Curbed Miami went to see Carlos Rosso, President of the Related Group's condominium development division, who talked about the future of Miami, Downtown, Uber, Peter Zalewski, All Aboard Florida, Brickell City Centre, the Biscayne Line, public transportation, why Related doesn't do offices, and his kids.
CURBED: So, what's up Carlos?
Carlos: What's up? Miami is definitely up. Miami is exciting. Miami's a new city. Miami is going to be a completely different city in the years to come. I think that there are some very interesting transformations that are happening in Miami, and that people need to be more in tune and aware of the things that are going to happen when this first wave of things that are brewing in Miami gets completed.
Today we were driving in front of Brickell City Centre, and I think a lot of people still cannot envision the impact of a mall of that size with that level of luxury and with those anchors, like Saks Fifth Avenue, or the East Hotel, with great restaurants and great shops. I think it's going to change Miami. For the first time in the history of Miami we're seeing urban retail. You used to have to jump in a car and go to a mall or a strip mall somewhere on the outskirts of Miami to shop. So, Downtown, which used to basically be just offices and residential, now is going to have a retail component. And not only Brickell City Center, but also the Design District and Miami Worldcenter.
When all that shopping becomes more entrenched into Downtown, we're going to see a lot more activity and all those uses feeding off of themselves. We're going to see more residents that want to live close to those areas and because of more residential we're going to see more office development coming because when there are more people there it makes sense to build more office buildings. Hopefully one day Swire will announce their office building at One Brickell City Centre and that's again more jobs for downtown and that's again better rents and better salaries, but the whole thing continues to grow where uses start feeding off themselves. So it starts feeding off itself, like in a real city.
And I think also with the retail component there's going to be a much bigger pressure for mass transportation, but because people will want to come downtown to shop, for that retail experience, and they will realize that there is a Metromover station right there. For a long time in Miami we used to do the Metromover and the rail away from points of interest. If you look at what happened with the [AmericanAirlines] Arena, the Metromover station is three blocks away. It would have made a lot more sense to put it in front of the arena, so people could have arrived in front. In Swire's case, the Metromover is a part of the Brickell City Centre development.
Again, I think that there are a lot of interesting things happening in Miami. There's this new urbanity that we're seeing in Miami that we have not seen before. People will want to come back to Downtown and to Brickell to live there, because they realize that everything will be a lot closer to them. We're seeing right now a pressure now to build bigger apartments in Brickell. Not so many small apartments, but bigger apartments, because there are a lot of people right now that say families will want to stay in Brickell. There are very few three bedroom and four bedroom apartments in Brickell. So, we are building in some cases bigger apartments for end users who really want to live in Brickell.
And again, when people start living in places and all those uses start occuring, I think there's a bigger pressure to reconquer the public spaces from people. So, these ideas that we've been promoting like the Biscayne Line Bay Walk or South Miami Avenue becoming the Lincoln Road of Brickell are going to happen because people that are going to be living there are going to start demanding places to do other things; where to have a park, where to go to a bar, where to enjoy the bay in this beautiful city, etc.
Have you seen a lot of momentum behind the Biscayne Line and South Miami Avenue?
The issue is that I think when the 1100 Millicentos of this world get built and get used, the people that are going to be there, and the retail that's going to be on the ground floor are going to realize that "hey, why don't we start with a pilot program that starts Friday nights that goes from seven o'clock to three in the morning, and we put out two police cars and a couple of things to occupy the street and use the street" and I think that's the way it's going to happen. That was the way a lot things in New York happened, in Times Square and during Bloomberg's government, people starting demanding to use the public space.
In the case of the Biscayne Line, when the Science Museum opens—which is going to attract a different type of demographic than the neighboring art museum—you're going to see more parents with kids who are going to use the park and the outdoor space like the Biscayne Line. I think that the Biscayne Line is going to continue to develop initially as a thought and more and more as a real thing. Biscayne Beach is going to be complete, Icon Bay and its park are going to be finished this year, and all the Melo jobs are going to be finished. So, in Edgewater, as it denses up, people are going to start asking for those places of expansion. And the more that we activate the waterfront with the Michael Schwartz Restaurant that we're doing at Paraiso Bay and the Park at Icon Bay, there's going to be more use.
