Responding to the changing world and staying competitive in Miami’s high demand real estate market was the topic of CREW-Miami’s November 16, 2016, luncheon program at the InterContinental Miami.
Attorney Monica Cunill-Fals, Partner at Avila Rodriguez Hernandez Mena Ferri, LLP, moderated a panel that included Diana Farmer-Gonzalez, Managing Director/Principal of Gensler’s Miami office; Cara-Jenna Kronengold, SVP/General Counsel for real estate and capital markets at Turnberry Associates; Sandy Londono, VP/Relationship Manager for commercial real estate at Sabadell United Bank; and Patricia Nooney, Senior Managing Director of CBRE’s asset services division in Florida.
To remain competitive in today’s fluid environment, the consensus was that firms and individuals must listen attentively to clients’ desires and needs, and be flexible and forward-thinking in negotiations and planning. Nooney noted that clients want customized solutions, not tactics from the past. Farmer-Gonzalez urged real estate professionals to look beyond their own industries at ways other cities are resolving design and infrastructure issues, particularly in Miami’s luxury “buy and hold” market. Flexible forward thinking is Kronengold’s recommendation, because today’s expensive mixed-use projects must be designed to generate revenues for longer periods than ever. Londono emphasized the importance of active participation—by individuals and companies–in industry groups like CREW and other organizations, because staying connected is the best strategy for success in Miami’s high powered market.
Panelists were generally optimistic about effects the presidential election will have on CRE in Miami, noting that its location and stable economy make Miami somewhat immune to election cycles. “Capital is coming from everywhere–South America, Israel, and Europe,” said Londono. “Twenty-two EB5 projects are in the works for Miami, and they’re not just from China and South America because Miami is a strong, sound, safe place to invest.” Nooney added that capital and investor funds are active and available, but they will want to lock in returns; her firm’s tenant base feels secure and will adjust to any changes that arise. Kronengold, however, finds that investors from Mexico and South America are withdrawing, and China is unsure, uncomfortable with Trump’s presidency. She believes that, although construction costs are likely to rise, strong savvy developers will lock in prices now.
Panelists addressed change drivers affecting everything from mixed-use development, to the design and repurposing of structures, to retail environments that focus on delivering social experiences. Examples of redeveloping and repurposing of structures include small Miami Beach hotels being transformed into retail, and a former office building in Orlando that is now a hotel. Farmer-Gonzalez believes the demand for new parking will evaporate within five years, so garage structures must be designed to shift to other functions. (Think Uber, public transit, and young people who don’t want to own cars at all.) She said that many Fortune 500 firms prefer office designs that give equal territory to “we” and “I” spaces. People spend more time away from their offices or working with others, so areas are allocated not by rank, but by where employees can be most productive.
Mixed-use projects with office need much more than rentable space to succeed, said Nooney. Amenities like fitness clubs, wellness centers, rotating art programs, and campus-wide WiFi are essential if buildings are to attract and hold tenants and their employees. All age groups, not just millennials, want social events and fun activities inside and outside, so the demand for sterile office environments has shrunk. Hotels are a desirable component because their catering services and meeting facilities create synergies for office and retail. Kronengold noted that developers of mixed-use are less cost-conscious than a decade ago, because their vision is to create and operate vibrant centers for consumers who want everything in a single, walkable location that includes attractive open space.
In today’s omnichannel retail industry, experiential social interaction is the key to success. A lively guest experience now drives design, and retailers are opening small stores in upscale projects so consumers can feel the luxury vibe. They don’t object if patrons buy online later, because a brick-and-mortar presence is just one part of their branding initiatives.
—By Susan Cumins, CREW-Miami member since 1998