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Miami Beach May Create Incentives For Affordable Housing Developers

Author: Admin
Categories: Commercial News,Development,Miami Beach,Multifamily

Miami Beach’s success in attracting luxury developments means there’s little to no room for affordable housing developers to build projects. But the city commission’s land use committee is hoping to solve that problem.

Committee members Mark Samuelian, Michael Gongora and Ricky Arriola, who are also commissioners, directed Miami Beach planning director Thomas Mooney to draft ordinances that would entice affordable housing developers to build in the city.

“As we know, the city is not building any significant affordable housing and hasn’t in quite some time,” Gongora said at the committee meeting. “The price of our land is very expensive and it is hard to get people interested in building new affordable housing.”

The most recent affordable housing project completed in Miami Beach was in 2018, when the 21-unit Leonard Turkel Residences at 234 Jefferson Avenue opened. The apartment building is among five affordable housing projects owned and operated by the Housing Authority of Miami Beach. The Miami Beach Community Development Corp. manages another 323 units scattered among 12 historic buildings in the city.

Still, that’s not enough affordable housing stock in a city where the typical home value is $364,074, according to Zillow. The average rent in Miami Beach is $2,018, and the average apartment size is 917 square feet, according to RentCafe. Roughly 55 percent of Miami beach households are renter occupied. Every year, the city opens its waiting list for affordable housing that often attracts thousands of applicants, whose household incomes must be no less than $8,868 and no more than $47,450. New renters are chosen through a lottery system.

Gongora proposed the city pass legislation that would fast track affordable housing projects through the building permit process and waive land use and other fees associated with new developments, which drew praise from his colleague, Samuelian.

“We have talked a lot about affordable housing and how to make sure it happens,” Samuelian said. “This is a movement in the right direction.”

But Arriola cautioned his colleagues that affordable housing usually requires developers to build high density projects, which are often met with stiff opposition from local residents. “If we want affordable housing, we will have to allow more,” Arriola said. “Otherwise we are kidding ourselves and the public. We have to be comfortable building more.”

The committee voted to direct Mooney to draft proposed ordinances and present them at the land use meeting in January.

 

Source:  The Real Deal

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Multiple National Franchise Brands Plan Florida Expansion

Author: Admin
Categories: Commercial News,Retail

Franchises are flourishing in Florida — and 2021 could be an even bigger expansion year for several national entities in the state and region.

The list of franchisors targeting the Sunshine State ranges from upstart restaurant chains to a swimming lesson provider to a flooring company. Yet the projected growth comes at a contradictory time. In February, right before COVID-19, Florida ranked No. 2 nationally in franchise economic output growth, according to a survey from the International Franchise Association. Florida’s franchise-based businesses produced an economic output of $63.5 billion in fiscal 2020, up 5.3% from $60.2 billion in 2019, second in growth rate behind Texas.

But the eight months since haven’t been pretty for franchises, at least on a national scale. Through August, for example, an estimated 32,700 franchised businesses have closed, the IFA reports in a new survey, and nearly one-third, 10,875, are closed permanently. Some 1.4 million jobs have been lost from March through August, with about 40%, 544,000, of those permanent. Another troubling stat: from March through August, franchised businesses’ average unit sales dropped an estimated 19.3%, or a total sales reduction of $185.3 billion.

Pandemic aside, executives with four franchised-based companies looking for Florida locations, in recent interviews, all point to the state’s growing population trends as the core reason for coming to town. And not only more people, but people with thicker wallets.

“We see a tremendous amount of middle to middle-upper class growth on the West Coast of Florida,” Footprints Floors Development Director Brian Knuth says.

The company, which specializes in installing hardwood floors, carpet, tile floors, backsplashes and laminates, has some 50 locations nationally, including one in Orlando. With more people working from home and doing home-based projects, Knuth says the company, based outside Denver, is as busy as ever and has seven available territories spread from Tampa to Naples.

An average investment range is between $68,130-$95,580 for a single territory, according to the firm’s franchise documents.

“It’s a lean opportunity for a investor to come in and run with it,” Knuth adds.

