by: Max Crampton-Thomas
4 Min read January 2021 — The challenges weighing on most sectors of the economy as a result of the COVID-19 pandemic have mostly continued into 2021. While some businesses have found these roadblocks to be insurmountable, others have embraced a “bootstrap” mentality and are successfully navigating through this time. Last year, Invest: Miami 2020 spoke with some of the leaders in the real estate sector, on both the development and financing sides, to find out how they were successfully pushing their organizations through the pandemic and how they see the overall real estate sector emerging on the other side.
Jessica Goldman Srebnick, CEO, Goldman Properties
opens IMAGE file This is the most incredible opportunity we will ever have to really learn what we are made of, to prioritize, restructure, reset and hopefully come out stronger and better on the other side of the pandemic. This crisis has required us to become resilient. It has required us to not have any thought paralysis when making decisions. You make the decision with as much information as you have and you keep going because there are so many decisions to make and so many fires to put out. In a lot of ways, you have to go on instinct and not second-guess yourself. You must dig in and embrace the confidence that you are doing your best with the best of intentions.
The beautiful thing is that this pandemic has really given us the opportunity to re-evaluate and rethink our businesses, our structure, the types of businesses we are in, the projects that have the greatest opportunities for success in this new environment, the markets to focus on and evaluating the change in customer behavior. This reflection is key to survival for the future. In certain cases where there were trends like remote working, now it’s a necessity. What does that mean to the future of work and the office market? I believe remote working is here to stay but there is no comparison to the productivity of working in an office environment. That is a benefit for the real estate industry because businesses are going to need more space.
For Goldman Properties, we are having to work harder than ever as we are a smaller group. I think that was the most devastating part of this whole situation: having to let go of employees I care deeply about. It has been a deep test of strength. Managing survival with empathy. Having the ability to pivot and adjust in uncharted waters and using creativity to solve problems. How have we dealt with the challenges? One day at a time.
Ernesto Lopes, President & CEO, AHS Residential
The real estate sector has already played an important role in the pandemic. We, along with many other developers, decided early on to notopens IMAGE file evict our tenants despite the economic pressures they are feeling as a result of this situation. We knew that we would be hit financially but we wanted to stay true to our corporate values. But the present situation, whereby we continue to pay all of our expenses, taxes and utilities without collecting rent, is not sustainable. We cannot build new projects if we do not have any income because the economics simply don’t add up. We were planning to build 1,000 apartments this year, but that target has now been cut to just 700.
I fear that there will be a permanent loss of jobs, particularly in South Florida where tourism and hospitality are such big employers. So we need more support from the government to make sure that we can continue to build new projects and ease the issue of home affordability in the United States. The real estate industry can only provide a small part of the solution. There needs to be a comprehensive plan at the government level to deal with this problem.
Alicia Cervera Lamadrid , Principal & Managing Partner, Cervera Real Estate
opens IMAGE file Confidence levels are starting to improve. The pandemic is more of a pause button than an actual downturn. It mirrors more 9/11 that was followed by a V shaped recovery than the 2008 crisis. We went into COVID with a strong economy and strong market fundamentals. In 2008, the lion’s share of our fundamental financial structures were deeply challenged, severely abused and misused. When we schedule virtual presentations, we have hundreds of people signing up for them. Buyer interest has not dwindled, they merely stayed home and opened their computers. Florida and Miami-Dade are doing exceptionally well. People are seeing that and gravitating toward us. We were already in an upward trajectory prior to the pandemic, and we are seeing this accelerate as we start getting through this.
Nelson Stabile, Principal, Integra Investments
Integra Investments was formed out of opportunities from the 2008 recession, then capitalizing on high value-add opportunities in nicheopens IMAGE file markets. Adapting to the existing macro- and microeconomic environments is in our DNA. With this being said, our private equity and full-service real estate development expertise is diverse, specializing in residential, land, office, mixed-use, marina and affordable housing. We remain diversified to accommodate changing market dynamics, while ensuring we focus on the asset classes we know best.
The pandemic will not only change the type of development projects in Miami but the characteristics of each asset class. At the forefront, residential will undergo various evolutions as many may forgo the urban core for less dense communities with ample green spaces. Developers and users will place increased value on live, work, play open-air environments with an added emphasis on outdoor amenities. Additionally, we predict an uptick in untapped products that merge single-family home features with class-A multifamily amenities. An example of this is our Bella Vista apartment community development in Lauderdale Lakes.
Considering the shift to remote work, our firm is incorporating dens and home offices in more units in our new multifamily developments. To support the ongoing demand for affordable housing, Integra’s Interurban division is working to increase the supply of premium, subsidized housing by delivering 390 units in Miami-Dade.
With health and wellness at the top of people’s minds, the commercial real estate environment is also undergoing a transition to include more open, distanced spaces with ample greenery. At the beginning of 2019, we announced the completion of Aventura Park Square, one of the country’s most forward-thinking, mixed-use projects with wellness as the cornerstone of its design. With careful consideration of all facets of the active-design approach, Aventura Park Square includes extra-wide sidewalks, open staircases, and lush canopies for enhanced walkability. While this project was certainly a catalyst, these design elements are now being incorporated by developers nationwide as we pose questions on how to interact in public places post-pandemic.
Tony Argiz, Chairman & CEO, MBAF LLC
opens IMAGE file We have been able to continue to expand our talent base and that growth has added a lot of depth, not only in additional expertise, but also in the different clients and industries that we can now service. This provides our employees with more experience and opportunities, which in turn will improve their skills and their depth of knowledge. We have seen significant growth in areas like international tax, risk advisory practices and other financial services. A lot of this is due to high-net-worth individuals relocating from high tax states to Florida. Our litigation and valuation work has also increased. One of the only areas of business where we’ve seen some slowdown is in financial institutions, because of the level of M&A activity in this space. To mitigate the effects of this, we are doing more consulting in this area.
Camilo Niño, CEO and Founder, LV Lending, an affiliate of Linkvest Capital
are witnessing. Once mapped out, we will work to focus on these industries to be more aggressive and obtain deals from them. We are also looking to obtain diversified capital sources to reduce inherent costs as interest rates remain low. It is a push toward a more institutionalized approach for our organization, avoiding being too dependent on foreign capital. There is significant liquidity across the United States trying to find attractive yields. Chasing yields is the name of the game. Looking at future growth, bridge lending is an attractive investment opportunity to obtain appetizing yields in a conservative way, while the loans side of our business will take an increasing share of our business to shield ourselves from future uncertainty, be it from COVID or other factors, as we cap our loans to 60% of asset value.
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