That has been our yin-yang with the city, and I think in the end we are in a great place. We said, yes, the Miami 21 zoning code is great in preserving the views, but preserving the views without uses on the waterfront is not really what urbanity is all about. Or living in a city is all about. The neighbors backed us up and said 'we are tired of seeing condoms here every morning, or a chicken without a head'. People are using those view corridors for other things that are not just a view corridor itself. So, I think it's good that it's becoming more of a complete city.
For the growth of Miami you also need more jobs, and we need to create a better city that attracts more companies, and Miami needs to do a much better job at attracting those companies to come here, and giving them incentives and giving them money to build headquarters here, be it banking, manufacturing, insurance, or whatever you want. Miami has a fantastic landscape and a beautiful geography, and I think it's a pity that we are not realizing that potential here even though investors and buyers from outside are saying that Miami is going to grow.
They are betting on Miami. When the Related Group sells these condominiums, the last thing we do is talk about the kitchen or the bathrooms. We talk about Miami and the growth of Miami.
So, all of this residential right now will lead to more office and commercial and more office buildings?
I think so. Look what's happening with All Aboard Florida. All Aboard is coming to Downtown Miami, and because they have a cheap land base, that's going to be a place for office development. And office development next to a train station makes a lot of sense, with good public transportation. People can go to the office, and go back to their homes, with good public transportation. There is going to be more office development. The challenge now is for office development to find the sites that they can finance and that they can hold on to. Once more of the office space that exists in Brickell gets absorbed, there's going to be more demand from tenants to build more space. Rents are going to go up.
Would Related ever develop an office building?
We're not office guys. We are residential and hotel guys but you know we've done some in the past. Actually this building, One Miami, initially was going to be office. Then it was going to be a rental.
It's still a little bit office. The Related Group's headquarters are here.
Yeah, this is our little office, but it was going to be all office, then it was going to be one office tower and one rental tower, then it was going to be two rental towers, then one rental and one condo, and at the end it became two condos.
This was one of the first buildings to focus on the riverwalk.
In the end it's all about staying power for the buyers. Anybody who bought in Miami twenty years ago, even if they over paid, will have made more money than if they put that money in the bank.
Well, you don't make any in the bank.
Buy a bond at one and a half percent, and inflation is one and a half percent, and you end up with exactly the same amount of money you put in twenty years later. So anybody that betted against any traditional investment and put their money in real estate in Miami today would have been much better off.
You mentioned public transportation. Ther are things like BayLink floating around. By the way BayLink might have just died.
The county is myopic. I think what's going to happen is that we'll see a transition from the public transportation concept that we're used to, to other modes of transportation that might be a little bit more effective. The trolley is great. If we find something that works great, sometimes it might just be cheaper to build a trolley system than to build an overhanging system like a Metromover or whatever. And then there are the Ubers and the Car2Gos of this world that are today a lot more practical. Now, is there a way to combine the technology of an Uber with public transportation? That's an interesting sort of thought that people are having. Could we do a trolley based on the Uber system? Uber is also analyzing how to get into the public transportation business, to transport more than one person.
That's an interesting idea that I've read. Other people are thinking "How can we create a bus system that is sort of going through the lines that Uber is? If we said it would be free for you to jump, or fifty cents, would more people jump? And then at the same time as the city denses up there's less need for the car.
You've mentioned parking to me many times. You've ranted and raved about it. I feel like I'm the person you vent to. Well, I'm sure you vent to many people about it. But parking minimums in the zoning code, that's an issue that coordinates with public transportation.
Again, on the parking side, you know there are new ways of parking. There are robotic parking systems. There are platforms. There are ways of making the parking garages more efficient that more people are going to use. Right now we are opening Millicento, and in Millicento we have a lot of platforms. Then there's robotic parking like in BrickellHouse. So there are ways of maximizing the parking on site and the parking sort of becomes more of a parking storage, sort of a car storage system rather than parking. Because, if you live in BrickellHouse, and if you live in Millicento, you're probably going to walk to an office and walk back to your apartment, and then walk to a shopping center. So, I think people are going to depend less on the car.
