Trump Tower and Donald Trump (Credit: Getty Images)

From the New York website: Condominium sales at Trump Tower have surged since Donald Trump announced his run for president in mid-2015, and the tumultuous early days of his administration don’t appear to have slowed the momentum.

The number of annual apartment sales at Trump Tower jumped to 22 in 2016, according to StreetEasy analyzed by The Real Deal. That’s up from 15 in 2015 and 11 in 2014, even as luxury sales fell across the city (see chart). Winter is normally a quiet time in the condo market, but as of Monday there were 21 active sales listings at Trump Tower, Streeteasy data show.

The seller of the tower’s most expensive current listing, a 58th-floor combination pad asking $11 million, hails from Mexico. Construction heir Elias Sacal bought his two apartments in January 2015, six months before Trump announced his candidacy. He listed them for sale again little more than a year later, in March 2016. Sacal’s broker, Rana Williams of Keller Williams NYC, declined to comment on whether politics played a role in his decision to sell. The Mexican government has repeatedly clashed with the Trump administration over its plans to build a wall on the border separating the two countries.

On-Line Residential, a listings platform, recorded six new condos listed for sale in January and February of 2017 — the highest January/February total since at least 1997. OLR doesn’t record all listings, and it’s likely that previous years have seen more units hit the market that weren’t tracked by the system. Still, OLR’s numbers seem in line with the general trend over the past two years.

Coincidentally or not, mid-2015 marks a watershed in sales activity at the building. Just 11 units sold in 2014 and the following year started similarly slow, with five sales recorded in the first half of 2015, according to Streeteasy. But in the second half of the year, after Trump used the building’s ostentatious lobby to announce his run on June 16, sales surged, bringing the annual total to 15.

Brokers active at the building insist Trump’s politics have no relation to the uptick at the building. Douglas Elliman’s Tal Alexander, who recently sold a one-bedroom apartment on the 32nd floor, said politics or security never came up in his conversations. It was initially listed for just shy of $3 million in January 2016 by Somerset Residential Real Estate’s Michael Balanevsky and the Alexander team. The brokers reduced the asking price twice, ending up at $2.195 million in May. The property sold at that price last week.

The price drop was simply a matter of initial inflated expectations, Alexander said, and that demand for the unit was strong. “We all know 56th and 5th Avenue,” he said. “For a Midtown buyer it doesn’t get any more prime than that.”

Echoing a trend seen at other high-end condo buildings across the city, eight of the 21 current Streeteasy listings have seen their asking prices chopped, and none raised their prices. A two-bedroom duplex on the 37th and 38th floors, for example, listed for $6.9 million in August 2015, now wants $5.995 million. In January, Bloomberg reported prices at the building’s rental units fell last year, in part because residents have to deal with protesters, metal gates and the Secret Service now that they share a home with the first family.

With prices falling across the city, the cuts at Trump Tower are hardly enough to paint the picture of a building that’s falling out of favor with wealthy buyers. The building’s average sales price per square foot even increased slightly between 2015 and 2016, in part because more pricey apartments on higher floors sold (see chart). In other words: there still seems to be considerable demand for apartments in the tower.

“If you got some large, renovated apartments with views, units will trade if they are priced right,” said Donna Olshan of Olshan Realty, who publishes a weekly report on Manhattan’s luxury apartment market. “This goes for any building.”

Town Residential’s Debra Stotts, who has sold several Trump Tower apartments, said sales at the building are going “really well.” While units in new Midtown condo towers come with sky-high asking prices, Trump Tower offers fancy units with similar views at lower prices, she claimed. This kept the deal volume up even as sales in newer buildings slowed or halted altogether.

“There’s going to be those who want to be there,” Stotts said, “and those who don’t want to be there.”

Bill Shanahan

From the New York website: China supplanted Canada for the first time last year as the most active foreign investor in U.S. real estate. But so far this year, some Chinese institutional investors such as insurance companies have been silent, and the yuan’s appreciation against the dollar could shift Chinese buyers toward markets in Asia.

But if the big guns from China pull back from the United States, there could be investors from Germany, Korea and Japan game to fill the void. Investors from those countries may be able to take advantage of arbitrage between overseas and local interest rates and make big-ticket deals, according to CBRE.

“We think the amount of Chinese investors that falls off may be enhanced by German investors and Japanese investors, in particular, as negative interest rates are driving capital out of those countries,” Spencer Levy, head of research in the Americas for CBRE, said Tuesday afternoon as the company released the results of its annual investor survey.

Bill Shanahan, co-chair of CBRE’s capital markets group in New York, said that’s exactly what he sees with Korean investors. Last year a group of South Korean insurance firms invested roughly $220 million in mezzanine debt for AXA Financial’s 787 Seventh Avenue.

“Korea has a 200-basis point negative arbitrage on currency,” he said. “One of the things they do is they borrow heavily here . . . because it’s a hedge in U.S. dollars.”

In CBRE’s survey of investors, about 40 percent said they planned to buy either the same amount or more property this year. About 30 percent of respondents said their largest motivation will be seeking yield spreads.

In September, North Carolina-based apartment REIT Bell Partners teamed up with the German firm HANSAINVEST to create a $1 billion fund focused on multifamily properties in the U.S.

