Robert Finvarb, whose development company has two hotels about to open on Miami Beach, discusses the superheated hotel scene in Miami.
With two hotel construction projects coming in for a landing, developer Robert Finvarb was sounding confident during an interview earlier this month.
Construction of both properties — the Hyatt South Beach and AC Hotel Miami Beach, both set to open in April — was running on schedule, no easy task in a market flooded with renovation and new building projects in recent years.
“I pride myself on that,” said Finvarb, a Miami Beach native. “This is all we do.”
After graduating from law school and working for nine years as an attorney, including for South Florida developers, Finvarb founded real estate investment and development company Robert Finvarb Companies, where he is president and CEO.
In an interview at the company’s Courtyard by Marriott South Beach at 1530 Washington Ave., Finvarb talked about the popularity of the area for investors, the advantages of being a local surrounded by outside developers and the challenges of landing a project (not to mention two) on time.
Q. What led you to start your business here in 2002?
A. Just the familiarity of the area, and actually my dad and I collaborated on this project with my brother. It was an emerging area of South Beach. This Washington Avenue corridor was dark, dingy, dirty. And as we’ve seen in many other markets that we’ve developed, it became an economic engine for this little part of South Beach because it legitimizes it.
And one thing that developers have is a herd mentality of following those that pioneer certain areas. Look at Wynwood, look at Design District. And I’m not going to put this on par with what the Goldmans did in Wynwood or what Craig Robins did in Design District, but this was our little opportunity to gentrify this area. We’ve done the same thing in D.C., we’ve done the same thing in other markets where they’ve been urban emerging markets and we’ve put Marriott hotels in areas that people did not associate as a destination for business or leisure travel.
Q. And how have you seen, down here especially, development opportunities change since you started?
A. Dramatically. Actually, most of the projects that I started with on my own were outside of South Florida. So our company did the [Courtyard by Marriott] project over by Fort Lauderdale airport. Then we went to Northern Virginia, D.C., Arizona, New York. Then I came back. ...
It’s crazy, I’ve been through three cycles and we’ve been in business for 12 years. So we came in and I was able to grow my business quite aggressively because the capital markets were extremely active and didn’t really limit my ability as a new developer or as a neophyte in the market from procuring financing. And then my legal background saved me in a sense that I was conservatively leveraged on all these deals so we were able to go through the downturn without ever missing a beat. And we actually were able to capitalize on a couple of opportunities during the downturn. We picked up the [Courtyard by Marriott] hotel in Coconut Grove and we picked up a second one outside of Chicago in a suburban market. Basically that was an alternative strategy during the downturn because construction financing for new projects was nonexistent.
Over the last three and half years, we got back into the market from a construction and development perspective and either developed or are in the process of developing two hotels in New York and three down here, including [Residence Inn by Marriott in] Sunny Isles. [A fourth, the Springhill Suites by Marriott — Miami Airport East, opened about five year ago.]
Q. Have you found that the opportunities available to you are reduced because there’s a lot of competition?
A. Huge. Right now, I mean, in my mind, I’m not really pursuing any new opportunities down here. I think the market is at a level that’s unsustainable from a cost perspective for a new project. Between construction, the cost and acquisition of land — you’re basically competing with condo developers, and they can pay more than a hotel developer can.
I don’t feel that, for the product type that we are accustomed to developing, that it’s a sustainable model. We’re long-term holders, we don’t sell. So we have to be in at a price point that allows us to survive for a long period of time.
And inevitably in the hotel space, there’s ups and downs. The market basically moves in tandem with GDP. So right now ’15 is expected to be strong, ’16’s strong. Let’s see then what happens with a presidential election, oil prices, international travel. There’s so many variables that play into it.
Q. What are the hottest areas for developers now?
A. In South Florida, South Beach remains a crown jewel. There are barriers to entry, obviously, both naturally and imposed by local zoning regulations in terms of the preservation of the Art Deco District and historic buildings. Those aren’t going to change. What scares me is downtown, Brickell I think is getting overbuilt to levels that are not sustainable because you’re not able to drive rate in our business as aggressively on the west side of the [MacArthur] Causeway as you are here on the beach.
