Episode 314: 04-30-15
This week’s show focuses on providing advice to emerging-growth companies and changes to the South Florida condo market.
James S. Cassel is co-founder and chairman of Cassel Salpeter & Co., a middle-market investment banking firm. Cassel Salpeter & Co., LLC, focuses on providing independent and objective advice to middle-market and emerging-growth companies.
We discuss what’s next for the US economy: The impact of rising interest rates, the strong dollar and slowing employment growth on the US economy.
Gil Dezer is an accomplished real estate businessman. Dezer Development entered into a master licensing agreement with Germany-based Porsche Design Group to deliver the luxury brand’s first foray into residential real estate, Porsche Design Tower Miami, slated for a 2016 opening. He is also developing the Armani Tower and the Hyde Midtown in Miami.
We will discuss the South Florida condo market.
Episode 314: 04-30-15 (To download, right-click and select “Save Link As”.)
Intro: 880 AM The Biz, South Florida’s only all business station welcomes you to Fried on Business. He grew up in South Florida, been in business here since the early 1940s and has closed over 1 billion dollars in deals. He’s seen it all. He always has an opinion and he’s always ready to share it. Informed, entertaining and effective. He has his finger on the throbbing pulse of South Florida’s business community. He’s Jim Fried, exclusively on 880AM The Biz. To talk to Jim and his guests, call 305-541-2350. Now, here’s your host Jim Fried!
Jim Fried: All right everybody we’re back with a great edition of Fried On Business for you today. Jimmy Cassel, we’re going to talk about the slow down in the American economy and what’s causing it. Then in the second half hour, one of our favorite guests Gil Dezer. Gil’s on his way. Hey Gil are you listening … there he is. He just waved to me from the highway. Gil will be coming in the second half hour. The Dow is down. The dollar is cheaper. Things may be getting better, but Jimmy’s going to tell us where it’s heading. We will be right back after this. D it is all yours.[commercial break]
Jim Fried: All right we are back and I am host Jim Fried. I want to welcome Jimmy Cassel. Jimmy, what’s your position at the firm that you work at?
James S. Cassel: Chairman and Co-founder of Cassel Salpeter on Brickell Avenue.
Jim Fried: Jimmy is our big economic expert and he comes in and talks about all kinds of great stuff. He is an investment banker. Jimmy, what’s going on with the softening economy?
James S. Cassel: What’s interesting right now is that news came out today with the jobless claims. Today they were the lowest in probably 15 years. Which is interesting because you hear from the Fed that the economy is slowing, so it’s interesting times we live in.
Jim Fried: Maybe it’s the same person taking two jobs.
James S. Cassel: Or maybe taking two medicines. One never knows. You’re depressed on one; you’re not on the other. I mean I’m happy and sad. I have a job to really make a living.
Jim Fried: Well it is a different issue. We’ll get around, I think, to the minimum wage discussion maybe in the break. Jimmy, what are the reasons that the economy slowed? I mean, it was really easy, it was cold. But what about some other ideas?
James S. Cassel: Well cold up north is certainly one thing economists look at. There was a port up north, in California and Long Beach, there was a strike there which people may be aware of. That prevented much stuff to be imported into the country from Asia. That became a problem. That has been solved but there’s still a backlog that’s coming in and that forced people to either bring things in from ships in the Panama Canal, go up to Seattle or even north. That was an issue. There have been some other things. We talk about the strengthening of the US dollar versus the Euro. It’s great for US, you’re going on vacation and you’re buying things from Europe. You’re getting it for a cheaper price. The flip side to that is that people aren’t buying as much US products, exports. Less exports, less jobs, less business. Then there are oil problems. Oil prices have certainly come down, although in the last week or two we’ve seen it’s got a little stronger. Depending on whom you talk to, it’s going to go up and going to do down. Who really knows?
Jim Fried: Saudi’s know!
James S. Cassel: The Saudi’s know, well the Saudi’s are just pumping more oil. They’re putting more oil. We’re shutting down rigs; they’re putting more rigs. They need to pump more oil so they can make more money. God knows what they’re doing with that money; I guess drop bombs on people. It’s interesting.
Jim Fried: It is an interesting turn of events. One of the local businesses that, I read, got impacted by these slow down at the port was the Feldenkrais business over at Perry Ellis. The goods waiting either on the water or on the docks and they just couldn’t get enough inventory. I guess you’re top of the line on your income statement.