And Shanahan said Germany’s Union Investment Real Estate, which entered the New York hotel market late last year with the purchase of Courtyard the New York Downtown Manhattan/World Trade Center for $206 million, is poised to invest more overseas.

“About two months ago, Union, probably for the first time in six or eight months, opened up one of their funds,” he said. “They got $800 million in a month and had to shut the gates because they can’t place the capital. They’re promising all their investors returns. So if you have all this cash laying around and it’s in a German bank – you’re basically getting no return – it’s a drag on the fund.”

“It’s also the same for Korea and it’s also the same for Japan,” Shanahan added, who said Japanese buyers are becoming more interested in New York City multifamily properties. “Rates in those home countries are either negative or they’re very, very low.”

Late last month, Japanese trading conglomerate Mitsui & Co. acquired a 20 percent stake in Los Angeles-based real estate investment firm CIM Group. Another Japanese conglomerate, ASO Group, made a splash by purchasing one of L.A.’s most notable properties, the Google-leased Spruce Goose hangar in Playa Vista.

Rendering of MiamiCentral (Credit: SOM/Smilodon CG)

Brightline’s Miami-to-Orlando train service won’t be up and running until at least the third quarter of 2019, about two years later than initially planned. 

While Miami, Fort Lauderdale and West Palm Beach are slated to open this year, ongoing litigation tied to financing plans for the Orlando station has halted progress for the last leg of the passenger rail, between West Palm and Orlando.

Martin and Indian River counties are trying to block development of Brightline into Central Florida, alleging that the U.S. Department of Transportation violated the National Environmental Protection Act by approving the issuance of $1.75 billion in tax-free bonds to finance All Aboard Florida’s rail service development.

Michael Reininger, former Brightline president and now executive director of its parent company, Florida East Coast Industries, told the South Florida Business Journal that the West Palm-to-Orlando portion is lacking permitting and financing standing between now and about 30 months of construction.

All Aboard estimates the total cost of both phases will exceed $2.9 billion. Phase 1 includes Miami, Fort Lauderdale and West Palm Beach, while phase two would extend to the city of Cocoa, near Cape Canaveral, and west from Cocoa to Orlando.

Brightline’s new CEO, Dave Howard, will oversee the next transition from construction to Brightline’s openings later this year. [SFBJ] – Katherine Kallergis

Donald Trump and Xi Jinping (Credit: Getty Images)

From the New York website: China granted 38 trademarks to Donald Trump, in a process that one observer called unusually speedy and that could raise flags over preferential treatment for the U.S. president.

Trump’s lawyers applied for the trademarks – which would allow Trump and his family to develop a line of branded businesses including hotels, insurance, escort services and other business lines – in April 2016. They received preliminary approval in late February and on Monday, Bloomberg reported. The question is whether Trump received these approvals faster than other companies would. That, critics say, could equate to a financial gift from a foreign government, which is a violation of the U.S. Constitution.

“For all these marks to sail through so quickly and cleanly, with no similar marks, no identical marks, no issues with specifications — boy, it’s weird,” Dan Plane of Hong Kong-based intellectual property consulting firm IP Services told Bloomberg.

But Spring Chang, a Beijing-based attorney representing Trump, dismissed the suggestion. “I don’t see any special treatment to the cases of my clients so far,” she told Bloomberg. “I think they’re very fair and the examination standard is very equal for every applicant.”

Former White House ethics counsel Richard Painter said that routine trademarks likely aren’t unconstitutional, but “with so many trademarks being granted over such a short time period, the question arises as to whether there is an accommodation in at least some of them.”

Trump’s son-in-law and White House adviser Jared Kushner was in the news recently for his own business ties to China. Before leaving his family real estate company to move to Washington, D.C., he reportedly negotiated the sale of a stake in office tower 666 Fifth Avenue to Chinese insurer Anbang.  [Bloomberg] — Konrad Putzier 

View from Hyde Midtown (Credit: Tamz Photography)

As new condo units continue to come online in 2017, resale pricing in Miami’s urban core is reporting a drop for the first time in eight years.

Greater Downtown Miami’s condo inventory will grow by 3,456 new units this year, the largest surge of new product expected over the next three years, according to the latest Miami Downtown Development Authority report authored by Integra Realty Resources. 

That annual growth is expected to fall after 2017: 2,846 units will be delivered in 2018 and 1,960 units in 2019. Between 2014 and 2019, 12,257 new units will be completed. While that number is high, it’s still significantly less than the more than 21,000 condos that flooded the market between 2004 and 2009, according to the report, which focused on July 2016 to January 2017.

The wave of new inventory has led to a decline in pricing. Existing condos saw a 7 percent decrease in prices in January compared to the year before. “I think we are going to see indexes down another 5 [percent or] 6 percent this year,” Anthony Graziano, Integra Realty principal and the report’s author, told The Real Deal. “I keep telling everyone, don’t wait for ‘the crash.’ Take advantage of the interest rates now.”