Three other franchise businesses with significant Florida growth plans include:

• Mooyah Burgers, Fries & Shakes: The Plano, Texas-based company has a hand in two fast-growing restaurant segments: fast-casual and what’s being called the “better burger” concept, where the focus is on fresh, never-frozen 100% Certified Angus Beef for the flagship product. Mooyah was founded in 2007 and has nearly 90 units, including three in the Orlando area and one in Miami. It’s looking to open at least 30 locations in Florida in the next year or so, projecting to hire about 600 employees.

Mooyah President Tony Darden says the company is “real bullish” on connecting the Orlando locations to Polk County and then Tampa, Sarasota-Bradenton and Southwest Florida.

“We think we can get 10 to 15 locations in that area,” Darden says. “We feel like that’s the logical next step for us.”

In general, the company seeks markets with growing annual wages that have about 100,000 people within 3 miles of the location, in what Darden calls suburban and light urban. The average investment in a Mooyah franchise location is $403,750 to $639,100, franchise documents show, with the top 25% of annual unit sales $1.26 million. There’s also a $40,000 franchise fee.

Earlier this year, prior to the pandemic, Mooyah introduced a smaller and renovated store model that includes third-party delivery and to-go shelving — a move that now looks prescient. The new prototype includes a closed kitchen and new dining zones and seating arrangements. The company also continues to respond quickly to safety protocols and rapidly shifting customer demands, Darden says.

“We are leveraging what the pandemic has taught us,” he says, “which is you have to be nimble and you have to come to where the customers are.”

• Big Blue Swim School: Backed by private equity firm Level 5 Capital Partners, the swim lessons company wants to make a big splash, going from six locations now to 150 by the end of 2021. Up to 20 of those new locations, all indoor pool facilities, could be in Florida. Specific areas in Florida the company is looking at include Tampa, St. Petersburg, Naples and Fort Myers.

With real estate, build out, supplies and maintenance and other costs, the investment for a Big Blue franchise — from $1.82 million to $3.68 million — is large. After five years, the annual EBITDA (earnings before interest, taxes depreciation and amortization) target is nearly $800,000, or 35.5% of the investment, the company says in franchise documents.

Competitive swimmer Chris DeJong, who missed a spot on the 2008 U.S. Olympic team after Michael Phelps beat him by three-tenths of a second in a qualifying race, founded Big Blue Swim. He says the model works well for both socially distanced activities and in combating the rise of e-commerce.

“The fact that swimming lessons cannot be outsourced or automated and is recession-resistant works in our favor,” DeJong says. “As long as there are kids and families, there will be a need for people to swim, especially in a state like Florida.”

Famous Toastery: The Charlotte-based breakfast-lunch-brunch chain is hot on Florida — even with the state being home to the brand that’s been at the forefront of the sector’s surge, Manatee County-based First Watch.

“First Watch knows how to make breakfast work,” Famous Toastery CEO Robert Maynard says. “They have it down. But we think there’s room for others. There’s so much more space for what we do.”

Maynard says Florida markets the company is initially looking at include Tampa, Fort Lauderdale, Miami and Deerfield Beach. The company so far has 26 locations, in the North Carolina-South Carolina-Virginia region. Like the early days of First Watch, Famous Toastery has grown slow-and-steady since it was founded in 2005. Back then Maynard opened the first location in Huntersville, N.C. with a childhood friend and business partner, Brian Burchill. They opened their first franchise location in 2013; by 2019 it was ranked No. 9 on Entrepreneur Magazine’s Top Food Franchises of the year in the full-service restaurant category.

Based partially on being picky about its franchisees, Maynard says the company’s growth strategy remains deliberate. But that could accelerate in Florida next year. It plans to open 10-12 locations statewide, in addition to expanding to other locations outside Florida. The initial investment for a Famous Toastery location ranges from $600,500 to $1.03 million, including a $45,000 franchise fee.

“We have been talking to a lot of people in the state,” Maynard says. “We think there’s going to be a restaurant explosion [in Florida], and we see an enormous amount of opportunity.”

 

Source:  Business Observer

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Developer Proposes Apartment, Office Buildings Near Aventura

Author: Admin
Categories: Aventura,Commercial News,Development,Multifamily,Offices,Retail

Three full blocks just west of Aventura could be developed into a trio of mixed-use buildings.