James S. Cassel: Not only lowers the line, but it also has other effects because when you take fashion, Perry Ellis. It’s very time sensitive. If those goods aren’t on the shelf at a certain point in time, not to the stores on time, you can’t make that up. They lose money on that and that causes a problem. In some cases they have to air ship. When they start shipping in by air, that increases their cost.
Jim Fried: We’ll talk to Gil in the second half of the episode; Gil Dezer will be with us talking about condos. We’ll ask him what the strong dollar has had an affect on his components. I would guess probably not much because his people are not really cost sensitive.
James S. Cassel: I think when you talk to him–, he’s had a fair amount of Russian influx in buying in some of his projects. Obviously we know what’s happening in Russia. Price driven, politically driven, it’s been an issue. Again, if you look at the South American economy it’s not as strong as it was a few years ago. Not withstanding that whenever there’s political turmoil in a South American country. Irrespective of that, the money flows in and obviously it’s coming from South America. South Florida fits but I’d love to hear what he has to say about that.
Jim Fried: We’re going to be talking to him after the turn of the hour. Jimmy, what are the types of people who should be looking at the economy and looking for some opportunity? Where would an opportunity lie in today’s economy, given that it appears to be but that may be a little false?
James S. Cassel: When we talk to private equity firms and institutional buyers, a lot of people sort of circling around the energy area. Buy real estate and office buildings and you have a lot more knowledge in that space than I do. What I see, the prices are very high. The cap rates are very low. Unfortunately, because of the decrease in oil prices, there’s a lot of energy that was heavily leveraged. Now is becoming available because banks are under pressure. There are people out there buying that and also looking to scoop up based on today’s oil price where they believe oil prices will actually go up.
Jim Fried: It sounds to be like you’re disporting the usual strategy for a good solid investor. If people are running, then it’s time to run towards it maybe.
James S. Cassel: It’s what you want to look at and crowd mentality. The good assets, people are buying, they’re paying very healthy prices. Interest rates are interesting. If we talked a year ago, I would’ve thought interest rates would’ve started going back up. Three months ago I would have said the same thing. Today as we sit here after the most recent sort of yawn, at the Fed meeting. It doesn’t look like they’re going to go up in June and now back a third quarter or fourth quarter. Who really knows when they’re going up? Financing is cheap.
Jim Fried: Then we’re in an election year. Do you think that they would be goosing the economy anyway you could, leave it static?
James S. Cassel: In election year, it becomes interesting and nobody knows who wants it to be good and who wants it to be bad. Each party wants to hurt the other party so who knows.
Jim Fried: We got the fact that they’re supposed to be independent, that type of thing. We’ve talked about the interest rates, we’ve talked about the softening economy, we’ve talked about the sectors that you think there could be some good value in. What do you see as far as South Florida, and the impacts that have been going on globally, here in South Florida?
James S. Cassel: You look at the cruise lines, which are very important to South Florida. They’ve gotten the benefit recently of lower oil prices so that’s downed their cost of operations. That’s been very good for them. They’ve also because its perceived as a very good value, they’ve got great percentages occupancy rates when the ships leave port, which is good for them. The problem they’re having is that there’s a lot more lines coming on; a lot more ships. Over time, it’ll be interesting to see how they do.
Jim Fried: With that, the cruise industry and redeploy their income generated, depending on a global economy. Even recently, the cruise ships relocating to Port Everglades, coming back to Miami. I guess up to Port Canaveral, I don’t really know what’s out of out whatever port they have up in Beach County. The Panama Canal’s opening up. We’re going to see an increase of traffic flow through the Panama Canal. Miami is set as a lynch pin in international finance now. What does the future look like here in Miami?
James S. Cassel: The whole cruise industry, the cargo–, what they’re doing at the Port of Miami. They’re extending the canal there to be able to bring in the super ships and come through Panama. They’re trying to make one of the few ports on the Eastern seaboard which will be able to accept the larger ships, which will be good for obviously that industry, good for the trucking industry. Only recently has the Port of Miami brought back trains. For years no trains went to the port, and they’ve actually seen trains getting ready for the new ships.
Jim Fried: Let’s talk a little bit about the strong dollar and what you see as far as valuations in the companies that you work with. Your primary business, the way you pay for your granddaughter’s care and things like that, are helping people monitor their families investments in their meat size companies. Are you seeing the valuation marks for people’s legacy assets, their company?
