Invest: Miami 2016

Miami 2016 An in-depth review of the key issues facing Miami-Dade’s economy featuring the exclusive insights of prominent industry leaders

Contents:

55 Affordable options: While the influx of capital into MiamiDade’s luxury real estate segments continues, the need for affordable options is pressing

56 Viewpoint: Michael Wohl, Partner, Pinnacle Housing Group 58 Miami’s top producers

59 Construction: 60 Peak performance: Despite a strong dollar and a saturating condominium market, the industry saw high spending and much foreign investment

13 Economy:

14 Miami-Dade in numbers

17 Map of Miami-Dade County

21 Interview: Carlos A. Gimenez, Mayor, Miami-Dade County

23 Viewpoint: Larry K. Williams, President & CEO, The Beacon Council 31 Ready, set, grow: Miami-Dade is finding a place in the international art market 34 Active citizenry: Greater civic engagement is a mark of MiamiDade’s growing sophistication 38 Roundtable: Marcelo Giusto, Consul-General of Argentina, Louise Leger, Consul-General of Canada and Ozgur Altan, ConsulGeneral of Turkey

42 Strong fundamentals: Rising domestic demand, steady

63 Viewpoint: Brad Meltzer, Southeast President, Plaza Construction

65 Interview: Stephen Owens, President, Swire Properties

67 Community building: Commercial structures in MiamiDade are being designed to reflect a more collaborative work culture

71 Heading north: Developers and buyers seek opportunities in neighboring Broward County

72 Viewpoint: Joseph Kavana, CEO, K Group Holdings

international interest and a stable economy support Miami-Dade’s diversifying real estate market

47 Interview: Carlos Rosso, President of Condominium Development,

22 High profile: All eyes are on Miami-Dade

61 Viewpoint: Jeffrey Gouveia, President & General Manager, Southeast Region, Suffolk Construction

41 Real Estate:

19 Interview: Rick Scott, Governor, State of Florida

The Related Group

49 Interview: Edgardo Defortuna, President & CEO, Fortune International Group

50 Interview: David Martin, President, Terra

51 Vibrant neighborhoods: Greater density is building in Miami-Dade’s infill areas, which are seeing big investments and dramatic revitalization

53 Viewpoint: José Luis F. Melo, Carlos F. Melo and Martin F. Melo, Directors, Melo Group www.capitalanalyticsassociates.com

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CONTENTS

Contents: 75 Environment & Infrastructure:

76 Climate agenda: Miami-Dade is creating strategies to face environmental issues and ensure its infrastructure can sustain growth

81 Interview: Jose R. Mas, CEO, MasTec

82 Interview: Vincent Signorello, President & CEO, Florida East Coast Industries

85 Transportation:

86 Better connectivity: Investments in public transit and sustained growth in passenger air traffic bolster connectivity in Miami-Dade

87 Viewpoint: Michael Reininger, President, Brightline

94 Viewpoint: Kasra Moshkani, South Florida General Manager, Uber

95 Green solutions: Conscious of environmental sustainability, county stakeholders are seeking

89 Viewpoint: Marilyn DeVoe, Vice President, American Airlines

90 Viewpoint: Gary J. Spulak, President, Embraer Aircraft Holding, Inc.

91 Interview: Alice N. Bravo, Director, Miami-Dade County Department of Transportation & Public Works

93 Innovating transit: Miami-Dade turns to technology to address its traffic woes

10 | Invest: Miami 2016 | CONTENTS

new transit solutions

104 Smart trade: In the era of thirdparty logistics, Miami-Dade is a leading market for the development of trade-related innovations 106 Pharma hub: MIA’s designation as a pharma hub will boost air freight

97 Trade & Logistics:

98 More volume: Expanded infrastructural capacity, strong trade promotion and cutting-edge innovations are boosting MiamiDade’s trade and logistics sectors

107 Interview: Emilio T. González, Director, Miami-Dade Aviation Department

109 Banking:

110 Growing strong: Commercial lending remains a key driver for Miami-Dade’s banking sector, while consolidation trends continue to shape the landscape

111 Viewpoint: Jorge Salas, President & CEO, Banesco USA

112 Viewpoint: Israel Velasco, Florida Region Executive, Popular Community Bank

117 Interview: Antonio Cassio Segura, President & CEO, Banco do Brasil Americas

118 Interview: Margaret Callihan, President & CEO, SunTrust Bank South Florida

119 More consolidation: M&A trends will shape Miami-Dade’s competitive banking landscape in years to come

CONTENTS

135 Viewpoint: Jeffrey Freimark, President & CEO, Miami Jewish Health Systems

136 Viewpoint: Steven Sonenreich, President & CEO, Mount Sinai Medical Center Miami Beach

148 Interview: Dr. Mark Rosenberg, President, Florida International University

137 Viewpoint: Richard Ballard, CEO, Sylvester Comprehensive Cancer Center

139 Interview: George Foyo, Executive Vice President & Chief Administrative Officer, Baptist Health South Florida

149 Gaining momentum: MiamiDade’s cultural diversity continues to shape K-12 schools and higher education alike

150 Roundtable: Eugene W. Anderson, Dean, University of Miami School of Business Administration, Jose M. Aldrich, Dean, Florida International University College of Business and Dr. Tomislav Mandakovic, Dean, Barry University Andreas School of Business

