Capitalizing on high-rise residential spaces in today’s market still holds challenges, but there’s plenty of optimism moving forward, especially in South Florida, according to the executive power panel at Elevate.
Elevate, an exclusive gathering of the biggest names in the luxury high-rise market in Miami, was hosted by Livabl, ARCHITECT, and Multifamily Executive magazines. The event took place in early December at the Fountainbleau Miami Beach Hotel.
The executive power panel consisted of Camilo Miguel, the CEO and founder of Mast Capital, Neil Vohrah, the president of high-rise North America for Great Gulf, and Chris Drew, senior managing partner, director, and co-head of the Miami office for JLL Capital Markets. This panel was moderated by Matthew Slutsky, vice president of Livabl.
“Many will tell you Miami’s currently the most important market in the world”
Slutsky led off the discussion by asking each guest how they felt about the current state of the market.
Miguel works within the state of Florida and has projects within both Miami and Miami Beach. “I feel very optimistic about the market,” Miguel said. “We’re seeing a big wave of buyers.”
Vohrah primarily operates in high-rise spaces in Toronto and South Florida. He remains buoyed on the market despite headwinds. “I feel optimistic, even though we are in challenging times,” Vohrah said. “Particularly where access to capital and cost of capital is putting pressure on developers to fund and develop projects.”
“On the consumer side, rising interest rates are making everything less attractive, but obviously, everything is cyclical. I think we’ll see opportunities over the next six to 12 months when interest rates stabilize.”
Drew took the macro view of the state of the market. “I’m in the trenches, every day, all day, capitalizing deals,” he said. “We’ve done a billion and a half [dollars] plus or minus in condos in 2023, and they are all challenging anything you do, whether it’s a $20 million deal or $100 million deal.”
“So first and foremost, I think the capital markets, if they start to shore up over the next 12 to 18 months, people getting a sense of the actual cost of capital will be is important. We’re fortunate to be in Florida, in South Florida, and Miami because I can tell you that just with our purview around the country, many will tell you that Miami is currently the most important market in the world.”
Slutsky then asked about the market’s challenges and the strategies that could be implemented to face those issues.
“The size of a project is challenging,” Drew said. “Today, for us to capitalize a deal, where you get the most demand from capital sources is somewhere between $75 to $200 million in total loan proceeds. Anything larger than that, the air gets very thin up there. As I said, there’s a lot of capital in the market, but the deal risk is a concern.”
“Construction costs have climbed dramatically over the past few years,” Miguel said. “But we’re starting to see those costs correct a little bit. We’re starting to see some savings there, and it’s exciting because it helps a lot of future projects make sense and move forward.”