James S. Cassel: Today and it’s because of a few interesting reasons and valuations for good companies are very high. It is a private equity community. The strategic buyers all have lots of money available. The banks are lending cheaply. Not stupidly, like they did a few years ago but that’s all in the way. The menders are active so plenty of money right now for people who are interested in selling their businesses to get prices.
Jim Fried: It sounds to me like I know something that’s sort of a rabbit running through all of the things that you’re saying. That’s that you’re flight to quality, people with cash with pay up for the quality. The quality perhaps is indicated by its stability?
James S. Cassel: Its stability is certainly one thing; a cash flow that people can look at and blame and over a long term it’s going to be there. Visible businesses are very important. I looked at a family years ago that is in the blockbuster business. They own blockbuster franchises. People thought that was stable 15 years ago. If you didn’t sell your business 5/6/7 years ago or more, you got nothing.
Jim Fried: Yeah.
James S. Cassel: The taxicab is an interesting business to look at too. Great strong business, the Medallions had real value. Wake up one day and all of a sudden this technology company was an amazing thing like Uber. Then next thing you know taxis are in trouble.
Jim Fried: The Taxi Medallion guys they had a lot of political cloud, look at what they did to the Metro rail for instance. We won’t go there right now, we’ve only–, in fact maybe we’ll let that hang out for a minute. We’ll be right back after this break. We’re going to toss it to D and come back and get Jimmy’s thoughts on the US economy, where we’re going and we’re going to get there. Stick with us, you may learn a couple of new things from my smart buddy Jim Cassel. Be right back after this quick break.[commercial break]
Jim Fried: All right you busted into some of the jokes that Jimmy and I were having off while we were doing over some of the commercials. I want to remind everybody to join ULI and a bunch of real estate people at the Ball and Chain Restaurant in Little Havana on May 5th. Go to uli.org. It’s going to be a great event. It’s got all kinds of panels. We’re going to be talking about what’s going on in Little Havana. I guess they were listening last summer when I was doing my series on “Where is the next Brickell?”. I said the next Brickell is Little Havana. No one believed me. Now they’re buying. Maybe it pays to listen to the radio show. We’re back with Jimmy Cassel. Jim is the–, what are you again? The chairman and something or other?
James S. Cassel: The Chairman and Co-founder of Cassel Salpeter.
Jim Fried: Ok great. What Jimmy does is he watches the economy and tells a lot of smart people how to place their bets on the economy. We’re going to get some of the insights he has here in the next few minutes. Jimmy, we talked a little bit about why the economy slowed over the winter. Does that mean it’s going to pick up again as we go into summer?
James S. Cassel: It would make sense that if the slow down of the last quarter was really caused by the outlier event that we should pick back up. If you look at how things were the fourth quarter of last year, the third quarter of last year, things did pick up. There was much better growth. If the dollar begins to weaken a little bit, that should be a little bit helpful. It happened to mean the Euro-Dollar exchange rate has gone up about 10 cents in the last week or so. Oil prices have gone up, which is good. If they don’t go too high; if they end up leveling out by $60 it’s good for the consumer but it makes sense on the oil patch. Probably not as many people would lose their jobs there. There are good things coming.
Jim Fried: That sounds good because I’ve noticed gas has gone up a couple of dimes at the gas pump in the last couple of weeks, but it’s still way below what it was before. To me, it’s just an automatic tax cut that you give to the American people. Lean into the mic next time, when you clear your throat. There you go, exactly. Jim, what other things do you see on the horizons that are rays of sunshine for the economy?
James S. Cassel: I think you mentioned before that you are into an election year so there should be some benefit there where people in both sides of the isle will try to assist there. Interest rates are not going to go up that rapidly. Even if they do go up, they are going to go up very slowly. They may go up a point or half a point. Believe that rates if over the next year or two, even as much as a point, it’s not going to have any real means of effect. It may have a psychological, in the very short term. Over the term meaning weeks, people have a very short attention span to that.
Jim Fried: That just seems like a slap on the wrist. What about the very big word here, malaise, in Europe? Will that have an impact on the US economy?
James S. Cassel: The malaise in Europe that we talk about may not be the malaise from a year or two ago. Look at Spain, Spain is growing now. It’s growing from where it was really down in the dumps, employment is getting better but when you go from 29 to 26 unemployment it’s a big number. A big percentage, but still it’s very sad the amount of people that are underemployed and totally unemployed over there.