Q. Do you think there are pockets that are still kind of hidden gems, undiscovered?
A. I’m very curious to see what happens in Wynwood and Design District. From the retail perspective, restaurants, it’s not a hidden pocket. It’s unproven from the hotel side. Will Wynwood one day become SoHo? Or will it just remain sort of a weekend destination, but not necessarily the kind of place you want to sleep, spend the night? So those are questions that we continue to ask ourselves. And the thing with hotels is: Being a pioneer is extremely risky. You could hemorrhage money with a hotel. If you build it and they don’t come, you’re screwed.
We have a hotel by the medical district, it’s a Marriott Springhill Suites. It does relatively well, but from a rate perspective, it’s dramatically lower to the point where by today’s dollar, it’s an unsustainable business model. So that’s why I’m hesitant to develop something on the west side. Because there’s no differentiating point between what you’re paying for construction on Miami Beach and the west side of the causeway. But your rates are dramatically different.
Q. What’s in your sights moving forward?
A. We’ve got a full plate. We’re not publicly traded, we’re not institutionally backed. It’s all private equity. [We’re] patient, so we’ve got plenty on our plate and if we develop and just continue to hold and operate and manage and extract value out of these assets, we’re fine waiting for the next opportunity. But we’re not going to chase an opportunity just to be active.
Q. What advantages do you think being a longtime local developer give you here?
A. I’ve seen it. When I go into markets like D.C. or Arizona, there’s just knowledge that you’re trying to gain from experts and locals that is still going to be second- or third-hand. Whereas here, I’ve lived it. I know where my wife and I want to go for dinner on a Saturday night that’s edgy versus more established and exciting, where we want friends of ours that are visiting to be staying. I don’t need a feasibility study to tell me how an opportunity is going to perform down here.
Q. So you’ve got these two hotels getting ready to open right around the same time. Why did you want to do those two things so close to each other, and how much sleep are you getting?
A. Not a lot of sleep, but I feel that the window of opportunity to develop the product type that I’m accustomed to developing, that three-and-a-half to four-star product, was closing. So we decided to dive in with both feet and assembled two fantastic teams and actually bolstered our team in house.
Q. I don’t think there’s a Hyatt in Miami Beach, right? And AC by Marriott?
A. First Hyatt in Miami Beach and the first ground-up AC by Marriott in the United States. So they’re pioneering.
Q. And how did you land those deals?
A. This is all I do, so I knew that Hyatt’s one of the leading brands in the world. Not having a presence in one of the most dynamic destinations screamed opportunity to me. It’s actually my first non-Marriott branded hotel, so when we presented them with the opportunity, they were extremely excited combined with our track record for executing developments. And I think it’ll play extremely well with the market, with the surrounding area. The Loews, it really complements the hotel product within that 16th and 17th and Collins corridor, which really is the most established hotel corridor in Miami Beach.
A. As far as the AC’s concerned, I’ve had a relationship with Marriott for 12 years. My family, we’re Hispanic, so it’s a brand that originated in Spain. And Marriott sort of involved me with its acquisition of the brand at a very, very early stage because I am bilingual, I’m a great ambassador from the developer side for the product. And the product obviously doesn’t play batter in any market than Miami because of the Latin and European influence.
Q. You’re right on deadline with both of them — how hard is that to do here?
A. Very. Especially now with so many construction projects on the condo side going on. The condo developers are extremely anxious to get completed and delivered. Nobody wants to get caught without a chair when the music stops. ... They’re heavily incentivizing subcontractors and their contractors to finish on time. So there’s a tremendous strain on resources. For me, I exhaled once the windows were on our buildings, frankly speaking.
Q. You mentioned knowing where you want your friends to stay and where you and your wife want to have dinner, so I’m curious: What’s the go-to dinner place these days?
A. The Edition: Matador Room and the Market. The Edition, in my opinion, from a five-star perspective, hit it out of the park. I don’t think anybody touches them now in the market.
From luxury beachfront hotels to airport motels, a slew of new hostelries opened in Miami-Dade County this year, beckoning visitors.
At least 11 hotels with 1,805 rooms launched in 2015. The majority are in Miami Beach, with some stretching out to Coral Gables and Doral. The roster includes new lifestyle brands, boutique hotels, and national hotel company properties.
“We had a great year of new hotels and great restorations,” Wendy Kallergis, president and CEO of the Greater Miami & The Beaches Hotel Association told The Real Deal. “It’s a good mix of different properties.”