New rental product, including the Broadstone at Brickell, which is set to open soon; Melo Group’s Melody tower in the Arts & Entertainment District, and Midtown Five, will bring down rents in older buildings, he said. About 1,000 rental units were delivered in 2016 in the Greater Downtown Miami area and 4,900 units are under construction. Graziano said that relative to other options in Miami-Dade, like new buildings in Dadeland, downtown Miami “is still a good option” for renters.

In 2016, 2,202 condo units were delivered in Miami’s urban core, which is more than half of the condo inventory that’s been delivered since 2012, according to the report. That new inventory included the Crimson, Le Parc, Cassa Brickell, Brickell City Centre, SLS Brickell and the Bond at Brickell.

While the absorption of new units to the Greater Downtown Miami market is slower, preconstruction condo pricing is holding steady. “If you don’t buy today I don’t know how you can complain about the rent three years from now,” Graziano said, citing lower prices at condo projects like Hyde Midtown and Centro.

“If you’re a domestic buyer looking for an urban lifestyle in the heart of Miami, now is a good time to make your move. There is no distress in the market similar to what we experienced in 2007-2009, so IRR does not predict dramatic declines in pricing similar to the last cycle. Pre-construction product pricing is holding up relatively well, with projects that recently delivered closing out their pre-contracted inventory without much fanfare,” Graziano said in the report.

Despite the pipeline of new condo units to be delivered in the next three years, some developers have launched new projects, including Aston Martin Residences in downtown Miami where asking prices exceed $1,000 a foot. But those will likely not be delivered this cycle, the report said. “Many properties that are entering the reservation stage now likely will not break ground this year, and many of the new condo and multifamily proposals that have appeared in recent months will likely be developed in later cycles due to capital constraints (debt and/or equity requirements),” according to Integra Realty Resources.

Brickell City Centre. Inset: Heidar Sadeki

Sometimes, business relationships can take you across the seas. Clarissa Richardson and Heidar Sadeki worked so well with developer Swire Properties in Hong Kong that Swire asked them to work on the $1 billion-plus Brickell City Centre project in Miami. Their Richardson Sadeki firm designed the public spaces for Brickell City Centre’s residential towers, Reach and Rise, and now, is talking with Swire about work on more Miami projects.

The duo met at Princeton University and had already crossed oceans to study. Sadeki grew up in Iran and Richardson in Singapore. Their boutique firm, founded in 1998 and known for modern design, is based in New York City and now has offices in Los Angeles, Hong Kong and Miami.

Sadeki came to architecture from film and takes a cinematic approach to design, focusing on narrative rather than form or proportion. He spoke with The Real Deal about his firm, working in Miami and the notion of “architecture as brand.” The interview has been edited for space and clarity.

Clarissa Richardson

Q. How did Richardson Sadeki start? What drew you to each other?

A. Clarissa and I met doing our master’s in architecture at Princeton. We had rather different backgrounds. Historically, Princeton’s architecture school has been very open to cross-disciplinary dialogue and a conceptual approach. I’d studied cinema in New York at SUNY Purchase, and to date, my knowledge of cinema and pop culture is a more significant influence on my work than architectural history. Clarissa had studied architecture in London.

What drew us together was our projects. Clarissa had designed these kind of “hotel-pods” in the Nevada desert for viewing UFOs, dug into the ground and set at an angle, so when you’re lying in bed, you’re looking into the heavens. I had a project after the First Iraq War for a helicopter-hotel, which had four living pods attached, and you could be dropped off at specific sites for 24 hours to visit war zones.

So, both of us moved away from this classical notion of proportion, what is beautiful and the polemic of taste. We came to look at “architecture as brand.” We now refer to ourselves as creative directors and look at our practice as being somewhere between an ad agency, creative agency and architecture. Our One Tomato unit even designs websites and logos for projects.

Q. What distinguishes your design from other firms?

A. We use a vocabulary that is minimalistic and modern, but we don’t cut and paste. Each project talks to a different cultural construct. We look at culture like a filmmaker does; we interact with it and critique it.

In Hong Kong, for instance, the Chinese culture is into light, happy colors — instead of evening. In one of my early projects there, an extremely expensive three-bedroom apartment, I decided to rip out one bedroom, make a very large master bedroom and essentially, design a bachelor pad. My colors were grays and blacks, not yellows and oranges — colors that might work well in New York or London. There was a lot of resistance, that it was too dark and morbid. Actually, the apartment sold in record time and for more than Swire expected.

Q. How does designing for Miami differ from Hong Kong or elsewhere?

A. There are elements in common between Hong Kong and Miami. They’re both transient cities and hubs for countries nearby. Both also have a presence of conservatism and a metropolitan culture that creates an interesting tension.

In pop culture and cinema, Miami is often seen as a party place with a bunch of wealthy visitors and a shallow culture. But the fact is visitors come from places with incredibly rich art, literature and design. So, my approach at Brickell City Centre was to celebrate the richness of the visitor culture with art and sculptural elements. Because when I go to Buenos Aires, it’s as sophisticated as Paris.

Our approach is different than the puffy, modern, white design you often see in Miami. For the lobby entrances, for instance, we went to some of the most sophisticated, expensive chandelier manufacturers worldwide. A lot of furniture was customized, including the sculptural stone benches in the Reach tower lobby.

