Brown Harris Stevens | Zilbert - Zilbert International Realty - Zilbert Realty Group - South Beach Real Estate - Realtors - Short Sales and Condos

USA - English - Inglese
Eng
France - Français
Fra
Brasil - Portuguese
Port
Italia - Italiano
Ital
Russia - Русский
Rus

Home | Condos | Homes | Rentals | Worldwide | Our Team | Contact Us | Zilbert Store

YOU ARE HERE:  HOME > Miami > News

Condo-hotel concept latest building boom
By Douglas Hanks III, Miami Herald
Posted on Mon, Jan. 24, 2005


Guy Mitchell, left, from the Miami-based Mitchell Cos. and Robert Falor, president of the Chicago-based Falor Cos., at the Royal Palm Hotel. CARL JUSTE/MIAMI HERALDIt took the Falor family only 21 months to assemble one of the most diverse hotel portfolios in South Florida -- seven prime properties from Islamorada to Coral Gables.

''What is the old saying? Make money while the sun shines?'' Robert Falor, 36, said during a recent lunch at The Tides, the 45-room celebrity haunt in South Beach his family acquired last year for a whopping $588,000 a key. ''The climate is perfect to execute our business plan.''

He wasn't talking about the weather -- at least not directly. Instead, the president of the Chicago-based Falor Cos. meant the current boom of condo-hotel properties, where hotels sell off their rooms individually to buyers.

More than 30 such projects are either open, under construction, or planned from Fort Lauderdale to Key Biscayne.

Already, the concept has changed how South Florida builds luxury hotels with developers turning to the real estate market instead of banks to fund construction costs. By selling ownership of the rooms in advance, developers secure more than enough money to build the hotels without the risk of making loan payments in the rocky early years of a hotel's debut.

Analysts note that only a handful of condo-hotel properties have been open long enough to offer comparisons for potential buyers, and there's no consensus on whether the units make good investments. Tourism officials also worry that the move toward individual ownership of hotel rooms could leave too few beds for tourists, as well as put pressure on the number of hotel rooms available for large conventions. Such conventions typically need thousands of rooms reserved years in advance.

''If you own one of those units, I don't know when you're going to use it,'' said David Kelsey, head of the South Beach Hotel and Restaurant Association. ''You can't guarantee you will have the room available for conventioneers.''

But nothing seems to be cooling developers' enthusiasm for condo-hotels and their quick access to cash.

Last week, the owner of the Sonesta Beach Resort on Key Biscayne announced it will raze the 294-room property to make way for a condo-hotel complex, and Ian Schrager's ultra-hip Shore Club has quietly begun compiling a waiting list for buying its 325 rooms. Fort Lauderdale's tourism boosters also are salivating over a wave of luxury hotels slated to open in that former low-budget paradise for spring breakers -- projects financed as condo-hotels.

A BIG APPETITE

Then there is the Falor appetite for acquisitions. In May 2003 the family -- David, the chairman; Robert, the president; and Chris, director of renovations -- closed the deal on their first conversion project: the Cheeca Lodge resort in Islamorada, home to George H. W. Bush's annual bonefish tournament. From there they scooped up the Mayfair House, a famed if faded hotel in Coconut Grove.

Then the Falors turned to South Beach, buying the Breakwater and Edison, and then the $500-a-night Tides, once owned by record mogul Chris Blackwell.

Next came the Royal Palm -- 417 rooms on the ocean, a major convention-headquarters hotel and the fourth largest resort in Miami Beach. Waiting for that deal to close, Falor signed a contract to buy the Omni Colonnade, an upscale business hotel in downtown Coral Gables.

The company is also converting a Chicago hotel and have two more under contract, along with one in Los Angeles and Boston.

People familiar with the deals say the Falors scooped up the prized South Florida properties by coming in early with strong offers and promising quick closings.

''They're very aggressive,'' said Scott Podvin, a real estate lawyer with Stearns Weaver in Miami who represented the Falor Cos. on the Mayfair deal. ''That's part of their strategy: Let's beat others to the market.''

Though the Falors have feuded with business associates in the past [see below], their condo-hotel ventures seem to be generating a mostly warm welcome.

And some industry leaders who had expressed concerns about condo-hotel conversions say they're reassured by the Falors' pledge to reserve rooms for conventions.