West Aventura Developers LLC and West Aventura Exchange LLC, both managed by Marina Kessler and Gustavo Lumer in Sunny Isles Beach, filed a pre-application with Miami-Dade County officials for the 7.9-acre site at 2375 N.E. 186th St. The property runs from Northeast 23rd Court to Northeast 24th Place and from Northeast 187th Street to Northeast 186th Street. It currently has some single-family homes, but it’s mostly vacant.

It’s located just north of Greynolds Park, on the south side of the Michael-Ann Russell Jewish Community Center.

The property is in the Ojus Urban Area, an area west of Aventura that the county rezoned to allow mixed-use development and more density. This has attracted a flurry of development.

The westernmost block of project would have an eight-story building with 378 apartments, 31,375 square feet of retail, and 585 parking spaces. There would be a rooftop pool deck.

The central block would have a 12-story building with 114,385 square feet of leasable office space; 16,715 square feet of retail, including a café on the ground floor; and 552 parking spaces. There would be a rooftop amenity deck with planters.

Finally, the easternmost block would have an eight-story building with 247 apartments, 19,160 square feet of retail, and 386 parking spaces. It would also have a rooftop pool.

Both apartment buildings were designed by Corwil Architects. Arquitectonica designed the office building.

Miami attorney Greg Fontela, who represents West Aventura Developers in the application, couldn’t be reached for comment. Developers file pre-applications to receive feedback from county officials before submitting official applications.

 

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Miami’s Design District Is Expanding West

Author: Admin
Categories: Commercial News,Development,Retail

The western edge of Miami’s ritzy Design District is being turned inside out — literally — to create a new wing for the luxury shopping and design neighborhood.

The Market at Miami Design District, a joint venture between the New York-based Apollo Commercial Real Estate Finance and the Miami retail leasing and development firm The Comras Company of Florida, will take 16 existing commercial properties spanning nearly a full city block and convert them into an open-air marketplace, with paseos and corridors carved out of the existing structures and storefronts on multiple sides of the buildings to give the area the feel of a village.

“The idea is to do something a little more elevated than Wynwood, but not with the luxury vibe of the Design District,” said Michael Comras, president and CEO of The Comras Company, who is overseeing the leasing and redesign of the area. “I want to create something between those two and maybe attract people from Midtown.”

Comras said the first phase of development will consist of adaptive reuse and reconverting the vacant buildings for multiple purposes — food and beverage, showrooms, office spaces and pop-ups — with an emphasis on home furnishings. The new landscaping, lighting and conversion of existing buildings is expected to be completed by the end of 2021.

“We want to create an identity over the next 3 to 5 years and attract people to the District,” he said.

The long-term master plan for the project could include as much as 600,000 square feet of residential, hotel and commercial. The project is also located inside an Opportunity Zone, which offers investors deferred taxes on their capital gains. A final budget for the entire development is not yet available.

Comras said the first tenants will get the sweetest deals — between $60-$80 per square foot in rent, considerably lower than the District’s current rate of $125-$150 per square foot.

“The new owners and I talk regularly,” said Craig Robins, CEO and president of Dacra development, which owns 900,000 square feet of land and one million square feet of buildings in the open-air Design District, along with rights to add another two million square feet. “They couldn’t have better timing, since our leasing post-pandemic has been more robust than any time in the last five years. I’m sure they’re going to be successful and it will be great for the District to have those properties activated.”

The Design District spans 18 square city blocks north of downtown Miami, from Northeast 38th to 42nd Streets between N.orth Miami Avenue and Biscayne Boulevard. The shopping haven is home to 211 luxury shops and boutiques and is famed for its upscale tenants — Gucci, Prada, Louis Vitton — and its architecture, including the 13,000-square-foot three-story flagship store for the French luxury fashion retailer Hermès. The District is also home to restaurants, ice cream parlors and two art museums.

The Market at Miami Design District stretches from Northeast 39th Street to Northeast 41st Street, between North Miami Avenue and Northeast First Avenue, nestled between the two existing Museum Garage and Parkview Garage parking garages. The Market already houses the home furnishings and decor store Nisi B Home and the German Kitchen Center, creator of customized kitchens of European design.

“I think what Michael is doing is so smart,” said Nisi Berryman, who opened Nisi B Home, located at 39 NE 39th St., at the southern edge of The Market 16 years ago. “He has a vision about this and it will enhance the appeal of the Design District. I’ve been waiting for five years for the former owners to say ‘This is your last month’ because they had a different plan with a big building. I just hung in here. But it’s been terrible because all the other buildings were left vacant since they wanted to proceed with their residential project.”