Q. Are you a disruptor? In Hong Kong, you went metro, not Chinese. In Miami, you went heavy, not ephemeral.

A. It’s not only about heavy. When we designed the sales center for Brickell City Centre, I wanted to make it iconic. So, I wrapped the 10-story building in fabric and put lights in the corners, so the entire building would light up like a lantern. We also bought a super-powerful projector and started projecting artwork onto the building, art that we primarily acquired from YoungArts Foundation.

When we design a project, we think of it as temporal stages in a cinematic progression: What is your first impression when you see the object, when you walk into the space, when you turn right…. We don’t think in terms of form. We think of how one space creates a narration compared to another. It is all experience.

Q. Were there any other particularities about designing for Miami?

A. In my opinion, the relationship between the automobile and the pedestrian is the measure of civility of any city. So, the approach to the residential units was extremely important to me. Downtown Miami hasn’t been pedestrian-friendly. So, I wanted to bring in that element of public space where you can walk and enjoy art and cafes.

My approach was to make the public space useful, instead of decorative. I designed the ground-floor lobby to be kind of a sculpture garden, where it’s pleasant to sit, look at original art and meet people, with a certain level of formality. The lobby spills out into the street, the way a café does. For the sixth-floor residential lobby, instead of a corridor, I designed a 12-foot wide gallery with an arts library and tea lounge among six sitting areas. On the seventh floor, the sophisticated social room called Fete can be rented out to host even a small wedding.

Q. What’s next for you in Miami?

A. We’re looking forward to working on the next phase of Brickell City Centre soon.

From left: the exterior and interior of Icon at South Beach

A recently filed lawsuit alleges the Icon South Beach’s condominium association charges non-refundable application fees in excess of what is allowed by Florida law.

The suit, which seeks class action status, was filed in Miami-Dade Circuit Court by Icon South Beach renter Derek Schwartz, but could end up involving more than 100 plaintiffs, according to the complaint.

Attorneys representing Schwartz and Icon Condominium Association did not immediately return phone calls seeking comment.

In order to rent or purchase one of the 290 units at Icon South Beach, a 42-story luxury tower at 450 Alton Road, a potential buyer or tenant must fill out an application and seek approval from the condo association, the lawsuit states. However, the Icon board charges applicants a $250 processing fee that is $150 more than the Florida Condominium Act allows, the lawsuit says.

“This deceptive and unfair scheme was used by Icon to line its pockets at the expense of Florida consumers,” the lawsuit says. “The Florida Condominium Act prohibits condominium associations from charging transfer fees of more than $100 per applicant.”

Schwartz is seeking unspecified damages for himself and anyone who qualifies for the class action, as well as an injunction from the court to stop Icon Condominium Association “from charging such illegal transfer fees in the future.”

The lawsuit also accuses the condo association of violating the state’s law against deceptive and unfair trade practices. If the court authorizes the class action status, anyone who paid the $250 application fee would be able to join the lawsuit.

Icon South Beach was completed in 2004 by the Related Group. According to Zillow, 16 units are currently on the market, asking between $678,000 and $4.5 million. Monthly rents average between $3,400 to $4,300 for a one-bedroom condo and between $5,800 to $8,900 for a two-bedroom unit.

From left: Airbnb Founders Nathan Blecharczyk, Joe Gebbia and Brian Chesky (Credit: Getty Images)

From the New York website: Airbnb might be getting into the long-term rental business.

The home-sharing startup has asked McKinsey & Co. to research the market and conduct a competitive analysis of Craigslist, Bloomberg reported, citing unnamed sources.

The $31 billion company has a sublet section on its website since 2011, which lists apartments and houses to rent by the month in more than 5,000 cities. But the feature isn’t advertised on the website, and is not exactly fine-tuned. It requires renters, for example, to put in an end date for their stays. An expansion into long-term rentals would likely require Airbnb to work out some kind of option for renters to pay for things like utilities and recurring service fees.

A spokesperson for Airbnb declined to comment, saying only that the company is constantly considering dozens of new initiatives and new product categories, many of which never become actual products.

“Examining different parts of the market is standard operating procedure, and we don’t have any announcements to make,” spokesperson Nick Papas told Bloomberg.

Airbnb has been hampered in Miami Beach by legislation designed to curb short-term rentals except in certain designated areas. In January, the short-term rental platform signed a deal with the town of Surfside to begin collecting and remitting taxes on March 1, marking the first municipality in South Florida to do so. 

The company recently bought the Canada-based short-term luxury rental website Luxury Retreats International for a rumored $200 million.

McKinsey is expected to present its findings to Airbnb’s senior leadership next month.

Craigslist has about 60 million U.S. visitors a month, according to the internet research firm ComScore, which is a huge user base Airbnb would look to tap into. Despite Craigslist’s popularity, however, the website looks much like it did when it launched more than 20 years ago, and doesn’t vet its listings.

A study from New York University in March 2016 found that Craigslist fails to identify and remove more than half of the phony rental listings on the site. [Bloomberg] – Rich Bockmann

Da Silva Hospitality Group launched Zucca, a new restaurant in Coral Gables, on Friday.