''Before I met with David and sat down with him, I was concerned,'' said Stuart Blumberg, president of the Greater Miami & The Beaches Hotel Association. ''He understands the business. He's not just someone coming in the front door, converting and let me take my carpet bag and move on.''

RENTAL POOL

Developers dismiss critics' concerns about a potential shortage of hotel rooms, saying most owners turn their units back to the hotel's rental pool. And they note the condo-hotel model is creating rooms when most banks won't fund hotels.

''To the extent it puts more hotels into the inventory, it's a good thing,'' said William Talbert, president of the Greater Miami Convention & Visitors Bureau.

By passing on debt, property taxes and other costs to unit owners, condo-hotel developers open a property with an instant profit on the real estate.

''You don't have to wait five years to sell your project,'' said Francis Nardozza, chairman and chief executive of REH Capital Partners, a Fort Lauderdale investment firm. ''Essentially, you're selling it on Day One.''

In return, unit owners -- who can pay in the low $100,000s for small hotel rooms or more than $1 million for an oceanfront suite -- get free stays in upscale hotels, instead of the housecleaning and shopping that often comes with a vacation home.

And when the owner leaves, the unit is offered for rent on a daily basis without any hassles for the owner. Unlike time-share units, which generally plunge in value with age, condo-hotel rooms offers the prospect of appreciation, or at least recouping the original purchase price.

Unit owners split operation costs with the hotel in exchange for a share of the room's rental income, typically about 45 percent. But with many hotels losing money their first few years in an always competitive and seasonal market, condo-hotel units are unlikely to be cash cows, the experts said.

''If I had to give someone advice -- and I probably shouldn't be saying this -- I would say don't buy a condo-hotel unit as an investment. Just don't do it,'' said Ricardo Dunin, who opened the Mutiny in 1999 in Coconut Grove, the first South Florida condo-hotel project since their scattered use as a tax-shelter died off in the 1980s.

BUY IT, USE IT

''The reason you buy a condo-hotel is for use,'' Dunin continued. ''And [when] you're not there, then it's being rented and maybe you pay for your costs.''

Federal securities law bars developers from marketing condo-hotel units as investments, but there's little question investors are fueling many of the projects' pre-sales. ''Ninety-five percent of the time [buyers are] really more interested in an investment than in a vacation home,'' said Joel Greene, president of the Condo Hotel Center brokerage in North Miami

If that's the case, then that pool could dry up if the first generation of condo-hotel projects generate too little cash and too low resale prices. But vacationers scooping up the units would be another story.

''If that is, in fact, the end user, I don't think there's an end to the demand,'' said Gregory Rumpel, the Jones Lang LaSalle Hotels vice president who helped broker the Falors' Colonnade and Cheeca deals.

Hotel markets in Latin America, Europe and Australia have been building condo-hotel projects since at least the 1980s, but the concept was mostly isolated to ski towns in the United States. Then the Mutiny opened, signaling the start of a trend that spread quickly through South Florida.

The last two years saw developers across the country tip-toe into the concept. The Trump International Hotel and Tower in Chicago -- where Bill Rancic went to work after The Apprentice -- is a condo-hotel property. Aventura-based Turnberry Associates launched the first Las Vegas condo-hotel last January, and other developers are following suit.

The Falor Cos. says it has $1.2 billion worth of property either under contract or in its portfolio and has plans for more acquisitions.

Admirers point to the company's experience running hotels. David Falor used to head up sales at the old Americana hotel in Bal Harbour and the Falor Cos. made most of its money buying and repositioning hotels. ''You have to understand the hotel business to understand the condo-hotel business,'' said Ezra Katz, chairman of the Aztec Group hotel brokerage, which is working with the Falors.

JETTING TO DEALS

The Falors have assembled a set of investors to fund the acquisitions, capped by a $45 million commitment from the Miami-based Mitchell Cos. In addition to cash, Guy Mitchell brought a Lear jet to the partnership, allowing him and Falor to crisscross the country in pursuit of deals.

A company press release says the Falor Cos. has more than $400 million pledged from equity investors for future acquisitions, and the company is scouring the country for markets where it can pioneer the concept, too. ''We want to be the first into a market where condo-hotels do not exist today,'' Robert Falor said. ''Because we want to set the prices.''