Jim Fried: Yeah, they’re running for Germany. Can Germany keep holding up Europe?
James S. Cassel: Everyone is running to Germany. The flight people from the Middle East and other countries. They are going to places like Italy where there are no jobs, places like Greece where there’s even fewer jobs. Although one things that’s interesting when you look at the economies in Europe, like in Italy, people are unemployed but are they really unemployed? There’s a lot of people working for cash. There’s that under economy where they’re unemployed in terms of government statistics but they’re working. They are making money.
Jim Fried: Yeah, they aren’t paying taxes, which I guess is the real problem. I’m not really an expert on the European economy. Getting back to the US economy, what do you think is a region that’s going to get better than the fair share for the upcoming year or so? You’ve got California but they have sort of issues with a drought. You’ve got Texas, but they’ve got sort of issues with energy. You’ve got the Upper Midwest but it’s the Upper Midwest. Are we still looking at the North East and the South East as bellwethers for the economy?
James S. Cassel: North East is interesting when you look at New York because that’s an outlier. It’s not like anywhere else. People are moving in. Housing prices are on the rise.
Jim Fried: It’s like Miami. You can’t live downtown anymore.
James S. Cassel: That’s absolutely true. You could fit 6 or 8 people in an efficiency and maybe be able to afford it.
Jim Fried: That’s going on all over Brickell Avenue right now.
James S. Cassel: It’s going on in New York. I have a son who’s one those. There’s also micro-apartments which are couple of hundred square feet.
Jim Fried: They have a hot plate and eat standing up. Is that the story there?
James S. Cassel: No, but if you want to buy a new shirt, you have to take one of your old shirts outside so you can bring the new shirt in.
Jim Fried: Well said. We’ll leave the real estate stuff to Gil and we’ll talk super lucks.
James S. Cassel: It’s interesting; areas that people talk about growth. Everyone in South Florida is talking about the tech, what’s going on in the tech area. We have the big tech conference coming up next week.
Jim Fried: I’m going! If they were on, they’ll be on again.
James S. Cassel: It’s very exciting and Manny Medina and his group have done a wonderful job, with the Knight Foundation and others in town, trying to really put tech on the map in South Florida. You try and equate that to what Arc Basel might have done for art. Then hopefully in 8 or 10 years from now, we’ll look back and go “wow that was really the beginning of the transformation into a real tech center here.” The thing that we’re still missing is that there’s not a lot of money.
Jim Fried: What about the brains?
James S. Cassel: The brains is a problem in both what’s here and attracting people to come here, especially when the costs are so high. Think about it, the costs are high out in San Jose, California. They make Florida still look relatively cheap. That should change. There is one area that there’s some people talking about. Years ago I heard “Pittsburgh – great place, great change.” It’s Detroit. Detroit is going through a real resurgence. Young people moving back in, technology moving back in, very affordable housing.
Jim Fried: Dan Gilbert. High five to Dan Gilbert to placing a bet.
James S. Cassel: He and a couple of others there singe-handedly really changed it. He got a great benefit out of it. He bought office buildings for a price equivalent of one year’s rent. Now he owns it all. There is a shortage of housing in downtown Detroit. I don’t know what’s going on there.
Jim Fried: Wow.
James S. Cassel: It’s similar to what happened in downtown Las Vegas. Not to be confused with the strip, but founder of Zappos, people know the shoe company which is now owned by Amazon, single-handedly transformed downtown Las Vegas. The same thing–,
Jim Fried: The old strip.
James S. Cassel: Not the old strip, downtown Las Vegas is the courthouse, office buildings. It’s amazing what’s going on over there.
Jim Fried: A lot of that could be attributed to the fact that the entire economy of Las Vegas transformed itself from visitation to development I think. Water exploitation would have to be a big business out there. I would have to imagine. Let’s talk about Dade County versus Broward County.
James S. Cassel: Oh, don’t start me on that. I’m a Dade County kind of guy. They could stop everyone at the county line and I’m fine with that.
Jim Fried: I guess we won’t go there–,
James S. Cassel: We can go there. Go for it.
Jim Fried: Ok so the Dade County economy completely different than the Broward county economy, or so it seems but are they kind of blending together and looking the same all of a sudden.