More than 250 attended the grand opening, held at the restaurant in the Hotel St. Michel, including Coral Gables Mayor Jim Cason and commissioner and Realtor Jeannett Slesnick. The event featured a ribbon cutting, hors d’oeuvres and cocktails by the Cocktail Cartel.

The 28-key boutique hotel, at 162 Alcazar Avenue, cost about $2 million to build in 1926, according to its website. It’s owned by South Florida auto magnate Alan Potamkin and Stuart Bornstein of Battlecreek Properties. They bought the property in 1979. La Crepe St. Michel opened in the ground floor retail space at that time, then the Restaurant St. Michel for 35 years. Before Zucca, it was Gaetano Ristorante.

The hotel is also north of Miracle Mile and Giralda Avenue, where the city of Coral Gables is in the midst of a $21 million streetscape improvement project aimed at widening sidewalks, replacing trees and streetlights, and substituting parallel parking spaces for the existing angled parking space on Miracle Mile. – Katherine Kallergis

Patrick Leahy and Louie Gohmert

From the New York website: At the first House Judiciary Committee hearing on immigration since Congress reconvened in January, the subject was not President Trump’s executive orders or recent deportation crackdowns, but instead the EB-5 investor visa, a 25-year-old pilot program that has become a pet fundraising vehicle for real estate developers.

Senators Patrick Leahy (D-VT) and Chuck Grassley (R-IA) joined members of the committee Wednesday to testify on program reform, urging Congress to make major changes that would push EB-5 money into more underserved communities rather than luxury projects in affluent urban neighborhoods.

Both Grassley and Leahy’s testimony cited an uptick in fraud and abuse in EB-5, a program that has enjoyed incredible popularity in recent years as a key means for New York developers to source highly sought after mezzanine debt in their capital stack. The senators decried what they said was a disproportionately small share of EB-5 money going into projects in areas with high unemployment, in part due to the control regional centers have had over “gerrymandering” those areas.

“For some developers, any change to the status quo is a threat to their bottom line,” said Leahy, whose home state of Vermont is also home to perhaps EB-5’s most famous fraud scandal at the Jay Peak ski resort . “And Congressional leadership has allowed a couple of powerful developers who exploit this program’s flaws to derail critical reforms. That is unacceptable. The worst abusers of a government program should not be given veto power over its reform.”

The Chairman of the House Judiciary Committee, Rep. Bob Goodlatte (R-VA), echoed many of Grassley and Leahy’s comments in his own statement and also took a shot at so-called gerrymandering. Goodlatte quoted extensively from a glitzy ad spread promoting the Hudson Yards (developed by Related Companies and Oxford Properties Group) in the September issue of Vogue, a colorful example of how current program rules make it easy to funnel millions into luxury real estate projects.

Patrick Leahy (Credit: Will Parker)

Rep. Jim Sensenbrenner (R-WI) brought up the ways regional centers have created custom TEA districts designed to allow more investors to get in at the current minimum of $500,000, a number that hasn’t budged since the program began 25 years ago.

“The exception swallowed the rule,” Sensenbrenner said.

Without a reauthorization by congress, the EB-5 program will sunset on April 28. The Department of Homeland Security, which administers the program, will continue to take stakeholder input on its proposed rule for EB-5 until that time, but President Trump could direct the department to drop any such rules, which would put more pressure on congress to enact reforms through legislation.

Representatives did bring up the program’s economic benefits and its ability to raise capital for projects that otherwise might not be built. Rep. Zoe Lofgren (D-CA) mentioned two such projects in her district, which includes the city of San Jose, and urged care in adopting any changes that “would reduce the overall investment” amount.

Members of committee then heard testimony from a panel of stakeholders, researchers and critics. Angelique Brunner, owner of EB-5 Capital and spokesperson of the EB-5 Investment Coalition, criticized proposals by the Department of Homeland Security that would allow the government to assign Target Employment Areas (TEAs) by census district. Over the course of the hearing she stated several times that proposals to raise the minimum investment threshold for a green card from $500,000 to $1.35 million is more than the market can bear and insisted the number should be less than $1 million.

During the Q&A after the panel, the only member of the committee who appeared uncritical of the current TEA system, which allowed Hudson Yards to be drawn together with a public housing complex in Harlem, was Rep. Jerry Nadler (D-NY). He agreed with Brunner’s assessment that workers’ commuting patterns should be factored into an analysis of the benefits of projects that may not physically lie in underserved neighborhoods. Sen. Chuck Schumer (D-NY), who was not at the hearing, has expressed similar views.

Focusing on census tracts as the DHS rules propose, Brunner said in the exchange, “completely ignores any principle of economic development.”

“You really have to look at the [wider] area in a whole different light,” she said.

When the panel was asked by Rep. Darrell Issa (D-CA) if, in the event EB-5 was was started from scratch, would if it be better if money only benefited underserved areas, all the panelists, which in addition to Brunner and Walls included a representative for the Government Accountability Office, a policy director at the Center for Community Progress, and a fellow at the anti-EB5 Center for Immigration Studies, responded with “yes,” although how “underserved” should be defined is still what’s up for debate.

There were still other members of Congress who rejected the program outright. Tea Party favorites Rep. Steve King (IA) and Rep. Louie Gohmert (R-TX) both expressed concerns over the possibility of unwittingly allowing criminals or terrorists to enter the country through the visa program.

