Port of Miami – Southwest Corner Aerial
Should a soccer stadium be built at the Port of Miami? Soccer superstar David Beckham and his investment team have identified the southwest corner of the Port as a potential stadium site for a new Major League Soccer franchise.
Sports enthusiasts hail the waterfront site with its stunning views of downtown as the perfect place to showcase Miami. Naysayers point to an already overburdened transportation system and public ennui with government involvement in professional sports as reasons to look elsewhere.
PortMiami’s 2035 Master Plan Considerations
Team Beckham’s most daunting obstacle, however, could be PortMiami’s 2035 Master Plan. As required by state law, the Port of Miami recently adopted a long-term strategic plan in conjunction with Miami-Dade County’s Evaluation and Appraisal Report on its Comprehensive Development Master Plan. The PortMiami Master Plan designates the southwest corner of the Port for commercial development. To sustain the growth of its cargo and cruise operations, the Port plans to add commercial development as a much-needed “third leg” to its financial stool.
Along with the condo market and the hospitality industry, the retail sector in Miami-Dade County has bounced back from the downturn, and developers and retailers are scrambling to expand existing shopping centers and build new centers in emerging markets such as the Design District, north of downtown Miami. As Terranova Corp., a Florida real estate advisory firm, reports in the 2012-2013 Miami-Dade County Retail Report, current shopping center inventory totals over 31 million square feet.
Shopping Mall Expansions
Shopping malls in Miami-Dade County have been expanding to meet the increasing demand for new retail space. Dadeland Mall in Kendall added a new wing with 100,000 square feet of additional retail space, while Bal Harbour Shops plans to expand by 200,000 square feet. As reported in Miami Today, several stores within Bal Harbour Shops have recently increased their space within the existing shopping center, including Chanel, Audemars Piguet, Brioni, Loro Piana, and Prada. Developer Dacra plans to build an upscale retail destination of more than 500,000 square feet in the Design District; luxury retailers including Louis Vuitton, Hermes, and Prada are among anticipated tenants.
This week in New Miami news, don’t miss the renderings of developer Jeff Berkowitz’s Skyrise Miami, a sleek 1000-foot observation tower that would become Miami’s tallest building.
Deepening the shipping channels will allow megaships to cross the expanded Panama Canal beginning mid-2015.
With 175 new residents coming to South Florida daily, it will take 70 new units per day to cover demand from new residents.
An Arquitectonica-designed proposal is slated to begin construction in 2014 on what is currently a parking lot behind Bayside Marketplace.
Companies including an online travel-search company, a manufacturer of mobile storage containers and a cancer treatment center – will contribute $26.12 million in new capital investment.
Private donors have given recent contributions totaling $8 million and Miami developer Craig Robins has pledged 102 works from his personal collection.
A recent article published in the Miami Herald reflects growing support to form a public-private partnership (P3) to save the national passenger rail system. To some, this statement may sound puzzling, as the national passenger rail system has been controlled by Amtrak, a public-private entity, since 1971. Amtrak, however, is not a public-private partnership, and the national passenger rail system is an ideal subject for explaining what is, and what is not a P3.
A P3 is not a public subsidy for a private operation. That, in a nutshell, is Amtrak. But, contrary to a popular misconception, a public-private partnership is not a “gift” of public dollars to a private entity. In fact, a P3 is much closer to the opposite–a private subsidy of a public operation whereby the private partner provides its technical expertise and access to financing to facilitate the efficient provision of a public good.
In addition, a P3 is not “privatization”—i.e., the outright conveyance of public assets to the private sector. The Herald article referenced above also discusses a proposal to solicit bids for the transfer of certain Amtrak corridors to private rail companies. The sale of a public asset, however, is not a public-private partnership.
Entrepreneurs in Miami and elsewhere are familiar with making and receiving loans as commonplace tools in the management of their businesses. One need look no further than the growth of Miami’s skyline through debt-financed development to understand how other people’s money can be leveraged to create new wealth for investors.
Managing Intra-Family Loans
It is natural, then, that entrepreneurs are generous in making loans to family members (especially children) to help them get a start in life or build businesses of their own. Such loans, if properly formulated, documented, secured, and managed, can have the additional benefit of effecting an estate-tax and income tax free transfer of wealth to a younger generation. Many of these loans are made to “grantor trusts” to achieve the maximum income tax benefits.
However, it is not uncommon for entrepreneurs to be overly generous with the terms and management of intra-family loans. Loans that do not carry sufficient interest, or have sufficient security, or the terms of which are not actually enforced, may be recharacterized by the IRS as taxable gifts. Such gifts will (after application of the “annual exclusion”) count against the lifetime gift tax “applicable exclusion amount” and, if the exclusion amount is exceeded, subject the lender to gift tax in the amount of 40% of the value of the loan/gift. The IRS may also argue that unpaid interest is taxable in the year accrued, if no real effort is made at collection.
Today, eMerge Americas hosted an eMerging Leaders Breakfast to kick off what is being touted as the hottest tech event scheduled for May 2 through May 6, at the Miami Beach Convention Center.
