|Out of the Slump and Into the Future|
|Written by Erik Bojnansky, Senior Writer|
The Biscayne Corridor in Miami is undergoing big changes -- and fast
The development slump is over. Banks are lending again, cautiously, and property owners are once again flooding Miami City Commission agendas with applications for zoning changes across the Magic City.
Brickell, downtown Miami, and the Design District are fueling much of the momentum. Yet that energy is also flowing outward. In this story, we update six areas along the Biscayne Corridor in Miami.
Edgewater More than ten condominiums totaling 2400 residences have been completed, are under construction, or are slated to break ground in Edgewater, according to real estate analyst Peter Zalewski in an April column for The Real Deal real estate news website. In this old neighborhood, the small apartments and single-family homes are being rapidly replaced by high-rises.
It’s within this 19-block area that Russian mining oligarch Oleg Baybakov sank $40 million buying a mere 2.7 acres of land. Most of his land was acquired within a three-month period and lies east of NE 5th Avenue between NE 26th Terrace and 26th Street. It includes a 12-story, 58-unit apartment complex on the bay built in 1982; a 35,000-square-foot vacant lot; a 7000-square-foot single-family home built in 1932; and three apartment buildings developed between 1926 and 1961 that house 32 residences.
But Baybakov isn’t finished. The Real Deal also reports that he bought two parcels just west of NE 5th Avenue on May 15 from a Bay Harbor Islands-based company owned by Israel Kopel for $1.4 million. In 2003, Kopel bought the properties (consisting of a vacant lot and a nine-unit apartment building) for $576,000, according to the Real Deal.
Baybakov hasn’t announced plans for his growing fiefdom. Coral Gables attorney Steven Cronig, the registered agent for Baybakov’s Miami-based company, didn’t return phone calls or respond to a BT e-mail inviting comment. The zoning on most of Baybakov’s land allows for a high-rise as tall as 36-stories. The 12-story bayfront apartment building on his land was going to be the site of the proposed 39-story MBay tower.
Baybakov used to be an executive of Norilsk Nickel, one of the largest producers of nickel and palladium in the world. According to media reports, he is now president of GSC City, a construction and consulting firm in Moscow. His 28-year-old daughter, Maria Baibakova, who has two master’s degrees, is a major collector and supporter of the contemporary art scenes in Moscow, London, and Brooklyn. She has been called “the lieutenant” of Mikhail Prokhorov, a six-foot-seven-inch oligarch with a net worth of $10.8 billion, according to a 2010 New Yorker article.
Prokhorov, principal owner of the Brooklyn Nets, reportedly plans to run a second time against Vladimir Putin for the Russian presidency, and once owned most of Baybakov’s former company, Norilsk Nickel, the investment fund ONEXIM group, and large stakes in various other Russian companies. (Baybakov has been mentioned in press reports as a minority owner of the Nets.)
Baybakov, who dabbled in real estate investment in New York, isn’t the only Russian who has taken a liking to Miami-Dade. Eastern Miami-Dade county is a popular destination for middle-class and wealthy Russians.
In April the English-language Moscow Times and CBS 4 reported on the burgeoning travel industry for expectant Russian mothers who want to give birth in Miami. They like the weather, the medical care, and the prospect of dual American-Russian citizenship for their babies.
Real estate agent Selda Kirkan, who specializes in working with Russians, says most of them prefer buying condos in Sunny Isles Beach and Miami Beach. Brickell and downtown Miami are also popular destinations for Russians, but it’s tricky to build anything there. “There is no land left in Brickell,” she says.
But there’s still room in Edgewater, and Baybakov has picked himself a good spot. “It’s a water location,” she tells the BT. “It’s a good investment.”
That investment came at a cost. According to Zalewski, Baybakov paid twice the market value for his Edgewater properties. His willingness to pay more is driving up land prices in Edgewater and beyond, he says.
Midtown Miami Midtown Opportunities, a real estate fund headed by 29-year-old Alex Vadia, is actively marketing the 18.5 acres of land it owns inside or near Midtown Miami, a 56-acre, pedestrian-friendly, planned development near Wynwood.