King asked the panel if Saudis sympathetic to terrorism or those tied to drug cartels might try to get entry to the US through EB-5. If such people were strategizing entry, King said, they “would look at the EB-5 program as the perfect tool for access into American society.” King also expressed skepticism that the price of an American green card should be below $1 million, citing much higher costs of entry in some other developed nations.

Gohmert later chided the committee for spending its time trying to peg a price on “prostituting our own visas” instead of “…figuring out whether these people are going to be good and moral…”

“America has degenerated to the point that our soul is for sale,” Gohmert continued. “…Give us your immoral, your degenerate, as long as they have money, the message is we want them in America and we’ll give them a visa to get their money.”

After the hearing, Ron Klein, a former Florida congressman and lobbyist for Holland & Knight, whose clients include the US Immigration Fund, a major EB-5 regional center, told The Real Deal that a lack of attendance by committee members was part of why the proceedings sounded so one-sided. And many of the members don’t have very extensive knowledge of how EB-5 works, Klein said. “I don’t think you necessarily got a broad representation of the people who have been paying attention on EB-5,” he said.

Aerial of the Florida Keys (Credit: Andy Newman/Florida Keys News Bureau)

The former finance officer and minority partner of the Cay Clubs Resorts and Marinas was just convicted of bank fraud and conspiracy, among other counts.

A federal jury in Miami convicted David W. Schwarz on four of eight counts. He will face sentencing, which could total 93 years, on May 1 for his role in what prosecutors are calling a Ponzi scheme, the Miami Herald reported.

Cay Clubs, founded in 2004 in the Florida Keys, raised more than $300 million from 1,400 buyers of condo hotel units at properties in the Keys, Clearwater, Las Vegas and the Caribbean. The resort company collapsed four years later after federal authorities discovered Cays Clubs was using that money to pay lease-back fees owed to earlier buyers.

Schwarz owned a third of Cay Clubs, which employed more than 1,000 people. He’s the fourth executive to be convicted or plead guilt to charges related to the case. Fred “Dave” Clark, founder and majority partner, is currently serving a 40-year sentence for bank fraud and obstruction, the Herald reported.

Clark “began Cay Clubs in 2004 with fraudulent sales of Cay Clubs units to insiders, using money from Cay Clubs bank accounts to fund the cash to close for purchases, while obtaining mortgage financing from lending institutions,” according to a statement from the office of acting South Florida U.S. Attorney Benjamin G. Greenberg.

The statement continued, adding that Schwarz and Clark “diverted more than $30 million in proceeds for themselves, including millions of dollars in cash transfers that was used to purchase property and other businesses, including a gold mine, a rum distillery, aircraft, and a coal-reclamation business.” [Miami Herald] – Katherine Kallergis

Rendering for 4030 North Miami Avenue, existing building, with Jonathan De La Rosa on left, Scott Sandelin on right

A vacant building on the edge of Miami’s Design District, owned by Alex Birkenstock and a partner, was just re-listed for $11 million — 15 percent below its $12.9 million asking price last year — amid the area’s transformation into a luxury shopping destination.

The property, at 4030 North Miami Avenue, has 7,642 square feet of leasable space, on an 11,750-square-foot parcel of land. The price equates to $1,439 per square foot for the building and $936 per square foot for the land. 

Marcus & Millichap’s Scott Sandelin, first vice president of investments in Marcus & Millichap’s Miami office; and Jonathan De La Rosa, senior associate, represent the seller, Miami La La La LLC and Miami Barokh LLC.

Records show Birkenstock of New York is the manager of Miami La La La LLC. Khashy Eynalhori is the manager of Miami Barokh LLC. Ben Bennett and Jerry Pumo of B.B.J. Rentals had sold the building to Birkenstock and Eynalhori for $2.5 million in 2012, according to the deed. The building was built in 1948.

Birkenstock, heir to the eponymous sandal company fortune, and his partner had originally listed the property in May of last year for $12.9 million, as part of a Design District assemblage of a more than an acre that was priced at $37.5 million, listed at the time with Metro 1. Records show none of the six parcels have since sold.

The property is zoned T5-O, which means it can accommodate an art gallery/studio, restaurant, hotel, retail store or lounge, Sandelin said. The offering includes plans by Kobi Karp Architecture for a mixed-use retail/restaurant concept for the building that would increase the leasable square footage to 9,326 square feet. Sandelin said he has renderings and a site plan showing different options that would allow one or two retail spaces downstairs and a bar/lounge upstairs with an outdoor patio facing east. “That is the vision,” he said.

Asking prices and rents are far lower on North Miami Avenue than in heart of the Design District, De La Rosa added. On North Miami Avenue, rents are at about $85 per square foot, triple net, compared to as much as $300 per square foot in the central part of the Design District, he said.

The Design District is in the midst of a transformation into a luxury shopping, dining and cultural destination, spearheaded by Craig Robins, president and CEO of Dacra. Dozens of stores are currently open, and a total of about 120 are expected to open on Dacra property by the end of 2018, with another 40 on other property owners’ land, plus about 15 restaurants, Robins has said.

