As Brickell City Centre nears completion of its first phase, Swire Properties President Stephen Owens reflected on the $1 billion project’s progress before an audience of 100 real estate professionals during the second day of the Urban Land Institute 2016 South Florida Summit.
“We generally do these type of projects without any debt,” Owens said. “Brickell City Centre has largely been done with equity. If we had taken the normal underwriting route, I suspect we would not be under construction. It’s too challenging when you are using other people’s money.”
By avoiding traditional construction financing, Swire has been able to stay on schedule, Swire said. He noted Reach, one of two residential towers in the first phase, the 40-story hotel East, Miami, and one of two mid-rise office towers have already opened and that the retail component anchored by Cinemex, Saks Fifth Avenue and an Italian food hall will open in November. Recently, Swire acquired a 7,500-square-foot lot a block away for $2.35 that will be a fire station, related to Brickell City Centre.
Joining Owens on a panel about urban master planned communities were Miami Worldcenter developer Nitin Motwani and Joseph Kavana, chairman and CEO of K Group Holdings, which is building Metropica in Sunrise. The trio spoke about the challenges they encountered in getting their massive mixed-used projects off the ground.
Kavana said his company acquired the 65 acres for the massive mixed-use project in 1995 and then spent the following 10 years to figure out the concept. When the city finally approved land use and zoning changes for Metropica to move forward in 2009, the market was in the throes of the recession, Kavana added. “We had to wait until we saw the light at the end of the tunnel,” he said. “We also have the challenge of being suburbia, contrary to other projects that are in the middle of downtown communities.”
The $1 billion project will span 65 acres in southwest Broward, and will include eight residential towers with 1,900 units, 400,000 square feet of retail, 650,000 square feet of office space, and landscaped parks, the latter of which will be designed by EDSA. When completed, the community will include a health and wellness center, a resort-style beach club and elevated recreational amenities such as tennis courts and mini soccer fields. Chad Oppenheim is the lead designer. In October, K Group broke ground on the first residential building, a 28-story, 263-unit condominium called Yoo at Metropica.
In order to make the retail component more attractive to lenders, K Group made a business decision to create separate buildings instead of incorporating it with residential buildings. “Some lenders don’t like a lot of retail under residential,” Kavana said. “It reduces your universe of lenders who are willing to finance sections or all of the project. Metropica has been designed so we can build each individual piece regardless of the cycle and regardless of financing challenges.”
Mitwani, managing principal of Miami Worldcenter Associates, said his company also found it easier to divide the 30-acre downtown Miami project into separate components. “We pulled out our apartment pad to be a straight apartment development because it is easier to underwrite,” Mitwani said. “It certainly plays a significant role in our business.”
Miami Worldcenter Associates also partnered with developers that have expertise building hotels and shopping centers. “We’d be foolish to think we could do this by ourselves,” Mitwani said.
At an estimated cost of $1.7 billion, Miami Worldcenter encompasses a 450,000-square-foot outdoor shopping mall being developed by Forbes Company and Taubman Centers; a Marriott Marquis World Convention Center Hotel with 1,800 rooms and 600,000-square-feet of convention space being developed by MDM Development Group; the 513-unit Paramount Miami Worldcenter luxury condominium being co-developed with Dan Kodsi; and a 429-unit apartment building by ZOM.