The assemblage of buildings that will comprise The Market was originally put together by the New York-based RedSky Capital and JZ Capital Partners firms at a total cost of $395 million in 2015. They leveraged the properties for a $220 million loan from Apollo Real Estate Financing in 2016, according to The Real Deal. Various projects were considered, including one large mixed-use development that would have included residential, office and retail.

But after defaulting on a loan for a project in Brooklyn, RedSky was forced to liquidate its assets. Apollo assumed ownership of the properties in April and brought on Comras, whose experience in retail includes large projects on Lincoln Road and the ongoing redevelopment of Sunset Place in South Miami, to conceptualize and lease out The Market.

The Market is expected to be a three- to five- year interim project before the final plan for the neighborhood is begun. But experts say the development ticks off all the boxes for the ongoing reinvention of retail around the country: Go smaller, pay less overhead and specialize.

“When you look at the Design District, you see a lot of downsized stores and ground-floor showroom boutiques,” said Zach Winkler, South Florida senior vice president retail lead for the commercial real estate firm JLL. “Back-channel logistics have gotten so much better that a retailer can have a smaller stock of their product onsite in the back of the store and replenish it quickly and easily.

“The great thing about the Design District is that it casts a much greater shadow than other neighborhoods do,” Winkler said. You have people from Coconut Grove and Brickell going there for a night out with friends. It draws tourists and day trippers. Because North Miami Avenue really is the western edge of the District — everything beyond that is residential — The Market will be as walkable as the rest of the District, which bodes well for its sustainability.”

 

Source:  Miami Herald

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$58M Affordable Housing Development For Seniors Underway In Trendy Allapattah

Author: Admin
Categories: Allapattah,Commercial News,Development,Multifamily

Seniors seeking affordable housing near art, barbecue and the Health District can soon look to Miami’s up-and-coming Allapattah neighborhood.

The Downtown Miami-based Interurban, a branch of Integra Investments, and the Sunrise-headquarterd property management company Elderly Housing Development & Operations Corporation, or EHDOC, are developing Mosaico, an affordable housing community for seniors.

The 13-story, 290,000-square-foot building will have 271 units, 92 studios and 179 one-bedroom, one-bath units. Amenities include a gym, computer lab, library, laundry room, and rooftop garden.

Mosaico will sit on 1.2 acres at 1396 NW 36th St., two blocks from the Allapattah Metrorail Station north of the University of Miami School of Medicine, Jackson Health and Bascom Palmer Eye Institute — and a short walk to the Rubell Museum, the soon-to-open Superblue art space and Hometown Barbecue in the emerging Allapattah neighborhood. Construction began in September and is expected for completion by late 2021.

“Miami is one of the most significantly rent-burdened markets in the country,” said Jake Morrow, head of Integra Investments’ Interurban. “The pandemic has exacerbated the dire need for affordable housing, especially for the area’s elderly population whose income far too often consists of only Social Security income.

“To serve the community’s needs, Interurban is committed to providing high-quality housing at affordable rents,” he said. “The pandemic has heightened the need for affordable housing. I think that we can see upward pressure on market rents due to an influx of residents from northern cities.”

EHDOC did not immediately respond.

The firms are using low income housing taxing credits syndicated by Boston Capital and tax-exempt bond construction financing from the Housing Financing Authority of Miami-Dade County, which are underwritten and administered by R4 Capital, for the $58 million project.

Interurban and EHDOC hired the architect firm C.C. Hodgson Architectural Group to design the project.

The firms expect to rent the 450-square-foot studios to single seniors and 580-square-foot one-bedroom units to couples. All units are reserved for households with average incomes at or below 60% of the area median income, which is $59,100. In other words, prospective residents cannot earn more than $38,400 per year to qualify.

Residents would spend 30% of their income on rent and would need a Section 8 voucher, administered by the U.S. Department of Housing and Urban Development.

Seniors interested in living in Mosaico must first register on the Miami-Dade Public Housing and Community Development general waiting list at miamidade.gov for affordable housing in Miami.

Integra, founded in 2009, launched Interurban in 2017. In recent years it has focused on mixed-use, market-rate projects; Mosaico and Las Brisas Trace, in Brownsville, near Liberty City, are its first affordable housing developments.