Major investors have swooped in to buy properties in recent years. In March of last year, Norfolk, Virginia-based Harbor Group International bought a retail building at 111 Northeast 40th Street for $21.5 million or $2,445 per square foot.

Brooklyn-based Redsky Capital and London-based JZ Capital Partners have added to their portfolio in the area, paying $128.3 million for eight sites encompassing nearly two blocks, in February 2016. In all, the joint venture partners have invested more than $233 million in the district.

Last month, developer Remy Jacobson’s plans to convert 4141 North Miami Avenue into retail use won approval from the Miami Historic and Environmental Preservation Board. Jacobson’s company bought the property for $10.5 million or $600 per square foot, in April 2016.

And in January, a group of homeowners on the edge of the district banded together to market their sites as an assemblage, asking $18 million. At that price, the combined 30,000-square-foot property along Northwest 38th Street would sell for $600 per square foot. The parcels have frontage along the northern end of the 112 expressway and border on the east by North Miami Avenue.

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International real estate federation FIABCI launched its business council at a party at the River Yacht Club last week.

Lennar International along with VS Miami Properties, Picmiller and Coldwell Banker sponsored the event, which included a swearing in of new members. The Miami Association of Realtors’ CEO Teresa King Kinney, ‎COO and chief marketing officer Deborah Boza-Valledor, and senior vice president of public relations and international Lynda Fernandez were also on hand at the event along the Miami River.

The River Yacht Club, a restaurant and boat marina venture in the Miami River district, opened last year at 401 Southwest 3rd Avenue. The Chetrit Group and Dupoux Partners turned the property into an indoor-outdoor restaurant, with a garden that accommodates up to 250 people, along with 100-seat indoor dining. It is not far from the site where the New York-based Chetrit Group plans a nearly $1 billion mixed-use project. – Katherine Kallergis

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Unit 1801 North. Inset: listing agent Jeff Miller

A combined unit at the Continuum South Beach just hit the market for the first time asking $10.8 million. 

Records show Continuum2 18N LLC, an entity controlled by James L. Sopko of Stuart, Florida and William E. Sopko of Euclid, Ohio, own the 3,497-square-foot condo in the north tower of the Continuum. James Sopko is a partner at KSL Attorneys in Stuart, and William Sopko shares his name with the owner of William Sopko and Sons Co., an Ohio manufacturing company with a location in Euclid. It’s unclear if they are the same person.

Jeff Miller of Brown Harris Stevens Zilbert is the listing agent for unit 1801 at 50 South Pointe Drive. Miller declined to comment on the sellers, only saying that, “they’ve lived in the Continuum since it was first built. It’s just time for them to move on and enjoy another city.”

The three-bedroom corner unit has four terraces, direct ocean and sunset views, as well as views up to Sunny Isles Beach. At 3,497 square feet, the asking price breaks down to $3,088 per square foot. “All of the premium units in the building are all selling between $2,500 and $3,000 a foot,” Miller said. “This is the highest floor available for sale with this square footage.”

Records show it last sold for $2.6 million.

The Continuum, at 50 and 100 South Pointe Drive, was developed by Ian Bruce Eichner’s Continuum Company in 2002 and 2008. Sieger Suarez Architects designed the two-tower condominium, which sits on a 12-acre property. Amenities include two lagoon pools, a spa and gym, and 1,000 feet of beach frontage.

Just last week, a New York hedge funder sold two units on the 34th floor of south tower for a total of $10 million, or for $2,420 per square foot and $1,591 per square foot.

Dev Motwani, Ken Stiles and Jack Seiler on the New River in Fort Lauderdale

Intense real estate development in Fort Lauderdale may shift from the downtown area and the beach to neighborhoods south of the New River and other areas.

“You’re going to see a tremendous [development] amount of activity downtown, and that will continue,” said Fort Lauderdale Mayor Jack Seiler. But in upcoming years, “I think you’re going to see more on South Andrews Avenue.”

Seiler was one of five members of a panel who spoke Wednesday night at the sales center for the Gale Residences Fort Lauderdale Beach.

Another panelist, Ken Stiles, co-CEO of Fort Lauderdale-based Stiles Corp., cited the potential for development of the area around the Broward Health Medical Center at 1600 South Andrews Avenue.

“It’s just waiting for somebody to step in and do something there,” Stiles said. “There’s not a lot of opportunity downtown anymore … so you’re going to have to look elsewhere.”

Yet Stiles also said assembling large tracts of land in the South Andrews Avenue corridor is a challenge: “There are a couple of big landholders there that make it difficult for us to go in there.”

Fort Lauderdale-based developer Dev Motwani said the city’s planned streetcar system, the Wave, will reinvigorate the South Andrews Avenue corridor when it starts operating there.

“Imagine what’s going to happen when the Wave starts operating,” he said. “Housing is an obvious play” for developers in the South Andrews area, “but there’s also retail [opportunity]. You can bring restaurants and shops that you didn’t have the daytime population for.”

Sean Jones, vice president of Milton Jones Development Corp. in Dania Beach, said he expects more new construction to unfold northwest of downtown Fort Lauderdale in the Sistrunk Boulevard corridor.

