Writer: Max Crampton-Thomas
2 min read July 2021 — Discussing the changes in housing development wrought by the pandemic, real estate developer Russell Galbut notes the need for a focus on affordable housing. The co-founder and managing principal of Crescent Heights, also told Invest: that developing the human capital that Miami needs to fulfill its potential is a vital goal.
What were some takeaways and milestones from the last year?
At Crescent Heights, we were very fortunate in that we had two projects that were CO’d the previous year pre-covid. We were just beginning to ramp up occupancy when covid struck. One project — NEMA Chicago — reset the standards for apartment buildings in Chicago, and what we’ve learned is people want different things out of their homes today. The property is the tallest residential tower in Chicago, consisting of 70,000 square feet of amenity space, unmatched anywhere in the world. During the pandemic, people have been searching for places where they can live, work and play. Having all of these in a safe, protected building really worked out very well. We were renting 60 or 70 units a month during COVID, which is unheard of even in normal times in Chicago. Now, we’re near full capacity. We were lucky to be kept busy doing that. Our second project, Nema Boston, has exceeded our wildest dreams in pricing and occupancy built up through this terrible time.
A bit of a different situation occurred in California. Because that state had an extended lockdown and also passed laws that allowed people to forego paying rent, we witnessed the effects of COVID firsthand. There was nothing to protect the landlords or the real estate developers, therefore it became very problematic very quickly. It was challenging. Now that we are on the other side of the pandemic, occupancy is back up to 90% in California. With the shortage of housing and no incentives to build in California, our products stand out as best in market developments.
Miami is doing incredibly well. Miami is the cruise capital of the world and with the CDC announcing that cruising can start back up in July, the local economy here will boom even more. One of the largest drivers of room demand is our cruise port and seeing it come alive again will make an incredible difference. Natiivo Miami, our project at the entrance of the Port, is not only 80 percent sold out but was also one of the hottest selling condos in South Florida during the pandemic. In addition to the 51-story tower, Crescent Heights is building Nema Miami in Edgewater on 29th Street at the very entrance way to Midtown and Wynwood. Finally, to show our complete belief in South Florida, we have broken ground on Miami Beach’s tallest and most luxurious tower ever built, Five Park, located at the entryway to Miami Beach and all that is offered in South Beach. Given all that has happened over the past year, South Florida has become the epicenter of the recovery. From an arts standpoint the Buren pedestrian bridge across the entryway to the Beach on the 395 will stand as the Beacon welcoming all our friends and guests from far away places.
What logistical difficulties have you come across during the pandemic?
I think everyone is facing the same issues. It’s not just a matter of materials, but also of labor. Our labor force has gotten used to staying home, as they have stayed at home during the pandemic for over a year. Some of them don’t want to come back into the workforce ever and are electing to retire. Some of them are still getting substantial unemployment benefits and are not in a hurry to work but will go back to work when these benefits cease.
The other part is materials. In some cases, we’ve had to find new avenues for obtaining materials, and in other cases, like sheetrock, there has been a scarcity. Other parts of the nation are still not caught up and materials are being shipped to South Florida every day now.
How do you engage with the local community in regard to advancing your projects?
The municipal governments that run cities don’t build buildings. It’s the building community within the city that builds buildings. It’s the government’s job to interact and work with the private sector, giving it a public-private element. It’s this kind of engagement that results in continued positive growth for communities. Communities are made up of people and they have to believe in what you are doing. It is a family that must partner to get what everyone needs and is still profitable for a developer.
What is the role of multifamily development in creating more affordable housing?
Affordable housing comes about in many different ways. One is public-private partnerships. The public sector owns a tremendous amount of land. They can make it available for all types of housing through partnerships with the private sector. That’s something that can happen and should happen. I also believe that by allowing the market to speak for itself, you’re creating a tax base that’s significant and important, resulting in additional support for more subsidized housing. I’m very much for workforce housing and subsidized housing, and I think there’s a role in every community for it.
What separates Miami as a market from other areas in which you work?
The major separation is good governance. Governor Ron DeSantis has been doing an outstanding job in opening our economy. Our local city mayor and our local county mayor are both incredible. I think the mayor’s invitation to the tech world has been second to none. I believe Miami is on fire because of great governance both at the state and city levels. In South Florida, we need to do a better job in terms of our higher education institutions. We have some excellent colleges. With these, we need to concentrate on producing a stronger workforce for the local community and a stronger tech workforce, because we are expanding in every way possible. We need our students to develop tech and finance skills. We are at the intersection of the world. We have all of South America and Europe near us. China and Malaysia will soon have non-stop flights directly to our incredible city. If we can continue developing our tech, finance and leisure industries, then Miami will succeed very well.
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