James S. Cassel: People have always tried to talk at least governmentally about South Florida and its impact. The scripts came up to Palm Beach County and Martin County. It’s a regional program. I don’t know that it’s turned out to be any regional anything because the people, you never see what’s going on with the biotech centre in Miami. It’s not really what’s going on; it’s scripts and things of that nature. Broward County’s housing point used to be less expensive in places, but today it’s as expensive as Dade County. The urban area, downtown Fort Lauderdale, there’s people in Brickell Avenue moving in there. Moving from West Broward into Dade. Then West Broward into downtown Fort Lauderdale. 595 change by putting in the speed lane there. From the people I know, it changed the world there. It gives people the ability to go back and forth who are willing to pay for it.
Jim Fried: We have that here in Dade County too, except that people don’t mind the cones. There you’ve got it’s concrete barriers and huge walls that keep people out.
James S. Cassel: Cones are just something; an obstacle course. They’re something to knock down in Dade County. You can see how that works when they put it further up and they do put concrete. I don’t think they’ll go through it so quick.
Jim Fried: It’s amazing all the traffic rules in South Florida. If you looked out there driving right now, you could probably agree with me there. I always found that traffic signals were mere suggestions in South Florida.
James S. Cassel: A red light means that you have to count to 3 when it goes to green, at least count to 3 before you go because somebody could run a red light going the other way.
Jim Fried: I saw a T-bone the other day. It scares the you know what out of me. When I go home from work every day, I take a hard look to the left every single time, just to make sure when the light changes. Talking about transportation, when you’re talking to companies, investors looking to invest here in South Florida–, we only have about a minute left? One minute left. It’s not enough time to talk about transportation Jimmy. Let’s give you a couple of minutes. If somebody wants to find you, how do they do that?
James S. Cassel: The best place to find us either on the web, through our website Cassel. C-A-S-S-E-L. Salpeter. S-A-L-P-E-T-E-R dot com. We mentioned earlier we do a fair amount of M&A work, companies, helping people buy companies. Raising capitol which may be equity, MES or debt if they need it and do some restricting work.
Jim Fried: Great. Be right back after this short break. I want to thank Jimmy Cassel for coming in and giving us his spin on all things economic. We’ll be right back after this. We’re going to have Gil Dezer. He’s going to be in the studio. Tune in for the South Florida condo update, coming up right after this. We’ll be back. D it’s all yours.[commercial break]
Jim Fried: All right we’re back live on the Wall Street network, which kind of surprised Gil. Gil we’re big time here man!
Gil Dezer: I’m assuming if you’re on it, then it has to be big time.
Jim Fried: It is. We’re big time and we’re talking with the big condo developer here in Florida. Gil Dezer. Gil has invested up in New York, down here. The guy probably knows what’s going on 2/3 of North Eastern Dade County. Welcome back to the show, Gil.
Gil Dezer: Thank you very much, lovely to be here.
Jim Fried: I was looking on YouTube and I saw the Dezervator. What is that?
Gil Dezer: The Porsche Design Tower, when we started out we had that car lift system that took the car to the unit. When the passenger goes inside the car, all the way up the building to his apartment. We actually went ahead and got a patent on that called the Dezervator. D-E-Z-E-R-V-A-T-O-R. You can see it on YouTube. If you click on YouTube right now, you can go and see the video of the car and how it works. It’s pretty amazing.
Jim Fried: I can’t wait. Can I take a ride before you start getting everybody up there and it becomes totally top secret?
Gil Dezer: Any time you want.
Jim Fried: I’m coming up there; I can’t wait! This is going to be great. Gil, you’ve got all these condos up on Miami Beach. You’re one of the very few condo guys that were able to work your out of what happened in the last condo cycle. You own a lot of good land. There’s a lot of things going on. Are you working full steam ahead or are you trying to make sure each building is built the right way?
Gil Dezer: We have a lot of property; all located in the same area. We don’t want to become our own competition. We are waiting for these buildings to kind of sell and take off and fill up the buildings before we start another one. Now we have the Porsche Design Building, we have 7 units left to sell. We launched Armani Casa, which was a few months ago and now we’re about 90% sold of that. We’ve got to start that construction and then the future will hold. No rush, I’m a young man, I’ve got plenty of time to go.
Jim Fried: You’ve had a career already in the first 20 years I’ve known you, you’ve already had one whole career. You’re the man, the myth and the builder out there. You’ve got now all this stuff on Sunny Isles, you’re doing Armani, Armani’s a JV with…
Gil Dezer: The Related Group, of course.
