Investing in South Florida Real Estate Development

On March 3rd, 2022, AKAM, a leading national coop and condominium management company, hosted a virtual webinar on the challenges and opportunities for out-of-state investors and developers eyeing South Florida’s booming real estate market. The webinar took the format of an interview between Regan Marock, Vice President of AKAM, and Anthony De Yurre, Partner in Bilzin Sumberg’s Land Development & Government Relations Group, focused on what new entrants needed to know to be successful in the region’s current development climate. With extensive experience representing national developers based out of New York and Chicago, De Yurre was well-placed to offer insight and advice to the talk’s participants. 

The interview first covered the lay of the land in terms of working with local authorities on land use and zoning issues. De Yurre highlighted that although much of the momentum regarding real estate development in South Florida centered on Miami-Dade County, the County included a patchwork of dozens of municipalities, each with their own rules for development, on top of the County government’s centralized oversight functions for real estate development. 

“It is critical for new players to have local partners that thoroughly understand the different layers of regulations that could affect a given development,” said De Yurre, “and the corollary to that is having local partners who also possess long-term relationships with county and municipal staff to help navigate all approval processes.”

One particular area that required specialized knowledge were the state and local economic incentives and reimbursements offered to incoming business, which could significantly affect profit margins. By way of example, De Yurre referenced a recent development project he worked on where the applications of such incentives saved the developer approximately $3 million. 

Another topic of discussion centered on the needs of different types of limited partners looking to invest with local partners. De Yurre stressed that there was no shortage of opportunities across real estate classes for limited partners to invest passively with local firms executing on the ground. He observed that some out-of-state limited partners were seeking to earn a simple return target for their investment, while others preferred profit-sharing arrangements with local general partners that typically saw more active participation by the limited partners in the venture. 

The discussion ended with De Yurre giving his thoughts on the issue of timing. Given the scarcity of developable land in much of South Florida, especially in Miami-Dade County, it was important to consult local counsel as early as possible once investors had started contemplating entering the market. Such counsel could advise on the areas most appropriate for certain usages, put them in touch with the right brokers, and also advise on an area’s unique entitlement risks and other land use issues. De Yurre also emphasized the key part that a long-term commitment to the region makes in aiding the success of new entrants.

“In my experience, South Florida’s real estate market does not reward one-off investors looking to cash in on a single development,” said De Yurre,” The most successful investors are the ones that have a long-term vision of continued investment and development in the area because they build the key local relationships necessary to fulfill that vision.”