Deborah Samuel, Midtown Opportunities’ representative and wife of Midtown Miami’s original developer, Michael Samuel, confirms that Vadia is hoping to take advantage of Miami’s rapidly heating real estate market. “He’s into urbanism. He loves Midtown,” Samuel says, but “like any smart business person,” he wants to exploit current conditions in the market.
Toward that end, CBRE, a global real estate firm, is aggressively marketing the property as the “800-pound gorilla.” Gerard Yetming, senior vice president of CBRE, claims there’s lots of interest in the gorilla. “The phones are ringing off the hook,” he declares. The buyer, he insists, “will be able to control the future development of over 3000 units in one fell swoop.”
Vadia’s Midtown Opportunities bought 22 acres of undeveloped land, including 7.3 acres of land just east of Midtown Miami (the former Chiquita Banana distribution site along NE 2nd Avenue), for about $62 million in December 2011. The sellers were Joe and Jack Cayre, a father-and-son development team who partnered with Michael Samuel to acquire the old Buena Vista Rail Yard for $35 million in 2002. Within a year, they sold the western portion of the land to DDR Corp. for $35 million.
DDR Corp. proceeded to build the Shops at Midtown Miami on its side of the property, while the Cayres (Samuel soon sold his interest) went about building some 900 residential units and 775,000 square feet of retail on their side. Most of those units are now owned by other individuals and investors. (For more on Midtown Miami’s history, see “Like a Rocket” April 2012.)
Midtown Opportunities has already sold off some of the land it bought from the Cayres. Jorge Pérez and Stephen Ross bought a vacant lot near 3301 NE 1st Ave. for $12.1 million where they plan to build a 31-story condo hotel called Hyde Midtown. Chicago-based Magellan Development Group bought a second lot at 3201 NE 1st Ave. for an undisclosed price on February 11, with plans to build a 24-story apartment building.
What remains within Midtown Miami are 11.2 acres of vacant land spread over five sites, where as many as 2240 residential units could be built, according to CBRE’s marketing material. Another 1089 units can be built on the 7.3 acre Chiquita site, located just east of the real road tracks at NE 29th Street.
Midtown Opportunities doesn’t intend to sell all the land it owns in Midtown Miami, Deborah Samuel says. The company still plans to build a 16,000-square-foot, linear group of retail spaces designed by architect Bernard Zyscovich along Midtown Boulevard as a means of buffering the rest of the community from the controversial, 203,000-square-foot Walmart that will be built at 3055 N. Miami Ave.
Allegro Life Unlike Edgewater and Midtown Miami, the MiMo Biscayne Boulevard Historic District isn’t zoned for high-rises. It isn’t even zoned for mid-rises. Bowing to the concerns of Upper Eastsiders who feared their neighborhoods would be destroyed by developers, Miami Commissioner Marc Sarnoff demanded a 35-foot height limit be placed on new buildings along the Boulevard in exchange for his support for a new citywide zoning code. When Miami 21 was finally enacted in 2010, so was the height limit.
Property owners claimed the height limit would crush development. However, that hasn’t proven to be the case. Instead, modest new retail projects are being proposed while an increasing number of motels are being renovated.
“I think it’s very up-and-coming, and it has been up-and-coming for at least a year and a half,” says Todd Leoni, whose properties in the district include the recently opened Taperia Raca restaurant at 7010 Biscayne Blvd. and the newly renovated Hotel MiMo at 7126 Biscayne Blvd. “I think eventually it’ll become something similar to Lincoln Road.”
Walter and Shirley Figueroa were among the pioneers. They invested more than a million dollars to renovate the Davis Motel at 6500 Biscayne Blvd. It reopened as the New Yorker Hotel in 2010.
Avra Jain claims it was the New Yorker that inspired her to renovate motels along the Boulevard. So far she owns five historic motels and a 1970s-era office building. Tony Ulloa, a broker with Keyes Commercial Real Estate, says he’s working on as many as 20 potential deals for Jain in the Upper Eastside and neighboring Little Haiti. (For more on the New Yorker and Jain’s impact on the Boulevard, see “Checking In, Checking Out,” January 2013; and “Rebuilding the Boulevard,” March 2014.)