Jim Fried: Ok and now you’re moving inland sort of with the Related Group to midtown. What’s up with midtown? Besides being in my neighborhood.
Gil Dezer: When I talked to George Pres about the midtown project, I got really excited about it. It’s going to be a SLS Hyde Hotel, attached to 400 condos and it’s going to be a really cool spot in the middle of midtown. It’s going to be a great place to kind of want to live, hangout and party.
Jim Fried: It sounds like it’s going to be great. What the neighborhood is missing is an upscale hotel. I know there’s a lot of select service that’s being built, but not really upscale. I don’t think you can call the DoubleTree upscale. What type of buyer is being attracted to the Hyde and midtown? Also I’ve got to give a high five to the guys at Related. I saw Carlos going out in the jet. We’ve got to get you and Carlos in here one day together. That would be just great.
Gil Dezer: I’m with him almost every day so whenever you want.
Jim Fried: All right. What’s the buyer profile at the Hyde? How is that different than the scene out on Miami beach? Sunny Isles.
Gil Dezer: What you see in Hyde specifically is a price point that really doesn’t exist in too many places in Miami. $350,000-$600,000.
Jim Fried: Wow.
Gil Dezer: Yeah, it’s quite reasonable. Therefore that’s why we’ve sold more than 50% of the building in sales over there. We are doing very well. Like you said, there’s no Hyde hotel in the area. We’re doing a José Andrés restaurant down on the ground level which is going to be a lot for the midtown area. It’s going to be a really cool spot for the midtown area. I think if you can live in a building where the action is happening downstairs, you can walk right upstairs to your apartment. That’s where you kind of want to be.
Jim Fried: 100%. What you’re really not discussing is the fact that they can walk right out of their apartment and right there at the North end of midtown really in a southern part of the design district. One stop away and you’re in the Design District.
Gil Dezer: That’s been a tremendous draw for us because the Design District is the new Bal Harbour therefore all the stores are there. We are literally two blocks away, walking distance, you don’t need to get into a car.
Jim Fried: Looking at the other sub markets, anything else on dry land maybe you bought that shopping centre up on 163rd Street. What’s going on over here?
Gil Dezer: We bought the shopping centre, we just got it rezone for a couple of thousand units and now we’re master plan and how we’re going to figure out the whole situation. We’re also partners with the relator group on 444 Brickell, which is where The Capital Grille is right now. We got plans approved on that last week for three towers, a hotel and 2 condos. Things are looking up.
Jim Fried: Wow you’re going to redo Rivergate there someday?
Gil Dezer: It’s going to be another icon Brickell type project. Definitely a little bit more twist on it, we’re going to put some extras to it.
Jim Fried: I’ve known you for a while; it seems to me that you have this tenancy to align your interest with billionaires.
Gil Dezer: It makes doing business easy.
Jim Fried: You’re a brand. I don’t want to call it a sub-brand, you’re your own brand. It appears as though as what’s going on is you’re kind of moving the cache with you. Is that the plan?
Gil Dezer: Whenever we start these buildings, we have a big name in the marketplace and the buyers come and follow us. We really build good stuff and that’s the difference between when the crisis comes and it doesn’t. You mentioned earlier, we were the only ones who really survived the crisis and it’s because location, quality, the brand we were working with Donald Trump, the buildings came out spectacular. The market crashed and what not, so we adjusted prices, but we were the first ones to sell out.
Jim Fried: Beyond that, you also stuck with it so when the lenders came back to the market, who’s the kind of person they look to do a loan with?
Gil Dezer: That’s right. We did the first construction loan post crisis, at the Porsche Design Tower for $214 million.
Jim Fried: What was different about that loan that helped you get it done?
Gil Dezer: They know I paid them back, they liked that idea.
Jim Fried: Isn’t it though that you have a different deposit schedule? Weren’t you the first one who didn’t have to have deposits?
Gil Dezer: We only went for 30% deposits. The average price of a unit there is $6.5 million so 30% deposit is still close to $2 million per year. We don’t think too many people are walking away from that kind of money.
Jim Fried: Hold on I just pulled out my keys and my pocket change fell on the granite, I’ve got enough for a deposit! Gil, what do you look for when you’re trying to put a deal together to put your personal stamp on it? What is it that makes a Dezer project, a Dezer project?
