Stephen M. Ross, the billionaire developer and Miami Dolphins owner, is betting that big out-of-state companies want more, not less, office space in South Florida despite lofty inflation and the threat of an economic recession in 2023.
“You can feel the slowdown because the money is not there and rates are higher,” Ross told a “Florida Summit” sponsored by the Urban Land Institute in Miami on Wednesday. “Certain cities are slowing down faster. You will feel it here but it won’t be as great as it will be in the Northeast. The so-called blue states will grow slower than the red states for a lot of different reasons. If you are in Florida, it’s a good place to be at this point.”
“We’re moving forward right now, no matter what,” Ross added, pointing to an unceasing flow of out-of-state companies that still want to locate in the region because of Florida’s friendly business climate.
“The growth has been phenomenal, and I don’t really see it ending,” he said, adding that companies contemplating moves to the Miami area are seeking between 50,000 and 100,000 square feet of space, well below the office sizes now being leased.
Ross. chairman of the Related Companies of New York, appeared on a stage with Kieran Bowers, CEO of Swire Properties, developer of the sprawling Brickell City Centre. Their conversation was moderated by Camilo Miguel Jr., founder of the real estate investment and development firm Mast Capital.
Ross and Bowers said they remain confident that South Florida’s office market will grow in the face of inflation and rising interest rates, particularly in West Palm Beach and Miami. Both areas continue to attract relocation-minded financial and technology companies from out-of-state.
“Miami has always grown and now I look at it as more of a commercial outpost than a residential outpost,” Ross said. He added that “Florida is entering a new stage of growth, and it will attract many different clientele.”
The two men made no mention of the Greater Fort Lauderdale area, which also seeks to attract new companies.
Aggressive development plans
Ross’s firm has aggressively expanded its office building holdings in West Palm Beach to the point where it is the city’s largest office landlord. Related is building a 25-story tower near the Royal Park Bridge overlooking Lake Worth Lagoon.
Previously, Related built the 360 Rosemary office tower and as the COVID-19 pandemic unfolded, acquired three downtown office high-rises including CityPlace Tower. Esperante Corporate Center and Phillips Point.
In July, Ross told Bloomberg News that companies struggling to coax their workers back to offices as the pandemic eases could see them flooding back if a recession hits the U.S. economy.
“The employees will recognize as we go into a recession, or as things get a little tighter, that you have to do what it takes to keep your job and to earn a living,” he said.
In Miami, Related is teaming with Swire Properties to develop a 1,000-foot office tower called One Brickell City Centre, a project rivaling the 1.049-foot Waldorf Astoria Hotel & Residences now under construction by PMG.
On Wednesday, Bowers said that the proposed Brickell tower would be the tallest commercial high-rise in the state and that work on clearing the site will likely take place in 2023. He said the firm is already speaking with would-be tenants who want to locate their businesses there. He did not name them.
Over four decades, Swire built out Miami’s Brickell Key — the manmade enclave formerly known as Claughton Island — from scratch, constructing numerous high-rise residential towers and a Mandarin Oriental hotel.
It developed the sprawling Brickell City Centre south of the Miami River. The firm intends to invest between $2 billion and $3 billion in South Florida over the next five years or more, Bowers said.
Ross, 82, and a Miami native, founded the Related Companies in 1972 and initially focused on affordable housing. Since then, he has “developed or acquired more than $60 billion worth of properties of all kinds from California to Abu Dhabi to Shanghai,” according to Forbes.
Ross had a net worth of $11.6 billion on Wednesday, according to a running real-time estimate by Forbes, which tracks the fortunes of the ultra-wealthy.
There was no discussion about Ross’s troubles with the National Football League. Before the current season started, the league suspended him for two months, fined him $1.5 million and stripped his Dolphins of two college draft picks after an investigation into alleged tampering with players from other teams.
Ross has strongly disputed the charges.
Miguel, Wednesday’s moderator, did ask Ross about the state of his professional sports enterprises, including the Dolphins, Formula 1 car racing and tennis at Hard Rock Stadium.
“The Dolphins are doing well,” Ross said, referring to the team’s recent on-field successes. “Wherever you go there is usually excitement.” The Formula 1 grand prix race, which took place in May, he added, generated interest among newcomers to the area, especially those in the technology field.
Both men departed without taking questions from the audience.
Staff writer David Lyons can be reached at [email protected]