I was with Terance Riley the other day and Terance was saying that for certain lots the city is thinking - because in Miami the question is how do we incentivize not only the big developments but also the little developments on smaller lots, you know, with five stories and ten condominiums, which sometimes cannot survive the parking requirements. So there is a discussion about trying to minimize the parking impact in those buildings in Little Havana or the Design District. How can we make it possible to develop five or six story buildings with twenty condos, and saying that, you know, doing less than X number of units, you don't need to provide parking on your site? You can park on the street. Which makes sense. It's like brownstones. Imagine you had brownstones and everybody had to provide three parking spaces under their brownstone in New York. First the urban fabric would be horrible. And second, people would not build them. So, what is happening is that there is discussions about that. And to tend towards what is happening in Europe. You have your car ten blocks away, five blocks away from your house in a parking storage with ten cars, one on top of each other.
Yep, so hopefully that'll happen.
Didn't you start using Car2go or?
Yes, I took Uber here. I Ubered it. Your receptionist was like "Do you want your parking validated" and I said "No, I took Uber." My next question is, what's next for Related?
The good thing about Related is we have, right now, fifty jobs under construction. Fifty. Five zero. But we work in different areas and people sometimes associate us only with the condo side. I manage the condo division and we have right now twelve projects under construction. But we have a lot of affordable housing and a lot of rentals, so we're trying to do the whole spectrum of housing. If you look at SLS Lux, three blocks away from SLS Lux there are three affordable housing jobs being done by Related. And then we are thinking of doing some 80/20 deals where there is less affordable housing and more market rate rentals. So, we do the whole gamut of real estate. Our affordable housing guys say "we do $150 a month rents and you guys do $15 million penthouses." We are building right now close to 4,000 affordable housing units, close to 4,000 rental units, and at different stages, around 4,000 condos. Which is nothing compared to what we did before the recession. So all this rant, going back and forth with Peter Zalewski [Editor's note: Carlos recently challenged the accuracy of South Florida real estate analyst Peter Zalewski's condo figures on Facebook] about what's the 'real number', how many new units Miami-Dade, Broward, and Palm Beach should produce per year… this year is what, 5,000? So it's 5,000 for a place where everybody in the U.S. would love to live. That's 400 million Americans. And where 1.2 billion Latin Americans and Europeans would love also to have a place. So, is 5,000 units a lot? It's not a lot. The secret I think is to maintain the purchase deposits as high as possible and to make sure these buyers look at real estate as a long term investment that's going to be rented out. And as I said before, twenty years from now that property triples or doubles in value.
Yes, I read just today that we get 200 new people a day.
But I think it's great. It's going to continue happening. When you see Brickell City Centre again, and then you see the train, and you see the convention center and hotel starting, and you see the convention center in downtown Miami. Remember, ten years ago we didn't have the performing arts center. We didn't have New World Symphony. We didn't have the museums. We didn't have the new parks. All of this is new. All of this is extremely new. All this has been built in ten years.
Yeah, we've gotten used to it so quickly.
It's incredible. Ten years ago this was a desert. It was nothing.
Whenever people get together and talk about Miami it really feels to me like we're communally building a city, and we're all in this together, all sort of playing our part. And I don't want to say it's selfless, because we all have our own self interests, but there's this communal idea that we're building Miami together.
I think when PAMM opened and we went there for the opening, my wife started crying. And I was like "what's happening?" and she said "you know this is incredible. The kids are not leaving." No, now we're becoming like a serious city, like a mature city. Before we used to have to take them to the MoMA or the Guggenheim and tell them this is a museum. And now suddenly we have a museum here. And not only one. Suddenly Norman Bramen says he's doing another one. Fairholme is doing another one. It's important for a city to have those institutions and those institutions will start giving credibility to Miami and hopefully Miami will start being perceived as a more serious city. Before, it was party town. And still is.
And we shouldn't lose that.
No, we shouldn't lose that, but what I'm trying to tell you is I don't want to be Las Vegas. I prefer to be Vancouver or I prefer to be a city that's perceived to be a more gracious city for the overall development of my kids, and I want my kids to stay as close as possible to me and to my wife. That's my selfish side. But, you know, to do that I think Miami needs to develop. Because I really don't want to tell them, "Hey, you really cannot do what you're thinking of doing in Miami. You have to go somewhere outside Miami."