EHDOC operates 55 senior living communities nationwide, including in Florida, Illinois, California, and Ohio.

Mosaico and Las Brisas are among the growing affordable options for local seniors, often strapped by the region’s notoriously high housing costs. Earlier this year, Related Urban announced Lincoln Gardens, a Brownsville project due to open in 2022; and expansion of affordable project Brisas del Este, also in Allapattah at NW 18th Avenue and NW 29th Street, due for completion in 2022. Earlier this year, Pinnacle Housing Group opened Caribbean Village in Richmond Heights in southern Dade and Carrfour Supportive Housing opened a complex for LGBQT seniors in Wilton Manors.

 

Source:  Miami Herald

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Developer Proposes Five Apartment Buildings Near Aventura

Author: Admin
Categories: Aventura,Commercial News,Development,Multifamily

A developer has proposed five apartment buildings in the Ojus neighborhood just west of Aventura.

The West Aventura Lofts would combine for 172 units. The project is led by Samir Dichy of Casa USA Brokers and all five buildings were designed in a similar style by Gustavo Spokolny of GS Architecture.

All five sites are located just west of the new Brightline passenger rail station under construction in Aventura, and east of the Sheck Hillel Community School. When completed, the Brightline station will connect Aventura to downtown Miami, Fort Lauderdale, Boca Raton, West Palm Beach and eventually Orlando.

Source:  SFBJ

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Medical Offices Remain Attractive Amid Pandemic

Author: Admin
Categories: Commercial News,Healthcare,Offices,Trends

The coronavirus pandemic has been a boon for industrial real estate as increased online shopping drives up demand for logistics space, but the medical office sector has also fared well in 2020, and experts expect continued strength in that area during and after the pandemic.

While banks are hesitant to lend on properties in the retail and office sectors, financing remains available for medical office properties, experts say. And investors also continue to eye such properties, thinking that demand for services there will pick up once a vaccine is found and becomes widely available.

Here, Law360 looks at three reasons medical office properties remain attractive amid the pandemic:

Banks Are Still Interested in Lending

In the weeks after the World Health Organization declared COVID-19 a pandemic, lending all but stopped for commercial real estate. While capital is still tough to come by for retail and office assets, lenders are now providing financing for the medical office sector.

“Lenders are willing to lend on medical office,” said George Scopetta, chief investment officer at medical office owner and services provider ShareMD. “If you come to market with retail buildings, the answer is going to be no. A medical office building, especially if it’s a stabilized building, that’s an asset class that [parties] want to be in.”

Danielle Gonzalez, a shareholder at Greenberg Traurig LLP, said she has closed more than $800 million in loans on medical office buildings since the pandemic began, including an $89 million loan in late September from Starwood Mortgage Capital for eight properties owned by ShareMD.

She said medical offices, along with multifamily properties, have fared markedly better than other asset classes amid the pandemic. Federal stimulus assistance this summer helped many tenants at multifamily properties continue to pay their rents.

“I see a wide variety of asset classes. Not just medical office. … We have seen the least impact on medical office buildings and multifamily,” Gonzalez said. “It was a small blip on the radar compared to other sectors.”

 

Occupancy Has Remained High

Another reason banks have been willing to lend on medical office properties is due to high occupancy levels there, and tenants have remained in those properties for a variety of reasons.

For one, many medical office tenants were unaffected by shutdown orders earlier in the year. David Tabibian, a partner at Jeffer Mangels Butler & Mitchell LLP, said occupancy rates for the sector have hovered around 90% to 92% during the pandemic.

“Rent collections have been very strong — above 90%. That’s exactly what you want as an investor in an unstable market,” Tabibian said. “They are essential services, and tenants are able to still access their space and are still paying their rent. Historically, [medical office properties] have done well in downturns.”

That has meant landlords have had stronger rent rolls to show to lenders, a domino effect that inspires more confidence.

But another reason occupancy has remained high is that leases at such properties tend to be longer, which means fewer leases have come up for renewal during the pandemic than leases in other sectors.

“Landlords want longer lease terms. That’s why you see higher occupancy levels,” Tabibian said. “There are various types of equipment. … It’s more custom, more expensive, and as a result of that, tenants tend to sign longer leases at medical offices.”

