Barry Sternlicht And A-Rod On Teaming Up In 'The Singapore Of The United States'
In 2016, Starwood Capital Group Chairman and CEO Barry Sternlicht left Greenwich, Connecticut, and moved to Miami Beach, near the headquarters of publicly traded arm Starwood Property Trust and its 300 workers. A new office building for the REIT, developed with Miami-based Integra Investments, topped off earlier this month.
Speaking on CNBC Tuesday, Sternlicht and another famous Miamian, baseball player-turned-entrepreneur Alex Rodriguez, spoke about why they chose to operate in South Florida and about teaming up on Starwood's new building.
Sternlicht said he was drawn to the Miami area because it has a good airport and Florida has no state income tax. He liked the business climate and public works, citing a recent convention center expansion in Miami Beach and a new bridge that will connect the beach to the city of Miami over the MacArthur Causeway.
"I actually grew up going to South Florida," Sternlicht said.
Rodriguez's focus will be on bringing in retail and restaurants to the new headquarters at 2430 Collins Ave.
The coronavirus pandemic hurt those sectors, but Rodriguez said that the greatest properties in the best locations are going to win long-term.
"I've been buying real estate in Miami for over 20 years, and it has been a great flight. Since COVID started, it's a rocket ship," Rodriguez said.
"Barry presented this opportunity for me, and I've been in Miami for over 36 years, so I know it really well," Rodriguez said. "He built the 1 Hotel, which is the greatest hotel here in Miami and the most profitable one, and right across the street, it made total sense to build 144K SF. I think it's going to be great. The demand has been off the charts. I email Barry a new offer every other week, it seems like, and we're excited about it."
Talk about a dream come true! I have always been inspired by Barry Sternlicht. He is a champion in business, a philanthropist, mentor to me and a great friend.— Alex Rodriguez (@AROD) December 9, 2020
And now, I can call him a partner! We’re working together on this building in Miami Beach. pic.twitter.com/AFLT4kzKqU
Sternlicht said the Miami market is fundamentally very strong.
"Miami's becoming, if it isn't already, the Singapore of the United States," he said.
Space in the new Starwood building will be leased largely to family offices, Sternlicht said.
"We've leased about everything we want to lease, and we're entertaining a few friends, but it's a nice problem to have," he said. "The vacancy rate in South Beach going into COVID was like 2%, and a new [office] building hadn't been built in more than 20 years, so this was a great project. And Alex is the mayor of Miami, so having Alex as a partner is incredible because he knows everyone and I don't have to do anything. He just brings the people, so it's fantastic."
A separate CNBC segment featured Nitin Motwani, developer of Miami Worldcenter, who showed off the site where he is beginning the construction of 90K SF of retail. Motwani said that an exodus from high-tax states to Florida began with tax reforms in 2017 that removed so-called SALT deductions, or state and local tax breaks, but the pandemic boosted the trend.
"This has been a whole new level," Motwani said.
"We're talking to many international companies, and we have a big demand for commercial office space," he said.
CORRECTION, DEC. 23, 2 P.M. ET: A previous version of this story misstated the year Starwood Property Trust moved to Miami Beach. The story has been updated.