A federal program that has help fund dozens of big new South Florida business projects over the past decade by swapping U.S. visas and green cards for foreign investment dollars is teetering on the brink of political extinction, according to its supporters.

The EB-5 visa program, which by the estimate of the investment community has funneled more than $18 billion in overseas cash into U.S. business development since 2008 — including hundreds of millions of dollars in Florida — will expire on Sept. 30 unless Congress renews it.

Some of the ongoing high-profile projects that are using EB-5 funds include Florida East Coast Industries’ eagerly awaited Brightline MiamiCentral, the mixed-use downtown Miami station for the upcoming All Aboard Florida passenger rail service. A deal for $130 million in EB-5 funds will go toward the plaza’s 180,000 square feet of retail space.

SkyRise Miami, the ambitious 1,000-foot skyscraper/tourist attraction planned by developer Jeff Berkowitz to launch in 2020, would also include EB-5 funds as part of its $430 million budget.

But the EB-5 faces congressional critics who want to amend the program into oblivion or even it kill it outright. And even to get a fair hearing, it must compete for attention with the always-contentious federal budget, President Trump’s tax-reform proposal and a score of other high-priority items with upcoming deadlines.

“I think Sept. 30 is the drop-dead for renewal,” said Miami immigration attorney Tammy Fox-Issicoff, who frequently works with EB-5 investors. “And I mean that’s the drop-dead date for a full renewal. We’ve had a number of short extensions. That’s killing the program’s credibility with foreign investors who might like to join. Nobody wants to put half a million bucks into something that might be gone in three months.”

What is EB-5?

EB-5 visas were first created in 1990 as part of a larger congressional reform of immigration policy. They allow a foreigner who invests $1 million in a project that will generate at least 10 long-term jobs to get a visa and a green card if the project is completed. The required investment drops to $500,000 if it’s directed at a high-unemployment area.

But EB-5s didn’t really take off until 2009, when the Great Recession dried up commercial lending around the United States. As banks and other traditional credit sources retrenched, businesses started using EB-5 investment to patch the holes they left.

“As a result of those absences, you had to look for alternative sources of financing,” said Michael Conaghan, chief operating officer at Fort Partners, the developer of the Four Seasons Hotel and Private Residences at the Surf Club in Surfside. Conaghan is raising up to $200 million in EB-5 money to build a Four Seasons hotel-residence in Fort Lauderdale. “Since then, EB-5 has proven to be a good source of financing for projects. It also brings new people and new capital and new jobs to the country. A lot of other visa programs focus on people who are already here.”

EB-5 critics say it’s an inefficient investment tool, a needless subsidy to wealthy developers, and an easy target for manipulation and corruption.

“What it mostly does is it saves money for a lot of folks who are already rich and are just getting richer,” said David North, a senior fellow at the Center for Immigration Studies, a Washington think-tank that’s harshly critical of immigration.

But what nobody disputes is that from beer joints to giant train lines, EB-5 funds are fueling economic development and local businesses in South Florida at an increasing rate. According to the latest figures available from the industry trade organization Invest in the USA, EB-5 investment throughout the state shot up from $10,500,000 in 2011 to $150,500,000 in the fiscal year 2013.

The precise impact of the EB-5 is nearly impossible to measure because the government keeps few statistics on the program. No one knows exactly how many EB-5 projects have succeeded, how many failed, or how many jobs have been created.

But the money definitely ripples through other economic measures. Invest in the USA estimates that the total gross domestic product contributed to Florida by EB-5 projects grew from $15 million to $179 million. State and local tax revenue went from $858,822 to $10,918,299.

Mezzanine Funding

Usually, EB-5 money serves as what developers call “mezzanine funding,” which fills the gap between what banks will finance and a project’s total cost.

“In a typical project, the developer is going to have some of his own money involved, maybe 20 to 25 percent of the total cost,” said Ron Klasko, a Philadelphia lawyer who has worked on 10 EB-5 projects in South Florida and hundreds across the country. Another 40 percent or so will come from a construction loan — what’s called the senior loan. And the other 35 percent is the mezzanine loan.”

Mezzanine loans obtained from a bank or other traditional lender might charge 14 to 18 percent. But because EB-5 investors are interested in getting their green cards, they are willing to accept a tiny fraction of that, often between 1 and 3 percent interest.

Funding for these projects is usually put together by federally designated business enterprises known as EB-5 centers that act as conduits for the program’s investment money. As recently as 2010, there were less than 100 EB-5 centers around the United States; now there are more than 850. Although they finance everything from farms to body shops, most of their money goes into real estate projects. In Florida, that has included everything from small businesses to mammoth developments.

Doug Rudolph, the CEO of Tapco Restaurant Group, says its first two Tap 42 Craft Beer Bar & Kitchen restaurants — the Boca Raton location, which opened in 2015, and the Coral Gables spot, which opened in 2016 — each used $2.25 million in EB-5 money, or 80 percent of their total construction costs.

The group’s other two locations — one in Midtown, which opened in June, and an upcoming spot at the Aventura Mall expansion — used $2.5 million each. Rudolph said the three existing restaurants have created “three to four times” the number of jobs required under EB-5 rules. That number varies depending on the size of the investment.

“People who want to invest in businesses that are creating jobs can touch and feel and meet us,” Rudolph said. “They can come into one of our restaurants and eat there, so they know exactly what they’re investing in. Most EB-5 investors intend to live in the same city as their investment, and they like the idea of being part of a local business. They feel closer to their communities.”

The $200 million mixed-use Hollywood Circle development, currently under construction on a 3.2 acre lot on U.S. 1 and Hollywood Blvd., will be composed of a trio of residential towers that will include a boutique hotel, gourmet restaurant, parking garage and a Publix supermarket. The budget includes $109 million in EB-5 funds.

The project is being developed by the Gold Coast Florida Regional Center, which was created in 2010 as a way to fill the void left by the departure of Lehman Brothers, Morgan Stanley and other big financial players from the real estate scene after the 2008 recession.

“We buy money just like plywood for development,” said Charles Abele, a founding partner of Gold Coast. “It’s one of the commodities needed to do what we do, so we decided to raise our own equity. EB-5 serves as a sweetener for every deal.”

Unexpected Benefit

Developers of the 60-story Paramount condo tower at the Miami Worldcenter mixed-use project under construction in downtown Miami say that EB-5 visas have been not a key element in their financing more than $50 million of it — but they say they have become an unexpected marketing tool for the project.

“Four of the 10 units we sold in June went to someone who came to the sales center intending to buy an EB-5 and bought a condo instead,” said Peggy Fucci, president and CEO of the real estate firm OneWorld Properties, the exclusive broker on the Paramount tower. Potential EB-5 investors have pockets deep enough to buy a condo at the tower, where prices start at $700,000.

Curiously, despite the tumultuous state of the U.S. debate over immigration, very little of the criticism of the EB-5 concerns the visas themselves or the 10,000 foreign investors and their family members (the annual cap on EB-5 immigration set by law) who use them to get into the United States each year.

“Most people don’t realize that a million immigrants come into the country each year,” said North, a strong critic of the EB-5. “In the context of a number like that, 10,000 is nothing, a drop in the bucket.”

A much bigger sticking point is what nearly everybody, including the most enthusiastic backers of the EB-5, admits is the program’s inefficient administration by a lumbering immigration bureaucracy that knows lots about visas but very little about cash flow, capitalization or anything else that goes into real estate development.

“The immigration component of the EB-5 program is trivial,” said Philadelphia attorney Klasko. “The EB-5 program doesn’t belong with the immigration service. Immigration officials don’t normally deal with reviewing securities offerings or economic reports or business plans. It creates problems at several levels. When you’re talking about the pace of business — especially in real estate development — it just doesn’t make any sense for immigration officials to say, ‘File your plan with us today and we’ll review it in a year and half.’ That’s not very realistic. But that’s the reality.”

An Uneasy Mix

The EB-5s uneasy mix of politics, business and immigration can lead to practices that are dubious in all three areas. One of the things most frequently denounced is what EB-5 players call “gerrymandering,” after the legislative practice of creating grotesque-looking districts to give one party or another an election advantage.

In the EB-5 version of gerrymandering, developers use tortuous geographic logic to link luxury developments in upscale metropolitan areas with blighted, poverty-stricken districts miles away. That allows them to get access to EB-5 money that’s intended for high-unemployment areas. Because the high-unemployment EB-5 investments can be smaller ($500,000 instead of $1 million), they are more plentiful.

The linkage is possible because the EB-5 law permits the developers to create so-called targeted employment areas, without regard to how large or misshapen they are, as long as the territory consists of adjacent U.S. Census tracts (small areas that are home from 1,200 to 8,000 people).

“We need more regulation on this,” said Rodrigo Azpurua, head of the Riviera Point Development Group, a Broward firm that has raised more than $53 million in EB-5 funds since 2012 to partially fund projects such as the Riviera Point Business Center Doral and the Radisson Red Miami Airport. “Right now, you can pretty easily build a line of Census tracts from Liberty City, where the unemployment rate is 20 percent or so, to Brickell, where it’s zero, and use the Liberty City unemployment to justify a luxury hotel in Brickell.”