Overall, the county currently boasts 375 hotels and motels with a total of 48,917 rooms, according to the Greater Miami Convention and Visitors Bureau.
Here is a list of some of the latest entrants during 2015, beginning with the newest, compiled with data from the Greater Miami & The Beaches Hotel Association.
Faena Hotel Miami Beach, 3201 Collins Avenue, Miami Beach
The walls of the lobby are decorated with colorful murals, the floors inlaid with an intricate mosaic pattern. Outdoors, a huge, gilded mammoth greets visitors at the entrance to the oceanfront pool and beach.
Faena Hotel Miami Beach, which opened in December, marks the next step in the completion of the Faena District, which runs on both sides of Collins Avenue, from 32nd Street to 35th Street in Mid-Miami Beach. Other components include the recently completed Faena Housecondominium tower; Faena Forum, an arts complex now under construction; two Faena Versailles condominium towers; Faena Bazaar, a retail building; and a parking garage, all also under construction.
For Faena Hotel, partners Alan Faena and Len Blavatnik completely gutted and renovated the former Saxony Hotel, originally built in 1947 by George Sax and designed by Roy F. France. Faena hired film director and producer Baz Luhrmann and costume designer Catherine Martin to help create an old-world ambiance with Art Deco decor, designed to recall the property’s former glamour of the 1950s.
Faena Hotel has 169 rooms and suites and 13 penthouse residences, decorated with hardwood floors, red velvet and turquoise furniture and blue tiled bathrooms. Prices begin at $750 a night, according to a hotel spokesperson.
Plans for the hotel include launching the restaurant Los Fuegos by Francis Mallmann, which will be the chef’s first restaurant in the United States, offering Argentine cuisine; as well as Pao at the Dome, chef Paul Qui’s first restaurant outside of Texas, offering Asian cuisine.
Nautilus, A SIXTY Hotel, 1825 Collins Avenue, Miami Beach
Nautilus, A SIXTY Hotel, is a 250-room oceanfront property originally built in 1950. Developed by Jason Pomeranc, it was renovated and restored by Quadrum Global and its partner InSite Group. It opened in December.
The porte cochere, 25-foot lobby ceilings, the Morris Lapidus “Staircase to Nowhere,” beveled windows, teal green tile and the Driftwood Room supper club, are among the historic elements preserved at the Lapidus-designed property. Its new owners said they took a nautical-themed Art Deco approach to the renovation, including “jet-set” style furniture, warm, neutral colors, mini bars in vintage-style trunks and conch shell lamps. The eighth-story penthouse features a rooftop garden terrace.
Amenities include an 1,890-square-foot heated salt water pool, 24-hour gym, spa, the Nautilus Cabana Club, outdoor deck and bar, cabanas and a lush, tropical backyard. All food and beverage, including the 200-seat signature restaurant, are led by celebrity chef Alex Guarnaschelli and operated by China Grill Management.
Hall South Beach, 1500 Collins Avenue in Miami Beach
Managed by Commune Hotels under the Joie de Vivre brand, the 163-room Hall South Beach opened in November.
Formerly the Haddon Hall hotel, the building was built in 1940 and was designed by famed architect L. Murray Dixon.
The Hall features a courtyard with an indoor/outdoor restaurant, beer garden, library, bar and swimming pool.
The building and neighboring Campton apartments were bought by Rockwood Capital in July 2013. Miami-based architectural firm ADD Inc. and interior design firm Robert McKinley Creative Services were brought in to renovate the properties.
Hyatt Place Miami Airport, West Doral; 3655 Northwest 82nd Avenue in Doral
The 135-room hotel opened in November. It was developed by a joint venture between Coconut Grove-based Aztec Group and Concord Hospitality Enterprises.
The property, near Miami International Airport, includes 800 square feet of flexible meeting space, a pool, a 24-hour gym, cocktail and coffee bar, and a 24-hour limited menu.
AC Hotel Miami Beach, 2912 Collins Avenue, Miami Beach
The AC Hotel by Marriott — Miami Beach, developed by Robert Finvarb Companies, opened in September.
The newly constructed hotel, across from the Miami Beach Edition, has 150 rooms in seven stories, with an eighth-floor rooftop pool.
The hotel marked the brand’s first ground-up launch in the United States. Marriott acquired the AC brand from a development company in Spain, and there are 80 of the branded hotels in Europe, Robert Finvarb, CEO of Robert Finvarb Companies, told The Real Deal at the time of the launch.
