As South Florida Embraces Rail Travel, Developers Go Along For The Ride
Migration and investment have driven demand for residential development, which has continued to push South Florida’s economy forward. But as projects become more difficult to finance in today’s economic environment, and traffic snarls daily commutes in the region, developers are looking to build projects that take advantage of both the rising demand for mass transit and the reduced zoning restrictions that frequently come with building near rail stations.
“The Brightline has really changed the way that we see real estate from the development side of things,” Sam Sleiman, executive vice president of transportation at construction firm Suffolk, said at Bisnow’s Transit-Oriented Development and Transportation Infrastructure event Thursday. “Everything sort of starts with us. We see the opportunity, we bring the change, and the residents and the businesses and everything follows.”
The Brightline took 1.23 million passengers along its route between West Palm Beach and Downtown Miami last year, a record number for the rail line since it began operating in 2019. The operator, which is owned by an affiliate of Florida East Coast Railway, is preparing to open a new route to Orlando next month that is expected to further boost ridership.
“Nobody wants to spend an hour or two hours in a car, that’s why having reliable transportation is a big thing,” Harvey Hernandez, CEO of Newgard Development Group, said at the event, held at the Four Seasons Miami. “We've seen residents, we’ve seen hotel guests staying really close to where those transportation options are.”
The increasing desire to be near mass transit options fits neatly with Miami-Dade County Commissioner Raquel Regalado's desire to expand services across Miami. The District 7 commissioner is also the governing board chair of the South Florida Regional Transportation Authority, which operates the Tri-Rail and its 18 stations from West Palm Beach to Miami International Airport.
Regalado has leveraged her dual roles to lobby for zoning changes around Tri-Rail and Brightline stations that allow for greater density and fewer parking spaces.
“It takes the Brickell live-work-play [model] and takes it all along this corridor in the hopes of bringing ridership and proving that transit-oriented development not only works in Miami-Dade County but will thrive in Miami-Dade County and will limit the amount of cars and congestion,” Regalado said.
She helped pass an ordinance in 2022 that allows for more residential construction near the county’s current and planned rapid transit systems.
“South Florida has been built on housing, period,” Regalado said. “What’s the No. 1 driver? Housing, it has always been.”
She is also advancing a resolution at SFRTA to allow the agency to lobby local governments along the South Florida coast to change land development regulations to maximize density and allowable uses around transit stops.
“These things always bring jurisdictional issues, but we’ll figure it out,” Regalado said. “It’s not that complicated, it’s just a matter of a bunch of politicians agreeing on something.”
Developers at the event said that the loosening of zoning restrictions has enabled them to design projects that make financial sense even as rising interest rates and the high cost of construction eat into projects' profitability.
“In terms of the headwinds with regard to private real estate development, it makes it interesting to balance some of the financials on the back side because it allows us to get additional density,” said Michael Marrero, director of development at Empira Group, a European real estate investment management firm with an office in Miami.
“Having the ability to have these sites within a TOD-designated area gives us the ability to use transit as an imperative amenity for the folks that are living in our buildings,” he said, using an acronym for transit-oriented developments.
Panelists at the event said the opening of the Downtown Fort Lauderdale Brightline station in 2018 encapsulated the type of development that can come from designing projects around transit stops.
“If you look at the time that that station was announced and opened to now, the amount of projects and the amount of residential and commercial activity around that station is probably tenfold of what it was before,” Sleiman said. “That’s a testament to the kind of transformation that mass transit provides to a neighborhood.”
Sleiman said Suffolk had acquired a site across from the station primarily because of “what the station represented” for the growth of the area, and his firm is not alone.
Ocean Land Investments revealed plans in July for a 392-unit luxury multifamily development that will connect directly to the Fort Lauderdale Brightline station after paying Florida East Coast Industries $13.2M for the 0.95-acre property at 105 Northwest Third Ave. in March.
“We believe so strongly that the populace is starting to adopt transit in their mindset,” Brandon Spirk, senior director of design and construction at Ocean Land, said at the event. “We typically were only focusing on waterfront development and we noticed that there was an exceptional amount of value in the station, there was a lot of interest, a lot of ridership uptake. I think that's going to continue particularly as vehicular travel becomes more congested.”
As developers lean into building transit-oriented projects, the number of viable sites is rapidly shrinking, said Eric Singer, a partner at the law firm Bilzin Sumberg.
“The low-hanging fruit at least in South Florida has generally been picked off, and by that I mean big, empty parking lots that really aren't needed for riders,” Singer said. “There's definitely opportunities on the construction side, but you have to have an appetite for that risk. There’s also just prevailing wages if you're building on government land and the subcontractor requirements. They're out there, but they’re complicated.”
TOD developers are also looking to future-proof their projects, adding more electric vehicle charging stations or building in the infrastructure to add them in the future, and designing parking structures that can be more easily retrofitted for new uses as demand for cars wanes.
Abe Dats, head of marketing and investor relations at Doroni Aerospace and a panelist at the event, is looking even further ahead to a time where nimble flying vehicles — called electric vertical takeoff and landing aircraft, or eVTOLs — are buzzing around cities.
Dats envisions a future where “we’re not really relying on the roads anymore” as personal flying vehicles that leverage automation to make flying more accessible allow people to live farther away from urban cores by reducing commute times.
“Over the next 10 years, developers should start thinking about developing more of these types of communities,” Dats said. “If you can just fly somewhere in 10 minutes when you’re coming into the city when it would usually take you an hour, it’s one of the biggest things developers should start looking at.”
The concept sparked a lively discussion at the event, with panelists and audience members peppering Dats with questions about how the company would navigate regulations, issues with noise and making the technology accessible to average people.
“I'm working on a project now where the transit authority is insistent that this technology is coming and the TOD has to accommodate it in the future,” Singer said. “But what are we accommodating and when? Is the flight path going to be defined, is the noise going to be defined? You have to have a project that's advanceable, predictable and still somehow accommodate this future undefined, ever-changing technology.”