Azpurua’s Brickell-to-Liberty City example is, if anything, understated. A 2015 lawsuit in Texas brought to light a targeted employment area that stretched through 190 Census tracts and five counties to link the battered, unemployment-plagued city of Brownsville with a planned upscale hotel in the city of Laredo, 200 miles away.

Not everyone agrees that the Where’s-Waldo? games with Census tracts are a problem. Immigration attorney Fox-Isicoff argues that the location of a project has little connection with where it will create jobs.

“I work on Brickell, but I live in North Miami,” Fox-Isicoff said. “I must drive through 12 or 15 or 20 Census tracts on my way to work each day. Same thing for most of the people in my office.”

And geography becomes even more irrelevant, she says, when the subject is so-called induced jobs — say, the people working in distant factories who manufacture the brick and steel and window glass that go into the construction projects.

“Those are all allowed to count toward the 10 jobs that must be generated by an EB-5 investment,” Fox-Isicoff said. “Does that mean every EB-5 project has to be built next door to a brick factory?”

The Gerrymandering Situation

Others, however, believe that EB-5 gerrymandering is part of a larger problem — that the allure of a potential visa makes investors look past red flags that something is awry. In recent years, EB-5 investors have been victimized in staggering corruption cases in Vermont and South Dakota in which the middlemen packaging their loans ran off well over $100 million of their funds or lost it in unauthorized investments.

The investors not only lost their money (a total of well over $100 million) but their visas, which aren’t awarded unless an investment program is successfully completed.

“It’s true that you can have a Bernie Madoff situation in any investment, with crooks taking your money,” said North. “But the likelihood in an EB-5 investment is greater because the intent of the investment is greater. A bank making a loan is looking for a good investment with solid security. EB-5 investors would like to have their money back eventually, but what they really want is the visas. And they don’t pay much attention to anything else.”

Fox-Isicoff agreed: “Inherent in the EB-5 program is the element of risk. The element of, ‘This may not work. You may not be paid back.’ People lose sight of that fact.”

The bureaucratic delays in the EB-5 program only make matters worse.

“Developers can’t wait two years before they start getting their money from investors, so a lot of times people are making their investment before the government has even reviewed the project,” noted Klasko.

The clumsiness of the EB-5 as an economic tool has led some to suggest that it be replaced with a program that simply sells a certain number of U.S. green cards, just as some two dozen other countries around the world offer citizenship for cash.

The government could use the receipts to create jobs programs wherever they were needed, not just in the high-profile urban areas that developers favor. (A pair of 2016 studies by New York University scholars of the 52 largest EB-5 projects in America since 2009 showed that nearly 40 percent of their money went to a single borough of New York City: Manhattan.)

“If we’re going to prostitute our visa process, let’s get a lot more money for it,” said North. “I’d run an auction. Charge whatever the market would bear. Let the government keep the money instead of giving it to big developers.”

EB-5 Opponents

That’s not one of the proposals on the table in Congress. Those range from killing the EB-5 visa outright to drastically raising its price — which might kill it anyway, many EB-5 supporters say. And although President Trump’s aversion to immigration is well known, the proposals to curtail the EB-5 originated well before his election.

Before President Obama left office, the Department of Homeland Security, which oversees the EB-5 program through its United States Citizenship and Immigration Services office, proposed a series of changes that would raise the minimum EB-5 investment from $500,000 to $1.35 million.

“If the cost goes above $1 million, that’s going to seriously impact the program,” said attorney Randy Sidlosca, a partner in the EB-5 Immigration Investor Program Practice at Cozen O’Connor in Miami. “People just don’t want to part with a million dollars for five or six years, which is how long it usually takes to get your money back from an EB-5.” Sidlosca favors a compromise increase to $850,000, which is gaining support in the EB-5 community. “We can live with that,” he said. “Change is going to come, it’s inevitable, and we need to accept that.”

Compromise is possible, said Ronald Fieldstone, one of the most active EB-5 attorneys in Miami, because the fight about EB-5s is about money rather than ideology, a subject Congress knows how to negotiate.

“This isn’t about Trump and people who don’t like Trump, or Republicans and Democrats, or pro-immigration and anti-immigration,” Fieldstone said. “It’s about rural versus urban. The most combative opponents of EB-5 are people like Iowa’s Republican U.S. Senator Charles Grassley, whose state gets almost none of the EB-5 money because of the way the program has been administered. … I think this can get worked out.”


Source: Miami Herald

Miami was ranked by Schroders Global Cities Index for being a prime global location for real estate investment.

Coming in at no. 27, Miami is one of 18 American cities listed in the top 30 by Schroders.

The index utilized a number of factors to identify the most “economically vibrant cities” including the population age 15 and over as a way to gauge demand for goods and services, median household income, retail sales and gross domestic product. The index also factors potential future growth into its calculations and local university rankings.

“We see universities as being critical in powering city economies,” Tom Walker, the co-head of global real estate securities at Schroders, said. “Knowledge-based hubs are growing in economic strength with a positive knock-on to real estate markets in those locations.”

According to Forbes, the index is used by “wealthy, global real estate investors and by institutional firms looking for the best long term value for fixed asset investments.” Shroders is a top international asset management firm.

Out of those categories, Miami ranked highest in retail sales, with a rank of 12. Miami ranked 19th in population, 19th in median household income, 27th in university ranking and 22nd in gross domestic product output.

Miami is already known as a top spot for international property investors, and it’s inclusion on this list won’t hurt that distinction. And while Miami draws inordinately from South American buyers, perhaps inclusion on this list will help draw interest from European investors.

See the rankings of the top 30 cities below.


Source: Miami Agent Magazine

RealConnex, a platform that connects real estate professionals to both access to capital as well as investments, has announced a strategic partnership with the Miami Association of Realtors.

According to RealConnex, the agreement will see the Miami Association of Realtors, and their 46,000 plus members, leverage the RealConnex platform to manage their properties and transactions. The platform wants to provide a wide variety of services for property investing – not just access to capital.

The Association is said to be working with RealConnex to add new features and improve design. RealConnex plans to roll out the program to other real estate associations accross the US.

RealConnex was founded to solve a problem faced by many real estate developers: funding mid-market projects and connecting to the right capital sources and service providers. RealConnex says it currently has a community of 72,000 developers, sponsors, capital sources, service providers and owners. It expects to reach the 100,000 member mark by the end of 2017. RealConnex claims it is on track to facilitate up to $1 billion dollars in transacted deals on its platform within the same time frame.

“RealConnex will provide our members with a powerful competitive advantage,” said Teresa Kinney, CEO of Miami Association of Realtors. “The platform will make it significantly easier for our members to collaborate, share, network and distribute listings locally, nationally and internationally.”

RealConnex founder and CEO Roy Abrams said he looked forward to extending their collaboration as they build out the network.

“As a New York- and Miami-based real estate technology startup, we are excited about working with MIAMI to offer better service to its member realtors and promote South Florida’s booming economy,” said Abrams.


Source: Crowdfund Insider

Speaking to a Greater Miami Chamber of Commerce crowd, an American Dream Miami consultant said construction on the massive theme-park-oriented mall may not begin until 2025, three years after all roads and expressway interchanges into the development have been completed.

In the meantime, fostering more development around public transit hubs is the key ingredient in creating the kind of critical mass that will transform Miami into a true urban center, according to a panel of downtown and Brickell developers.

“Bringing in the Brightline commuter train into downtown is going to be transformative for the city,” said Greg West, president and chief development officer at ZOM. “It not only elevates Miami, but all of South Florida on the global stage. It should bring more population.”

West joined Swire President Kieran Bowers and Henry Pino, managing member Strategic Properties Group and Alta Developers, in a discussion about builders capitalizing on Miami’s continuing evolution. It was the second of two panels during the Greater Miami Chamber of Commerce 2017 Real Estate Summit held at Jungle Island on Friday.

Pino said his companies have plans to develop two mixed-use sites near Miami-Dade Metrorail stations south of Miami.

“We are trying to expand our projects to be closer to the train stations,” he said. “We just closed on a property that will be 900 feet from the Dadeland South Station,” Pino said. “We have another one in South Miami that is across from city hall and within walking distance to another Metrorail station.”

Earlier this week, Alta paid $11 million for a 1.45-acre industrial site at 9600 South Dixie Highway to complete an assemblage that also includes a 6,250-square-foot site with a retail building at 9514 South Dixie Highway and a 3,125-square-foot site with an office building at 9516 South Dixie Highway. Alta plans to seek county approval to redevelop the sites into a mixed-use project that includes 420 apartments, roughly 20,000 square feet of ground-floor retail, a pool, a fountain and a fitness center.

Bowers said Brickell is a good example of how residential development close to a Metrorail station creates critical mass and encourages people to use public transit

“My experience with Metrorail is that it is fine once you get on it,” Bowers said. “But getting to the stations is the real problem.”

During the earlier panel, three developers building massive projects in the northwest area of Miami-Dade discussed the challenges they face breaking ground, noting it can take years to cut through the regulatory red tape. The panelists were Jose Gonzalez, vice president of corporate development for Florida East Coast Industries, Stuart Wyllie, CEO of the Graham Companies, and Edgar Jones, president of Edgar Jones & Co., which is part of the development team building American Dream Miami.