The breakfast consisted of a panel of industry leaders including Jorge Plasencia of Republica, Carlos Garcia of Nobox, and Matt Haggman of the Knight Foundation, all who provided insight on the emergence of Miami in the tech industry. The panel was moderated by Derrick Ashong of Fusion. Special presentations were made by Manny Medina of Medina Capital and Armando Christian Perez, aka Pitbull. The tech convention is estimated to have at least 5,000 attendees, 100+ speakers, panels and workshops. Sponsors already include industry giants like IBM, Verizon Terremark, FPL, XOMO, Miami Innovation Center and Verifone among others.
The convention will not only highlight Miami as the tech center of the Americas but is an opportunity to meet the cutting-edge start-ups, innovative technologists and influential thought leaders who are transforming industries and communities. The convention will include a Mayoral Innovation Summit with 50 of the most influential mayors in America, an eMerge Hackathon Challenge with a $100,000 prize and a Center Stage that will allow entrepreneurs to connect and explore the transformation of the industry. The convention, a first for Miami, is anticipated to be a yearly conference and cement Miami as a tech leader like its counterparts on the West Coast of the United States.
Condo hotels offer private individuals the opportunity to purchase a condominium unit for personal use part of the year and for rent to the general public as part of a hotel when it is not in use by the owner. These projects provide a source of financing for developers, a seasonal vacation home for unit owners and the opportunity for unit owners to cover their costs of carrying their units so long as there is sufficient demand from renters. Condo hotels were popular in the early- to mid- 2000s until real estate values started declining in 2008. Historically, there have been strict limits on how condo hotel units could be structured and marketed for sale under the securities laws in the United States. However, two recent legal developments combined with increasing demand for real estate in South Florida may provide significant opportunity for these arrangements to flourish.
Under the U.S. securities laws, if someone purchases a condo hotel unit with the expectation of receiving profits from the rental pool arrangement, then the arrangement is tantamount to an investment contract and the offering of units has to be registered with the Securities and Exchange Commission (SEC) unless there is an available exemption. Until recently, exempt offerings of investment contracts (known as private placements) were strictly prohibited from being marketed to the general public, which required that condo hotels be structured (often with great uncertainty) so as not to be deemed an investment contract. Whether offering a condo hotel unit constitutes an offering of an investment contract generally turns on two key issues: first, the structure of any rental arrangement associated with the unit and, second, the representations that the developer or broker makes about the rental arrangement to a purchaser during the sales process. Continue Reading
This week, David Beckham, Art Basel, MIA and a Global Diversity Summit all made headlines.
David Beckham chooses Miami to build his soccer empire
According to reports, the international soccer icon’s MLS franchise team will be located in Miami.
As passenger numbers rise, Miami International Airport adds more venues, flights
MIA continues to expand with the opening of GNC health supplement store, Irish pub and a new WestJet route to Calgary, Canada.
Miami event promises to help minorities in commercial real estate
Global Diversity Summit will hold its annual conference in Miami for the first time, November 6-7. Panel discussions will focus on topics such as off-shore capital sources, multifamily investment opportunities, infrastructure development and entertainment districts.
How three South Florida galleries went through the gantlet to be chosen among 258 exhibitors at this year’s Art Basel
The Fredric Snitzer Gallery and Spinello Projects in Miami, and the Gavlak Gallery in Palm Beach were selected from 800 galleries that applied to exhibit at Art Basel this year.
SoFla homebuyers increasingly paying above appraisal
The Real Deal reports that some homebuyers are willing to pay above the appraised value rather than lose out to another prospective buyer.
We have on several occasions discussed the major infrastructure projects currently under construction at PortMiami, and how the port is a prime location for public-private partnerships (P3s) in the coming years.
Seaport To Play Key Role in Miami’s Economy
Last week, RCA Miami hosted a conference that included a presentation by Kevin Lynskey from PortMiami on the importance to the Miami economy of the seaport and, in particular, the Port of Miami Tunnel P3 project. A recent article in the South Florida Business Journal further confirms that the seaport will play an expanded role in Miami’s economy. The article explains that the ongoing improvements at the port to accommodate the larger post-Panamax ships that will soon be traversing the Panama Canal will give Miami a competitive edge shared by only three other cities on the East Coast: New York, Norfolk, and Baltimore, the nearest of which is nearly 1000 miles away.
A recent report published by commercial brokerage company Marcus & Millichap, projects an improved financial environment for owners of office buildings in the second half of the year as a result of lower vacancy and increased rents.
By the end of the fourth quarter, the office vacancy rate in Miami-Dade County is projected to be 16.1%, a decline of 0.8%. Average asking rents will reach $28.13 per square foot, an increase of roughly $8.00 per square foot. The report indicates that the recovery in the office sector is due in large part to stagnant growth in new office construction (as compared to new residential condominium construction, which is expected to add approximately 5,500 new units to the Miami market). Developers will add only 250,000 square feet of office space to the market this year, which will boost inventory by a meager 0.3%.