Miami real estate players brace for recession
Major brokers, landlords and developers doing business in South Florida’s real estate market are bracing for an economic downturn, though they expect deal flow and new construction to continue through the year at come.
It was the consensus among panelists and attendees at The real deal’s South Florida Showcase + Forum Thursday. The one-day event — TRD‘s greatest ever – was headlined by a fireside chat between TRD founder and publisher Amir Korangy and CEO of Compass Robert Reffkin.
Douglas Elliman’s Haleh Gianni, one of about 4,500 people in attendance at Mana Wynwood in Miami, said that with the economy heading towards a recession, she felt “a lot of tension about how to respond”. But after listening to the speakers, “there are a lot of reasons to be motivated and a lot of expectations,” Gianni said. “It’s time to step up our game.”
The showcase included more than 100 exhibitors, including booths for luxury developments such as The Edition Fort Lauderdale, Bentley Residences Miami and 1428 Residences in Brickell. Some exhibitors fed the crowd of real estate professionals. Fortune International Group poured Bellinis, courtesy of Cipriani Residences Miami. Compass has kept event goers caffeinated with espressos. Prop-tech company Courted.io gave away a little something stronger: sample-sized tequila bottles.
At the Title Brothers and Dr. Mortgage booth, a long line of hungry attendees formed in front of two sushi chefs baking fresh rolls. Inside the VIP Lounge, bartenders mixed bourbon cocktails for special guests and speakers.
Alicia Cervera Lamadrid of Cervera Real Estate said the showcase was an opportunity to give people a quick look at the projects her company is promoting, to contact old friends, to make new friends and to remind them that the residential market of South Florida is very active. “We have four new projects that we present here,” she said. “They come and make appointments.”
During the first panel of the eventThe Agency’s Mauricio Umansky was candid with the public about the country’s economic situation. “We are 100% in a real estate recession,” he said. “I think companies today need to be fiscally responsible.” Ryan Serhant, also from the Agency, advised public officers to be smart, efficient and to follow what is happening in the markets.
The third panelist in the discussion, Pam Liebman of the Corcoran Group, said South Florida brokers need to have direct conversations with sellers about price reductions. After the panel, Liebman stayed to hear what Reffkin had to say about Compass’s recent troubles.
The headlines about Compass losing money are misleading, Reffkin said during his conversationnoting that “Compass has decided to invest more in the agent’s future than other companies – that’s all it’s saying.”
During developer panel, Ian Bruce Eichner, Arnuad Karsenti and Carlos Rosso acknowledged working in a difficult environment due to rising construction costs and inflation. But they insisted that South Florida’s residential real estate market is a far cry from the catastrophic crash that occurred in 2008.
Developers are focusing more on building luxury condominiums that cater to high-net-worth buyers, as opposed to “bread and butter” apartment buildings for the middle-income investor market, Rosso said.
During round table on the office market, billionaire Jeff Greene said the commercial real estate sector will see more distress over the next two to five years. “I’m not very bullish on office buildings at all,” Greene said. “I think we’re going to have a major, major correction.”
Michael Shvo, the New York-based developer and investor whose plans include the redevelopment of Miami Beach’s Raleigh Hotel, joined Greene on the panel. Shvo said he is focused on buying high-end office buildings, like the Solow Building on 57th Street in Manhattan. Shvo is rumored to be a potential bidder for the property. After the panel ended, Shvo mingled with exhibitors and attendees for about an hour.
Developers Rishi Kapoor and Alex Witkoff expressed a more optimistic outlook for the South Florida market during their Next generation panel. The migration of people from other states over the past two years is “creating demand from the top down,” Kapoor said.
Miami is “much more stable” after going through years of boom and bust cycles, Witkoff added.
During the welcome round tablerestaurant owner Robert Rivani and nightclub mogul Marc Roberts have also played down the negative impacts of a recession.
“When recessions happen, opportunities arise,” Rivani said. “If you are well prepared, that makes you a good investor.”