Gonzalez talked about the hoops Florida East Coast jumped through simply to prepare a former landfill for development into an industrial park.

“We bought the land in 2004,” Gonzalez said. “We literally just broke ground last year. And it will take 10 years to build out that park.”

Jones said that construction of American Dream cannot begin until the state and county finish building all the roads and expressway interchanges that provide access to the gargantuan entertainment and shopping destination.

“That will be completed in 2022,” Jones said. “Construction of the mall won’t start until three years after that.”

Jones also groused about amount of time the developers have been required to spend on traffic studies to convince county officials that American Dream will create more gridlock in an area already plagued by traffic congestion.

“The development team has widened the scope of the areas that may be impacted by more traffic so much that we now know the traffic impact in Santa Monica, California,” Jones said in jest.

He also claimed that if American Dream opponents succeed in killing the project, the massive assemblage of land would be developed into industrial parks.

“You will have trucks on the road at significant levels,” Jones said. “Those trucks will be out during rush hour.”


Source: The Real Deal

Year-end surges in the office, industrial and retail sectors foreshadow robust economic growth across South Florida for 2017, commercial real estate experts say.

A lack of new supply pushed office rents higher, particularly in the downtown corridors, and the optimism displayed by businesses looking to expand is prompting developers to strongly consider shovels in the ground after a decade of inactivity.

West City Partners has proposed a 500,000-square-foot office building in downtown Fort Lauderdale, although the project isn’t expected to break ground until an anchor tenant commits.

The Stiles real estate firm is in talks with Broward College for a ground lease at the two-building site on Las Olas Boulevard. Stiles would tear down the buildings and replace them with a 350,000-square-foot office tower, said Doug Eagon, the developer’s vice chairman.

“It is time to introduce the next generation of office space into the downtown market,” Eagon said.

Last year, Stiles paid $13.1 million for the Bank of America building next to Broward College.

“The firm is considering its options, with retail and residential likely,” Eagon said.

Meanwhile, demand is soaring for warehouse and distribution space as e-commerce suppliers struggle to keep up with online retail sales, according to a report from the Colliers  International real estate firm.

In the fourth quarter of 2016, Broward’s industrial vacancy rate plummetted to 4.4 percent from 6.6 percent in the fourth quarter of 2015, the Colliers data show. Palm Beach County’s vacancy dropped to a nine-year low of 4.2 percent.

Boca Raton and Jupiter had the county’s two lowest industrial vacancy rates, at 1.2 percent and 1.5 percent, respectively. Those two markets also had the two highest rents — $14.53 a square foot in Boca Raton and $11.43 a square foot in Jupiter.

“Palm Beach County has more than 422,000 square feet of industrial space under construction, the majority of it at McCraney Property Co.’s Turpike Business Park adjacent to Florida’s Turnpike at Belvedere Road,” Colliers said.

In Broward, Butters Construction and Development and Bristol Group Inc. are planning a 925,000-square-foot business park at the site of the former Deerfield Country Club off Interstate 95 and Hillsboro Boulevard.

Tom Capocefalo, senior managing director for the Savills Studley commercial real estate brokerage in Miami, said the tri-county region is geographically positioned to easily ship goods domestically or internationally to the end users.

“We’re finding that the South Florida marketplace is one of the top-tier distribution markets in the country,” Capocefalo said. “It’s incredible, the pace of it.”

“Industial developers are moving north into Palm Beach County because the county has more available property than either Broward or Miami-Dade,” said Ken Krasnow, executive managing director for Colliers in South Florida, said

“Land is a scarcity,” Krasnow said. “We’re not making any more of it.”

“Palm Beach County also had a banner year in retail, with more than 1 million square feet of space leased – the highest level since 2006 and nearly double the 515,050 of 2015,” Colliers said.

Broward totaled 1.4 million square feet in new retail leases, its best showing in a decade. The first phase of Dania Pointe, an $800 million shopping and entertainment center, is expected to open this year just east of Interstate 95 at Stirling and Bryan roads in Dania Beach.

Colliers said small blocks of space in the 2,000-square-foot range are most in demand as Broward tenants seek to control costs in an era of rising rents and the growth of e-commerce. With smaller spaces more in vogue, the challenge for retail landlords this year will be to find tenants for the available “big box” spaces across the region, market observers say.

Sports Authority filed for bankruptcy and went out of business, closing 13 stores across South Florida and auctioning 10 others. In January, Macy’s said it would close stores nationwide, including one at CityPlace in West Palm Beach.

“Landlords will first try to find a tenant to take the space in its current configuration,” said Peter Reed, managing principal at Commercial Florida Realty Services in Boca Raton. “When those efforts are exhausted, they’ll have to ask themselves, ‘How do I repurpose this?’ In some cases, they’ll be able to multi-tenant it, but in other cases the best thing may be to scrape it and do something different.”


Source: SunSentinel

Miami’s Wynwood neighborhood, already a hub for artists, technologists and other creatives, will soon be the home of the new Miami College of Design.

It’s the vision of Walter Bender and Franco Lodato, experts in industrial design. The co-founders broke ground last month on the-state-of-the-art educational facility, which will be Florida’s first accredited college focused solely on industrial design, they said. The state-licensed associate and bachelor of science curricula will focus on a mentorship model and nature-inspired design methodologies. Selected students will be able to attend on generous scholarships provided by Bender and Lodato’s  IAM (Industrial Arts and Method) Foundation via donors and corporations. Lodato and Bender are aiming to open the college next fall.

“Ideas are cheap but knowing how to take an idea and make it into a product is rare,” said Bender, a longtime senior research scientist at the Massachusetts Institute of Technology who also co-founded the nonprofit One Laptop Per Child. “Miami has become a hotbed of ideas. It’s young, it’s vibrant, what we want to do is add to that.”

The new college will be officially announced Wednesday by Miami Mayor Tomás Regalado, along with Bender and Lodato, to kick off the Masters of Tomorrow Summit, a conference bringing together design thinkers from around the world. The conference line-up, curated in partnership with the IAM Foundation, includes talks on virtual reality in film, using big data in climate change research, wearable fashion, smart luggage, incorporating “mindfulness” in design and other topics and ends with a free concert behind The LAB Miami.

The Miami College of Design will seek to advance the integration of design, science and engineering by taking students through a design process, exploring new approaches and solutions.

“The aim is human-centered and nature-inspired design that enhances the human experience, and our approach will be unconventional,” said Lodato, who previously headed design at Motorola and was a director at VSN Mobil Technologies in South Florida, among other roles, and has been collaborating with Bender on various projects for two decades.

Lodato pioneered “bionics,” the theory and practice of nature-inspired design. He has served as Master Innovator of wearable technologies for Google-Motorola and he led design for Herman Miller and Pininfarina. He holds 71 patents including one for the precursor of Gillette’s Mach3, and he has also consulted for Dupont, Coca-Cola, Ferrari-Maserati, Boeing and others.

Bender, president of the IAM Foundation, is also founder of the nonprofit Sugar Labs, a collaborative learning platform, and co-founder of One Laptop Per Child, which innovated distribution of laptops in third-world countries. He headed the MIT Media Lab and founded the MIT News in the Future Consortium, which helped launch the era of digital news.

Rendering shows the front of the Miami College of Design under construction in Wynwood

Rendering shows the front of the Miami College of Design under construction in Wynwood

About 18 months ago Lodato and Bender embarked on this college, acquiring the property and applying for a state license. The new building, designed by architect Fred Nagler of Pompano Beach, is under construction at 26 NE 25th St. They took off the front and rear of the two-story warehouse and expanded it, and are adding a third floor and rooftop garden as a social space, Lodato said. While the school is being constructed, the IAM Foundation will be doing workshops and seminars at The LAB Miami and other venues.

The curricula will be based on Bender and Lodato’s apprenticeship-driven education model that has close ties to industry. It will be project-based, and each student will work on a few projects hand in hand with professionals from the field who become their mentors.

“One of our goals in our model is that the students will be on 90 percent scholarships funded by industry. We already have raised funding for the first cohort of students. We really want students to focus on learning 100 percent, not on how they will pay for it. The work they do will be valuable for the industry,” Lodato said.

Miami is a natural location for the new school, they said.

“There is clearly an energy here but there is not a lot of history in the space in Miami. That means there is not a lot of rigid thinking – there is a lot more openness to ideas and new approaches,” said Bender. “It is a great opportunity for a vibrant, young community and at the same time the world has really opened up to this idea of entrepreneurship, of making, of doing. It’s the time. It’s the right time to be doing this.”


Source: Miami Herald

The king of real estate is set to rule the country, but what will a Donald Trump presidency mean for local real estate, one of South Florida’s biggest industries?

The Miami Herald wanted to gauge response from Realtors, developers, economists, bankers and lawyers about possible impacts of the election, both in the short and long term.

The Miami Herald asked: Will a new president — especially a political unknown like Trump — mean uncertainty for Miami real estate? What will the election’s impact be on sales and developer activity? They also wanted to know their views on whether Latin American investors would hesitate to invest in President Trump’s America after his strong anti-immigration stance. Will his election depress demand from Latin American buyers?

