By Andrew Cohan, Managing Director at Horwath HTL – Miami
In 2013, I wrote an article titled "Miami's Leap to Global Gateway Status". The article examined the factors that combined during the previous decade to move Miami from one "comp set", that of secondary cities and resort markets, to a new comp set, that of Global "must include" gateway markets. In Miami's case, the two-way link with Latin America and the city's role as a transit point between Latin America, North America and Europe dominate the competitive advantage that favors movement of people, information and goods and services between continents through our city and South Florida in general.
In the three years since the article was published, my contention has been confirmed time and time again. If one Googles "Capital of Latin America", the first two pages of matches are virtually all articles about Miami from sources such as the BBC, Time Magazine, The New York Times and Forbes. Bisnow, a commercial real estate media company with local representation, is holding it 2016 State of the Miami Market conference in September with a subtitle of "From a vacation destination to World Class Metropolis!"
It seems that in the past two years we Miami residents have taken the opportunity to celebrate having arrived on a larger global stage. Before moving our collective attention to how we maintain this status in a world that has constantly changing centers of gravity when it comes to financial capital, creative capital and intellectual influence, I want to list some of the benefits that have already accrued to players in the hotel development and investment sectors.
Who Is Investing?
The following chart displays ten of the largest hotel transactions from the Miami and Miami Beach hotel markets during the past three years.
Three of the ten transactions had sovereign fund purchasers from the Middle East, and two purchasers were European (including Tommy Hilfiger's group). Hyatt purchased a hotel in a prime location to support its new Unbound Collection, rebranding the fairly new Thompson Hotel Miami Beach to become the Confidante. Of the remaining US purchasers, HFZ Group is one of New York's largest luxury condominium developers who is in the process of transforming the Shore Club into a Fasano Hotel of 85 rooms and 67 Fasano-branded luxury residences. One is an executive with Chatwal Hotels, the company that created the Dreams brand (since sold to Wyndham Hotels), who, we can assume is partial to Dreams-branded hotels. And one purchaser is a major Hotel REIT, Chesapeake Lodging Trust.
With half of the purchases originating in Europe and the Middle East and the other half with representation from a "Who's Who" of the US Hotel and luxury residential high-rise community, we can conclude that this diverse set of investors are of the type who invests in the world's premier gateway markets.
What Brands and Operators Are New to the Market?
In the past four years all of the above brands and management companies have acquired management agreements in Miami that represented entry of the brand to the United States, the first property of a global brand in the United States, or the first property of a new brand opened by a hotel company. Again, a diverse group with representation from Asia, Europe and South America. As well, direct investment by Marriott, Hyatt and Starwood Capital to build/renovate and introduce new products using their own balance sheets to launch new brands or initial US locations of new brand categories.
I would contend that from the hotel investment and hotel brand distribution evidence stated above, we can conclude that Miami is no longer in transition, but is displaying a strengthening diversity of global investment and operational talent in the hotel sector, and simultaneously in many other sectors of the political, economic and social fabric that constitute a world class or global gateway city.