Top brokers, landlords and developers doing business in South Florida’s real estate market are bracing for an economic recession, although they believe deal flow and new construction will remain steady in the coming year.
This was the consensus among panelists and attendees The Real Deal’‘s South Florida Showcase + Forum on Thursday. The all day event – TRD‘s biggest ever — was at the head of a campfire chat between TRD founder and publisher Amir Korangy and Compass CEO Robert Reffkin.
Douglas Elliman’s Haleh Gianni, one of the roughly 4,500 attendees at Mana Wynwood in Miami, said that with the economy heading into recession, she “feels a lot of tension about how to respond.” But after listening to the panelists, “there’s a lot to be motivated about and a lot to look forward to,” Gianni said. “It’s time to step up our game.”
The showcase featured more than 100 exhibitors, including booths for luxury developments such as The Edition Fort Lauderdale, the Bentley Residences Miami and 1428 Residences at Brickell. Some exhibitors provided sustenance for the crowd of real estate professionals. Fortune International Group poured Bellinis, courtesy of Cipriani Residences Miami. Kompas kept event attendees caffeinated with espressos. Prop-tech company Courted.io handed out a little something stronger: sample-sized bottles of tequila.
At the booth for Title Brothers and Dr. Mortgage formed a long line of starving attendees in front of two sushi chefs making fresh rolls. Inside the VIP lounge, bartenders mixed bourbon cocktails for special guests and panel speakers.
Alicia Cervera Lamadrid with Cervera Real Estate said the showcase is an opportunity to give people a quick look at projects her firm is promoting, catch up with old friends, make new friends and remind them that South Florida s residential market is very active. “We have four new projects that we are showcasing here,” she said. “They come in and make appointments.”
During the event’s first panel, The Agency’s Mauricio Umansky was blunt with the audience about the nation’s economic state. “We are 100 percent in a housing recession,” he said. “I think today companies have to be fiscally responsible.” Ryan Serhant, also at The Agency, advised agents in the audience to be smart, efficient and keep track of what’s happening with the markets.
The discussion’s third panelist, Pam Liebman of Corcoran Group, said South Florida brokers need to have direct conversations with sellers about price reductions. Liebman stuck around after the panel to hear what Reffkin had to say about Compass’ recent troubles.
Headlines about Compass losing money are misleading, Reffkin said during his chat, noting that “Compass has decided to invest more in the future of the agent than other companies — that’s all it says.”
During the developer panel, Ian Bruce Eichner, Arnuad Karsenti and Carlos Rosso admitted they were working in a difficult environment due to rising construction costs and inflation. But they maintained that South Florida’s residential real estate market is nowhere near the catastrophic collapse that occurred in 2008.
Developers are focusing more on building luxury apartments that cater to high-net-worth buyers, as opposed to “bread-and-butter” residential buildings for the middle-income investor market, Rosso said.
During a panel discussion on the office market, billionaire Jeff Greene said the commercial real estate sector will experience more distress in the next two to five years. “I’m not super bullish on office buildings at all,” Greene said. “I think we’re going to have a big, big correction.”
Michael Shvo, the New York-based developer and investor whose projects include the redevelopment of Miami Beach’s Raleigh Hotel, joined Greene on the panel. Shvo said he is focused on buying top-of-the-line office properties, such as the Solow Building on 57th Street in Manhattan. Shvo is rumored to be a potential bidder for the property. After the panel ended, Shvo mingled with exhibitors and attendees for about an hour.
Developers Rishi Kapoor and Alex Witkoff expressed a rosier outlook for the South Florida market during their Next Generation panel. The migration of people from other states during the past two years “creates demand up and down the spectrum,” Kapoor said.
Miami is “much more stable” after going through years of boom and bust cycles, Witkoff added.
During the hospitality panel discussion, restaurant owner Robert Rivani and nightclub magnate Marc Roberts also downplayed the negative impact of a recession.
“When recessions happen, opportunities happen,” Rivani said. “If you are well prepared, that separates you as a good investor.”