Property Markets Group, developer of Manhattan’s Walker Tower, achieved a milestone by obtaining $22 million to buy the land for its 190-unit Echo Aventura condominium project.
With $120 million in sales for the project, PMG plans to break ground by this summer.
In addition to Echo, PMG is developing Sage Beach in Hollywood and 95th on the Ocean, a boutique beachfront development featuring seven luxury waterfront homes.
It is now looking to downtown Miami as its next frontier.
PMG founder and Executive Director Kevin Maloney spoke to the Business Journal about strategies including using buyer deposits to help fund construction. The following has been edited for length and clarity:
Maloney: We have two deals we have been working on for a couple of months. It’s tough to find the right parcel at the right price, because there is so much attention placed on Brickell, downtown and Midtown. We plan on developing one site as a condominium and the other site as a luxury rental.
Maloney: We felt the market was going to turn and the opportunities were abundant, especially on the sand. [In Miami], oceanfront property was trading anywhere from $50 to $150 a square foot in mid-2010, and that type of real estate is truly a limited commodity.
Maloney: The sales price per square foot is generally higher in New York. For example, at Walker Tower, a development we are doing in Chelsea with our partner firm, JDS development, some units are trading north of $4,500 a square foot. Those numbers are not achievable down in Miami. But it’s much more expensive to build in New York – roughly two and half times the cost. Also, acquisitions trade at much higher prices.
So, it is deal-dependent and, with new surging prices in Miami and construction and acquisitions costs relatively low, it’s catching up with New York profit margins.
Maloney: New York buyers come from everywhere; it’s truly a global feeder city. North America, South America, Europe, Asia – literally everywhere. In our Miami projects, over 50 percent of the buyer pool comes from South America.
Maloney: It’s huge. It means funds similar to our lender, Colony Capital, are heading back into the market. And what will follow will be the construction lenders. Once that happens, the credit market is truly back and land prices will skyrocket.
Maloney: We set our benchmarks based on total developments and product type. Right now, we have 14 deals under way among three cities (New York, Miami, Chicago) with a variety of product class from high-end condominium to low-income housing. I would like to see this number grow, but very gradually.
Maloney: Very much so. In Chicago, we only develop multifamily; in New York, we just acquired a piece in Long Island City that is set for 410 ground-up, new-construction, multifamily units. In Brooklyn, we have two new construction multifamily deals, both developed jointly with JDS Development, one of which is beling delivered next month. In Miami, we will be announcing our first high-rise multifamily deal this year.
Maloney: We believe that, before the gambling is approved, the current landowner, Genting Group, will develop and improve the entire area with all product types: retail, condo and multifamily. It will be a huge benefit to the area, and once, or if, gambling is approved, the area will already have enjoyed the benefits of urban infill with local and primary users.
Maloney: Possibly Broward, but not Palm Beach. We are not familiar with the Palm Beach market and prefer to stay in the South American feeder markets of Miami-Dade and Broward.