“You’re going to see more intense development in the northwest,” Jones said, citing such catalysts as the summer startup of the Brightline passenger train service at its Fort Lauderdale station, located at 101 Northwest Second Avenue.

The Fort Lauderdale economy is on a roll. Employment in metropolitan Fort Lauderdale increased by 28,604 jobs in 2016, more than in Palm Beach County and Miami-Dade County combined, according to the Bureau of Labor Statistics.

But financing development in Fort Lauderdale still can be difficult, Jones said. “It’s a great place. But many times, banks are looking at things on a national basis, and on a national basis, they’re starting to pull back on financing,” he said.

Ben Carson and President Donald Trump (Credit: Getty Images)

From the New York website: The Trump administration is considering a plan that would cut more than $6 billion in funds from the Department of Housing and Urban Development.

Under the new measures, HUD’s budget would be reduced by around 14 percent to $40.5 billion in the 2018 fiscal year, the Washington Post reported, citing preliminary budget documents it obtained. The proposal, if it goes ahead, would end most federally funded community development grants and shrink public housing support.

Around $1.3 billion would be taken from the public housing capital fund, and an additional $600 million would be withdrawn from the public housing operating fund. Despite the cuts, the preliminary budget proposes keeping the same level of funding to rental assistance programs, according to the newspaper. The cuts, however, target funding for building maintenance and community development projects, although HUD makes recommendations that those projects still receive funding, but from another source.

HUD spokesperson Jereon Brown told the newspaper the budget document “is still a work in process.” It’s not yet clear if the potential cuts will be part of the president’s final budget proposal. A complete budget plan will be released next week, according to the administration.

Last week, the Senate voted to confirm Ben Carson, a former pediatric neurosurgeon, as secretary of HUD.

Carson has no housing experience and a long track record of criticizing government assistance programs, but some housing groups have focused on Carson’s positive comments on public housing, such as his praise for the low-income housing tax credit program (LIHTC).
[WashPo] — Miriam Hall

Rendering of Oceana and an aerial view of the construction site. Inset: Bal Harbour resident Doug Rudolph

A real estate investor who cut a $1.15 million check to an influential Bal Harbour resident for his help in upzoning the Oceana Bal Harbour site back in 2012 is claiming the resident didn’t hold up his end of the bargain – and that he was extorted.

Joseph Imbesi, a real estate investor from Philadelphia, publicly claimed at a Bal Harbour Village Council meeting last year that Doug Rudolph, a resident and restaurateur, shook him down for the $1.15 million. Imbesi is alleging that Rudolph, who owns the Tap 42 restaurant chain, promised to secure the upzoning of the Oceana site before Imbesi’s Bal Harbour Club Inc. sold it to developer Eduardo Costantini for $220 million in 2012.

Imbesi also says that Rudolph promised to not block approval of another project at the marina – all in exchange for the $1.15 million, according to the Miami Herald. Rudolph is now opposing Imbesi’s plans to operate the marina and build single-family homes on the adjacent land, which could block Rudolph’s water views. (Imbesi is suing Bal Harbour over the right to operate the marina.)

Rudolph alleges the check was for a legitimate consulting fee for helping sell the beach club. He filed a lawsuit Tuesday, claiming breach of contract and defamation, the Herald reported. He’s also seeking $25 million in damages.

Oceana‘s sales director Ernesto Cohan, who brokered the land sale in 2012 to Consultatio, told the Herald he wasn’t aware of Rudolph’s consulting role, but that he met with him because of Imbesi.

Oceana Bal Harbour, meanwhile, is expected to have the biggest sellout of any condo project in South Florida at $1.3 sellout. It opened in November. [Miami Herald] – Katherine Kallergis

Rendering of Modera Edgewater

Mill Creek Residential just closed on the land for its Modera Edgewater apartment building and secured a $61.8 million construction loan.

Records show six entities sold 14 parcels on Northeast Fourth Avenue between 24th and 25th streets to MCREF Edgewater LLC, a Mill Creek affiliate, for a combined $21.7 million. The Dallas, Texas-based multifamily developer also closed on its financing from PNC Bank.

The sellers were N5 Holdings LLC, 24 On the Bay Two LLC, Prive Opportunity Investments Two, EdgeSun 455, and Otto T. Praderes. Mill Creek paid about $200 per square foot for the non-waterfront land.

Together, the properties total about 2.44 acres. Mill Creek submitted a proposal for Modera Edgewater in November to the Miami Urban Development Review Board, which approved its plans for the 297-unit building.

The eight-story building, designed by Corwil Architects, will total 477,626 square feet, broken down into 18 studios, 114 one-bedroom apartments, 16 one-bedroom apartments with dens, 106 two-bedroom apartments and 43 three-bedroom apartments. It will also have 436 parking spaces. The project has yet to break ground.

Edgewater has been flooded with plans for new condo and apartment buildings, including the Related Group’s under-construction Paraiso condo complex, OKO Group’s planned Missoni Baia condo tower and the Richman Group’s Biscayne 27 apartments.

Mill Creek has built more than 20,000 apartments in more than 90 communities, as well as buying more than 2,50 apartments. By the end of the year, Mill Creek expects to deliver an additional 5,000 apartments to its portfolio, according to a company statement.