Overall, those who responded are mostly bullish, as you might expect from business people who depend on optimism and consumer confidence for sales. The Miami Herald selected a representative sampling of the views expressed and excerpted comments they made, mostly via email. (Thanks to the team at Bendixen & Amandi, the Miami Herald partners on their annual Real Estate survey, which helped put out the word.)


Mekael Teshome, economist at PNC Financial Services Group

Trump’s policies on immigration and trade could have the greatest effect on the South Florida real estate market, Teshome said.

“The president in a sense is using a blunt instrument where you’re dealing with the whole country. Real estate is an industry where it’s very localized. It would be hard for a President Trump to craft a policy that affects the real estate market in South Florida.”

Since the early 2000s, the local real estate industry has relied heavily on foreign investors. But their numbers have thinned because of a strong dollar and weak foreign economies. If Trump’s proposed policies result in higher tariffs, friction over trade and lower confidence in the United States as a stable haven for flight capital, that could scare away foreign investors, Teshome said. “Fewer foreign buyers would weaken demand.”


Jeff Morr, broker with Douglas Elliman, chair of Miami Master Brokers Forum

“I think people are just happy that the drawn out, vitriolic election process is over. Interest rates are low, the economy is solid and many prices have adjusted. The timing couldn’t be better for buying in Miami.” Longer term, he said: “I expect continued improvement barring any major catastrophes.”

Morr’s business is about half foreign, half domestic; his domestic business has grown because of the U.S. housing market recovery and a strong dollar.

Will Latin Americans continue to invest in Miami real estate? “The U.S. is still the U.S. — a safe haven for people from around the globe. Miami is the unofficial capital of Latin America and will continue to be the beneficiary of Latin American money.”


Jorge Pérez, CEO, Related Group

Pérez recently returned from a sales trip to Mexico and said the biggest fear of potential buyers for real estate is the possible visa status changes that could take place with Trump as president.

“We had to reassure our clients that in our opinion there will be no increased restrictions on visas or ownership requirements for foreign buyers. Trump is a businessman and understands the importance of foreign buyers. We have done four condominium towers with him in Florida, and he was part of the presentations to Latin Americans. … I believe that, if anything, he will try to promote this investment to help our economy grow.

“A very large percentage of our buyers are from South America and also from Europe. They invest not only because they love Miami’s lifestyle but also because it is the most secure country in which to invest. Uncertainty is a big deterrent to investment, and I hope that no policies are developed which in any way affect our standing as the most secure country in which to invest. I am also hoping that, after clear and unbiased reflection, Mr. Trump realizes that trade will lead to greater growth and employment in America, which is the cornerstone of his campaign.”


Avra Jain, real estate developer and investor

“Overall, Trump will have a positive effect on the real estate industry. People may pause for a week or two while they digest, but I expect the market to resume its positive course.”

Over the next 12 months, “given he is heavily invested in the real estate space, I would expect him to protect favorable real estate tax laws currently in place and will probably try to create more incentives to encourage investment/development. “Favorable policies will be good for everyone, but the personal tax incentives from the income and capital gains would benefit U.S./resident buyers more.”

Her personal concern: Supreme Court justice appointments and how that will affect her daughter’s generation.


Masoud Shojaee, president and chairman of Shoma Group

“We have seen so much unpredictability in the course of this election; we are dealing with a very unpredictable person. That will destabilize our dollar in the short term, which will create opportunities for foreign investors. …The message we are hearing from the new administration is that more jobs will be created, more infrastructures and growing of the economy. If this is truly the case, it will have a positive impact to our market. No matter what the rhetoric was prior to the election, the new administration will focus on reality and hopefully on the positive path this country needed badly.”


Marcelo Tenenbaum, co-principal of Blue Road, a Miami developer of residential, hospitality and commercial projects

As to the short-term impact of a Trump presidency on Miami real estate, as well as the impact one year out: “We don’t see any change in that trend. Miami has been a magnet for investors for more than 30 years, regardless of different presidents, political moods and parties — they look at the long term. … As the electoral campaign defuses, people will go back to business as usual. Trump talked about a tax cut, which might help to increase profit for investors. That is music to their ears.”

On Latin American investors in particular, he said, “Investors are pragmatic. They look at numbers and returns; they don’t look at political correctness, values, etc. If Trump reduces capital gains, income-tax rates and eliminates the estate tax (which is huge for foreign investors), they will keep investing in South Florida.”


Jack McCabe, a South Florida real estate analyst

The country was likely heading into a recession in 2017 no matter who was elected, but the uncertainty of a Trump presidency will accelerate it, McCabe said.

In South Florida, the implications of a Trump presidency will likely be most hard-felt among foreign buyers, who make up about 60 percent of South Florida real estate sales, he said, because of Trump’s disparaging remarks against Hispanics, Muslims and other minority groups.

“Without a doubt, Mexican buyers that have been a growing segment; I think many will find it difficult to invest.” The threat is particularly badly timed now, when foreign investment has eased due to recessions in other countries and a strong U.S. dollar.

Issues have arisen closer to home, too. Luxury real estate, which is largely bolstered by foreign investors, has been suffering from drops in resales and increasing supply. The uncertainty of Trump’s presidency will likely raise more questions for investors. In the past several months, several developers have put plans on hold due to the slowdown in the market, McCabe said.

“There is a tremendous amount of concern from different countries about how his presidency is going to affect global economics. We are headed for a very volatile period in the future, especially in the luxury real estate section.”


Marc Shuster, partner at Berger Singerman

“Generally speaking, I don’t see a connection to any president and his/her election on the one hand, and Miami real estate functionality, on the other. I think if anything we might see some pullback by U.S. investors in the short term who are concerned about yield over the next year or so.

“Conversely, the long-term tailwinds that the U.S. is positioned to inherit or even seize makes for a very rosy picture for Miami real estate in the long run. It is a premier destination, and a low-interest-rate environment creates a long-term play for prosperity.

“It seems dubious to me that his campaign speeches will be easily put into government, [with] the executive branch being checked by the Legislature and judicial. And I think, given the rest of the world has such strong economic dislocations, Miami will continue to be one bright spot on the world stage, almost out of necessity when looking at the entire world and desirous of achieving yield in cash-flowing assets. The weather, lack of state income tax, population growth, low-interest-rate environment will help.”


Jay Parker, CEO, Florida Brokerage, Douglas Elliman

Parker doesn’t expect a major impact this year.

“That said, I do believe the world in general has faced uncertainty by pausing on most major decisions, especially as we faced the end of a long and complicated election process. As has been seen in the stock market on the first day since the election, I expect that the world will find confidence in the fact that the U.S. is a strong and safe country to invest in. And as we see the country reunite, I think our real estate market will see a strong boost. I also expect that issues like Zika will subside, which will directly benefit Florida.

“Ultimately, I believe and expect Trump’s tax plan, banking regulations and overall effort to lower taxes will create more income, more spending power, which will lead to a housing industry boom. I expect we will see more impact as we move into the first and second quarters of 2017.”

In Florida, Douglas Elliman has seen slower velocity from foreign markets, but Parker believes that many such markets will resume their focus on the U.S., as he expects the security of investment and overall opportunity will increase under the Trump presidency. “I also believe that states like Florida will remain uniquely appealing due to our tax benefits and the continued maturity of our culture, educational institutions, hospitals and quality of life.”


Daniel de la Vega, president, One Sotheby’s International Realty

On a national macroeconomic level, most people will take a wait-and-see approach, de la Vega said. “From a local real estate level, I believe people just wanted to know the definite outcome. Now that they do, they feel more confident making their purchase. Donald started off on a good foot in his acceptance speech by saying he wants to bring America together, thanking everyone around him for his success and verbalizing his admiration for Hillary in a long hard-fought battle.

“Some of his fiscal policies and less regulation could lead to economic growth. Jobs created in states that are most competitive will lead to a healthy more stable U.S. Most foreign investors look for stability and a democratic place to put their money. Overall, this country always finds a way.

“2016 definitely shifted to a more domestic buyer. Financing has eased, and job and wage growth were on the rise. I believe this will continue if we make for a better America. This will not be about who our leader is, this will be about who we are as Americans. Like Deepak Chopra said: ‘Perhaps the future no longer depends on a single leader but on each of us who can quietly dedicate our life to light, love and healing.’”


Gil Dezer, Dezer Developments and Trump’s former business partner on several South Florida developments

“I think the overall economy will get a boost as consumer confidence grows due to the results of this election. Unfortunately, I’m sold out of Trump units in my six buildings, but I’m sure my clients will enjoy a nice bump in value. … I presume that a year from now is when we will really start to see the positive economic impacts of Mr. Trump’s presidency.”

Will Latin American investors in particular continue to choose to buy in Miami because the U.S. is a stable political and economic environment? “I think you answered your own question here. Latin American INVESTORS are doing just that. They are investing. There is a small fraction of them that actually leave their businesses and families behind to move here. I don’t believe there will be any changes to tourism policies or tourist visas. Latin Americans looking to emigrate to the U.S.A. will most likely go the EB-5 route. That is a completely separate transaction from a real estate purchase.”