Gil Dezer: It has to be unique. It has to be something that can not be replaced some place else. It has to have something to it to make it a “wow” and a need to be there. We spend a lot of effort trying to make these buildings, the common areas and the amenities and everything to the liking of the buyers. Most importantly, what really makes it a Dezer project, if I can’t live there myself; then I can’t sell it to anyone else. Everything we design is a place that I would move into myself. I do live in my own tower.
Jim Fried: I was going to say, the best selling point is that the developer lives here.
Gil Dezer: Right and nobody calls me to fix their broken toilet, so everything works out.
Jim Fried: It’s great; I love going there to visit you. You sit there up on top of Trump Dezer tower there. It’s fabulous, I get to go up there and see my town. See all the different things that used to be flat ground which are now high rises. It’s just amazing I love what you’ve done with the whole city of Sunny Isles there. To me the last domino to fall in Sunny Isles Beach, I’ve got to just say it, the old My Pi. Take away My Pi and you’ve got Sunny Isles city hall or something coming here Milton’s building. What really blew my mind, it took me two light changes to make the left hand turn onto Sunny Isles. D, you’re making–, one more minute there. One more minute. We’ll wrap up this segment, we’ll come back with another. This time we’ll talk about his view of overall condo market supply, demand, where we’re going and how we’re getting there and what he thinks after this with Super Luxe Condos King, Gil Dezer.[commercial break]
Jim Fried: All right we’re back and we’re here with Gil Dezer and we’re talking about the Miami condo market. Welcome back Gil.
Gil Dezer: Thank you.
Jim Fried: Gil I read an ad for Warren Henry and how they consistently give the best price and best service and always Warren Henry, and they’re dependable. We were talking about why people buy the Dezer brand. It seems to me they buy for the same kind of reasons.
Gil Dezer: You’re taking a leap of faith when you’re buying a condo pre-construction, putting a deposit down then hopefully the building’s going to come out the same way you were promised, that you saw on the renderings and everything else. That’s really what we’ve been kind of known for. We undersell and over deliver and that’s been the secret to our success.
Jim Fried: I love watching the photos of Carlos and Eric flying over to Italy in somebody’s jet. Who’s jet was that?
Gil Dezer: Yours truly.
Jim Fried: I figured; I was just fishing for that. I could go on that jet sometime and have a good time. Gil, let’s talk about overall condo market in general. I’ve been talking to my friends at other developers; the press says that things are slowing down. People I’ve talked to are beating their budget week after week. What do you see?
Gil Dezer: Overall, you can’t really listen to what the press says because they talk about the market in a global scope. We are specifically in the pre-construction game. We also read to what the average condo price in Miami. $165,000 or whatever the case is. You all know that’s not the market we’re in. Our average price of units is $4,000,000-$5,000,000. When you speak of the market as a whole, I’m sure that’s going on. Specifically at the upper end where we are, and the people we deal with, we’re not seeing any signs.
Jim Fried: You’re pretty much close to being sold out in all your projects on the ground anyway right?
Gil Dezer: That’s where we are.
Jim Fried: It sounds like you’re a banker’s best friend.
Gil Dezer: That’s why they call me all the time.
Jim Fried: Gil, you’ve got some land over there on the west side of Sunny Isles. It’s really not on the dry side, what are you thinking about doing over there?
Gil Dezer: The piece you’re talking about is the Thunderbird, where we own the Thunderbird hotel on the ocean, 7 acres on the west side. It’s a very interesting piece of land because it’s the only piece land in Miami Dade County that stretched from the ocean to the inter-coastal. What we’re going to do there, we still haven’t figured it out right now. Right now, we’re running the hotel. The hotel’s doing well; it’s making money. We actually need that empty piece of land on the west side for staging for the Porsche Design Tower, as well as a paring and construction parking and that kind of stuff.
Jim Fried: That kind of gets into some of the business that goes into being the super luxe condo King. You have to do staging, you have to plan your projects, you have to plan your capital. It sounds to me like you have to plan pretty far in advance. Is your plan to continue to do co-branding?
Gil Dezer: Yes, of course. The branding has worked tremendously. We get instant gratification–,
Jim Fried: You get instant gratification as soon as you open up the door to your condo.
Gil Dezer: That’s right. Instant recognition from the market, and the brokers community and everything. For us it’s been working out well. We are talking to a few other brands that we can not obviously mention at this point. If you remember, I was here on the show a year ago and I couldn’t tell you about Armani and here we are today with the Armani Casa. We’re working with a few other brands that are going to continue to make Miami a great city.
