Damn The Tariffs, Full Speed Ahead: South Florida Construction Lending Reignites After 'Liberation Day'

The construction lending environment in South Florida this summer was nearly as hot as the region itself despite the uncertainty plaguing the economy.

Developers in Miami-Dade, Broward and Palm Beach counties have landed more than $3.2B in construction financing since April 2, according to a Bisnow analysis, the day President Donald Trump announced sweeping global tariffs, sparking fears of soaring costs and stalled projects.

The burst of financing activity — which included the busiest quarter for construction loans in three years — is being driven by increasingly available capital for multifamily and condominium developments, particularly as construction has slowed down and private credit activity has ramped up. The momentum is only expected to continue.

“Our team gets approached every day for new construction financing assignments, so we're seeing in real time how many people are looking to get buildings up and get them built,” said Matthew Robbins, managing director of Berkadia’s Boca Raton office.

In the second quarter alone, more than $1.5B of construction loans were originated, three times higher than the same period in 2024, according to data provided by Berkadia. That's more than any three-month period since the third quarter of 2022, when interest rates started to rise.

“Because capital has woken up, I think a lot more of these deals are actually getting off the ground,” said Steven Jemal, the managing director of New York City-based lender S3 Capital.

S3 provided a $112M construction loan to developer Giuseppe Iadisernia for the Oasis Hallandale condo tower in Hallandale Beach in June and $40M last month for the Eturna Residences condo tower being developed by Condra Property Group in Hollywood. 

Jemal said the number of developers looking for financing doesn't seem different than last year, but more money is coming off the sidelines and foreign capital is playing a larger role, with investors trickling in from Chile, Mexico City, Latin America and elsewhere, he said.

Much of the capital that is more available to developers in recent months has come in the form of mezzanine debt, which is junior to senior construction loans and typically comes with higher interest rates.

Mezzanine debt allows developers to lower the amount of equity they have to provide in a project, Robbins said.

“By people taking on this [mezzanine debt], that shows that they have long-term conviction in their asset, even if they have a higher cost of capital throughout the development stage,” Robbins said. 

Related Ross, led by Miami Dolphins owner and billionaire developer Stephen Ross, took on $125M in mezzanine debt in June when landing the biggest construction financing of the summer. It paired the mezz from private equity players GoldenTree Asset Management and TZ Capital with a $475M senior secured mortgage from Bank OZK to finance the construction of South Flagler House, a two-tower, 500K SF luxury condo project in West Palm Beach.

The presence of mezzanine debt is increasingly a part of large-scale construction deals for established developers, Oak Row Equities Chief Operating Officer Adam Metzger said.

The structure shaped the New York City-based development firm’s deal in June, when Oak Row and partner Lndmrk Development landed $211M in construction financing for a luxury rental tower in Edgewater. Bank OZK provided a $142.5M senior loan, and California-based Canyon Partners Real Estate provided a mezzanine loan for the remaining $68M.

“There's just a tremendous amount of demand to provide mezzanine capital to proven sponsors in good locations,” Metzger said. “We were able to really negotiate terms from strength. Ultimately, we selected Canyon. They put together the strongest overall offer and the opportunity to do a lot of repeat business with their debt equity groups going forward.”

The riskier debt loosened up an environment where deliveries are projected to significantly slow in the coming years, part of why new construction is becoming so active.

Developers realize now is the right time to break ground to deliver new units by 2027 and 2028, said Brian Gaswirth, JLL’s senior managing director of capital markets in the Miami office.

That's partly because elevated materials and borrowing costs narrow the playing field.

“Other developers are recognizing that if you can break ground today, which is fairly challenging, that means you're going to be delivering in 2027, a market with very thin competition,” Metzger said. “That's going to put upward pressure on your rents and downward pressure on your cap rates, because you'll be the best and brightest new project in a pretty scarce landscape for new development.”

In 2024, a record 18,600 apartments came online in South Florida, according to CoStar data reported by The Real Deal. The deliveries outpaced the 15,000 net new leases signed, keeping rents flat.

While Miami surged to the top spot in the U.S. for multifamily construction in June, the city still issued 2,500 fewer multifamily permits over the trailing 12 months than it did the year before, according to a RealPage analysis of Census Bureau data.

The resurgence in construction hasn't been enough to meet the strong demand for units in the city. Miami is ranked as the most competitive rental market in the country, according to RentCafe, with the highest occupancy rate, the least time on the market and about 21 applicants per vacant unit in Miami — twice the national average.

The continued strength of rental fundamentals and healthy presale figures for luxury condo projects, paired with developer-friendly policies at the state level and in many localities, puts South Florida at an advantage compared to other markets hoping for more projects to get out of the ground.

“We don't have some of the social challenges and economic hardships that some of these other municipalities are facing around the country, and I think the state and [Palm Beach County] in particular has embraced that in a very meaningful way,” Related Ross Vice President Jordan Rathlev told Bisnow.

He and others were quick to point out that the developers landing construction financing this year tend to be those with healthy balance sheets and long track records. Terra Group, Property Markets Group, Related Group and Related Ross combined have landed more than $2B in project capital since April, according to Bisnow's analysis.

Developers with less of a track record are having a harder time. Many have been forced to sell their sites as rising construction costs, fluctuating interest rates and tariff uncertainty have prevented them from landing financing, pushing them to cash out before their acquisition loans come due.

Even the developers who have landed big loans acknowledge it is still a precarious time to break ground. But with capital more freely available than it has been in three years, they are pressing forward.

“We're in the business of developing real estate, and we try to identify opportunities that make sense at the time,” PMG Managing Partner Dan Kaplan said.

When asked why his firm — which landed more than $600M in financing in April at two Miami condo projects — is breaking ground amid higher tariffs, an ongoing labor shortage and a weakening economy, he said, “If I had an answer to that question, I wouldn't be dumb enough to build buildings.”