Forecast: COMMERCIAL REAL ESTATE

Ken Krasnow Vice Chairman of Investor Services / Florida
Colliers International, Miami

The residential condo market surprised many people during 2019, with prices holding steady even as more units were delivered, says Ken Krasnow.

“What we’ve seen is continued demand, and I think the expectation is that we will continue to see that through 2020,” he says. However, he says, industrial will continue to be the most sought-after class of real estate in Miami-Dade, driven by expansion of the Panama Canal, dredging of PortMiami and “the convergence of e-commerce and the retail world.” Krasnow adds that “we’re definitely continuing to see (Miami as) the gateway to Latin America … but clearly strong local population growth is a driver, the ability and the need to distribute goods faster, in a more efficient manner.”

In the retail sector, he says “the challenge in the market will be the resetting of expectations on Lincoln Road.” In recent years, buyers have been willing to pay ever-higher prices for retail properties on the Miami Beach pedestrian mall, but tenants have left the market rather than agree to big rent increases. “There will be a period of adjustment between tenants and the new capital that bought into these markets,” Krasnow says, adding that “there are a number of deals that are about to be announced that will be part of Lincoln Road resetting in a positive manner.”

Miami-Dade’s office market will see several large new buildings open this year, so “rental rates should kind of plateau,” Krasnow says. He’s not worried about the macro troubles that co-working company WeWork has experienced, despite the fact that it has space in nine buildings in Miami-Dade — about 493,000 square feet total. “All of those co-working environments — the Pipelines, the Büros, the WeWorks, are performing well because that is still a core fundamental dynamic of our office market: Growing, entrepreneurial, startup-type companies,” he says. “I don’t think WeWork in Miami is overextended. And we’ve heard from other coworking providers that have said, ‘If anything happens (with WeWork’s leases), let us know because we would step right in.’ ”

Forecast: ENVIRONMENT

Eric Eikenberg, CEO
Everglades Foundation, Palmetto Bay

Eric Eikenberg believes Gov. Ron DeSantis’ support for Everglades restoration will begin to help both the Everglades and South Florida’s waterways in 2020.

“This decade, we’ve had a lot of stops and starts,” he says. “Now we have a governor who is leading on this issue, who has made it his No. 1 priority. The sky is the limit as we enter into 2020 and you see the groundbreakings on a lot of these projects.”

Among other milestones, this year will see the completion of the first phase of a project to restore the southward flow of freshwater into the Everglades under Tamiami Trail (U.S. 41) and into Florida Bay. “For the first time in nearly 100 years, we have water flowing uninhibited into Everglades National Park and ultimately into the Florida Keys.”

Forecast: INNOVATION INFRASTRUCTURE

Juan Montoya Chief Cobuild Officer
Rokk3r, Miami

There will likely be increasing focus in Miami-Dade on growing companies rather than starting them. Failure to scale up companies founded in the county “continues to be the case,” says Juan Montoya. “But other numbers are trending up,” including more venture capital.

He also expects that Miami-Dade companies looking to grow will increasingly turn to funding sources outside of the venture capital world. Those alternate sources include family offices; angel investors; large companies; and wealthy Latin Americans looking to either diversify their investments or invest money into U.S. companies for safety. There’s more of this type of money in South Florida then there is venture capital, which Montoya thinks bodes well for the innovation ecosystem.

Montoya also expects to see opportunities for technology-based innovation within older, more traditional companies and industries. “You could easily make a case to say anything new or innovative or the future in any industry is in technology, so it becomes about how quickly certain companies or certain people or certain ecosystems can move (to innovate),” he adds.

A significant uncertainty for the county’s innovation ecosystem lies with Latin America. “Unfortunately, the last few weeks in Latin America have been very tumultuous, with unrest in Chile and Ecuador and a big strike in Colombia,” Montoya says. “If those continue, you could expect more people to leave Latin America or move their money out of Latin America, and Miami becomes a destination for that.”