June 19, 2004 -- If you're thinking of joining Beyonce� Lenny Kravitz and all the other celebrities who have recently bought Miami pads, here's an inside tip: South Beach is so, like, totally over.
In-the-know locals are now setting their sights on a rapidly metamorphosing skyline: downtown Miami, which is starting to look less like Florida, and more like Manhattan.

A massive wave of development has seized the city, from the core of downtown (best known, until recently, for low-budget luggage shops), and extending south to Brickell Avenue (Miami's version of Wall Street), west along the Miami River and north to a burgeoning artsy scene.

Joining neighborhood vanguards like the Four Seasons (a 70-story luxury hotel and condo building, the tallest residential building south of Manhattan) and NeoLofts (Miami's first "New York-style" loft building) are a variety of residences. Many are massive mixed-used projects, like the six-acre Metropolitan Miami, and Everglades on the Bay, a two-tower condominium.

"Miami is an untapped metropolis, and it's been underutilized - until now," says Mark Zilbert with EWM Realtors.

Suzy Buckley, an editor at Ocean Drive magazine, is one of many young professionals taking a chance on downtown Miami. She recently bought, based on plans, a two-bedroom condo at One Miami, a two-tower waterfront development that is nearly sold out.

Currently, Buckley lives, works and plays in South Beach.

"Everything I do is here," she says, admitting to being slightly nervous about moving. "I'm thinking about everything that is springing up downtown, so maybe it'll be the same thing downtown as it is in South Beach.

"I got more for my money downtown," Buckley, 28, explains. "Basically, I could have afforded an amazing one-bedroom in South Beach, or a brand-new two-bedroom in downtown."

In South Beach, oceanfront properties average $1,000 per square foot, while bayfront condos are going for $600 per square feet. By contrast, pre-construction prices for waterfront properties downtown average between $350 and $450 a square foot - though "prices are accelerating rapidly," cautions Zilbert

Residents speak of big plans to turn their sleepy city center into a 24-hour community. Downtown is zoned for all-day, all-night liquor licenses. Further uptown, construction on the Performing Arts Center of Greater Miami is nearly complete.

"Within the decade, downtown Miami will have the attraction and allure of Las Vegas," predicts Zilbert, somewhat optimistically.

For today, a bird's-eye view garners nothing but construction for miles.

"When we first broke ground four years ago, there wasn't much around," says Richard Baumert, vice president of Four Seasons developer Millennium Partners. "Now, the area's exploded."

"Anybody who saw South Beach in the '80s can see what downtown Miami will become," says Lissette Calderon, who was behind NeoLofts and is now developing the 100-unit NeoVertika loft building on the river. "South Beach progressed from a sleepy older-immigrant neighborhood to the lively community it is today. Downtown is the next frontier - it's the heart of the city."

Hedge fund manager Paul Beloff is one of the locals - OK, like many Floridians, he's a New York City transplant - kick-starting that heart.

"I don't necessarily want to be where the party's at," says Beloff, 41, who recently moved into the Four Seasons and is an investor in the Pawn Shop, a lounge opening in the performing arts district this summer. "Here, it's nice and classy and upscale. In South Beach, it's not so classy - and it's touristy.

"In Miami, you can still buy property and view, and you don't have to be a millionaire to afford it. "



 

 

E-Mail:  Contact Us  |  Tel:  +1 (305) 726-0100 |  Fax:  +1 (305) 726-0101

   

 


Miami Beach Condos and Real Estate
200 Ocean
1 Hotel & Homes
1000 Venetian Way
1500 Ocean
5600 Collins
ABSOLUT Lofts
Akoya
Apogee
Aqua Chatham
Aqua Gorlin
Aqua Spear
Bath Club
Bel Aire Ocean
Bentley Bay - N
Bentley Bay - S
Bentley Beach
Blue Diamond
Boulan South Beach
Carillon
Capri South Beach
Caribbean
Continuum North
Continuum South
Cosmopolitan
Courts
Decoplage
de Soleil
Edition
Faena House
The Flamingo
The Floridian
Fontainebleau II
Fontainebleau III 
Glass
Grand Venetian
Green Diamond
Hilton Bentley
ICON
ILONA Lofts
Il Villaggio
IRIS on the Bay
La Gorce Palace
Marea
Mei
Mirador North
Mirador South
Mirasol Ocean Towers
Mondrian South Beach
Mosaic
Murano at Portofino
Murano Grande
Nautica
Ocean House South Beach
Ocean Place East
Ocean Place West 
One Ocean South Beach
Portofino Tower
Regent South Beach
Roney Palace
Ritz-Carlton Residences
S5 South of Fifth
Setai
South Pointe Towers
Sundance Lofts
Sunset Harbour North
Sunset Harbour South
Vincci South Beach
W South Beach
Waverly
Yacht Club