But the 35-foot height limit has no effect on properties that don’t front Biscayne Boulevard. Allegro Life, a six-story, ten-unit condominium, is being built just outside the MiMo zone on a 7260-square-foot lot just behind the New Yorker Hotel’s pool deck. Once complete, the condo will be the tallest structure on this block of two-story apartments and single-family homes.
Allegro Life’s developer is Augusto Franchino, a partner in the Argentine company Red Group Life, which develops or promotes real estate projects in Miami, New York, and Buenos Aires. Franchino bought the property at 569 NE 66th St. from Kay Maunsbach of Miami Beach for $160,000 in November 2011.
Among the amenities touted in an online brochure is on-site parking and proximity to Legion Park, the Design District, American Airlines Arena, Bayside Marketplace, and Miami Beach.
Bob Powers, president of the Palm Grove Homeowners Association, says buildings as tall as Allegro Life won’t be allowed under revised zoning codes governing future development on that block. Allegro managed to get an extra floor from the city after it agreed to provide parking on the ground floor, Powers says. Those rights were vested when the city issued a special permit in 2008. “They [Maunsbach and Franchino] kept paying their permit fees,” Powers explains, “and as long as you can pay your fees, you can keep your original plans.”
As a result, Powers says there’s “nothing to fight” regarding Allegro Life. He also notes that the value of his own property, located across the street from Allegro, actually increased since the project broke ground. “I can’t get mad at these people,” Powers says. “They’re building something they’re allowed to do.”
No one from Red Group Life returned phone calls by deadline.
Motel Blu Look up Ventura 77 LLC on Sunbiz.org, and only one name comes up: Orlando Valdes. Yet ask Orlando about his plans for the 68-room, 57-year-old Motel Blu at 7700 Biscayne Blvd., and he defers to his wife, Gladys.
“She’s the one doing the work and the decorating and all that kind of stuff,” Orlando says. He promises that Gladys will give the BT a call. She never does.
Fortunately, their broker, Tony Ulloa, has studied the property. “It took me a year to close on this deal,” he says.
The Valdeses bought the Motel Blu in February from Pretish and Priesh Patel. “They’re going to basically renovate it completely and take it up to boutique hotel standards,” Ulloa says. The first steps of the renovation, a roof replacement, began in mid-May.
This isn’t the couple’s first hotel. They owned the Delores and Eva Hotels on South Beach, selling them both in February for $17.5 million. That same month, they bought the Cavalier South Beach for $12.5 million and the Motel Blu for $4.2 million. The Motel Blu is their first Miami hotel.
Motel Blu wasn’t always the Motel Blu. In 1957 it was the Gold Dust Motel, home to the Gold Dust Lounge, an after-hours club that operated in a basement-like space by the Little River. The Gold Dust used to serve up drinks and good jazz after the Playboy Club across the street closed for the night. The Playboy Club closed for good in 1983. An Advance Auto Parts store now stands where the club used to operate. The old Gold Dust Lounge, meanwhile, has been used as storage space for decades.
The motel has had its ups and downs. One of the partners of NYMI Enterprises, which bought the motel in 2003 for $1.3 million, died of a heart attack while the building was undergoing renovations, Ulloa says.
From 2008 to 2012, Motel Blu was home to Kris Wessel’s popular Red Light restaurant, which closed amid licensing problems, much to the dismay of many devoted diners.
Then there was the mysterious 1920s-era city easement that cut right through the property. “Nobody caught it for over 50 years,” Ulloa says. But when its existence was discovered, the easement managed to slow down the sale until the city agreed to abandon it.
Besides fixing up the rooms and opening a new restaurant in Red Light’s old space, Ulloa says, the new owners plan to reopen the Gold Dust Lounge.
And if things don’t work out, they can always tear the place down. Motel Blu is located just outside the MiMo Historic District, so permission from the city’s Historic and Environmental Preservation Board isn’t necessary.
Not that demolition is in the current game plan. “No, no, no, no, no,” Orlando Valdes tells the BT when asked if bulldozers will be visiting the motel soon. “We’re not planning on doing any of that stuff. We plan to make it nicer, and maybe change the name.”