Miami / Miami-Dade, Monroe Counties

• Miami Dade College: Miami Dade College is still without a leader after Eduardo Padrón stepped down in August after more than 20 years as president. The college’s board of trustees rejected three of the four final candidates presented by a search committee and voted in July to restart the search process. The failed initial search has led to mistrust from many stakeholders. Meanwhile, the board appointed retired provost and former MDC trustee Rolando Montoya interim president. The college, the second-largest in the nation, won the 2019 Aspen Prize for Community College Excellence.
• Census 2020: In the 2010 Census, Miami-Dade’s completion rate was 72%, below the national average of 84%. This year, controversy over whether to ask Census respondents their citizenship and the citizenship of others in their households has increased concerns that the county’s population will be undercounted even though the attempt to add the question ultimately failed. At stake: Billions of dollars in population-based federal funding, as well as congressional seats. According to Miami-Dade Counts 2020, a coalition of funders and community groups, “every person not counted translates into $1,800 lost per year in federal funds.” The coalition is led by the Miami Foundation, which raises and distributes money to organizations around the community and is distributing $475,000 in grants to community and government organizations for Census-related outreach. Its work will complement the Miami-Dade County 2020 Census Task Force.
• Super Bowl: This year, Miami will host the Super Bowl for the 11th time, a record. Super Bowl LIV will be played at Hard Rock Stadium, home of the Miami Dolphins and University of Miami Hurricanes football teams. Both the Dolphins, who own the stadium, and the Miami-Fort Lauderdale region, which is host to a long weekend of Super Bowl activities, have a lot to prove. It’s been 10 years since the National Football League held a Super Bowl in Miami, put off in large part because the roofless stadium got nearly an inch of rain during the 2007 game (although it made for sloppy conditions on the field, Prince gave a legendary halftime performance of “Purple Rain” in pouring rain). The Dolphins tried unsuccessfully to obtain government assistance to put a retractable roof on the stadium. Ultimately, the team acted on its own to install a canopy over more than half of the seats, and South Florida won hosting rights for the 2020 game. The Miami Super Bowl Host Committee’s top executive, Ray Martinez, is a law-enforcement veteran — current chief of security for Ultra Music Festival and a former Miami Beach chief of police and Miami assistant chief of police. His job: To oversee daily operations and preparations for Super Bowl LIV and make sure game day goes off without a hitch.
• Virgin Trains: The high-speed train connects downtown Miami with Fort Lauderdale and West Palm Beach. Miami-Dade is already working to add stations. Late in 2019, the county approved $76.7 million to fund a station connected to Aventura Mall at the county’s northern border. That station could open as early as 2020 or as late as 2022 and would move passengers from downtown Miami to Aventura in 15 minutes. The trip can take an hour or more by car during rush hour. The county is also in final negotiations for another new station, at PortMiami, where Virgin will also homeport its first cruise ship beginning this April. Virgin Trains says adding the two Miami stations, plus one in Boca Raton, could more than double its annual ridership by adding another 2 million passengers.
• Tri-Rail: Tri-Rail and local governments spent about $70 million to build a platform for Tri-Rail at Virgin Trains’ station in downtown Miami. But the Tri-Rail trains, which run through Miami-Dade, Broward and Palm Beach counties, still haven’t been able to begin service there. Virgin says Tri-Rail service into the downtown station should start this year but has been delayed while safety upgrades are implemented and approved.
• Politics: Term limits mean Miami-Dade County’s current mayor, Carlos Gimenez, can’t run again, and four current county commissioners (from the 13-member commission), a former commissioner and a former county mayor have already filed to run for mayor in this year’s election. The four current commissioners in the race are Jean Monestime, the commission’s first Haitian-American chairman; former city of Miami Mayor Xavier Suarez; Esteban “Steve” Bovo Jr.; and Daniella Levine Cava. Former county Mayor Alex Penelas and former county commissioner Juan Zapata are also running, as are several other candidates.
• Environment: This past fall, the Florida Keys National Marine Sanctuary proposed rules that will increase restrictions on fishing and other activities in the 2,900-square-nautical-mile preserve. The goal of the Florida Keys National Marine Sanctuary Restoration Blueprint is to improve the health of coral reefs, seagrass, archaeology sites and waters in the sanctuary. But many residents and local business owners, including Florida Keys Commercial Fishermen’s Association Executive Director Bill Kelly, say the new restrictions go too far and that restricting access and closing additional areas will have severe negative consequences for Keys industries such as fishing and diving. Comments will continue through the end of this month.