Jim Fried: We have a great story that I like to tell about Gil, both on the airplane coming back from Los Angeles on the fourth of July in the mid 90s. You were–,
Gil Dezer: A long time ago, yeah.
Jim Fried: Gil was there. We walked past Gil and the guy sitting behind him was Pat Riley.
Gil Dezer: That was back in the day.
Jim Fried: Pat Riley had just come back. We were all worried we were going to lose Pat to Los Angeles. He came back. We walked past him on the plane and he goes “yeah all we do is extend that guy’s contract and we get us a championship ring. A parade down Biscayne Boulevard.” I tell Gil, do you know what he’s talking about! The Shaquille O’Neal deal. Gil, it was great. Let’s talk a little bit about your playpen. You do these car things, you go on the Gumball Rally, what’s going on with the gumball rally? What have you got coming up? Let’s live like a star. How is a star going to be living? What are you doing that’s really fun that we’re going to be reading about in the next few months?
Gil Dezer: Hopefully you’re not going to be reading about the real stuff.
Jim Fried: No, that’s what my camera’s for.
Gil Dezer: We are doing the Gumball Rally again, around May 23rd of this year. It’s in Europe and it ends up in I believe Las Vegas. It should be a very good one. We’re very excited for that. Ship the car over and everything. Then I do these all kinds of events where I mix and mingle with these potential buyers of Porsche Design units. We have 7 left, so it’s not that I need to go but it’s also fun to do the job too.
Jim Fried: That’s super. One of the first things we did–, I’ll give you some kudos for this, first time I ever really met Gil be the host for a charity event. It opened up what is now the Trump Hotel. We had a beautiful event. Gil, thank you so much for that. For letting me marry my wife, and not trying to get in the way of that too. I really appreciate that.
Gil Dezer: Not a problem; don’t worry. As soon as I found out she was with you, I backed off.
Jim Fried: Thank you so very much. Back in the day you were quite the wolf but hey it takes one to know one. We’ve only got a few minutes left. Gil, what are you seeing in the super luxe market? What really sets it apart for me is the little gizmos that people do. You see Turnberry doing this pool–, I don’t know how people are going to go to that pool, it’s 1000 stories up there and stuff.
Gil Dezer: I feel bad for the guy who lives underneath the pools. The wind blows and his whole dock is going to get wet.
Jim Fried: Hey now! Well that’s why your guys have individual smaller pools, no?
Gil Dezer: That’s right. What’s happening now in the condo market is that the units are becoming amenity rich, if you will. They’re doing all kinds–, we’re doing it as well. We’re doing cigar rooms and kids rooms and that kind of stuff within the tower. That’s what buyers are looking for and what they’re buying for. Above and beyond the brand, we have the Armani project we used César Pelli, who’s a star architect. One of the world’s most famous architects. We’re combining all the different features of whatever has been tried to put together sporadically and doing it all together in one project.
Jim Fried: We’ve only got a couple of minutes left. D, there we go. We’ve only got a minute left. I know that you’d like to tell people how they can get to your shopping centre and other projects. If they want to bring a client or a customer, to see your towers or one of your units, how do they do that?
Gil Dezer: 932-1000 305 area code or pdtower.com is Porsche Design Tower website and rbac.com are the Residences by Armani Casa website. You can go ahead and look at that stuff, then come to our sales office. We’re there 7 days a week.
Jim Fried: Look how fast it was. He’s always quick. That’s it. I want to thank you so much for coming and livening up the show with your gigantic personality. All these great tips about what’s going on here in the condo market in Miami. Always great to get the condo market from the King of the super luxe condos. Dezer, thanks again for being a friend of the show Gil.
Gil Dezer: Thank you for having me, I love it.
Jim Fried: My pleasure. I want to thank Gil, I think I did three times, I’ll make it four. I want to thank Jimmy Cassel. The people I want to thank are our sponsors: KIND Snacks, South Florida Business and Wealth Magazine, the CCIMs, Terek Maddox, UHealth, Warren Henry Automotive, the NFL Alumni, the Miami Dolphins, the Miami Marlins, Social Media 305, Lauren’s Kids, the Aztec Group, the University of Florida Bergstrom Center for Real Estate Studies, Magnum Energy Solutions.