Tunnels Under Fort Lauderdale? City In Talks With Elon Musk's The Boring Co.
Speakers at Bisnow's Fort Lauderdale State of the Market event this week generally struck an optimistic tone for the city and its real estate prospects in the post-pandemic era — with the mayor even talking up the idea of boring a tunnel from downtown to the beach to alleviate traffic snarls.
But the city, and South Florida for that matter, still face some headwinds, the participants also said. Perhaps most urgent is a convergence of circumstances making property insurance in the state harder to find and much more expensive.
The city government's responsibility is to make sure the city runs — making sure that when a new building is built, tenants get clean water out of the tap, said Fort Lauderdale Mayor Dean Trantalis, who gave the event's keynote. Making sure the necessary infrastructure is in place, in the other words.
"We're about to rebuild our water treatment plant, something that should have been done 20 years ago," the mayor said. "And our entire sewer system. Many of you have heard about the bad experience we had."
The mayor was referring to a series of recent sewer leakages that have happened in Fort Lauderdale, including a 2021 bursting of an 18-inch main that spewed more than 1,000 gallons of raw sewage into the street and Intracoastal Waterway.
"That's the past. The future is here. The future has arrived, with the kind of investment the city is making," Trantalis said.
As an example of thinking big about the future, the mayor pointed to the city's talks with Elon Musk's The Boring Co. to create tunnels in Fort Lauderdale, specifically one to take people from Downtown to the beach. Plans call for moving passengers about 2.5 miles underground in Tesla cars, going to their destination in a few minutes.
"Imagine being able to go underground to get from the performing arts center to the A1A in less than five minutes," Trantalis said.
The mayor said that a tunnel under the New River to facilitate high-speed rail between Miami and Palm Beach is also a possibility.
"We try to make this city desirable, in the ways a city [government] can," citing the city's sports facilities, cultural venues and parks, many of which have been renovated or upgraded recently.
"How many of you have been to our soccer stadium?" the mayor asked rhetorically. "David Beckham has been a great influence on our community, and so have the Mas brothers, who brought their team to Fort Lauderdale. The way I see the politics of it, I think the team's going to be permanent in Fort Lauderdale. We're going to have our own team."
The mayor said that the city is now investing over $200M for new park space, both on the beach and elsewhere in the city.
"Our Downtown is growing because people see the area is a place to live," the mayor said, calling it a mecca for people from around the country and the world.
The event panelists generally agreed with the mayor's optimism for the future of Fort Lauderdale, but also discussed some imminent challenges for the city and the health of its commercial real estate.
"We are in challenging times right now," Franklin Street Regional Managing Director Evan Seacat said regarding the current property insurance crisis in the state, which is seeing major insurers leave or raise premiums.
"We're seeing massive increases in premiums right now. Legislation is going to have to step in, or a lot of properties are going to become uninsurable in the Broward market," Seacat said.
Gov. Ron DeSantis has set aside May 23 through May 27 for a special legislative session about the property insurance crisis.
In the local construction business, the impact of supply chain disruptions didn't really kick in until well after the start of the pandemic, because projects underway at that time were already sourced, Suffolk Construction Chief Operating Officer Stephen Chang said.
"We're seeing the impact today," Chang said.
Even so, South Florida and Fort Lauderdale in particular are doing well in attracting people and businesses. An estimated 300 people a day are now moving to the city, the speakers said.
Cymbal DLT Cos. Chairman Asi Cymbal, who is a developer, is planning to move his company headquarters to Fort Lauderdale.
"As we expand, we have a $2B pipeline, and we want to double it by the end of the year," Cymbal said. "I don't want to schlepp to Palm Beach from Miami, so we're going to centralize in Fort Lauderdale, which will give us easy access to all three counties, plus the West Coast.
"When we first invested in Fort Lauderdale 12 years ago, we saw it as a real city, and it's continuing to develop well," Cymbal said. "For the first time, I'm able to convince friends from California to move here. That's a big shift I've never seen before."
All three counties work with each other, Chang said, and that helps each county's site selection efforts.
"A company might come looking for Miami or Palm Beach, but realizes that it fits better in Broward or Fort Lauderdale, or vice versa," Chang said. "So them working together is very important."
Some of the city's site selection successes are largely unheralded, Chang said, such as the movement of the country's largest jet engine leaser to move to West Broward.
"Almost every airplane that you're on leases engines from this company," he said.
Chang was referring to Willis Lease Finance Corp., which moved its HQ to Coconut Creek from California in 2018.
The city has a bit of luck in being centrally located in South Florida, Fort Lauderdale DDA CEO and President Jenni Morejon said, adding that Fort Lauderdale is "approachable."
"Downtown is now first choice for a visitor experience," Morejon said. "The beach is fantastic, but we have 1,000 new hotel rooms, and new places to live, and new shops and restaurants. It's really becoming a mix destination, with a series of amenities that support that."
The city is also moving past the coronavirus pandemic, and while it caused dislocation and pain, even the local retail sector didn't suffer as much as feared.
Azor Advisory Services owner Beth Azor, who owns shopping centers, said that she lost only one tenant during the pandemic, and knows other owners who lost more, so she considers herself lucky.
"If you have trophy assets, tenant sales will stay high, and they will figure out how to bring consumers into their stores, whether it's pickup at the curb, or to go, or whatever it needs to be," she said.
"The restaurant business has skyrocketed since Covid," Azor added. "Before Covid, there was about 10% second-gen restaurant space available in South Florida. Today, you cannot find second-gen space, and if you have a drive-thru, rents are up 30%."
Calls about finding retail space have been numerous lately, Azor added. Many of those calls are from out of state.
"I've signed leases with businesses from California and New York, and they think our rents are cheap, and our home prices are cheap," she said. "I had an empty Michael's space for five years, and a gym owner from California came in and wanted that space. They didn't negotiate the rent or tenant improvement and opened in 45 days."