BUSINESS BRIEFS

CONSTRUCTION

• The National Transportation Safety Board’s review of 2018’s deadly Florida International University pedestrian footbridge collapse blames the university, the Florida Department of Transportation, Tallahassee-based FIGG Bridge Engineers, inspectors, other engineering firms and the bridge’s construction firm. Six people died when the bridge collapsed onto cars on Tamiami Trail. Cracks had been seen growing and spreading in a crucial support junction, but the road below it was left open. Prosecutors are still determining whether to file criminal charges.

EDUCATION

• The University of Miami named its business school after Patricia and Allan Herbert, who own the Richmond Hotel in Miami Beach and have given more than $100 million to the university. The couple pledged an additional gift to what is now the University of Miami Patti and Allan Herbert Business School. Both are graduates of the school. The university would not disclose the amount of the additional gift.

ENTERTAINMENT

• California-based Live Nation acquired a majority stake in Miami Beach-based Groot Hospitality, the company that owns and operates the LIV and Story nightclubs as well as several restaurants. Groot CEO David Grutman will stay on.

FINANCIAL SERVICES

• Los Angeles-based City National Bank opened its first Florida location in Miami, operating as CN Bank (to avoid confusion with City National Bank of Florida).

REAL ESTATE

• Residential real estate brokerage Compass Florida hired former Facebook Mexico director and U.S. multicultural division head Christian Martinez as regional president for Florida.
• Local, state and non-profit groups in Miami-Dade, Broward and Palm Beach counties will use a three-year, $5-million investment from JPMorgan Chase to build apartments and upgrade existing apartment complexes near Brightline and Tri-Rail stations in the eastern parts of the counties. The South Florida Housing Link Collaborative is hoping to build 150 affordable housing units and renovate 150 existing ones.

TECHNOLOGY

• Technology platform Papa, which connects seniors with college students who can assist them with various tasks, raised $10 million in a round of funding, led by California venture capital firm Canaan and including Melinda Gates’ Pivotal Ventures investment firm.
• Conglomerate SoftBank says it is hiring about 100 people for the Miami office it opened in June 2019. They will primarily manage its Latin American investments.
• Through a partnership with Miami-based Wyncode Academy, technology training company General Assembly expanded to Miami-Dade. It has campuses in 25 locations around the world.

MANUFACTURING

• Gunmaker Taurus will close its 175-employee Miami Lakes plant.

HOSPITALITY

• Miami-based Virgin Hotels will open its first South Florida property in Miami’s Brickell neighborhood in 2023. It will be a 40-story hotel with 250 hotel rooms, lounges, event space, an entertainment venue and 150 micro co-living residential units. Developer Blue Jay Capital will operate the residential portion.
• Spain-based Hotusa Group, parent of Eurostars Hotels, purchased the 126- room Eurostar Langford hotel in downtown Miami’s National Bank Building. The $37-million purchase transforms the hospitality giant from brand to owner of the hotel, which is on the National Register of Historic Places.
• Andy Stuart stepped down as CEO of Norwegian Cruise Line. Harry Sommer, president of the line’s parent company, Norwegian Cruise Line Holdings, replaced him.

Read more in Florida Trend's January issue.

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