Paramount Bay’s Comeback
Ocean Drive (FL)
Jul 19, 2012 :
Paramount Bay's Comeback
The 47-story Paramount Bay, at 2060 N. Bayshore Dr. in Edgewater—the dowdy low-rise haven that is the edgiest of Miami’s downtown bayside neighborhoods—was one of the worst crash-and-burn stories produced by the 2007 real estate crisis. As if the market crash weren’t bad enough, in March 2008, a construction crane collapsed on a quaint 1920s-era two-story home serving as Paramount Bay’s sales center at the foot of the still-rising tower.
Burned were the high-rise project’s lenders, particularly those at Chicago-based Corus Bank, who had overextended themselves in the condo- construction game and would soon go bankrupt. The Paramount Bay developers, one of whose public faces was a firm named Royal Palm Miami Holdings managed by Daniel Kodsi of Boca Raton, couldn’t close enough presales to cover the mortgage. It was a “death spiral,” says Anthony J. Burns, a senior vice president for iStar Financial, a real estate investment trust that helped finance the project. “The sentiment in the market was that it was damaged goods,” he adds. “A poster child for the excesses of ’05 and ’06.”
IStar Financial foreclosed, and finally in May of last year took over the skyscraper, which a judge valued at $262 million. It took about a year to, as Burns puts it, “change the entire paradigm and framework of how we wanted to position this in the market.”
Key words for the repositioning: urban oasis and Lenny Kravitz. “We felt that we needed to do something outside the box,” Burns says. “Thinking along those lines is what led us to engage Kravitz Design and Lenny Kravitz, because we felt they could bring something that Miami hadn’t seen before.” Through a judicious use of walnut and Ecuadoran ipe wood floors and thresholds of vertical strings of brass beads, the makeover produced a funky-yetclassy minimalism.
Amenities aside, the main draw of Paramount Bay is its 346 water-view apartments, 11 of which are penthouses, whose terraces alone range from 700 to 3,000 square feet. Above the 24th floor, one sees not only Biscayne Bay everywhere, but also, beyond a thin strip of land (aka Miami Beach), the Atlantic Ocean.
Fortune International’s agents on the project in May hit the 75 percent-sold point for the 346-unit skyscraper. What’s driving the sales? “All the beautiful things that are happening in the Design District and in Wynwood and the night activity in the arts,” says Edgardo Defortuna, Fortune International’s president. Edgewater is part of a neighborhood that is “very attractive for a specific segment of the market,” he says, which consists mostly of South Americans and Western Europeans. About 60 percent are US-based—a high percentage that Defortuna considers to be “relatively atypical these days.” He reports having buyers from Florida, New York, New Jersey, Connecticut, Georgia, Texas, and even Ohio.
One type of gringo investing in Paramount Bay may be of special interest for market watchers: New York City-based investors. “They’re making macro calls on inflation,” Burns explains, ascending to a 40th-story penthouse during a recent tour of the building. “They’re buying irreplaceable real estate—beachfront, bayfront—because they believe they’re going to lock in a low interest rate now at four percent,” he says. “And the $5 trillion that’s been put into the economy is going to cause a big inflationary spike in the next couple of years, which is probably what’s going to happen. And inflation will start kicking along at seven percent.”
Enhancing the building’s appeal are bargain prices. Overall, the Paramount Bay is hovering at $590 per square foot, on average as of May—about half as much as high-rise luxury living space on Miami Beach.
At a boozy, saxophonetinged grand-opening party in May, Burns stood on a staircase and addressed the crowd gathered beneath the lobby’s 30-foot ceiling. The scene was reminiscent of the condo boom’s good old days, and it appeared iStar and its partner, ST Residential (which assumed many of Corus Bank’s assets), had transcended Paramount Bay’s tragic past. The question now is whether the bash was the last hurrah of a high-rise craze that began in 2004 or a harbinger of the next one. Paramount Bay, 2020 North Bayshore Dr., Miami, 305-374- 2757