Peggy Fucci, CEO, One World Properties

“I think our buyers will continue to see Miami as a safe haven — the U.S. continues to provide that image regardless of who the president is. The situation in all the markets that continue to buy Miami, especially Brazil and Argentina, hasn’t changed. Miami is a great bet. We are talking about a city that is poised to be the Hong Kong of the West with all the characteristics necessary — diversity, financial institutions — and it’s centrally located to South America and Europe.

“Trump has real estate in his blood. He has already said he is interested in boosting home ownership. If he shows that during the upcoming year by continuing to keep interest rates low, our housing market will continue to grow. There is too much international turmoil not to continue to keep our rates down. We will also see the rise of the U.S. buyer.”

She said international markets represent about 60 percent of her companies’ sales among all its projects. “Latin America has always invested in Miami … In addition, Trump’s immigration policy has changed since he started campaigning; immigration reform would be a tough bill to push through, so it’s difficult to determine whether this will have any influence in the real estate market.”


Armando Codina, developer and executive chairman, Codina Partners

“We do not believe that a new president equates to an uncertain real estate environment here in Miami. The Miami real estate market will probably react much like the stock market reacted [after the election results were announced] — a pre-market drop and then a quick rebound.

“If Trump is successful at getting his proposed tax plan into effect, we believe it will have a positive impact on the economy in general. Real estate will benefit from lower capital gains, and businesses should benefit from lower corporate rates. “Elections in Latin America have a much greater impact on us. America will continue to be seen as a great safe haven.”


Craig Studnicky, broker and principal of ISG World

Trump’s lack of experience in public affairs has international buyers and real estate developers concerned, Studnicky said, but Trump is a real estate developer — it’s in his blood.

“There are many people in Miami and abroad that are hoping Donald Trump will use his power as president to influence policies that are favorable for the real estate industry and build a healthy real estate economy. Time will tell. The real question is, in a year from now, will Donald Trump be perceived as a strong leader for the country and will his presidency be perceived as a benefit by the world? Domestically, he/it may be. It’s very unpredictable at the moment.”


Art Falcone, co-founder and managing principal of Encore Capital Management

Like traders in the stock market, real estate buyers may react to gyrations in the market and become skittish, Falcone said. “But as to developers, if you are not thinking long term, you should not be in this business. You can’t invest hundreds of millions of dollars into projects and overreact to short-term market changes.

“We were on the phone with some partners from China [Nov. 9], and there was certainly no overreaction about changing their long-term thinking about Miami. If Trump does half of the economic stimulus policies he has mentioned, versus things the media has hyperbolized as being hurtful to the economy, we would be in good shape. He’s certainly not going to eliminate trade altogether.

“With EB-5 projects, you could see a big push to file new applications because of the uncertainty of what the new administration might do with that program. There could be some very positive long-term benefits here if Trump and the policymakers are successful with the infrastructure investments they hope to facilitate. “In general, consumers don’t cause recessions — policymakers do. We have to keep a careful eye on what policymakers will do in the first year of the administration.”


Chris Zoller, broker at EWM Realty International

After an election year of uncertainty, Trump’s presidency ushers in an era of certainty, Zoller said. “Now we know what we have, but don’t forget one important thing: What we have is a system that works so well, that is still the strongest democracy on the planet, is still creating the safest place to be investing in real estate.”

Zoller expects the next few years to be prosperous, largely driven by economics, not politics. “In my experience, the president in the White House has much less to do with economics than the business community or the Treasury or the Federal Reserve System or Wall Street.”

Experts have worried that Latin American investors, who are major players in South Florida’s real estate industry, would be scared away by Trump’s anti-immigration stance. Zoller disagrees. “I don’t think every foreigner is looking to come here to live,” he said. “And I don’t think there is a more attractive place for them to make an investment [than Miami].”


Andrés Asion, master broker, founder/broker of Miami Real Estate Group

Asion was in Mexico for a poorly attended real estate expo that started the day after the U.S. election. While the peso was tumbling and the country seemed to be in shock about the news, Asion believes that will be temporary.

“Many Mexicans I spoke to feel that Trump is looking out for the best interest of the American people first and they understand that. [They] also feel that after the initial state of shock, Mexicans will continue to invest in the United States because other areas like Europe are too far and South America does not offer the security of the United States. … They feel people will always want to invest in a country that is doing well, so if Trump’s policies will make the U.S. economy strong, it will in turn make everyone else want to invest into it, regardless… The people I spoke to also understand that Trump wants to have a hard stance on immigration.

“In the short term, the hold from many Latin Americans in ‘wait-and-see mode’ will cause sellers in Miami to possibly lower prices in order to move units quicker as the South Americans slow their buying power for approximately the next six months.”


James Shindell, attorney and chair of Bilzin Sumberg’s real estate group

“On the commercial side, Miami will continue to be an attractive destination for Latin American capital. It is still an exciting gateway market on an upward trajectory. It is still Spanish-speaking. It is still safe. The rule of law still applies. Alternative investment choices haven’t suddenly lost their flaws. If that’s not enough, the president-elect is a real estate developer.”


Dan Kodsi, developer and CEO of Paramount Ventures

Kodsi said a Trump presidency may create some short-term uncertainty in the Miami real estate market, which may weaken the dollar over the next 60 days and send a buy signal to Miami’s largest market, South America, as a good time to buy.

As Trump begins to build his cabinet with fiscally conservative Republicans combined with private sector ex-CEOs who wouldn’t ordinarily get involved in the public sector, it will create a new confidence in our economy, Kodsi said. “While our largest market the Latin Americans may be offended by Mr. Trump’s rhetoric, they will make investment decisions based on the strength of our economy, not his personality. Continuing the reckless spending of past administrations will continue to weaken us over time and would have created an unforeseen long-term issue.”

About 90 percent of Kodsi’s business is from foreigners — about the same as a year ago, he said. “Most of the Latin Americans that invest in Miami do not come to the country illegally. His anti-immigration stance is against illegal immigration, not overall immigration to the U.S. The type of buyers that invest in Miami real estate are the immigrants that a Trump administration will most likely incentivize to come live and invest in the U.S.”


Mike Pappas, Realtor, CEO and president of the Keyes Company

The market likes clarity and consistency. There may be a slight pause until the market understands his economic and immigration plan. Longer term, “If Trump implements a pro-business strategy, then that will lift sales and prices.”

Thirty percent of Keyes’ Miami-Dade market is from foreign buyers. “With the dollar strengthening and turmoil in Venezuela, along with political and economic issues in Brazil, we have seen a slight decrease this past year. We are seeing a rising interest now from Asia, as well as a strengthening of the northeast domestic market toward South Florida. For the long term, there’s no effect. In fact, it may actually be positive. As for the short term, they may sit on the sideline until they are comfortable with the new policies.”


Ezra Katz, real estate investor, CEO of Aztec Group

“Donald Trump is a businessman and developer by trade, so I believe his presidency will positively impact our economy — and by extension, real estate development, finance and sales. I think his administration will create jobs, which will stimulate consumer spending, and I believe he will be pro-business. By eliminating many of the bureaucratic regulations that are hurting U.S. companies, we will encourage entrepreneurship and entice companies to relocate to gateway markets like South Florida. The real wild card is whether President-elect Trump will reach across the aisle to work with members of both parties in Congress. If he makes bipartisanship a priority, then the U.S. economy is destined for significant growth.

“The U.S. will be a significantly better-managed country under President Trump, particularly when compared with nations in Latin America and Europe. As people overseas begin to see the U.S. economy thriving, it’s only natural that they will want to join in on the growth and profit themselves by opening businesses here and investing here — as they should. The vast majority of inbound investors in South Florida are migrating and doing business here legally, so President-elect Trump’s stance on immigration is unlikely to have a measurable effect on our regional real estate economy.”


Karen Elmir, broker, CEO of the Elmir Group

Elmir believes short-term impact will be minimal. “The long-term projections relative to Miami real estate are positive due to the economic policies of President-elect Donald Trump — lowering of tax rates for individuals and corporations, and the reduction of governmental regulations. These should result in an increase in the GDP from the current lethargic figure of 1 to 1 1/2 percent to a robust projected increase of 2 1/2 to 4 percent GDP projected for mid-2017 through mid-2018. A commensurate increase in property values in part due to the increase in GDP and in part due to these policies will result in a slight increase in the inflation rate, which should create upward pressure on residential prices.”

Foreign nationals find investment in Miami real estate attractive because of proximity to South and Central America and the stability of the United States’ political and economic environment, she said. “The immigration policy should have minimal impact on buyers of luxury real estate in Miami.”


Calixto Garcia-Velez, executive vice president of FirstBank Florida

“Sales and developer activity are affected by economic drivers, not necessarily political changes. For example, the Federal Reserve has the potential to have a more effective impact on real estate, as any increase or decrease in interest rates can materially affect someone’s ability to pay a mortgage/loan. Although the new president cannot directly influence the Fed, the movement we’ve seen across America and the new administration’s platform could influence the Fed’s decision-making process moving forward.

