I recently had the pleasure of moderating the latest installment of the Bilzin Sumberg New Miami Breakfast Series – “The Return of Real Estate Financing: Passing Trend or Here to Stay?” During our lively discussion, which featured an expert panel of industry leaders (listed below) and a packed audience of business and community leaders, several noteworthy points emerged.
- Miami has a lot to look forward to. The City is about to enter its biggest boom and does not have a bust in sight. This time is very different than the last cycle where money and loans were only in condo buildings and the boom was based primarily on construction and flipping of real estate. Now our economy is running on all engines, including: tourism (Miami hotels had 75% occupancy rate in August – our hottest and wettest month), trade (opening the port tunnel will be huge for some of our landlocked industries), and real estate. Real estate values are increasing because of these fundamentals and because there has been no new product in several sectors of the real estate industry for the last five years.
- Lenders see Miami as a “darling” city as real estate values are growing due to strong real estate fundamentals, instead of speculation like in the last cycle. Hotels, once taboo, are now a favored asset class because Miami has one of the highest occupancy and rental rates in the nation. Industrial real estate is also hot as Miami-Dade County and the City of Miami upgrade their infrastructure with port dredging, the port tunnel and sewer infrastructure.
- Lenders are coming back to South Florida but are making low-leveraged loans, especially when it comes to construction financing. Lenders put a lot of value in the quantity of equity going into the deal and the quality of the sponsor.
- Mezzanine lenders are slowly coming back to the market. The challenge is to find a senior lender that will work well with a mezzanine lender and vice versa. The new trend is for the mezzanine lender and senior lenders to come as a package deal.
- The drastic increase of land values in the Brickell area shows investors’ sentiment for Miami. Raw land purchased in connection with an office building earlier this year that was valued at only $3 million is now under contract for $16.5 million.
Thanks to our panelists and everyone who attended – we look forward to the next Breakfast Series!
- Steven Cohen, Executive Vice President, Commercial Real Estate, Sabadell United Bank
- Jim Dockerty, Managing Director, HFF
- Charles Foschini, Vice Chairman, Debt & Equity Finance, Institutional Group, CBRE Capital Markets
- Isaac Pesin, Managing Director, Investments & Business Development, LNR Property, LLC