 million square feet.

The largest warehouse spans about 500,000 square feet. Other tenants include CGI Windows, which inked a roughly 325,000-square-foot lease at the park.

Hialeah emerged as one of the top industrial submarkets in Miami-Dade. About half of all industrial transactions in Miami-Dade County in the second quarter took place in Hialeah, according to a CBRE report.

CenterPoint pays $95M for SuperValu distribution site

CenterPoint Properties, a major investor of industrial properties in the United States, added to its South Florida portfolio in 2018.

It made a $95 million acquisition of a 778,816-square-foot distribution center leased to a SuperValu wholesale store in Pompano Beach. Fortress Investment Group was the seller. It bought the site at 1141 Southwest 12th Avenue in 2006 for $51 million.

Built in 1973, the 51-acre property features 120,000 square feet of cooler and freezer space, 179 trailer parking positions and extra land for development in the future.

The deal comes on the heels of United Natural Foods’ purchase of SuperValu for $2.9 billion. In April, Supervalu announced it would be selling eight of its facilities, including one in Pompano Beach.

TA Realty pays $92M for industrial portfolio

The third priciest deal highlights a trend of industrial portfolio sales of smaller warehouses.

In September, TA Realty bought a 10-parcel industrial portfolio in Medley and Hialeah Gardens for $92.25 million from Cofe Properties.

Records show Cofe paid $48.3 million for the 932,500-square-foot portfolio in 2013.

Industry insiders say spaces in the 10,000-square-foot to 25,000-square-foot range are desirable, as competition for industrial space is expected to push rental rates for such buildings closer to rates for new construction.

Fortress pays $66M for Pompano Beach SuperValu

Yet another SuperValu distribution center sale made the list.

Fortress Investment Group paid $66.4 million for a 769,000-square-foot SuperValu facility in Pompano Beach, as part of a $483 million national portfolio deal.

The trade is part of a 20-year sale leaseback agreement with SuperValu, with a five-year renewal option at the facility at 1141 Southwest 12th Avenue. Rent is expected to total about $31 million in the first year of the lease, according to SuperValu’s website.

The seller, Associated Grocers of Florida, was acquired by Supervalu for $180 million last year. Records show the facility was built in 1973 and last traded for $51 million in 2006. It sits on the 51.5-acre site just west of North Andrews Avenue and north of West Mcnab Road.

RMR Group pays $43M for Hellmann Worldwide HQ

In another sale leaseback deal, Industrial Logistics Properties Trust bought the North American headquarters for Hellmann Worldwide Logistics in Doral for $43.1 million.

The industrial real estate investment trust paid about $180 per square foot for the 240,700-square-foot property at 10450 Northwest 41st Street. Hellmann Worldwide plans to lease the property for a minimum of 10 years.

The German company is one of the largest full-service logistics companies in the world. The buyer, Logistics Properties Trust, is a subsidiary of Newton, Massachusetts-based The RMR Group, which is an alternative asset management firm.

Hellmann Worldwide Logistics had owned and occupied the property since 1996.

Marsha Soffer and 801 Southwest 27th Avenue (Credit: World Red Eye)

A company tied to Marsha Soffer just sold a Chase Bank branch near Little Havana for $7.5 million.

Soffer’s company, Chandler Chase LH, sold the 30,928-square-foot property at 801 Southwest 27th Avenue for $242 per square foot to Parkwood Plaza Realty Holdings LLC.

Marsha Soffer, who is the daughter of Aventura-based developer and Turnberry Associates founder Donald Soffer, bought the Chase Bank in 2012 for $5.96 million, property records show.

The property sits just down the road from the heart of Calle Ocho in Little Havana, a popular tourist destination that is the historic home to many Cuban exiles. The Chase Bank totals 5,266 square feet and has a lease until 2031, according to Loopnet. The lease includes 10 percent rent increases every five years during the initial term and 3 percent increases at each of the renewal options, according to Loopnet.

Bank branches throughout the country are closing down and the buildings are being converted for other uses due to the increasingly popularity of mobile banking. Almost 9,000 branches closed this decade, the Wall Street Journal previously reported.