A REBUILDING BOOM
Miami-dade is in the throes of a hotel buying-and-building boom with an emphasis on upgrades OTHER MARKETS
coln Road, and the upcoming Edition at 29th Avenue is expected to do the same when it opens late next year.
Marriott announced two years ago that it was buying the old Seville Beach Hotel to become an Edition, a chic and exclusive new brand formed in partnership with hotelier Ian Schrager. The Miami Beach location will be the only one in the United States when it opens.
Jay Coldren, Marriott International’s vice president of lifestyle brands, said at the hotel conference that the company’s investment in the Edition is unusual — Marriott does not typically own the hotels it operates — and a sign of Miami’s significance in the world.
“We’re really serious about this market, the future of this market and what it means to the global positioning of the brand,” he said.
Slightly north of the Edition, the Saxony hotel at 3201 Collins Ave. is coming back to life courtesy of Argentine developer Alan Faena. And the old Cadillac Hotel at 3925 Collins Ave., now the Courtyard Miami Beach Oceanfront, changed hands late last year for $95 million. New owner Hersha Hospitality Trust is adding a tower with another 93 rooms to the property, scheduled for completion by the end of 2013.
Hersha, a Philadelphia company that also has property in New York, Boston, Washington, D.C., Philadelphia and California, had been eyeing Miami for years before making the purchase. Back during the height of the real estate market, said chief financial officer Ashish Parikh, prices were prohibitive.
“The market obviously went into a freefall,” he said. “At that point we really didn’t know where Miami was going to shake out. As we looked at the trajectory, we thought last year Miami was shaping up to have a nice long run — and it seems like that’s coming to fruition.”
“Statistics show that Miami is not the only hotel market in South Florida illustrating strong performance indicators,” the HVS report says. “Investors could benefit from widening their ‘gateway city myopia.’ ”
But for those who are set on Miami-Dade, Comess said, Miami Beach could start to get too pricey.
“The premium’s obviously on the beach, and that’s the first place everyone wants to be,” he said. “But as pricing gets ridiculous on the beach and exceeds peak levels, both guests and investors will start coming inland to find more attractive deals in terms of places to stay.”
Some of the most talkedabout future projects are planned for the mainland, though specifics are far from clear. Genting Group, the Malaysian company that bought the Miami Herald building for $236 million last year, had initially said it planned a 5,000room resort complex with a casino. But after state legislators failed to approve expanded gaming, the company has said it plans to scale the project down.
Swire Properties plans to include a 265-room hotel in its $1.05 billion Brickell CitiCentre project, and developer Craig Robins has said his $312 million vision for the Design District includes a hotel.
And the market is clamoring for more select-service hotels such as Courtyard by Marriott, said Ezra Katz, chairman of real estate investment banking firm Aztec Group. In Miami-Dade, at least two Aloft hotels from Starwood are on the books for early 2013, in the Brickell area and Doral.
The Miami International Airport area also has potential for future development, Katz said.
“It’s a very healthy market, and that airport generates a lot of traffic,” he said. “You may not get rich, but you won’t get poor.”
The South Florida hospitality industry, of course, is wary of boom-and-bust cycles after recovering from the impact of the Sept. 11, 2001 terrorist attacks and the recent worldwide recession. Industry players say there doesn’t appear to be a bubble in the making but warn about the unexpected.
Peter Zalewski, a principal with Bal Harbour-based consultancy Condo Vultures, said added inventory could be an initial drag on occupancy and pricing. And, he pointed out, hotels are especially vulnerable to outside events.
“We’re one international incident away from the whole scene changing,” he said.
In this post-recession phase, tourism boosters and visitors alike are enjoying the progress.
Interior designer Colette Anderson, visiting from the Atlanta area recently as part of the lodging conference held at the Fontainebleau, toured the new SLS with a group and “took 100,000 pictures.”
“It’s just quite fascinating that there’s a big construction boom down here in South Beach,” she said.
The constant redevelopment helps to keep interest fresh in Miami, especially as northerners are making their winter vacation plans, said Chanize Thorpe, editor of the Conde Nast site HotelChatter. com. “You’ve got these kind of classic hotels that are reinventing themselves,” she said. “I think that’s one of the reasons why people will continually be interested in what’s going on.”