“It is premature to predict long-term activity as a result of the election. In any event, it is important to note that change in political arena does not necessarily mean change in the real estate market. More significant drivers are what occurs in the world markets and the countries that directly contribute to our real estate activity. For example, Latin America’s economics and political landscape may have more of an effect than short- or long-term election results.

“Regardless of who is president of the United States, Miami has been, and will continue to be, a safe investment and beacon of strength and stability for Latin American investors.”


Ron Shuffield, Realtor, president and CEO of EWM Realty International

Shuffield does not think it means uncertainty for the market because Trump is such a highly recognized entity within Miami’s real estate community. “A president-elect who has frequently stated that one of his main goals in office is to address overregulation by the government would have an immediate positive impact on the market.

“I see it as all the more positive in the long run. While much of the luxury market is driven by cash or mostly cash sales, securing a mortgage, especially at the entry level, has become incredibly cumbersome. The overly stringent credit limits that came to pass as a reaction to the financial issues from the recession have had a very negative influence on specifically, the entry level market. His working to eliminate unnecessary barriers will certainly help keep the market moving forward at a viable growth pace.”

Shuffield also doesn’t see negative fallout in the Latin American market. “The person who is purchasing in South Florida is in the U.S. legally, and they certainly have means. Trump has always said that he has no issue with people who are in the U.S. legally. Will the Latin American buyer be psychologically affected and hence not purchase? For the most part, I really do not think so because we are already seeing a softening of that stance from even 60 days ago. I believe Trump’s pro-business, pro-real estate stance will compensate for any negative feelings they may have.”


Alex Zylberglait, broker and senior vice president of investments with Marcus & Millichap

In the short term, uncertainty created by a new administration will most likely mean a pause among some investors until emotions settle down. But Zylberglait doesn’t project a slowdown in deals. “Miami real estate deals in South Florida and especially Miami are, in big part, fueled by foreign capital. Except for Mexico, the impact of the Trump elections hasn’t reflected negatively on the value of their currency against the dollar. On the contrary, from the yen to the euro, currencies around the world gained strength, making U.S. real estate more affordable. Also, many real estate investors feel comfortable having a real estate person calling the shots in the White House.

“Having said that, every new administration brings uncertainty to the market so we may see a rush to close deals before Jan. 20 to take advantage of current rules on the books to play it safe. I would not be surprised if the uncertainty in the stock market will re-direct capital to the real estate market in search for a better return.”

Longer term, it will all depend on how the credit markets respond to the new administration, Zylberglait said. “If banks trust Trump’s ability to govern and support its agenda in terms of lending regulations, lenders will feel comfortable refinancing deals and making acquisition and construction loans. Otherwise, it will negatively impact the future of deals because most domestic investors need financing to close on a deal and developers to finance new construction. Since many foreign investors buy cash, they will have the flexibility to buy assets even when the U.S. credit markets put more restrictions on lending. Miami benefits from cash-buyers from across the globe so a tighter lending environment will have less of an impact in Miami than in other cities.”

Zylberglait doesn’t see a slowdown in foreign investment on commercial real estate in the $1 million to $20 million range. “Having said that, if the Trump administration develops an anti-immigration stance, it will hurt deals. Investors are people and they go where they feel welcome. … It is important to see how governments across LatAm will react to Trump’s unexpected victory.”


Edward W. Easton, chairman and CEO of the Easton Group based in Doral

“In my opinion, President Donald Trump will not be harmful to Miami real estate. Because he understands real estate, I’m of the belief that he’ll be pro-growth between South and Central America, and North America — and that will be to our benefit, if in fact it happens. Same for long-term activity: It will take time, but in my opinion, it will be neutral or positive.”

Easton believes there will be a waiting period where people watch and see what kind of people Trump surrounds himself with. “I’m hopeful he will be a pro-business president and will cut back on the regulations that I believe are harming our economy.”

Foreign sales are down, but mainly because of currency, not because who the president is, he said. “What will be helpful is if the Trump presidency will be less regulatory than the Obama presidency. Regulations, especially around the Dodd Frank Act, have caused some worry for potential investors from South and Central America. That basically puts the burden on the investor to supply a lot of the documentation to the government about what they’re doing. And that’s not something investors want to have happen. So, maybe by Trump eliminating a lot of the regulations, that will be very positive for investment in the United States by foreigners.”

Regarding Latin American investment, “I believe it will be a net positive. Their fears of investing are coming from what’s going on in their own countries, more than the fears of what’s going on politically in our country. Real estate is a protective asset for them, and I don’t think that reality changes. They feel safe putting money in America and that will continue. Regulatory behavior will be helpful for that.”


Aaron Drucker, managing broker in Miami for national real estate brokerage Redfin

Inventory levels and economics will drive consumer decision-making, not election results. Any uncertainty will be short term as Trump lays out more concrete plans for how he’ll help the housing market, Drucker said.

Some wealthy sellers may delay listing their homes this year, hoping to get a more favorable death tax rate, he said. Trump’s proposed tax plan does include repealing the “Death Tax.” “I don’t believe developers will make any rash decisions or change any current promotions they are advertising. For projects currently on hold, it’s likely some developers will revisit coming to market if they believe GDP growth will improve under a Trump presidency and a Republican-led congress.”

Long term, if Trump can execute his tax plan, business and personal taxes will be cut from current levels, Drucker said. Finance regulations implemented under Dodd-Frank and the CFPB could be repealed or replaced with guidelines that are more business-friendly.

“One of the biggest impacts Trump can have to the housing market long term is a refocus on FHA loans. Those are the federal government’s strongest tools for increasing home ownership and expanding access to housing for low-to-middle income and minority Americans, but the mortgage insurance premium for the life of the home loan under FHA can be a deterrent for some borrowers. If Trump can remove that premium, we could see increased access to home ownership and sales volume in the market.”

Trump can also relax some of the scrutiny appraisers must give to the “condition” of the home required when a veteran obtains a VA loan, Drucker said. “When veterans are trying to buy a home with a VA loan and get into multiple-offer situations, it can be hard to compete with other buyers bringing conventional loans or cash to the table. Trump has talked a lot in the campaign about the importance of taking care of our veterans, so we’ll see if he incorporates their housing needs into his plan.”


Jill Hertzberg and Jill Eber, “The Jills” at Coldwell Banker, master brokers

Uncertainty can rattle the stock market, which impacts the high-end luxury market, The Jills said. Election night was difficult for the market, but it rebounded the next day.

Longer term, “It’s hard to have a crystal ball, but the Miami market will really depend on the growth of the economy in the next year, both here in the U.S. and economies around the globe. The world is so interconnected, and we are very dependent on what happens in our feeder markets. We are a primary as well as a second- and third-home market, and we are very attractive [for] our favorable taxation [and] reasonable pricing compared to the Northeast U.S., California, Europe and Brazil, and [the U.S. is] a safe country for capital flight.”

South Americans will continue to invest in Miami, the Jills believe. “They have been coming for years and years, they have relatives and friends here, and they are very comfortable here.”


Mark Meland, a partner at Meland, Russin and Budwick

While markets don’t like uncertainty, the transactions scheduled to close before the end of the year likely took political risks into consideration, Meland said. “So, in the short term, we do not see much impact [on] the markets. Certainly, interest rate volatility is more impactful in the short run. In the long term, a Republican president with a Republican House and Senate should provide for similar, or favorable, tax treatment for real estate transactions.”

The maturity and stability of the market and the U.S. dollar are more important factors than immigration policy, he said. “While some foreign buyers may be investing for immigration purposes, i.e. EB-5 investments, most are investing in the U.S. market for the stability of the market, as a hedge against currency fluctuations/devaluations and inflation in native countries. The devaluation of Latin American currencies to the dollar (i.e. Mexico) could have potentially negative effects on the real estate market as U.S. real estate assets will be more expensive for these foreigners.”


Paul Shelowitz and Ira Teicher, real estate attorneys at Stroock, Stroock & Lavan

These attorneys think that in the short term, Trump’s victory will temporarily chill sales activity, given how overheated the real estate market is right now. As to developer activity, there will be little or no discernible impact given the long lead time associated with project development, they said.

“Our clients tell us that uncertainty relative to a Trump presidency is expected to create buying opportunities. Of course, with that comes additional risk. Our clients are already acting on the news and putting out feelers for jittery institutions and the like. Our clients have also noted that a positive/negative start to Trump’s administration might bring added/reduced value to properties located in the vicinity of Trump branded assets. The latter point of course remains to be seen.”

They believe Latin American investors will perceive the same opportunities that their domestic clients have noted. “Our experience dictates that shrewd investors — here or abroad — are able to divorce their own political views from their investment decisions. We don’t believe that Trump’s anti-immigration stance will materially impact that analysis.”


Ken Krasnow, executive managing director for the South Florida region, Colliers International

The lack of certainty and unpredictable nature of any election affects investor confidence, Krasnow said, but market volatility was short-lived, and, ultimately investors found opportunity.

“While uncertainty levels remain high, we expect the Fed to delay raising interest rates this year, and investors may push investment decisions into Q1 until they understand what a Trump presidency means for them. … Miami is already recognized as a safe haven for investors, and Trump’s promise to lower taxes and reduce capital-gains rates could spur additional investment here. An area to watch would be the industrial market: Trump’s plans to renegotiate trade agreements may pose a level of uncertainty for Miami. Global trade and job growth have been a catalyst for the growth of Miami’s industrial market.”


