Timothy Hernandez, Principal, New Urban Communities

Invest: met with Timothy Hernandez, principal at New Urban Communities, to discuss recent milestones, trends, and challenges in South Florida’s real estate market, highlighting walkability, sustainability, workforce housing, and the unique approach the company takes to address the region’s pressing housing and development needs.

What have been some recent highlights and key milestones for New Urban Communities?

We’ve been busy with several projects across South Florida. Last year, we completed the Pompano Beach Fishing Village commercial development, which is right on the ocean at the Pompano Beach Pier. That was an especially exciting milestone for us. This year, we wrapped up the final phase of a for-sale townhome community in downtown Delray Beach, Atlantic Grove, and we also completed a similar townhome community in Wilton Manors, the Village at Wilton Manors, which has been another exciting venture.

Our focus has always been on creating walkable communities or retrofitting areas to make them walkable, addressing a major problem we have in South Florida. This region is incredibly car-dependent, and we aim to change that with thoughtful development.

Additionally, we completed a build-to-rent project in Stuart, Haney Creek Crossing, which is close to downtown and offers both detached single-family homes and townhomes for rent. Another development we finished in downtown Stuart was a multifamily development called Azul, which we’ve since sold, but it was a great community for us, the first new housing in downtown Stuart of any consequence in many years. We also recently completed a mixed-use residential development in Jupiter, the Centre at Abacoa. Over the last couple of years, we’ve done multiple projects in Palm Beach, Martin, and Broward counties.

What types of properties are driving growth for New Urban Communities?

We’re pretty diversified, focusing on what makes the most sense for each area. For example, in Pompano Beach, we completed a commercial development, while in Jupiter, we did a mixed-use project with multifamily residential units over retail. In Delray Beach, we focused entirely on residential townhomes, whereas in Stuart, we’ve built both single-family homes and townhomes for rent, as well as apartments.

The key is to adapt to the specific market. Instead of repeating past projects in new locations, we analyze each area to determine what fits best. We don’t take a cookie-cutter approach. Every community we build is tailored to the unique demands of that submarket.

What trends have you observed in South Florida’s real estate market?

There are definitely some challenges to note. Construction costs have skyrocketed, which makes it harder to make deals financially viable. Interest rates remain high, which significantly increases borrowing costs compared to just a couple of years ago. On top of that, insurance has become a major issue, driving up operating expenses for income-producing assets. This combination — rising construction costs, higher borrowing costs, and insurance challenges — has created significant hurdles for developers.

Are the insurance issues tied to the hurricanes and companies pulling out of Florida?

That’s part of it, but there have also been legislative efforts to attract insurers back to Florida. Still, it remains a significant challenge, and it’s not just impacting developers; homeowners are feeling the pinch, too. A recent Wall Street Journal article pointed out how, for some people, insurance and tax costs now exceed their mortgage payments. Florida was highlighted as a prime example.

Despite the challenges, what opportunities do you see in the South Florida real estate market?

There are definitely opportunities. South Florida remains incredibly desirable. People are moving here because of the low taxes, especially when compared to the Northeast, Midwest, and West Coast. We’re seeing a consistent influx of people not just from across the U.S. but also from Europe and South America.

Even amid economic uncertainties, Florida remains an attractive place to live and invest. However, transportation infrastructure is a critical issue holding us back. If we invested more in public transit instead of focusing so heavily on road expansion, it would be a game changer for the region, opening up the possibility of densifying areas along transit corridors and establishing linkages to employment nodes and other destinations. 

There are countless global examples of efficient transportation systems that we can emulate. For instance, when in France recently, I used high-speed trains and local public transit, even in smaller cities like Annecy. Compared to that, South Florida’s transportation network falls woefully short.

What do you think sets New Urban Communities apart from other developers in South Florida?

We operate in a broader range of asset classes than many other developers. We work on single-family homes, multifamily developments, commercial projects, and mixed-use communities. We also focus on smaller, more complex projects, those too small for the large developers and too complicated for the smaller ones. That niche has been our sweet spot.

We take a creative approach. I’m an urbanist, so we prioritize good design and often step outside the box to create projects that fit the area’s unique needs. Instead of reusing old designs, we spend a lot of time refining and tailoring our work to the site

What future projects are you most excited about?

We’re particularly excited about a new workforce housing community in Sunrise. We’ll be building 29 single-family homes around a common green. Housing affordability is a critical issue in South Florida. For example, I haven’t found any new construction in Broward County priced under $600,000 recently. This project aims to create single-family homes that are attainable for people earning less than 10% of the median income, the so-called “missing middle.”

Addressing this issue requires collaboration between developers and governments. Municipalities need to rethink zoning and land-use regulations to accommodate housing typologies that meet modern affordability needs. Miami-Dade County is setting a good example with new projects along the Metrorail line that drastically reduce parking requirements. And Broward County is providing GAP financing. This approach cuts costs and encourages people to use alternative transportation.