Little Farm Just outside of Miami’s borders, hidden behind a defunct supermarket at 8500 Biscayne Blvd. and nestled within the tiny hamlet of El Portal, is Little Farm, a 12-acre trailer park that’s been there since the 1940s. About 1000 people call Little Farm home, the vast majority of whom are low-income individuals and families.
They may soon need to find another place to live.
Michael Goldstein, an environmental attorney, confirms that he’s under contract to buy Little Farm Trailer Park from Madison Capital, a New York financial company that foreclosed on the land last year. Part of the attraction, Goldstein admits, is the fact that it’s undergoing environmental remediation for high levels of arsenic.
“We are always interested in environmentally challenged sites that are located in infill communities where restoration can benefit a community,” Goldstein says. “We think that’s the case here.”
As previously reported in the April 2014 Biscayne Times article “Vanishing Breed,” Madison Realty is seeking to sell the Little Farm for $15 million. The current owner has also been working with the Village of El Portal to create zoning guidelines for a town center-type project with tree-lined streets, retail, mixed-income housing, and buildings between two and eight stories tall. Even without such guidelines, a developer can build retail buildings up to 50,000 square feet, as well as low-rise apartments, under current zoning regulations.
Thanks to the increase of development along Miami’s Biscayne Corridor, Goldstein is sure he can transform Little Farm into an economic asset for El Portal and the surrounding community. “We think we can resolve the environmental issues [on site] and create better and more sustainable affordable housing,” he says. “We also want to create more jobs and activate that part of the corridor in a very interesting and catalytic way that will result in even more investments from private enterprise.”
But Goldstein hasn’t bought the land yet. The attorney suspects it’ll be another two months before any deal is closed.
“I don’t know if he’s representing a larger group of people, in terms of being developers,” says El Portal Councilman Adam Old.
If a deal is signed, affordable housing will only be a portion of the total project, Goldstein says. As a result, there may not be enough affordable units to provide housing for all of Little Farm’s residents, some of whom are at risk of losing manufactured housing that they actually own. “Our hope is that by providing some level of mixed-income housing,” Goldstein says, “that some of the residents may also be able to stay on-site once the property is redeveloped.”
Biscayne Design Center Anil Kakar, owner of Kakar House of Design, is making a transition from interior designer and furniture store owner to developer. He’s making the transition partly because he’s feeling inspired by the MiMo Historic District’s resurgence.
“The motels are being redone on Biscayne Boulevard, and there’s a lot of buzz and excitement,” Kakar says. “Biscayne is becoming the grand majestic boulevard that it used to be, and I want to be a part of it.”
Kakar also senses opportunity. The Antiques & Design Plaza at 8650 Biscayne Blvd., where Kakar House of Design currently operates, is in the midst of an expansion project. Yet even though it’s growing from 26,500 to 39,500 square feet of furniture retail, that’s still not enough space to accommodate all the furniture stores being displaced from the Design District, he says.
So he’s building yet another plaza for furniture stores, called Biscayne Design Center, right across the street from Antiques & Design Plaza. “It’ll be five stores, with each store two stories in height,” Kakar explains. “And possibly one of the five stores could be a very good restaurant.”
The other four store spaces, Kakar envisions, would be filled with an eclectic range of home furnishing stores.
Biscayne Design Center LLC bought the future site for this mall, a vacant 9240-square-foot lot at the southeast corner of Biscayne Boulevard and NE 87th Street, for $1.2 million in August 2013.
Kakar has already hired Corey Lafferty, president of PrecisionArt Design+Projects, as the architect. According to plans provided to the BT, Lafferty’s vision is for each store to have an upstairs area and for both floors to have high ceilings -- 17-foot ceilings for the first floor and 14-foot ceilings for the second.
Kakar’s ultimate goal is to contribute to the overall energy along Miami’s Biscayne Corridor. “I want to add to the excitement of this dynamic city we’re living in,” he says. “I want to keep it growing by leaps and bounds.”
Volume 14, Issue 7, September 2016
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