Brown Harris Stevens | Zilbert - Zilbert International Realty - Zilbert Realty Group Logo
Zilbert International Realty
Zilbert Realty Group, Inc.
1129 5th Street
Miami Beach, FL 33139
Tel:  (305) 726-0100
Fax:  (305) 726-0101


Fisher Island
Fisher Island      


Downtown/Brickell/Midtown/Coconut Grove/Coral Gables
2 Midtown Tower
2 Midtown Mews
2 Midtown Midrise
4 Midtown Tower
1000 Museum
1010 Brickell
1100 Millecento
1800 Club
50 Biscayne
500 Brickell Tower 1
500 Brickell Tower 2
900 Biscayne Bay
Aria on the Bay
Asia
Avenue 1060 Brickell
AXIS - North
AXIS - South
Baltus House
Biscayne Beach
Blue
Brickell Flatiron
Brickell Heights
Bristol Tower
Carbonell
Centro
Cloisters on the Bay
Epic
Everglades on  the Bay
Four Seasons
Gables Club I
Gables Club II
Gran Paraiso
Grove at Grand Bay
Grovenor House
ICON Bay
ICON Brickell 1
ICON Brickell 2
ICON Brickell Viceroy
Infinity
Jade
Latitude
The Loft Downtown
The Loft Downtown 2
Marina Blue
Marquis Miami
Met 1/Met 3
Midtown 2
Mint
My Brickell
One Miami
One Paraiso
One Thousand
Museum

Opera Tower
Onyx
 
Paraiso Bay
Paraiso Bayviews
Paramount Bay
Paramount Miami Worldcenter
Park Grove Club Residences
(Two) Park Grove
Plaza on Brickell I
Plaza on Brickell II
Quantum
Santa Maria
SLS Brickell
SLS Lux
 
Ten Museum Park
Venetia Coral Gables
Villa Alhambra


North Bay Village
360 Condo West
360 Condo East
360 Marina Condo West
360 Marina Condo East
The Lexi  


Miami Beach Houses
Alison Island
Central Miami Beach
Hibiscus Island
La Gorce Island
Palm Island
Pinetree
South Beach
Star Island
Sunset Islands
Venetian Islands
West Miami Beach 


Aventura/Bal Harbour/Surfside/Sunny Isles/Hallandale/Hollywood/Fort Lauderdale
Acqualina
Apogee Beach
Atlantic One
Bal Harbour Tower
Balmoral Bal Harbour
The Beach Club I
The Beach Club II
The Beach Club III
 
Bellini Bal Harbour
Chateau Beach
Eighty Seven Park
Hamptons South
Harbour House
Jade Beach
Jade Ocean
Jade Signature
La Perla
Majestic Tower
Ocean III
Ocean 4
Oceania I
Oceania II
Oceania III
Oceania IV
Oceania V
One Bal Harbour
Pinnacle
Porsche Design Tower
Porto Vita - North
Porto Vita - South
Regalia
Ritz-Carlton Bal Harbour
Sayan
Solimar
St Regis Bal Harbour
The Palace
Trump Hollywood
Trump Palace
Trump Royale
Trump Tower I
Trump Tower II
Trump Tower III
Turnberry Ocean Club
Turnberry Ocean Colony N
Turnberry Ocean Colony S

Navigating Our Website
Miami beach real estate
Mortgages
Real estate listings
Miami beach news
100 Most Expensive
Buy South Beach real estate
Miami condo news
Subscribe
South Beach Real Estate News
100 Highest Sales
Sell Miami Real Estate
Miami Beach Cities
Investment property
Zilbert News
100 Newest Listings
100 Highest Sales
News
About me
Uptown Miami
First time buyer
Foreclosures
Join Us
Realtors
Contact
About Miami
Zilbert Realty Store
100 Latest Sales
Videos
Sitemap
News
Links
Condo Super Centre
Condo Super Center
Sofi district
Lualdi Doors
Homes
Condo Hotels
Zilbert Blog
Privacy Policy