Edgewater, Miami

Prive Group ventured into the East Edgewater area in 2010 with a bold effort to establish a significant land position in what is now one of Miami’s most desirable areas for development. Through an intricate assemblage of 12 choice parcels taking nearly 3 years, Prive has amassed 1.71 acres East of Biscayne Boulevard, between 24th and 25th street.

Deal Dynamics:

Working on his nearby downtown Miami project 900 Biscayne Retail in 2009, Prive’s CEO Javier Rabinovich spent a lot of time commuting through the greater downtown market. He found the stark contrast existing between downtown Miami and the then blue-collar neighborhood of East Edgewater particularly intriguing. Only a few blocks divided the skyscrapers of downtown and Brickell and within walking distance, the beginnings of a significant demographic shift was already underway in Wynwood and the Design District. East Edgewater was literally in the middle of it all and in 2010, the City of Miami finally passed a massive overhaul to its zoning code named “Miami 21” which would dramatically change the fate of this forgotten section of prime land. The small land lots, single family homes, duplexes, and garden style apartments that comprised the majority of East Edgewater now carried entitlements to build up to 55 stories with 150 units per acre, dubbed “T-6-36”. This zoning designation created a huge opportunity to compound the value of smaller pieces of contiguous land by assembling them into larger, buildable parcels. East Edgewater was a metropolis that didn’t know it yet and in 2010, Prive began establishing its position.

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Deal Mechanics:

The Prive team began combing the market to identify an opportunity that allowed them to amass an undeveloped area by acquiring smaller parcels. Through their research, they identified a single 6,050 square foot lot that was owned by a Chinese bank through a recent foreclosure. The Prive team began their efforts to assemble land around it, consequently knowing that each piece added would compound the potential of what could be done and heighten the value of the overall parcel. Amassing this position would be no easy task, as each parcel was owned by a different individual. Over a period of nearly 2 years, Prive strategically acquired 12 individual parcels, amassing 1.71 acres east of Biscayne Boulevard between 24th and 25th street. With the combination of these parcels, Prive has created position yielding entitlements to build up to 260 residential units, 520 rooms of hotel, 1.35 million square feet of commercial, or various combinations of either. Market conditions were in Prive’s favor when they initiated their acquisition plan, as the general market was still shrouded in recessionary concerns. However, Prive was well aware that behind the scenes private equity groups and wealthy all cash buyers from all over Latin America, Europe, and Russia were rapidly swallowing up the post cycle condo glut. News began to circulate that what was considered to be a ten-year supply of condo inventory had been consumed faster than anyone expected. Fueling investor interest was the overwhelming demand for rentals from displaced homeowners and young professionals in the area. South Florida became a safe haven for cash as the once empty condos became home to more people every day. Neighborhoods all over South Florida’s came to life, especially in the greater downtown Miami area. In just 30 months, the inventory of unsold condos had fallen to a meager 6-month supply. In East Edgewater and the surrounding areas of Midtown, Wynwood and the Design District, new retail shops and restaurants were opening every day.

Seemingly overnight developers rushed into the market to meet the voracious demand of foreign buyers. A wave of new development had begun in ultra-high-end luxury markets like Bal Harbor, Sunny Isles, and Miami Beach that eventually carried over into Brickell and greater downtown Miami. As Prive intuitively projected the wave of development naturally flowed into East Edgewater and in the spring of 2012, the Related Group announced the one time overlooked neighborhood of Edgewater would be home to their prestigious Icon Bay project, which sold out in a matter of weeks. Land sales and prices ignited, as vetted developers and investment groups began an unprecedented land grab, which still continues to rage on this day. As projects throughout the area have experienced robust sales, construction continues at a healthy pace and the future of Edgewater is now clear. The era of speculation is over and we are very happy to have established such a favorable foothold. As we entertain proposals of varied structure, Prive enjoys a cash flow positive land position with the assemblage as it carries 8 properties with over 30 tenants. The stable income throughout our holding period allows us flexibility to choose between our options in what will be a very profitable exit for Prive and its valued investors.

About the Area:

The East Edgewater neighborhood of Miami has come to be known as the area east of Biscayne Boulevard between 17th street to the south and 36th street to the north. Fronting the gorgeous Biscayne Bay, this area has beautiful exposure of Miami Beach and the port of Miami to the east. Residents of the area enjoy trendy new restaurants and retail stores emerging on Biscayne Boulevard, and a one-block walk to the west takes you to the heart of hot spots like Wynwood and the Design District. Located slightly north, you will find the bustling central business districts of Downtown Miami and Brickell. Young burgeoning Millennials have cultivated an “artsy” scene in the area where art as entertainment is celebrated further than the globally visited Art Basel festival. On every second Saturday of the month, local residents can take an “Art Walk” in neighboring hotspot Wynwood where artists and retailers open their doors late into the evening for the thousands of people who line the streets to take in the cultural exhibition. With such a compelling location, seasoned developers such as Related Groups’ Jorge Perez, and Crescent Heights’ Russell Galbut have taken significant land positions and their developments throughout the area are well underway. These two are only a few among many development groups and investment funds taking positions to completely redevelop the landscape.