Liza Mendez, Realtor

“Some portions of the market have been at a standstill, waiting the results. Now that we know the direction, the marketplace will start to make decisions on what is best.” But Mendez is most optimistic about “getting our government to actually work on the issues and provide solutions rather than gridlock.”

Source: Miami Herald

The policy director of a think tank supported by Florida’s largest electric utilities admitted at a conference what opponents have claimed for months: The industry attempted to deceive voters into supporting restrictions on the expansion of solar by shrouding Amendment 1 as a pro-solar amendment.

Sal Nuzzo, a vice president at the James Madison Institute in Tallahassee, detailed the strategy used by the state’s largest utilities to create and finance Amendment 1 at the State Energy/Environment Leadership Summit in Nashville on Oct. 2.

Nuzzo called the amendment, which has received more than $21 million in utility industry financing, “an incredibly savvy maneuver” that “would completely negate anything they (pro-solar interests) would try to do either legislatively or constitutionally down the road,” according to an audio recording of the event supplied to the Herald/Times.

Nuzzo offered others a recommendation: “As you guys look at policy in your state, or constitutional ballot initiatives in your state, remember this: Solar polls very well,” he said. “To the degree that we can use a little bit of political jiu-jitsu and take what they’re kind of pinning us on and use it to our benefit either in policy, in legislation or in constitutional referendums — if that’s the direction you want to take — use the language of promoting solar, and kind of, kind of put in these protections for consumers that choose not to install rooftop.”

The comments underscore the claims made by opponents to Amendment 1 on the November ballot that the utility-backed political committee, Consumers for Smart Solar, was formed to undercut attempts to allow third-party sales of rooftop solar by leaving voters with the impression that their rival amendment will expand solar generation in Florida.

Spokeperson for Consumers for Smart Solar, Sarah Bascom, however, contradicted Nuzzo’s claims and told the Herald/Times late Tuesday that “Consumers for Smart Solar did not engage or hire or ask JMI to do research regarding the effort.”

Robert McClure, executive director of the Tallahassee-based James Madison Institute, responded to this report and said Nuzzo “misspoke” when he characterized the effort as a strategy to deceive voters into thinking the plan was a pro-solar amendment.

“At an event with an unfamiliar, national audience, Mr. Nuzzo generalized his commentary and misspoke in reference to JMI partnering with Consumers for Smart Solar in any capacity,” McClure said in a statement. “JMI has never worked with or received funding from Consumers for Smart Solar,” McClure said in a statement. “We have released policy positions on both solar amendments and have publicly spoken on the pros and cons of each.”

The solar industry-backed group, Floridians for Solar Choice, wants to encourage a broad-scale solar market in the Sunshine State by using the state Constitution to remove the ban on third-party sales and require lawmakers to allow customers to lease their solar generation to neighbors or building tenants. But the effort failed to get enough signatures to appear on the November ballot. It is expected to return in 2018.

Threat To Utilities

Utility investors, like Warren Buffett, and the industry’s trade group have warned that distributed energy from solar and wind are long-term threats to the monopoly economics model of the investor-owned utilities. Floridians for Solar Choice claim that the amendment attempts to convince voters that it is pro-solar when it “paves the way for barriers that would penalize solar customers” and adds to the state Constitution “the false assumption that solar customers are ‘subsidized’ by non-solar customers.”

Nuzzo confirmed that he made the comments while on a panel for the conference. He disagreed that the strategy was deceptive and instead claimed that the opponents of Amendment 1 “have been rather deceptive about the degree to which solar is already incentivized and already propped up and subject to more crony carve-outs than anything else.”

In mailers and television ads for Amendment 1, the utility industry says it will allow customers to “strengthen your right to generate your own solar energy … protect consumers, particularly our seniors, from scam artists … and protect consumers who don’t choose solar from having to pay higher monthly electric bills.”

The Florida Supreme Court approved the amendment language in a 4-3 vote, concluding the proposal was not misleading but did enshrine into the Constitution protections consumers already had. Justice Barbara Pariente, in her dissenting opinion, called the language “a wolf in sheep’s clothing” because it would allow utilities to raise fees on solar customers and was “masquerading as a pro-solar energy initiative.”

In the hour long audio recording acquired by the left-leaning Center for Media and Democracy and the Energy and Policy Institute, Nuzzo told the group that the utility-backed amendment was motivated in part by the popularity of the solar industry’s proposal and their ability to win the support of free-market advocates.

“They actually leveraged some of the less savvy, less informed, tea party groups and formed what is now called the Green Tea Movement — God help us, we’re dead and destroyed,” Nuzzo said. “So they come in and they merge and they start a constitutional ballot initiative. They go out and sell a ballot initiative saying if you put solar on our rooftop, shouldn’t you have ability to sell to your neighbor? Yes, that’s free-market … that’s exactly what they were marketing as a free market principle and the tea party got behind this.”

Who Pays For Grid?

He said JMI, a free-market research and policy organization that has ties to the Florida utility industry, saw it differently. Nuzzo explained that they believe that solar users are being subsidized by non-solar users because they don’t pay for the fixed costs of maintaining the electricity grid.

“So here’s the James Madison Institute, this right-wing think tank, the Koch Brothers-funded group, part of the vast right-wing conspiracy going ‘please stop!’ ” he said. “They wouldn’t stop, so the idea was that they were completely and vehemently opposed to any grid maintenance cost being spread out.”

Nuzzo said that his reference to the Koch brothers was “in jest” but that they had given money to JMI. Nuzzo would not say how much. According to federal tax documents, JMI has received more than $120,000 from the Charles Koch Institute and Charles Koch Foundation, and Stan Connally, the CEO of Gulf Power, sits on JMI’s board of directors. Gulf Power and its affiliates have contributed more than $2.3 million to the utility-backed amendment, which also has received funding from Florida Power & Light, Duke Energy, Tampa Electric Co., and non-profit groups primarily funded by Exxon and the Koch brothers.

Adding to the utility industry’s dilemma, Nuzzo told the panel, was the fact that the solar-industry-backed amendment “was actually polling in the 70s.”

“Why? Because the tea party was behind it,” Nuzzo said. “We even saw some folks that we would normally play pretty well with — the chambers of commerce locally, the business community — was kind of galvanizing behind it. Why? Because if you’re not a utility generating organization, this kind of helps you because it makes it a little bit easier for you to go that route and sell it. The other problem with the pro-solar amendment is that the language of the ballot initiative is mandating in the Florida Constitution that solar is the preferred energy source in the state of Florida. It directed in the Constitution that the Legislature create policy to advance solar interests in the state. So the utility industry came to JMI and said you guys are the adults in the room, you’re the ones that have access to the research, to the scholarship … to a lot of the national organizations. We need some help.”

‘Savvy Maneuver

Nuzzo said that the utilities also created a political committee, Consumers for Smart Solar, that not only funded the JMI research but then “also, in what I would consider an incredibly savvy maneuver, they put forth their own constitutional ballot initiative.

“That ballot initiative also gathered the 700,000 signatures, but what it said was individuals have the right to own solar equipment, they have the right to install solar equipment and lease it, they have the right to generate as much electricity as they can.”

Nuzzo said JMI partnered with the conservative Heartland Institute and a free-market researcher from Florida State University’s Devoe Moore Center to conduct the research requested by the utility industry. Consumers for Smart Solar said did not clarify whether or not the organization reached out to these groups for the research assistance.

Together they “built a model” and, in a report released in December, concluded that over 10 years if the solar industry-backed amendment was approved, the cost of maintaining the electricity grid would be shifted from solar customers to non-solar customers — a $1 billion cost shift “from wealthy solar consumers on to the folks who were not able to install and to the rest of the ratepayers.”

It’s an argument solar promoters vigorously disagree with. They argue that instead of costing non-solar customers more, solar energy brings more value to the electricity distribution system than it takes away. Floridians for Solar Choice argues that instead of protecting customers, Amendment 1 imposes barriers to solar expansion in Florida that will cost customers more money in utility bills.

They point to a Brookings Institution study in May that concluded that when solar customers sell their power back to the electric utility through a billing system known as net metering, it helps non-solar customers by reducing the need to build new power plants to meet peak demand, reduces the need for costly grid maintenance, reduces reliance on oil and gas power generation, lowers utility rates, increases energy security and saves customers money.

“The economic benefits of net metering actually outweigh the costs and impose no significant cost increase for non-solar customers,” the Brookings report concluded. “Far from a net cost, net metering is in most cases a net benefit — for the utility and for non-solar rate-payers.” The report also cited several state-based studies that offered similar conclusions.

Nuzzo acknowledged Tuesday that the JMI research looked only at the hypothetical impact of the solar industry-backed proposal and did not take into consideration the net metering studies done by governments in many other states, including those that allow third-party leasing. He said he considers Florida’s current net metering law, which pays customers retail rates for the excess energy they sell back to utilities “absolutely the subsidization of solar.”