 

More Consumer Demand Is Expected Once a Vaccine Arrives

While the medical office sector has taken a hit during the pandemic when it comes to consumer traffic in and out of facilities, experts expect demand to pick back up once consumers feel safe going in for procedures. That may not be the case for retail and office properties.

“The big distinction is the impact on medical office buildings was very much temporary, whereas the impact that we’re seeing on retail and office is much more permanent in nature,” Gonzalez said. “Once this is over, people are still going to have to go back to their dentist’s office for a root canal or their doctor for a comprehensive medical exam.”

And with real estate investors looking for places to park their capital and shying away from retail and office, medical offices will remain a solid option, experts say.

“Medical office really attracts the long-term, serious investors. There is tons of investment by [real estate investment trusts] and funds and institutional buyers,” Gonzalez said. “These are players that do thorough due diligence and are really looking for strong assets to hold for the long term.”

Expect more investment in the sector in coming months, particularly in the first and second quarters of 2021, said Tabibian, who noted there is lots of cash on the sidelines that could flow into such properties in 2021.

That investor optimism is being fueled by a sense that there will be a rush back to the properties once a vaccine is widely available.

“Telehealth … has its limitations and does not work with every specialty. At some point, doctors need to see their patients and can’t always do that virtually,” Tabibian said. “Many people have not undergone elective procedures during the pandemic. There’s a huge amount of demand for elective procedures … that’s coming as soon as there’s a vaccine.”

 

Source:  Law360

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Miami’s Biggest Condo Developer Is Focusing On Apartment Rentals Now. Here’s Why

Author: Admin
Categories: Commercial News,Development,Multifamily,Trends

The pivot quietly began five years ago.

Back then, construction cranes dotted the downtown Miami skyline like the towering alien invaders in Steven Spielberg’s “War of the Worlds.” The real estate industry had recovered from the 2009 recession and was bouncing back hard. Thousands of condos — many of them priced way beyond the reach of local residents — were being delivered or built, completing Brickell’s transformation from office district to dense residential neighborhood.

But Steve Patterson, president and CEO of Related Development, the multifamily rental arm of the Related Group, saw a different picture altogether and started buying up land outside of Miami-Dade.

“I was hired by Jorge Pérez [chairman and CEO of the Related Group] right at the trough of the recession to reactivate the company’s market-rate rental division,” he said. “We like to put the pedal to the metal during a downturn, because costs are lower and the quality of our product is better. There is some softness in the condo market now, and we feel it’s the perfect time right now.”

The Related Group is best-known for its luxury and market-rate condo towers, with an estimated 80,000 condos built, the bulk of them in Miami-Dade. But with a glut of unsold condos dragging down that market, the company is shifting gears and invested $2.3 billion for a wave of apartment rental buildings — both affordable and market-rate — in Miami-Dade and cities such as Tampa, Orlando, and Fort Myers.

This year alone, the company has delivered 3,053 market-rate and 719 affordable/mixed-income rentals in Lantana, Palm Beach and Orlando, including another 204 units in the ongoing $300 million Liberty Square renovation project, which unveiled the completion of its second phase on Friday. Phase I, which opened in July 2019, brought another 204 affordable and workforce units online.

In the pipeline are another 6,772 market rate units in cities including Fort Lauderdale, Phoenix, Atlanta and Jacksonville, all due to break ground between now and the summer of 2021. Another 3,576 affordable and workforce units in mixed-income developments built with the support of local government and federal subsidies are under construction, most of them in Miami-Dade. They include the 120-unit Brisas del Este in Allapattah and the 150-unit Gallery at River Parc in Little Havana.

Related still has more than 1,500 condos under construction or in development in cities such as Fort Lauderdale, Tampa, Sanibel and Jacksonville, but none in Miami-Dade

According to Patterson, all major banks are continuing to provide real estate funding, including Related’s projects. But lenders are being more conservative than in years past, and backing for condominiums is much tougher to secure than that for apartments — another motivator for the company’s pivot to rentals.

Because of the glut of apartment rentals built over the last couple of years in the downtown urban core — nearly 6,000 units since 2014, according to the Downtown Development Authority — Related is steering clear of that area except for one project: The first of three planned towers at 444 Brickell, a four-acre site the company bought in 2013 for $104 million, will be a 40-45 story tower with 500 apartment rentals. Groundbreaking is scheduled for first quarter of 2021 and will take 30 months to complete. In total, the company has 1,500 condo units in the pipeline in Florida, Brazil and Cancun, Mexico.

