MIAMI-The Adler GroupÂ is no stranger toÂ multifamilydevelopment. Over the past 50 years, the firm has built more than 8,000Â multifamilyÂ units.
As land prices got too high, Adler Group expanded into other commercial real estate sectorsâ€”namely, industrial, retail, and office. Now that the market is settling down, Adler Group is returning to its roots in theÂ multifamily sector.
GlobeSt.com caught up withÂ Michael M. Adler, chairman and CEO of the Adler Group, to discuss how his firm will move forward in themultifamilyÂ market. Adler also discusses the firmâ€™s specific plans forÂ multifamilyÂ in South Florida as market dynamics change.
GlobeSt.com: There were initial signs that we might be headed for another wave of condo development, but now we are seeing new multifamily projects announced. Why the shift?
Adler:Â The South Florida multifaily market is balancing out after years of emphasis on condo development. We are still going to see new condos built, but rentals will be built side-by-side. As the condo supply diminishes and prices begin to rise, new product will deliver. But there is still a large segment of the market that is not interested in ownership. For them, the best real estate decision is to rent, likely due to cost factors or the flexibility that comes with an apartment. Our culture is readjusting to the reality that ownership is not for everyone.
GlobeSt.com: A number of high profile developers have unveiled South Florida multifamily projects in the past three months. Why is this market appealing so appealing for multifamily development?
Adler:Â We begin by evaluating the market and the customer base, recognizing that different product types suit different people. South Florida learned from the condo wave and consumers now appreciate the benefits of renting. Condo developers look to turn a quick profit by selling as many units as possible before handing ownership over to an association, while rental developers prioritize long-term investments that will yield income and provide value to tenants. Itâ€™s the difference between a short-term and long-term financial view. Adler Group has a decades-long history developing and operating income producing assets across all product types, so this is our model of choice.
GlobeSt.com: Adler Group started out building apartments, then expanded to industrial, office and retail, and is now returning to its multifamily roots. How did this evolution come to be?
Adler:Â Adler Groupâ€™s earliest days were marked by large-scale high-rise rental development, having built more than 8,000 apartment units across South Florida dating back 50 years. As land prices climbed, the rental model became less feasible and an overall shift to condo development ensued. Our firm turned its attention to industrial, office, and retail uses. Now that market dynamics are balancing out, the timing is ripe for a re-entry into theÂ multifamilyÂ sector.
GlobeSt.com: You are partnering with Atlantaâ€™s ECI Group on your new Miami project. How did that relationship come to be and why did you decide to team up for this development?
Adler: ECI GroupÂ is one of the largest operators ofÂ multifamilyÂ properties in the Southeast and we have known the firmâ€™s leadership for years. The firm has a strong history of high-qualityÂ multifamilyproperty management across the region, so they bring an operational platform and infrastructure that we will employ in Miami. ECI Group already operates in central Florida, so this development is a great opportunity for them to enter the Miami market.
GlobeSt.com: How will this new project stack up against the existing rental product in Miamiâ€”including the thousands of condos that are individually owned and rented?
Adler:Â For starters, it will be a luxury multifamily development directly on Biscayne Bay, just north of Downtown Miami and minutes away from Miami Beach. Most important, the complexâ€™s two 20-story towers will be professionally managed, marking a clear distinction from the thousands of individually-owned condos-turned-rentals now on the market. This creates a peace of mind for tenants that is forfeited when leasing a condo unit from an independent owner.
GlobeSt.com: Adler Group has made a number of acquisitions outside Florida in recent years. Are there more multifamily developments in the firmâ€™s futureâ€”in South Florida and beyond?
Adler:Â Yes. Adler Groupâ€™s roots are in developing and operating income-producing real estate assets.MultifamilyÂ residential is at the center of that equation alongside office, industrial and retail product. In fact, there are many similarities across these sectors, with all tenants seeking a professionally-run environment and a landlord who brings value to the property and its occupants.
GlobeSt.com: Is there a concern that the new rental product being built will ultimately evolve into condo conversions as the market rebounds and owners look to profit from a quick sale?
Adler:Â Itâ€™s possible that there will be condo conversions as individual units become more valuable, but we are hopeful that the market has learned from its past mistakes and will be more balanced. Whatâ€™s best for the market and consumers is a contingent of high quality rentals alongside condos. The two are not mutually exclusive. Our Miami property with ECI Group is a long-term hold that will be developed, marketed and leased as a luxury rental community.