Also at the Oct. 2 meeting, Todd Wynn, director of external affairs at Edison Electric Institute, the trade association for investor-owned utilities, detailed the threat net metering poses to the industry. None of the presenters made any mention of the Brookings report or the reports from several states that have studied the impact of net metering on customer bills.

“If a homeowner had a large enough solar power system, they could essentially zero out their bill,” Wynn said, arguing that the cost of maintaining the electrical grid would then be borne by the non-solar customers.

He suggested two solutions are to charge all customers to access the grid, and the other is to reduce the net metering rate so that the utility will not have to pay retail rates for the excess energy. When asked about what impact Amendment 1 would have to any pro-solar amendment in the future, Nuzzo told the Energy Summit that it is likely to severely limit the Solar Choice amendment in 2018.

“If Amendment 1 passes, in my opinion and the opinion of people far smarter than me, it would completely negate the ability of the Green Tea movement folks to make a ballot initiative that would include subsidization and a cost shift on it,” he said. “It would cancel — it would attempt to cancel — that one out.”

David Pomerantz, executive director of the Energy and Policy Institute, one of the groups that obtained the tape, said the audio reveals that the groups behind Amendment 1 “were very clear about the utilities’ plan when they thought the public wasn’t listening: They’re trying to confuse voters into believing their utility-backed ballot initiative is pro-solar.

“It’s a dirty trick, and Floridians should show them that they’re too smart to let them get away with it.”


Source: Miami Herald

Whether it’s Wynwood, downtown Miami or Miami Beach, commercial developers and brokers are starting to look toward one demographic above all others for how they market and sell their projects: millennials.

So said a panel of industry heavyweights during “Commerical Outlook: Examining the flurry of activity across South Florida’s retail, hospitality and office markets,” at recent The Real Deal’s South Florida Showcase & Forum.

From left: Stuart Elliott, Steven Kamali, Lyle Stern, Keith Menin, Donna Abood and Tony Cho

From left: Stuart Elliott, Steven Kamali, Lyle Stern, Keith Menin, Donna Abood and Tony Cho

Panelists included Donna Abood, principal of Avison Young’s Miami branch; Keith Menin, principal of Menin Hospitality; Tony Cho, president of Metro 1; Lyle Stern, president of the Koniver Stern Group; and Steven Kamali, founder of Hospitality House. TRD‘s Editor-in-Chief Stuart Elliott was the moderator.

“The millennial way of thinking has already started filtering into Miami’s evolving office market,” Abood said. “All Aboard Florida is building more than 800 market-rate rentals right next to its Class A offices as part of the MiamiCentral development in the downtown area. The project also has a built-in transit hub — a detail that helped convince global media company Cisneros to lease 30,000 square feet of office space before the project even opened. They’re speaking millennial languages. These guys don’t want to own cars, they don’t want to own homes.”

Abood added that the overall office market in Miami has been starved of supply, leaving brokers frustrated as potential tenants leave Miami-Dade County for greener pastures.

“We are tight on office space to the extreme,” Abood said. “Condo developers took prime sites that were really meant for offices. Since there’s been a dearth of new construction, the trend has been for investors to scoop up Class C or Class B office buildings and renovate them. Co-working operators like WeWork have also proliferated as smaller businesses and startups seek affordable office space.”

That’s been the case in Wynwood more-so than anywhere else in Miami, where companies have transformed a swath of the neighborhood’s aging warehouses into hip workspaces and shops.

“There’s still a big gap to fill for development in Wynwood. Top-shelf retail space in the neighborhood is pushing $100 per square foot and land prices are rising as a result,” Cho said.

His firm recently brokered the $53.5 million sale of nearly an acre to the Gindi family, which is planning to build a new two-story retail project.

“It won’t be long before Wynwood starts seeing hotel projects,” Cho said. “Wynwood is underserved in terms of hospitality leaving room for one or even several new hotels. Metro 1 is already in talks with several operators.

Outside of Wynwood, Cho said he’s also working on a dual-branded hotel in Brickell that’s geared toward the middle market instead of luxury.

“The first developer is a little bit scared,” Cho said. “But once the first person does it, everybody’s going to follow.”

One major point of fear: Zika, the mosquito-borne virus linked to birth defects, which made landfall in Wynwood earlier this year and wreaked havoc on local businesses as tourists avoided the neighborhood. Cho said the situation was overblown in the media, and that Wynwood’s retail market quickly bounced back once Gov. Rick Scott declared the neighborhood a Zika-free zone in September.

Menin conceded his hospitality firm hunkered down for the Zika fallout amid an already slow summer season, cutting costs as much as possible, paying staff quarterly and offering incentives to guests and events ahead of any drops in occupancy. “For us, we really just watch every dollar and every cent,” he said.

Stern was also keeping his fingers crossed, hoping a cold winter in the Northeast would keep business flowing to South Florida. “Usually around Yom Kippur, we start praying for icebergs in the Hudson,” he said. “That’s not always going to be the case.” He added that though business may be slowing in Miami’s already well-established neighborhoods, Miami River and especially Allapattah are seeing a boom in property sales — and development will likely follow soon.

Stern said two major investors have scooped up almost 20 acres of industrial properties in Allapattah over the past several years, totaling some $40 million in transactions. And with a swath of new national retailers coming to Brickell City Centre and Miami Worldcenter, the surrounding neighborhoods are poised to see a wave of hip street retail and restaurant concepts fill in the gaps.

“If you drew an arc from New York to Chicago to Las Vegas, there’s not another city in that entire arc that has the number of restaurants doing over $8, $10, $12 and $15 million dollars in business that we do in the Miami market,” said Stern.


Source: The Real Deal

The commercial real estate market outlook for Miami-Dade: Sunny, as long as more mass transit is on the horizon, said industry experts at the Building Owners and Managers Association of Miami-Dade’s 2017 Commercial Real Estate Outlook event.

In the office market, rents are at an all-time high in certain sub-markets, said Brian Gale, Cushman & Wakefield’s vice chairman of Brokerage Services who represents nearly 5 million square feet of office space in South Florida.

On Brickell, office space is hitting around $60 a square foot for Class A space; back in 2008 the high was in the upper $40s, said Gale, during the panel discussion at the East Miami in Brickell. Downtown Miami is just behind it, and Aventura and Airport West have also hit all-time highs, too, he said. Coral Gables presents a different story, he said. In 2007-08, rent in the trophy buildings was $46-$48 a square foot; today it’s the low $40s.

“For many years, Coral Gables was the darling of the office market. I would say it has a temporary black eye with less demand and blocks of spaces still existing. But Coral Gables also has the most to gain,” Gale said.

Gale sees the South Miami market as vaulting too, once new mass transit options fully kick in for the area.

“The traffic on Useless 1 is not getting any better. … Miami Beach needs to figure out a way to get light rail over there.” Gale said. “Rental rates will continue to increase in 2017. Looking further out, being a gateway city … there is no reason to believe we couldn’t be a $70 rental market in 2022.”

Growth in shared office spaces has exploded — for instance, WeWork recently leased 65,000 feet at Brickell City Centre and there are now more than 20 shared workspace centers in downtown Miami alone. Sometimes these shared office centers can act as an incubator for a building; when the companies grow out of the co-working space they take space on other floors, Gale said. In the broader office market, expect more smaller offices, with more open spaces and cubicle areas on the outside of the floor with the glass-walled offices in the center, he added.

In the industrial sector, with job growth projected to slow in 2017 and 2018, is that a concern with 1.8 million square feet coming online in 2017 and 1.4 million in 2018?

“That’s actually less than half of what we have seen in 2015 and 2016.” said JLL Managing Director Brian Smith, who led the team representing NBC Universal/Telemundo Enterprises in the record breaking lease of over 550,000 square feet for a world headquarters broadcast center in western Miami-Dade.

He said he looks more closely at population growth. In both the office and industrial markets, new-to-market tenants are pushing the records. The last three years have brought more than 700,000 square feet of new-to-market office tenants. But that’s more than the previous 15 years combined, Gale said.

The last two years saw 300,00 square feet of new-to-market industrial tenants, but this year it will be 2 million and perhaps 3 million square feet.

“John Deere, new names. We have quickly become one of the most important industrial markets on the globe,” said Smith. “Three large deals in the works may be the biggest ever, in addition to the NBCUniversal deal.”

To be sure, urbanization has transformed the retail landscape, with Miami’s downtown population now approaching 90,0000 people, a 30 percent increase since 2010, with an incredibly affluent demographic, said David Moret, president of Highline Real Estate Capital, which acquires and redevelops office and retail properties with capital partners.

Retail rents are in the stratosphere on Lincoln Road, surpassing $300 a square foot. They are hitting $200 in the Design District and Coconut Grove and Wynwood are flirting with $100 a foot, Moret said. How far will they go?

“I think we have gotten ahead of ourselves,” Moret said. “ I think there will be a reset. … We are already seeing resistance. We are seeing leasing volume way down on Lincoln Road.”

He sees the biggest impact coming from millennials, a group that will have the most spending power by 2017. This means tenant mix is more important than ever.

“Successful centers are going to be about creating experiences, to give people a reason to go there instead of click on their phone,” said Moret.


Source: Miami Herald