“It’s a lifestyle, millennial brand, which is the market that everyone seems to be targeting these days,” he said.
Guest rooms feature floor-to-ceiling windows, and the third-story amenity deck has outdoor games, including Bocce ball, ping pong and chess.
Hampton Inn Miami South Beach (Claremont), 1700 Collins Avenue, Miami Beach
The 69-room Hampton Inn Miami South Beach opened in September. The three-story hotel features a lobby bar, rooftop pool and business center.
The property marks the first Hampton Inn in Miami Beach. It was formerly the Claremont Hotel, built in 1947, according to Miami-Dade County property records. The 14,200-square-foot property last sold for $10 million in 2008.
Four Points Sheraton Coral Gables, 3861 Southwest 40th Street, Coral Gables
The 103-room hotel opened in July.
The property has a pool, 24-hour fitness center and 550-square-foot function venue, according to its website.
Hyatt Centric South Beach Miami, 1600 Collins Avenue, Miami Beach
Hyatt Centric South Beach Miami, a new “lifestyle hotel” developed by Miami-based Robert Finvarb Companies and its partner David Martins, opened in June.
The 105-room hotel represents the first Hyatt Centric-branded hotel in Miami Beach, and the second Hyatt Centric property worldwide, after Chicago. Another 15 rebranded hotels are on tap for New York, Paris and other destinations, Robert Finvarb, CEO of Robert Finvarb Companies, had told TRD.
Kobi Karp designed the 10-story glass tower in Miami Beach, which sits above an historic building façade.
As an added plus, the hotel’s ground floor has 9,300 square feet of retail space facing Collins Avenue, Finvarb said.
Geared to attract millennials as well as other visitors, the hotel’s amenities include DECK sixteen, a Spanish-Mediterranean indoor-outdoor restaurant helmed by Executive Chef William Milian, who was formerly a chef at the COMO Hotel Group’s Traymore restaurant and at Asia de Cuba at the Mondrian Hotel. He also worked alongside celebrity chef Jose Andres as sous chef at Bazaar at the SLS Hotel.
At the Hyatt Centric, guests enter a central lobby lounge on the third floor, with a cocktail bar and a curated book collection. Outside is an open-air deck featuring a swimming pool. Additional amenities include recreational bikes, artwork curated by local gallerist Dina Mitrani and an automated parking garage system.
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Aloft South Beach, 2360 Collins Avenue, Miami Beach
Aloft South Beach, developed by Jason Halpern’s New York-based JMH Development, Madden Real Estate Ventures and Starwood Hotels & Resorts, opened in June.
The 235-room hotel features a Stephen Starr restaurant, Continental Miami.
Built on the site of the historic 1954 Ankara Motel, the hotel aimed to preserve its Art Deco architecture, incorporating classic brick walls in the “historic wing,” refurbished Ankara Motel signage and the original pool shape, Halpern previously told TRD.
The hotel’s lobby also features a series of black-and-white images of 1970s beach scenes and near the entrance, a large-scale aerial view photograph of models in vintage swimsuits.
1 Hotel South Beach at 2341 Collins Avenue, Miami Beach
1 Hotel, a joint venture between developer Richard LeFrak and Starwood Capital Group’s Barry Sternlicht, launched in April.
The 426-room hotel is the first property of the 1 Hotels brand. It has three restaurants by Tom Colicchio, the hotel’s signature beachcraft, lobby lounge bar Tom on Collins, and poolside restaurant the Sand Box; as well as STK by the One Group.
The 426 rooms, which include 84 studio suites and one oceanfront presidential suite, feature Nespresso coffee machines, yoga mats and glass terrariums. The hotel component also includes four outdoor swimming pools, 57 cabanas and daybeds, and access to Tesla cars for guests traveling within a three-mile radius.
1 Hotel South Beach was developed on the site of the former Gansevoort Hotel, which was last branded as the Perry South Beach.
Element Miami Doral, 3285 Northwest 107th Avenue, Miami
The 139-room extended stay hotel opened in March.
The hotel offers kitchenettes in each room, equipped with refrigerators, microwaves and stovetops, as well as cookware, flatware and utensils.
Element also has a complimentary breakfast bar and a 24-hour fitness center, according to its website.