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Hollywood, sandwiched between Miami and Fort Lauderdale, has seemed quaint and sleepy compared to its big-city neighbors, despite impressive community assets.

The 30-square-mile municipality’s amenities include an airport, a walkable downtown, 7 miles of oceanfront and a beachfront pedestrian walkway called the Broadwalk that’s lined with independent restaurants and hotels. Inland are golf courses, residential neighborhoods and the Seminole Hard Rock Resort & Casino. Port Everglades is partly within the city limits.

“Soon, a new wave of development is poised to transform Hollywood. The city currently has $1.2B in real estate development planned or under construction,” City Manager Wazir Ishmael said during a Bisnow webinar last week.

Ishmael outlined some of the major projects around Young Circle, the downtown city center with a 9-acre outdoor amphitheater and arts park, where Hollywood’s main east-west corridor meets north-south artery US 1.

On the southwest quadrant of Young Circle, the $60M Block 40 project is planned from GCF Development. It will have 166 residential units and 103 hotel rooms. On the southeast quadrant, a mixed-use project by BTI Partners will bring 366 luxury rental units and ground-floor retail. The east side of Young Circle is slated for matching towers with two levels of restaurants and retail, also by BTI. South of Young Circle, Hudson Village, a 108-unit mixed-income affordable project by Housing Trust Group, broke ground last year, and Pinnacle at Peacefield, a senior housing community, was recently completed.

Further east, on Hollywood Beach, Related Group last year completed the 41-story Hyde Beach House on the Intracoastal Waterway. In 2019, voters approved a $165M general obligation bond to finance more than 30 projects.

 “Beachfront properties farther south in Miami-Dade County are bloody expensive,” said Continuum Co. Chairman Ian Bruce Eichner, who has been looking to develop a 4-acre beachfront site in Hollywood. “But in Broward County, there’s still an opportunity in Hollywood for a beach that is certainly as beautiful as anything south, at a different price.”

Webinar moderator Raelin Storey, Hollywood’s director of the Office of Communications, Marketing and Economic Development, said the city has two opportunity zones — one downtown and one between Sheridan Street and Stirling Road near I-95. Storey said that over the past few years, the city adjusted its zoning to encourage development along its commercial corridors.

Keith Poliakoff, partner at law firm Saul Ewing Arnstein & Lehr, said that his client, BTI, is about to break ground on Block 58, formerly known as The Hollywood Bread Building in the downtown opportunity zone. It’s planned to include approximately 366 apartment units with 15K SF of retail.

“Construction prices had risen about 10% since the project got underway, but the opportunity zone designation was helping them draw investment to offset the increased costs,” Poliakoff said. “If you do it right, that savings, that potential tax savings in the future, can actually offset the higher construction price.”

Inigo Ardid, co-president of Key International, which owns the Eden Roc and Marriott hotels in Miami Beach, has been exploring possibilities in Hollywood and said he was very bullish on leisure hospitality.

“What we’re seeing is in places that people can get to, mostly drive markets, the hotel markets have come back stronger than ever… Our average stay has gone up well in excess of 60% from where it was before,”  said Ardid.

Related Group Managing Director Eric Fordin said that the once-stunning but long-neglected Hollywood Beach Resort might be redeveloped in time.

“We had the majority of the unit owners under contract to redevelop that property,” Fordin said. “But the ownership structure is complicated. Not only is there a condo-hotel but an estate owns the land and the parking garage. A tentative deal he’d made with it fell through at the last minute.

That’s not all that makes it complicated.

“There’s a separate owner who owns the commercial unit on the first floor and a separate owner that owns the commercial unit on the second floor, plus 360 unit owners and 36 timeshares,” Fordin said.

But that’s not to say the project won’t happen.

“It’s a site that I am laser-focused on,” Fordin said.

