New York-based development group has made its first South Florida investment with the $42 million purchase of 1.75 acres at 58th Street and Collins Avenue where it plans a luxury, 135-unit oceanfront condominium.
PMG Collins LLC, a subsidiary of New York-based Property Markets Group, bought the parcel at 5875 Collins Ave. and plans a 22-story condominium that has already received zoning approvals and building permits from the city of Miami Beach, said Mitchell Schneiderman, a principal of PMG.
The seller of the oceanfront parcel, First Ocean Estates Realty LLC, is led by the same developers who are proposing two huge skyscrapers in downtown Miami that would be the tallest residential towers in the world.
Mauricio and Leon Cohen, who want to develop Empire World Towers, bought the Collins Avenue property in 1999 for $8 million. They abandoned plans to develop the oceanfront site because they wanted to prioritize the downtown Miami project and other interests, said Miami-based Bruce M. Goldstein, a principal in PMG.
“He has two huge projects besides this,” said Goldstein, referring to Mauricio Cohen. “It became too much for him.”
Cohen could not be reached for comment before deadline Wednesday.
Peter Amoruso of AJR Realty and Jason Cohen at Ackman Ziff brokered the transaction that closed April 27.
Schneiderman, who is overseeing the project for the New York-based developer, was part of the group that developed the upscale Hidden Bay condo in Aventura in 1997.
PMG’s 22-story building will be called Mei (pronounced May-e), which is Mandarin for beauty and femininity. The units at Mei will range from 900 to 2,600 square feet at an average price of $1.3 million, Schneiderman said.
Construction is expected to begin next month and will take 18 months.
PB Capital of New York provided PMG with $98 million for the purchase of the land and to partially fund construction of the condo. The lender did not require pre-construction sales before approving the loan because of its confidence in the project and the company’s development track record, Goldstein said.
Ziel Feldman and Kevin Maloney founded Property Markets Group, developer of walk-up apartments in Manhattan, in 1992. Today, its portfolio includes hotel, resort, residential and commercial properties.
The sellout value is about $180 million, Schneiderman said. International Sales Group will handle unit sales.
In addition to the 135 units in the building, the development will have 10 condo cabanas as well as a 3,000- to 4,000-square-foot private spa.
Mei is coming onto the market as talk about an impending market correction heats up. Thousands of condos are in the planning stages and some people question how long the current development rate, driven largely by investors and speculators, can be sustained.
Many developers and brokers contend oceanfront developments will be insulated from any correction.
Kevin Tomlinson, a broker at Esslinger-Wooten-Maxwell who works in Miami Beach, echoes that sentiment, citing especially a shortage of developable oceanfront land the city.
“Biscayne Boulevard is a potential problem, but I think that Miami Beach, the ocean, the bay, are built-in insurance policies,” Tomlinson said. “Even if the market gets funky, there is always going to be demand for oceanfront, bayfront, and the beach.”
Jo Sumberg, a board member of the Master Brokers Forum, recognizes the value of oceanfront properties, but also pointed to some concerns about the amount of product on the oceanfront market.
“I have to believe that the timing is bad,” said Sumberg, a broker at Avatar Real Estate Services in Coral Gables, which specializes in luxury homes and condos. “I would have to believe that with all the stuff that’s up there, you have Canyon Ranch, the Ritz-Carlton, Setai, 58th and Collins is a great spot. But what are they going to do that is different?”
Craig Studnicky, a principal at ISG, said Mei instantly differentiates itself because of the fact that there is very little new condo product being sold in Miami Beach. “It could be one of the last ones that ever gets built on Miami Beach,” Studnicky said about Mei.
Schneiderman said he’s aware of the challenges and potential pitfalls.
“We’ve all been flying high for many years. I can’t predict, nor can I rule out, a correction,” he said. “Depending on the severity of a correction we could ultimately be affected, but we would be the last to be affected. There will always be a need and a desire on the part of people who would like to live on the ocean.”