A real estate investor is moving forward with a $22 million hotel development in Miami Beach during a time when few are investing in the hospitality market.
José Fernandez, president of Miami-based Fernandez Properties, is proposing to build a 64-room hotel at 1030 Sixth St., according to a plan submitted to the City of Miami Beach Historic Preservation Board. The site consists of three two-story rental buildings designed by famed architect Henry Hohauser. Development plans include gutting and adding 14 hotel rooms and a restaurant to the two corner buildings. A seven-story hotel with 50 rooms and a rooftop pool would rise in the place of the current building in the center — only its façade would remain. The project requests one parking space.
The hotel would be named The Hohauser, after the architect who designed the historically designated 1934 buildings.
“Because the development process takes some time, any project that we start now will be done by 2023. When I think about coming online with pent-up demand for international and domestic travel, it’s perfect timing,” Fernandez said.
The project is expected to go before the board in October. Fernandez is requesting a Certificate of Appropriateness. If approved, Fernandez is expecting to focus on design plans for the next eight months.
Fernandez purchased the 15,000-square-foot site in 1988 for $185,000, according to property records. He has developed only a handful of projects since he entered the South Florida real estate business in 1984, he said. His last project was a six-story multifamily building in Little Havana in 1999.
“The beach every so often reinvents itself,” Fernandez said. “Just when you see it decaying, it comes back.”
Recent developments encouraged Fernandez’s confidence in the market, he said, including the Wolfsonian-FIU museum expansion, plans to reopen the Paris Theater as a restaurant, Canopy Park, and the completed Miami Beach Convention Center.
Other developers, including Dezer Development which is moving forward with the Monaco Hotel, are optimistic about the Miami Beach hospitality market, said Rich Lillis, Colliers International’s executive managing director for the U.S. hotel division.
“For the current hotel owners, it’s been tough and it’s going to take the next three years to rebuild to where we were in 2019,” Lillis said. “A developer’s timeline is about two to three years. Most of the developers are probably figuring that the pandemic disruption is going to be in the rearview mirror and they are going to hit the market when it is better than where it is now.”
Still, new developments are facing greater financial challenges than before COVID-19, Lillis said. “Before, construction financing was available, so these deals were getting done. Now, the lenders are taking a pause and seeing what the landscape is. Having said that, for developers who have a long-term view and have access to capital they seem to be going forward.”
For The Hohauser, Fernandez is negotiating with investors, he said. He is anticipating working with a group of Mexican investors, including from Guadalajara, through the EB-5 Visa program to fund the project.
“We may see more Mexican investors in Miami,” Fernandez said. “We are thinking about the EB-5 Visa, because Mexicans are concerned about their government. There may be some flight capital.”