Tuesday, January 22, 2008

Miami, where the delusional come home to roost, by gimleteye

Politicians and their appointed development review boards in Miami and Miami Dade county will eventually come around to economic reality or be washed out like stormwater into the Virginia Key wastewater treatment plant.

But we are far from that moment, as a recent story in the Miami Daily Business Review perfectly attests.

Astoundingly, a local developer is applying for zoning to build a Dubai-style condo in downtown Miami, “moving forward with plans to build twin 93-story condominium towers across from Bayside Marketplace."

Why would a developer seek a major-use permit required for large developments and why would Miami’s Planning Advisory Board vote 8-1 to approve, at a time when thousands of condo units can't get a bid at auction and those condos now nearing completion show signs of cost-cutting on interior spaces that betray desperation by developers to just break even? (hit read more)

According to DBR, in May 2005 the developer bought the 2.66 acre site for $31.75 million, joining the flood of liquidity that washed over Florida real estate like a hungry tidal wave. Now, in the midst of a market crash, he is asking $80 million.

$80 million could only mean that getting an affirmative vote from local zoning councils and the city commission is worth $50 million, give or take.

A real estate professional dryly notes: “… permits for future development can add value to a property… the value can be influenced by such factors such as the perceived ease in obtaining city permits.”

Land use law firms, Greenberg Traurig comes to mind, built massive profits by re-zoning properties like the one in question. Sometimes their paychecks were tied to “success fees”. They were so successful in this, that they helped build the durable political machine that has controlled Miami and South Florida politics for decades.

Today we can see what success really means: subprime politicians everywhere, a world-wide credit crisis, half-empty subdivisions in former farmland, and C-thru condos.

The biggest speculative development bubble in Florida history scorched the public interest, wasted Biscayne Bay and the Everglades, and chained taxpayers to unsustainable costs of growth.

Apparently, there are still a few people who expect the band to just play on.


Anonymous said...

To relieve your distraction today, watching the stock markets' response to the emergency intervention of the Federal Reserve--lowering the benchmark rate 75 basis points before the opening of the markets-- you might check out, in our archive feature, the category "Federal Reserve".

11 months ago, I posted the following: http://eyeonmiami.blogspot.com/2007/02/friday-rant-cont-by-gimleteye.html

If you have been reading eyeonmiami, you'll know how to understand today's news.

Anonymous said...

The simple facts are as follows:

If the Empire Tower is going to be built, from a Planning prespective, it belongs exactly where it is, the center of the Miami urban core.

There was no upzoning or land use change, just a development order for a Major Use Special Permit, and that will not be final until the Commission votes on it.

At the end of the day, if a developer is going to risk building the structure, who are we to tell them how to spend their money.

The MUSP development order is renewable every two years (although City staff argues that there is a six year limit, but, they are wrong based on a plain reading of the Zoning Code). That means that they can hold off on construction until the market shifts.

Anonymous said...

As I see it the main and overwhelming reason thet the project should not be allowed to go forward is the water shortage. Of course is the developer will add a plant to change seawater into drinking water at least sufficient for his buildings, then let him build.

Anonymous said...

Of course, none on the future residents will own automobiles. Who are we to say?

Anonymous said...

I think the FAA will have some input on this and will be short and sweet.

out of sight said...

Hey, perhaps the first 90 floors of the 2 towers will be garages?

Anonymous said...

Actually, Myamuhnative, the FAA has already had a say. They, along with the City of Miami and Miami-Dade County (MDAD specifically) entered into an interlocal agreement which sets the maxium heights in and around Miami for structures. It so happens that this structure is located in the 1010' height set-aside sub district. Tibor Hollo had his 1010' building, One Bayfront Tower (Office & Hotel) approved about six months ago, maybe more. There are no FAA issues. The only conceivable issue is that the applicant could seek revisiting the interlocal agreement for an upward adjustment, since the project was designed to go up to 1060', but, being one of the architects of the deal, I don't see that flying now. The FAA was happy to create height certianty in Miami, however, under the condition that there would be no modifications in the future. That being said, I think the developer is happy with 1010'. I was at the City PAB when this item was heard, and I had the opportunity to speak with Mr. Cohen. You all need to understand that this man comes from insane money, and he views this more as a legacy peice. Initially, he wanted to build a 1,200 foot tower, and all out of concrete, making it the tallest concrete structure in the world. He was not able to sway the FAA or MDAD, so, he is building at the current max. That being said, if approved, I see him moving forward with the project, despite the state of the real estate market. You can always rent the units at a loss, and flip to condo with the market shifts. This guy can eat those losses... Trust me on this..

Anonymous said...

I can't wait to see this get built! It's unfortunate it couldn't get built to its original proposed height.