A NATIONAL TREND

Related’s switch to apartment rentals is a continuation of a national trend that’s been happening for the last few years.

“The biggest driver of apartment construction is the home ownership rate,” said Gerard Yetming, executive managing director of the Urban Core Division of Colliers International. “Home ownership peaked in 2005 at 69% and it’s been trending down every year. So it makes sense there would be a growing demand for rentals and that Related is pushing into that area. The question is will it be a long-term trend. What you’re seeing right now is really just a result of big economic trends that are cyclical.”

Over the last 20 years, home ownership in the U.S. peaked in 2005 at 69%, according to Statistica, and hit a low of 62% in 2015. The percentage inched back up to 65% in 2019. But the U.S. population also grew during that time, from 296 million people to 328 million in 2019.

“The government created the notion that owning a home was the American dream,” Patterson said. “It proved to be beneficial to most people who bought homes until we saw the spike in prices in the last cycle. A lot of millennials saw their parents lose a lot of money.”

The housing bubble burst in 2008, when the bottom fell out of the real estate market, resulting in 2.3 million foreclosures and a loss of $2 trillion in home values in that year alone.

 

Source:  Miami Herald

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DoorDash Launches Program To Revive Closed Restaurants Using Ghost Kitchens

Author: Admin
Categories: Commercial News,Retail,Trends

Since the pandemic hit, hundreds of restaurants across the U.S. like Krazy Hog Barbecue in Chicago have remained temporarily closed as they figure out the right time to reboot their businesses.

Some won’t ever come back.

Today, DoorDash launched a plan to give these brands a fighting chance by matching them with ghost kitchen facilities through a new program called Reopen for Delivery.

Krazy Hog, a full service restaurant that has been temporarily closed since the onset of the pandemic, will be the first brand to take advantage of the program.

“We couldn’t plan for the pandemic,” Krazy Hog owner Dana Cooksey said in a statement. “The first thing I thought of when I heard the executive order in March was, ‘Who is going to feed our customers? There was a massive fear factor – the future was uncertain and overnight our business came to a halt.”

Krazy Hog plans to reopen a new brick and mortar restaurant soon in Chicago. In the meantime, the barbecue concept has hooked up with DoorDash to reboot the business through a delivery only model.

Krazy Hog will be preparing its menu, known for its pork rib tips, in virtual kitchen facility Á La Couch. The company provides restaurants with kitchen spaces designed for off-premise orders. The ghost kitchen operator, located in the Lincoln Park area of Chicago, also licenses brands.

“Our fully staffed kitchens handle cooking, delivery, and fulfillment on behalf of restaurant partners so they can focus on what they do best,” the company states on its website.

Restaurant brands listed on the company’s site include Wow Bao, Tender Canteen, Mac’d, Momo Noodle, The Bombay Frankie Company and SINI.

Victor Cooksey said DoorDash has stepped in to help his restaurant build an off premise operation until he and his wife can ultimately reopen their new restaurant.

DoorDash, which operates a ghost kitchen facility in Northern California, plans to use this model to revive other closed restaurants. The company, however, has not named any other restaurant partnerships.

Krazy Hog owners Dana and Victor Cooksey are featured in “Southside Magnolia,” a documentary by Rodney Lucas that chronicles how COVID-19 pandemic has impacted the two Black entrepreneurs in Chicago.

“The South Side is the heart of resilience, and we see that through the Cookseys’ story. They’ve never accepted their fate as being closed and fought to reopen,” Rodney Lucas said in a statement. “They have an entrepreneurial spirit that runs generations deep and an unwavering faith. COVID wasn’t going to stop them.”

 

Source:  NREI

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Growing Number Of Landlords Are Offering Restaurants Percentage-Only Rent

Author: Admin
Categories: Commercial News,Retail,Shopping Centers,Trends
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A recent survey by the NYC Hospitality Alliance helps illustrate the dire straits of America’s restaurants.

The survey found that 87 percent of New York City’s restaurants, bars and nightlife venues couldn’t pay their full rent in August. The culprit, of course, is pandemic restrictions imposed on these businesses.