Fordin lives in Hollywood himself. He said some residents love Hollywood’s slow vibe, independent stores and two-story motels that cater to Canadian snowbirds. They don’t want Hollywood to be like Sunny Isles, lined with tall towers that create a canyon-like feel. But the quaintness comes with blight.

“Hollywood is always going to be more of a boutique-friendly development opportunity experience,” Fordin said. “I believe once we’re able to assemble some properties along the Broadwalk, you’ll see some great development impacts for the city, but it’s a matter of really aligning all the stars for those things to take place.”

The panelists called for more public-private partnerships, but that hasn’t always worked out great for Hollywood’s taxpayers. For a Margaritaville Resort developed in 2015 by developer Lon Tabatchnick’s Lojeta Realty and Starwood Capital Group, the city invested $23M in the development and left the city potentially liable for $84.3M in bond payments for a connected parking garage, the Sun-Sentinel reported.

 

Source: Bisnow

Midsection of businessman with true and false wooden blocks on seesaw at desk

Panelists representing the industrial, office, retail and multifamily sectors of commercial real estate made the case for investment in their respective sectors at NAIOP’s CRE.CONVERGE, the virtual conference recently taking place.

In a real-time audience poll, the attendees cited industrial as the sector they would be most likely to invest in.  However, much of the discussion pointed to the upsides in what, so far in 2020, has been mostly seen as a negative story for the other sectors.

“Retail may be the sector everyone loves to hate, but all that means is that it’s at the bottom of a cycle that is going to rebound,” said Wade Achenbach, executive vice president, Portfolio Management at Kite Realty Group. “The strip sector and the mall business were struggling for a lot of reasons, and COVID has dramatically made them the hardest hit. If you just look at that trend alone, that’s going to be short lived. You have to be very careful of what you’re looking at. There is no online-only retailer that’s making money today, nor has there ever been. What’s really happening when somebody says e-commerce?  It’s more of an omnichannel. Even Amazon realizes the value of stores with its purchase of Whole Foods.”

The old adage, buy low and sell high, applies.

“I think there is more of an opportunity (in retail) than any of the other sectors,” Achenbach said.

Speaking on behalf of the office sector, which many are questioning in light of the shift to work from home, George Hasenecz, senior vice president, Investments at Brandywine Realty Trust, said its demise has been incorrectly predicted in the past — just as it is now.

“When you think about all the economic events and social trends that have occurred, the dot com bust, September 11, the densification of the office and COVID, people have always said that office is dead. Office has always reinvented itself,” said Hasenecz. “Work from home has been successful in response to the crisis, but it’s very difficult to work in a collaborative environment. How do you maintain your culture, bring new employees on and recruit? Work from home really does go against people’s needs and desires to come together. We think that Class A office is going to be in high demand. Companies want to make sure their employees and their talent feel safe. There still is the competition for talent and office space will be used as a recruiting tool.”

A similar story is playing out in the multifamily sector, said John Drachman, co-founder at Waterford Property Company. The pandemic has driven many people out of dense urban areas and into suburban multifamily units. The turnaround has been sharp in large markets such as New York, San Francisco, Los Angeles and Chicago, where vacancies are increasing and rents are falling. One year ago, the main story line in these markets was a lack of affordable housing.

“As with retail and office, a wider perspective will benefit investors,” Drachman said. “People will move back to urban areas. If you can stomach a little bit of pain, over the long term there could be great buying opportunities for urban apartments.”

Rene Circ, senior managing director and COO at GID Industrial and GID Investment Advisors LLC, spoke on behalf of the industrial sector, which to no one’s surprise seems to be strong. He said there are essentially very few people who are not buying things online.

“I would argue that too much capital is allocated to multifamily and way too much is allocated to retail,” Circ said. “Investors will need to invest in industrial.”

The panel was moderated by Will McIntosh, head of Research at USAA Real Estate.

 

Source: GlobeSt.

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A key component of a successful real estate investment is choosing the right asset class to invest in within the given market.

