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Panelists, from left to right: Donna E. Shalala, President, University of Miami; Richard LeFrak, Chairman and CEO, LeFrak Organization.   

LeFrak Shares South Florida Commercial Real Estate Strategy

As industry titan Richard LeFrak sees it, the scarcity of developable land combined with demand from domestic and foreign buyers make South Florida strategic ground for investment.

“You have great culture and great culinary, a great beach, a financial sector, and the second busiest airport in the country,” LeFrak, CEO of LeFrak Organization, told his audience during a keynote presentation at the 2015 University of Miami Real Estate Impact Conference. “You are a global city and your market here is the world,” added LeFrak, one of the most prolific and iconic real estate developers of our day, in a candid conversation with University of Miami President Donna E. Shalala.

LeFrak is a family-owned property company committed to community development and long-term ownership.  LeFrak affiliates own and manage a massive portfolio of real property concentrated in the New York and New Jersey metropolitan area, as well as South Florida, Los Angeles and throughout the West Coast. In fact, the company is one of the largest residential real estate owners in the nation.

The New York company is making a big push in Miami with a $350 million renovation of the 1 Hotel & Homes South Beach and massive redevelopment at Biscayne Landing, formerly known as Oaks at Biscayne Landing, the first phase of a mixed-use master-planned community.

Boca Developers constructed the towers in the first phase of what was called Biscayne Landing. The company’s lender went under in 2009 and the project went into bankruptcy right behind it. iStar stepped in with millions in property improvements and new amenities.  Under LeFrak’s watch, the first project, two condo towers together known as One Fifty One at Biscayne, sold out.

LeFrak is running ahead of the curve. He’s betting his Biscayne Landing project will \ transform the entire region when completed. He also bet plenty to bring the 1 Hotel & Homes project to Miami Beach. LeFrak was involved in of the largest hotel transactions in recent years when he partnered with iStar and Invesco to acquire The Perry South Beach — formerly known as the Gansevoort and rebranded as 1 Hotel & Homes — for $230 million in 2012.

With nearly 2 million square feet of improved space, 1 Hotel & Homes will reopen as a hotel and series of oceanfront condominiums under a new eco-luxury brand created by Barry Sternlicht, CEO of Starwood and founder of Starwood Hotels. The concept is healthy lifestyle living centered around nature and sustainability, living well and living smart with no sacrifice.

The collaboration is spending more than $100 million to transform the existing 1970s structure into a LEED-certified, environmentally-conscious structure featuring natural materials and finishes. The project will include 163 residential units and duplexes. The property is located next door to the W South Beach and two blocks from The Setai Hotel and Residences.

“People will look back at this time as a transformational period for this city,” LeFrak said.  He expects low interest rates to continue fueling commercial real estate development and acquisitions in South Florida.

After all, he said, commercial real estate is still delivering stronger returns on investment than traditional bank accounts in today’s market. Latin American investors are faring well by purchasing Miami condos and renting them out for small but safe returns.

LeFrak sees developers branching out as land prices rise in downtown Miami and Brickell. LeFrak owns a site in the Design District, which is seeing plenty of interest from developers. Midtown and the Biscayne Boulevard corridor are also turning heads.

“It has frontage on the bay, it’s close to the beach, there’s a major north-south road, and it’s an area with empty land,” LeFrak said. “It’s the next ring of development after downtown and the beach.”

Nevertheless, LeFrak warned the audience to expect another down cycle. 

“There will be some volatility in the market even if people are buying condos and putting 50 percent down,” he said.  “You don’t jump in with both feet when everybody is giddy.”