MIAMI-Seven years ago Mehmet Bayraktar, chairman and CEO of Flagstone Property Group, was invited to Watson Island by the City of Miami, which was looking to plan a marina on the site that sits just off the MacArthur Causeway between Downtown and Miami Beach. Last week, Bayraktar celebrated an event he has been waiting for since 2001: the groundbreaking of Island Gardens, a $640 million mixed-use yachting resort on the island.
Island Gardens, to be developed and owned by Flagstone, will be built on a 24-acre site owned by the city adjacent to the Miami Children’s Museum. The development is set to feature two towers and 221,000 sf of retail space. The first tower will house a 150-room Shangri-La Hotel and 98 luxury fractional residences to be managed by Shangri-La Hotels.
“We are selling a one-eighth fractional ownership that allows buyers to have 45 days per year of usage,” says Philip C. Freedman, Flagstone’s vice president of residential sales. Pricing starts at $215,000 for a 1,200-sf, one-bedroom unit and goes up to $850,000 for a 3,770-sf, four-bedroom unit. Freedman believes the units will sell, even during tough economic times. “There are 267 fractional clubs worldwide,” he explains. “Last year they accounted for $2.6 billion in sales, and the year before was $2.1 billion. Sales have consistently gone up 20 to 30%, and we have 141 fractions sold to date,” he adds.
The second tower at Island Gardens will include a 350-room hotel run by a four-star brand to be announced later this month, Bayraktar tells GlobeSt.com. The two-level retail space is set to feature 60 luxury shops, 18 waterfront restaurants and outdoor and indoor seating for more than 1,500 guests. In addition, the project is planning a “super-yacht harbor” designed for mega-yachts and giga-yachts longer than 400 feet. According to Flagstone, Island Gardens is the only location under development in North America to accommodate these vessels. Public gardens featuring waterfalls and artwork are also being planned for the site.
Approximately 18% of the fractional ownership units are committed, says Bayraktar, and letters of intent have been received for about 15% of the retail portion. According to Flagstone, institutional equity in form of 35% of project costs has been closed with ING Clarion. Flagstone will seek to borrow the rest by 2010, a deadline set by the City of Miami. The developer is currently at various stages of debt placement based on components of the project. Flagstone says some components have received their loan commitment and agreements are being drafted and others have been committed and approved by a lead bank and are in the process of being syndicated.
“I hope and believe we’ve been very lucky that now things are slowing down,” Bayraktar tells GlobeSt.com of the current downturn. “This is the perfect time for construction—for labor and materials—and once we open in fall of 2011, things should be going in the other direction.”
Story written by: Crystal Proenza - GlobeSt.com November 3. 2008 - Original Story
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