Supply and demand is constantly changing, meaning what was a lucrative investment one, two, or 10 years ago may not be worthwhile today. See what types of real estate are in high demand right now and how investors can participate in the growing market.

Before we dive into where opportunity lies, note that just because there’s a general demand for these types of real estate doesn’t mean there’s opportunity for them in every market. Real estate is a very localized business that operates on a macro and micro level. For active investors, it’s important to identify what opportunities lie in your local market or participate in a more diversified investment portfolio specializing in these asset classes through a real estate investment trust (REIT).

1. Cold Storage

Cold storage is a type of industrial real estate responsible for the storage and transportation of cold goods, including food products. The global pandemic interrupted the food supply chain, making consumers and large grocery retailers adapt to the shift in consumer preferences for online grocery sales as well as the need for more cold storage as a whole.

This specialized niche has several barriers for entry, making it a difficult asset class to invest in outside of Americold Realty Trust (NYSE: COLD). Americold is the only industrial REIT specializing in cold storage, owning more than 1 billion cubic feet of cold storage space. The company is well positioned financially to grow with the increased demand.

2. Data Centers

We are undoubtedly in the age of technology, with more people and products becoming reliant on the efficiency, ease, and convenience of technology. Data centers are responsible for safely storing and computing data for the government, large corporations, cloud companies, and even data used from phones.

Demand for data centers has been on the rise over the past decade, but COVID-19-related work-from-home orders have put even more pressure on this growing sector. While demand as a whole is up, certain markets are leading the sector, including northern Virginia and Atlanta.

Data centers are another unique sector to invest in with large barriers for entry, making any of the top data center REITs a wonderful way to participate in this industry.

3. Residential Housing, With Emphasis On Affordable Housing

A study conducted by Freddie Mac found that the U.S. is short 2.5 million to 3.3 million housing units in 29 states, with states like Oregon, California, Texas, Minnesota, Florida, and Colorado the leaders in the housing shortage. These states, among others, are also home to some top-tier markets, where housing prices far outpace wages for the area, putting affordable housing in serious demand.

This means multifamily properties, single-family homes, and new construction can potentially be good investments in the right markets. This asset class is the easiest point of entry for investors, with dozens of options available to participate in actively, like fix-and-flip or rental properties, or passively through residential REITs.

However, it’s important to note that with current eviction moratoriums and a record number of tenants being unable to pay rent, the rental industry is facing tough times, making this a volatile market to participate in right now as a smaller investor. However, this industry is fairly resilient, and while it’s currently facing unique challenges, this market clearly has long-term demand and should bounce back in time.

 

Source: The Motley Fool

Panelists spoke at the RealInsight’s Florida Commercial Real Estate Summit at the Hyatt Regency Miami on Wednesday, October 16, highlighting the potential for distribution centers, hotels, shopping malls, technology hub and sports stadiums in Florida’s major cities.

Despite years of continuous activity, Florida’s industrial and multifamily sectors still have room for growth,  said Crocker Partners Managing Partner Angelo Bianco, Mitchell Property Realty President Ed Mitchell and Merrimac Ventures President and CEO Dev Motwani.

“Industrial is where we get our stuff,” said Mitchell.

His company recently bought industrial warehouses in Fort Lauderdale and Tampa, and is soon closing on one in Miami.

“Capital lenders are all over you. It’s nice. Everybody wants to do industrial now,” Mitchell said when asked how capital partners influence his acquisition strategies. “But land costs present a challenge. It costs more to get land in Miami than to build.”

The average land acquisition price per square foot costs $60 to $70 a square foot.

In Boca Raton, Crocker is creating a campus with a food court and STEAM lab maker space, hoping to draw a tech company.

“The idea is to make the workplace like a hotel.” Bianco credited WeWork for the concept. “Their loss is our gain,” referring to the company’s recent woes.

The retail category drew little enthusiasm from panelists, especially at this time when national chains are flailing.

