One Company Is Single-Handedly Transforming A Miami Suburb
The City of West Miami is only three-quarters of a square mile. In the 2010 census, its population was 5,965. But by completing three multifamily developments there in the past two years, Estate Investments Group has single-handedly increased its population by 10%. With additional projects in the pipeline, it is on track to transform the tiny city even more.
“We single-handedly changed West Miami,” EIG founder Robert Suris said. “They didn't even have a building department before we got here. Citizens had to go to the county to pull permits.”
West Miami, where Sen. Marco Rubio lives and started his political career as a commissioner, is adjacent to affluent Coral Gables. EIG has developed three apartment complexes there: Soleste West Gables (206 units), Soleste West Gables II (221 units) and Soleste Club Prado (196 units).
EIG has plans to develop two more projects in West Miami — Soleste Alameda, to include 310 units, and Soleste Twenty2 at 338 micro-units — plus others in Miami proper.
The changes in West Miami are massive for a municipality that was founded in 1947, when four men got together because they did not want to comply with the City of Miami's laws cracking down on gambling rooms and alcohol sales. Soldiers returning home from World War II were given free lots, and the town had 700 people when it was incorporated.
Suris said he had never heard of West Miami until about 2008, when he was a principal of 13th Floor Investments and looking for distressed properties around the time of the housing crash. One site brought to him for consideration was in West Miami.
It was too small to meet his fund's objectives, he said, but a few years later, after he closed that fund and started EIG, the area came to his attention again. An individual buyer had cobbled together a few parcels on a city block in hopes of building a five-story condo, but had lost the property to the bank.
Because it was close to highways and adjacent to Coral Gables, Suris knew West Miami would appeal to professionals with commutes.
“It sits smack in the middle of everything, but had been bypassed by everybody,” he said. “The household income does not encourage you to develop there — it's in the $38K range. There wasn't anything in the area that would stimulate development.”
Except for a few half-million dollar homes like Rubio's, there are quaint houses, many with families who have lived there for decades. It is considered a safe, solid area.
“It has its own police department, which doesn't have a lot to do, but it has like 16 officers, so you pick up your phone, and they're at your door,” Suris said.
EIG pitched plans for a seven-story complex. Although some city commissioners were initially hesitant to approve it, the town's mayor, a retired architect, persuaded them, Suris said. The mayor, Eduardo Muhina, did not return an email and call from Bisnow, nor did the vice mayor.
“They knew that to make our buildings work, we would really work with the neighborhood — have a park, and pedestrian sidewalks, and doggy parks, the right amount of parking," Suris said. "If the parking's not right, then there's overflow into other areas and then there's conflict, and when you have conflict, there's problems.”
Suris said “there's always one or two” vocal critics, but his company's projects are drawing high-quality, professional tenants, so neighbors are happy. No one showed up at the last commission meeting except his team and the commissioners, he said.
EIG's permit fees were in the thousands of dollars, and impact fees in the millions, adding to the city's bottom line. During construction, Suris' crews improved water and sewer lines, he said, which benefit the whole city. New retail outlets like sushi bars and massage parlors have sprung up near the complexes. According to the Miami Herald, the new construction caused West Miami's property taxes to surge 28% in a year.
Suris said his projects displaced mostly empty retail, a rundown complex and eight single-family houses that he paid the owners twice market rate to vacate.
“Most of our stuff we buy off-market,” he said. “We knock on a lot of doors.”
EIG has in-house design, general contracting and property management services, which enables cost savings. The company may hang onto its future properties, but “cap rates are so low right now, and the offers have been so interesting, we decided to sell.”
EIG recently sold Soleste West Gables to Watertown (for $57.4M and $59M, respectively), a Chicago-based firm. Watertown changed the apartments' names to District West Gables. Soleste Club Prado sold in June for $61M, to Grand Peaks Properties, a Denver-based firm.
EIG announced yesterday it secured a $52M construction loan for Soleste Blue Lagoon, a 330-unit multifamily development in the Blue Lagoon neighborhood.
"Soleste" means "sun from the east" in Spanish. Suris said the name sounded fitting for the largely Hispanic neighborhood. The second phase of Soleste West Gables sold before it had a single lease signed, he said.
"Typically, we don't start marketing until we are close — four months before our one-year anniversary," he said. "But the market has been hot, and our name has gotten out there, so they've been knocking on our door, too. A lot of REITs are not allowed to buy property until it is stabilized; the capital has that mandate. Others are more aggressive. They can get a better cap rate if they're coming in much earlier.”
Watertown, he said, bought the West Gables project when it got its temporary certificate of occupancy and was basically empty.
There is still no competition in the area, according to Suris.
“Another project applied — it was smaller – but has not been able to acquire financing," he said. "It's difficult to get financing for multifamily now. You need to have track records, and banks are starting to get concerned about the number of units on the marketplace.”