At about $162,790 per unit, the new sales listing on the 86-room hotel pales in comparison to the $272,727 per unit, or $6 million, that is being asked for the 22-unit Casa Grande hotel at 834 Ocean Drive; or even the $433,333, or $6.5 million, being asked for the 15-unit Mare Grande hotel at 524 Ocean Drive.
There's no question asking prices are increasing appreciably, Miami-based hotel consultant Sheldon Greene tells GlobeSt.com. The relevant question is how long the owners can maintain their asking prices in light of the dramatic drop in air travel following the Sept. 11 national tragedy and increasing fears over a pending economic recession. It is all coming at the worst possible time, he says, just months before the start of the tourism season.
"Miami is a fly-in city--not a drive-in city," Greene says. "Because of the Sept. 11 tragedy, we are going to be more negatively impacted than probably any other city in the country. Some hotel owners are shaken severely right now psychologically. As soon as it hits their pocketbook, they're really going to be shook up."
While such uncertainty exists, others like Fabian Garcia-Diaz, a sales associate with Miami Beach-based Wimbish-Riteway Inc. note that there are other factors at work. Garcia-Diaz represents the Casa Grande and the Peter Miller Hotel, a 62-room hotel and restaurant at 1900 Collins Ave. with an asking price of about $91,935 per unit, or $5.7 million.
"South Beach is attracting buyers who want hotels more for personal satisfaction than for the numbers," Garcia-Diaz says. "In two recent deals I negotiated, the buyers expressed more of an interest in having a presence in South Beach. They're looking for a place to do business and have fun at the same time."
It appears even now that some buyers intent on buying property on South Beach are unfazed by the terrorist attacks.
"I'm involved in two negotiations right now," Garcia-Diaz tells GlobeSt.com. "One is an investor from South America who wants to be on Ocean Drive to enjoy the beach, to bring his family during the season and to show the rest of the world he is on South Beach."
Notwithstanding the impact of Sept. 11, Greene notes that the small to mid-sized hotel properties also are facing competitive pressures from new hotel development. The luxury, all-suites Mercury Hotel recently opened at 100 Ocean Drive, for instance. To the north, work is about to begin on De Soleil South Beach, a planned five-star luxury condominium-hotel, between 14th and 15th streets and Ocean Drive and Collins Avenue.
"The prices on Ocean Drive have escalated tremendously," Greene says. "But these are people who are just caught up in what is happening with all the upgrades. Some of these prices have a lot of water in them."
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