“The spaces are of interest only when there is a big box that you can tear down and add multifamily,” said Motwani. “Multifamily developments continue to generate strong returns, especially in the luxury market.”

As for why affordable projects don’t draw greater interests, Motwani pointed to the financial realities.

“Concrete costs what it costs. Land costs what it costs,” said Motwani. “From a financing perspective, it makes sense to get luxury condos done, not affordable housing.”

But municipalities can encourage affordable housing development through incentives, including fee relief, parking ratios and adding density bonuses, agreed Motwani and Bianco.

 

Source: Miami Herald

The Counselors of Real Estate, an international organization for commercial real estate professionals, ranked what its membership body recently voted on as the current and emerging issues it expects to have the most significant impact on real estate.

Topping the organization’s list in a detailed report just released was U.S. infrastructure, which it characterized as severely lacking, and lagging behind many other developed countries.

“Inadequate infrastructure creates a hard ceiling to economic development, and real estate values are tied to sustainable growth,” Julie Melander, the 2019 chair of The Counselors of Real Estate, said in a press release about the ranking.

The nation’s roads, bridges, tunnels, railways, airports, the power grid, water systems, and levees are all in need of improvement and have failed increasingly often, the organization said.

President Trump has pledged to address infrastructure woes, and the White House and Congressional leadership have discussed funding for infrastructure to the tune of as much as $2 trillion, but action commensurate with the scale of the problem has not materialized.

Housing in the U.S. was the second item on the list, and the organization put an emphasis on the impact of growing inequality and the rising tide of unaffordability in housing, particularly for the middle class.

“Housing affordability is threatening the stability of the middle class, which will hit other parts of the economy as well,” Melander said.

The recently-imposed limit on state and local income tax deductions, along with Baby Boomers having trouble selling their homes were additional housing-related challenges outlined by the organization. Challenges related to weather and climate were third on the list, while slow technological progress including outdated physical plant systems in many buildings, economic challenges and high levels of institutional and personal debt also made the list.

 

Source: Miami Agent Magazine

West Palm Beach

Developer Jeff Greene is moving forward with a four-building, 352-apartment complex that looks across Clear Lake reservoir toward the West Palm Beach skyline. But wait — that’s not all.

Greene, who owns probably more West Palm Beach property than anyone, and who long has drawn city criticism for holding off on construction, says he has pushed the launch button not just on Clear Lake Estates but on several projects in and around the city.

Among them:

– One West Palm, a two-tower, hotel/office/apartment complex downtown at 550 Quadrille Blvd., whose groundbreaking was last month, is scheduled for completion in the first half of 2021.

– A Westgate neighborhood apartment complex, off Congress Avenue north of Belvedere Road, is in the permit process.

– An industrial project off Jog Road, south of Okeechobee Boulevard, is a few weeks from construction.

– He hopes to start a refrigerated distribution center for McArthur Dairy off Florida Mango Road in 30 days. That would allow McArthur to move from its current location on Flamingo Road, where the developer plans to expand his Greene School and build indoor tennis courts.

– A residential complex overlooking Currie Park, with the city’s tallest towers, could be under construction in 12 to 18 months, depending on permitting and the city’s ability to more forward renovating the park.

Housing Affordability A Growing Challenge

The city commission gave initial approval Monday to site plan changes to will allow Clear Lake Estates to rise on the 11-acre site of the scuttled Sail Boat Club project, just across the water from downtown. A vote on final approval is expected as soon as May 20.

Greene said in an interview that another nearby apartment complex he built four years ago, Cameron Estates, is so fully leased it indicates the market is ripe for the Clear Lake project. He’s getting rough construction cost estimates now and would start building as soon as possible, with city approvals. As planned, the project is short 106 parking spaces of the 721 required, so in exchange for a waiver on that requirement, Greene has offered to contribute to transit alternatives.