Further complicating the situation, 60 percent of the businesses surveyed said their landlords hadn’t waived any of their rent in response to the coronavirus pandemic. But in New York City and across the country, a number of landlords are offering concessions for restaurants and other hospitality businesses in the form of percentage-only rent.

Some restaurant landlords are temporarily switching from fixed-rate rents to rents based only on a share of the tenant’s gross sales or revenue, in an effort to help these businesses survive, says Ken Lamy, founder, president and CEO of The Lamy Group, a Mandeville, La.-based financial management consulting firm. Landlords are then leaving the door open to revisiting the rent structure at a later date, perhaps 12 to 18 months down the road, he notes.

“Rent is a function of revenue, and with restaurant revenue getting decimated in certain types of trade areas, one way to protect the financial stability of a restaurant—and provide a cushion before we recover from COVID-19—is to structure a percentage-only rent deal and fix the restaurant’s rental expense with an acceptable percentage of gross sales,” says Jason Kastner, managing director of the national advisory group at Washington, D.C.-based Dochter & Alexander Retail Advisors, which represents restaurant and retail tenants.

Percentage-only rents are especially helpful in an industry with notoriously thin profit margins of around 3 percent to 6 percent and, now, with slumping sales. In September, sales at U.S. eating and drinking establishments totaled $55.6 billion, compared with the pre-pandemic tally of $65.4 billion in February, according to the National Restaurant Association, an industry trade group.

The percentage applied to a restaurant’s rent in a pandemic-era agreement typically ranges from 5 percent to 15 percent, according to Lamy. The figure sometimes includes common-area expenses like property taxes and insurance, but sometimes excludes them, he says. In some cases, the percentage-only rents come on the heels of rent deferrals that went into effect earlier in the pandemic.

Not every restaurant can take advantage of percentage-only rent, though. For instance, some landlords are limiting percentage-only deals to tenants that operate multiple restaurants rather than just a single “mom- and-pop” location.

At the other end of the spectrum, some landlords are being quite generous. For instance, San Francisco-based Presidio Bay Ventures, a commercial real estate investor and developer, has let Merkado, a Mexican restaurant and open-air market in San Francisco’s SOMA neighborhood, operate rent-free since March.

A prime example of the percentage-only approach to rent is New York City’s Grand Central Terminal. The Metropolitan Transportation Authority, which operates the terminals, has proposed percentage-only rents for restaurants at the famed train station that are run by small businesses. The percentage, to be based on gross revenue, hasn’t been revealed. The rents would likely return to fixed rates once business reaches pre-pandemic levels.

Without percentage-only rents in place for some restaurants, vacancy rates would climb even higher, according to Lamy. (In the second quarter, the average vacancy rate in the retail sector, which includes restaurants, jumped to 20 percent, according to Statista.)

“A store that’s empty is not a good situation anytime. It’s even more damaging to the landlord today,” Lamy says. “So, is it better to have some dollars flowing with a store that’s open? Or would you rather have an empty store because you think you can re-lease it at a better rent? But when is that going to happen?”

Some restaurant landlords might even benefit from percentage-only rent if a tenant’s sales numbers happen to rise above the average, says Allan Perales, chief operating officer of Chicago-based Gold Street Partners, which represents commercial real estate landlords and tenants. Still, the most important consideration for a landlord agreeing to percentage-only rent is to simply keep a restaurant space occupied, Perales says.

The National Restaurant Association reports that in the first six months after pandemic shutdowns took effect, nearly 100,000 restaurants closed either permanently or for a long-term period. Thousands more could be on the chopping block.

For the percentage-only rent structure to work from the landlord’s perspective, a restaurant must supply up-to-date sales and revenue data, according to Lamy. This puts landlords in a “trust but verify” position, he says.

“What’s your average sale today? What was it pre-pandemic? Those metrics are critical to understanding what was happening before, what is happening now and what has happened during this time,” he notes.

Kastner believes the percentage-only rent model will remain as a restaurant lifeline for the next year or two before traditional rent structures kick in again. Unfortunately, the percentage-only setup won’t be enough to save some restaurants.

“For already open and operating restaurants, given the enormous impact to sales because of COVID-19, we will continue to see what feels like daily announcements of permanent closures,” he says.

 

Source:  NREI

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