Miami developer Jorge Perez is planning to add hotel rooms and condos to the Brickell area in what would be his third project in Miami’s financial district.
A Perez affiliate plans to build 132 hotel rooms and 450 condos near his Icon Brickell, also home to condos and a hotel. One of Icon Brickell’s three towers, completed during the recession, is home to the Viceroy Hotel & Spa.
The new project is planned on a 56,090-square-foot parcel at 1300 S. Miami Ave. Perez’s Related Group of Florida subsidiary, PRH 1300 S. Miami Avenue LLC, acquired the site for $18.5 million late last year. The price tag included approvals to build 600,000 square feet of residential space and about 50,000 square feet of retail and office space.
But PRH won’t be using the inherited site plan approval obtained under the city’s former zoning code for the Infinity II condo project. Instead, the developer plans to redesign the project to meet the criteria required under the city’s revised zoning code, dubbed Miami 21.
"It is our understanding that the project is going to be coming in as of right under the Miami 21 code," said Luciana L. González, assistant to the director of the Miami Planning Department. "In other words, they are redesigning it and submitting under existing regulations rather than using their vested rights."
González said her department hasn’t seen any plans yet.
Related executives didn’t reply to a request for comment by deadline. Related’s proposal was revealed in an agreement PRH signed with the Miami-Dade County Water and Sewer Department to connect future pipes to the county’s infrastructure to serve the condos and hotel. The planned high rise also would include 16,755 square feet of restaurant space and 3,174 square feet of retail space.
Since the U.S. economy began to emerge from one of its worst recessions in decades, Related, through various affiliates, surfaced as South Florida’s most prolific condo developer and has two condo projects under construction in downtown Miami: the 382-condo Millecento and 192-condo Mybrickell. Related affiliates also are building the 249-apartment New River Yacht Club in downtown Fort Lauderdale and the 49-condo Apogee Beach in Hollywood.
Related last year got approval from Hallandale Beach to build Beachwalk, which would contain 216 two-bedroom suites designed to be converted into 432 hotel rooms under a hotel rental program. The plan also calls for 84 condos and a five-level parking garage. Another permitted project is Iconbay, a 42-story condo tower in Edgewater north of downtown Miami.
Hotel experts said Brickell, already home to some of the region’s finest hotels like the Mandarin Oriental and the Conrad Miami, is experiencing a growing demand for hotel rooms. The Brickell neighborhood has long been a destination of choice for business travelers but now also is "capturing an entirely new market of leisure travelers from all over the world," said Alyce Robertson, executive director of the Miami Downtown Development Authority, a quasi-government agency in charge of promoting downtown.
"As a result, we should see more interest among hotel brands who seek a presence here," she added.
The Brickell area has 1,844 hotel rooms, and many more are across the Brickell Bridge in downtown Miami, Robertson noted.
More hotel rooms will be added to the area when CityCentre is completed in 2015 a few blocks north of the PRH site. The $1.05 billion, 2.9 million-square-foot complex will include a 243-room hotel plus condos, retail and office space.
Having a hotel as part of a condo tower has its advantages, said Bo Ashbel, managing director at Aztec Group Inc., a Miami investment bank.
"Hotels create activity," said Ashbel, who is not involved in the project. "They create a buzz about a project."
He said a hotel, depending on the brand, can anchor a project and attract condo buyers.
"People like to say ‘I live in the Four Seasons, or I live in the Ritz-Carlton,’ " he said. "It creates a certain cache."
It is not clear what hotel flag Related would pick for its new project. But Ashbel doesn’t expect a luxury brand for two reasons.
"The high-end hotel would want a Brickell Avenue address," he said. "Also, high-end hotels are not always comfortable being part of a larger project because they like to do their own thing."
But right now, the only way first-class hotels in the Brickell area can be financially feasible is as part of a condo project, said Christian Charre, senior vice president with CBRE Hotels. That way, the sale of the condos can subsidize the construction of the hotel.
Charre, who is not involved in the Related project, said a hotel with less than 160 rooms doesn’t generate enough revenues to cover the construction cost.
"The residential component will absorb the cost of developing a hotel," he said.
At a time when lenders are reluctant to finance condo projects, Related and PRH will most likely collect hefty deposits from buyers to help fund the construction. That has become common practice since the recession among Miami developers, who often collect 50 percent to 75 percent of the sale price throughout construction and the remaining at the closing table. Related pioneered that strategy last year while targeting South American buyers familiar with that model.
Before the housing crash, enterprising condo investors capitalized on no-money-down offers.
"There is no sign that the deposit structure has fallen out of favor with the buyers, meaning we are not seeing some folks say, ‘Sorry, I am not willing to put this money up,’ " said Daniel Sheehan, partner and senior managing director of Cohen Financial’s Miami office. Sheehan, who is not involved in the Related project, often secures financing for developers.
As the economy improves, lenders are increasingly becoming more open to making small loans to cover 20 percent to 30 percent of construction costs, Sheehan said.
The fact that people are paying big money up front for their units reduces the chance of no-show buyers closing, which happened when the credit markets collapsed in 2007.
"If you are willing to put the money up, it makes you feel more comfortable about your future neighbors," Sheehan said. "You know that if things don’t work out, you are not going to end up in a building where you are the only one who closes."