He would build a waterfront walking and bike trail on the property’s lakefront, and a publicly accessible path linking that trail to Executive Center Drive, or pay the city $158,000 to do the work, by the end of 2020. That work would create a non-vehicular connection between the Palm Beach Outlets, Okeechobee Boulevard and downtown. The developer also agreed to install a PalmTran bus shelter on Executive Center Drive.

At Monday’s city commission meeting, commissioner Cory Neering asked planning officials whether they would require Greene to include workforce housing in the project. Housing affordability has been a growing challenge as the city works to attract companies and their employees downtown. Neering was told the city could broach that issue with the developer over the two weeks before the final approval vote.

But Greene told The Palm Beach Post the site, which he bought in 2015 for $17 million, was too expensive to offer subsidized, below-market rents.

“This building, with the cost of construction and rents will just barely make it” financially, Greene said. “It only works for someone like me, who builds it for what it’s worth when its done. The rents just aren’t high enough and construction costs have gone up so much. The problem is, I can build it if I just make a return on investment, make cash flow, like owning a bond. But if I had to sell it to make a profit, there’s not enough there,” In short, he concluded, “if you try to have any kind of reduced rents, it would probably kill the project.”

No Tenants Yet For One West Palm

One West Palm, its foundation finally under construction, also faces challenges. The project, which Greene announced several years ago and got city approval for two years ago, has yet to line up a tenant for its 209,000 square feet of Class A office space.

Meanwhile, The Related Cos. is coming out of the ground with a competing downtown office tower, 360 Rosemary, to be completed about the same time, next to Rosemary Square (the renamed CityPlace development).

And the city’s Community Redevelopment Agency this week approved a letter of intent for developer Charles Cohen to build an office tower as big as 490,000 square feet, on the ‘tent site’ at the corner of Okeechobee Boulevard and Dixie Highway. Greene, who owns the former Opera Place lot just north of the tent site, where he could develop as much as 1 million square feet, said that despite the current shortage of Class A space, he doubts there are enough tenants out there now to fill three or more buildings.

All the construction comes at a time of sustained growth in the city, which counts $3 billion of substantive projects in its development pipeline and has been challenged for solutions to the traffic that inevitably will generate. These include highrise residences off N Flager Drive in the North End, a sprawling Anchor Site mixed-use development and Currie Park redevelopment on opposite ends of Northwood Road, the renovation of the 1930’s-era Sunset Lounge in the Historic Northwest, a rebuilt golf course and tennis center in the south end, a Drive Shack indoor golf entertainment center and Mitsubishi dealership near the airport, condo towers on S Flagler Drive, and a possible doubling in size of the county convention center, just to name a handful.

Of course, not all proposed projects get built. Greene has tabled a number, himself. His Opera place site has remained vacant for years. He dropped a micro-apartment building a block from Clematis Street and tabled a residential project on Clematis, after commissioning drawings by the same high-profile firm that designed One West Palm, Miami’s Arquitectonica. For the 20 acres he owns around the Currie Park waterfront, he has hired an even higher-profile firm, the Switzerland-based Herzog & de Meuron, designers of the Beijing Olympics’ Bird’s Nest stadium, but that’s another site he’s been talking about for a long time that remains vacant land.

Despite complaints from city officials or neighbors of his vacant sites, the Palm Beach billionaire gets construction cost estimates, does the math and only moves forward when the numbers add up to a profit, particularly since he’s generally not using other people’s money but his own.

At One West Palm, he waited on the market, held off while the city politicked zoning changes that benefited a competitor and he took time off for a run for governor. Now he’s done the numbers again and they add up to a worst-case scenario in which he makes only a little money, and best-case in which he makes a lot, he said. So, the cranes are in place.

Meanwhile, seeing occupancy stabilize at Cameron Estates at a healthy 95-97 percent, the numbers told him that despite construction costs trending high amid the building boom, Clear Lake Estates stood a good chance at success.

 

Source: Palm Beach Daily News