January 15, 2015

3 Trends in South Florida Construction for '15

Construction costs in South Florida are still rising, but that doesn't mean a bad year ahead for the region's construction companies. Miller Construction SVP Brian Sudduth tells us why.

1) Costs are still rising. Just like in 2014, materials and skilled labor costs will rise, Brian says. High demand is only one reason. More stringent energy codes will also add to project costs, and require more due diligence in the pre-construction phase. Also, a Florida building code revision is due. As code requirements become more stringent, owners will see an increase in the upfront building costs as they install items like insulated glass, LED lighting and high-efficiency mechanical systems to ensure compliance.

2) Demand isn't slowing. Brian nevertheless anticipates that robust South Florida construction demand of '14 will intensify throughout '15. The Miami-Dade market is leading the way, especially in the residential condo market, which is spurring growth in retail and other markets. Institutional investors are back in South Florida markets in a big way, and their growing presence is boosting industrial construction. Brian, left, is snapped at Gateway Center Doral, a mixed-use project Miller is building for developer DBH Properties.

3) Public development is back. County and city governments with long-delayed projects are starting to spend, Brian says. “That's shifting the construction industry's competitive landscape, where it seemed everyone was competing for every job,” he notes, with many contractors who traditionally specialized in public sector work returning to that sector. Broward's $800M school board bond issue voters approved in 2014, plus the $1.2B bond Miami-Dade approved in 2012 for the school board, will have a major positive impact on the local industry.

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2 Trends in Miami Multifamily

Is Miami multifamily running out of steam? (Nothing lasts forever except taxes, after all.) Lionheart Capital CEO Ophir Sternberg (snapped with Irene Horuzhik, his fiancé) tells us no: he predicts 2015 will be another strong year in condo sales. Lionheart's development, The Ritz-Carlton Residences, Miami Beach—which has 111 units and 15 stand-alone villas—has managed to sell 50% since kicking off last spring at price points from $2M to $40M. Word-of-mouth, he says, has been particularly important in attracting buyers for the property, both domestic and international, a dynamic that applies marketwide.

On the rental side, tenants are demanding more—and getting it, according to Rivergate | KW Management president Marcie Williams, who was recently tapped for the position. "Amenity spaces are getting bigger,” she tells us. Residents also want to have a place to be seen and socialize, such as fitness centers with 24/7 fitness programs and lounge areas. At the same time, though units are getting smaller, tenants still want their residences to be retreats with high-end finishes, large closets and USB chargers. “Every resident wants tech and convenience, no matter who they are or what part of the country they live in," she notes.

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"Hell's Kitchen" Chef Ralph Pagano Brings Fine Dining to the Health District

Concentrations of healthcare like the Miami Health District spur residential and retail development in their neighborhoods, and South Florida chef Ralph Pagano is betting that fine dining will have a place in the district as well. Ralph, who owns the Naked Taco in Miami Beach, and who used to be on Hell's Kitchen, is bringing his yet-to-be-named next restaurant to the UM Life Science & Technology Park in Miami, which is owned and managed by Wexford Science & Technology, a BioMed Realty Trust company. The new concept, the chef tells us, will capitalize on a location few fine dining establishments have before by being within walking distance of the health district. “The area's full of untapped potential for new growth,” he says.

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