140 Mobile medicine: While local stakeholders explore telemedicine, state legislators weigh its potential benefits

121 Interview: Ernie Diaz, Florida Regional President, TD Bank

122 Interview: Jorge Gonzalez, President & CEO, City National Bank

123 Under management: As more wealth enters South Florida, new opportunities arise in the market’s thriving wealth management industry

142 Interview: Steven Altschuler, CEO, UHealth

143 Education:

153 Retail:

154 Shopping haven: More investors eye retail opportunities in MiamiDade as the county continues to develop a more complete “live, work, play” experience

155 Viewpoint: Carol Brooks, President & Co-Founder, CREC

144 Exceeding standards: Miami is preparing students for the global workplace

145 Viewpoint: Alberto Carvalho, Superintendent, Miami-Dade County Public Schools

147 Viewpoint: Juha & Johanna Mikkola, Co-Founders, Wyncode Academy

124 Interview: Joe Atkinson, South Florida Region President, Wells Fargo

125 Technology & Innovation:

126 Maturing ecosystem: High-profile events and increased venture capital are among the makers of growth in Miami-Dade’s tech hub

127 Viewpoint: Xavier Gonzalez, CEO, eMerge Americas

129 Viewpoint: Nabyl Charania, CoFounder & CEO, Rokk3r Labs

133 Health: 134 Care for the future: Miami-Dade’s health sector continues on a growth trajectory even as it grapples with changing regulations

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Contents:

Miami 2016 ISBN 978-0-692-64476-8 Executive Director: Abby Melone Chief Financial Officer: Albert E. Lindenberg Creative Director: Nuno Caldeira Senior Writers: Eric Franqui Sarah Watson Writers: Christianna Bonin Carmella Guiol Irina Gusin Ali Jessani Cynthia Oka Kavita Ramakrishnan Pablo Ruiz Editorial Assistant and Senior Copy Editor:

157 Viewpoint: Oscar Feldenkreis, CEO, Perry International 158 Viewpoint: Beverly Raphael, President & Co-Founder, RCC Associates

159 Tourism:

171 Viewpoint: Eric Woolworth, President of Business Operations, The HEAT Group

Keren Moros

173 Viewpoint: David P. Samson, President, Miami Marlins

Stephen Kane

175 Viewpoint: Adam Barrett, Director & IMG Executive Vice President, Miami Open

Project Coordinators: Nisha G. Cunningham Steven Liu Photographer: Luis Arturo Mora / LAMphotos Invest: Miami is published once a year by Capital Analytics Associates, LLC.

177 Interview: Chris Bosh, Player, The HEAT Group

For all editorial and advertising questions, please e-mail: contact@capitalaa.com

160 Open for visitors: Miami combines the traditional and innovative, the local and global, to open new frontiers

178 Moving to Miami: Beckham’s journey to bring MLS to South Florida

To order a copy of Invest: Miami 2016, please e-mail:

164 Viewpoint: Robert Hill, General Manager, InterContinental Miami

180 Interview: Tom Garfinkel, President & CEO, Miami Dolphins

ted in any form by any means, without the express

165 Interview: Arnold Donald, President & CEO, Carnival Corporation 166 Beyond beaches: An increasing variety of attractions are diversifying Miami-Dade’s tourism industry as well as its contributing to its cultural offerings

168 Viewpoint: William D. Talbert III, President & CEO, Greater Miami Convention & Visitors Bureau

169 Sports:

170 Scoring goals: Successful major league teams and outdoor sports continue to impact the local economy

12 | Invest: Miami 2016 | CONTENTS

contact@capitalaa.com All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitwritten consent of the publisher, Capital Analytics Associates, LLC. Whilst every effort has been made to ensure the ac-

181 Legal:

182 Connecting markets: MiamiDade’s steady economic growth and international appeal have resulted in more diverse opportunities for its legal industry

190 Interview: Cesar Alvarez, Senior Chairman, Greenberg Traurig, LLP

191 Directory:

192 Hotels

193 Consulates

194 Photo credits Thank you, Miami

curacy of the information contained in this book, the authors and publisher accept no responsibility for any errors it may contain, or for any loss, financial or otherwise, sustained by any person using this publication.

Capital Analytics Associates, LLC accepts no responsibility for the return of unsolicited manuscripts and/or photographs, and assumes no liability for products and services advertised herein. Capital Analytics Associates, LLC reserves the right to edit, rewrite, or refuse material.

Economy: Featuring insights from Rick Scott, Governor, State of Florida, Carlos A. Gimenez, Mayor, Miami-Dade County, Larry Williams, President & CEO, The Beacon Council, Bill Johnson, Secretary of Commerce, State of Florida and President & CEO, Enterprise Florida, Marcelo Giusto, Consul-General of Argentina, Louise Leger, Consul-General of Canada and Ozgur Altan, Consul-General of Turkey, shared exclusively with Invest: Miami

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Miami-Dade in numbers: Total Non-Agricultural Employment (2015):

Foreign-Born Residents (2014):

3.4% 3.3%

Construction

12.1%

GOODS PRODUCING

Manufacturing

Total Government

6.7%

MIAMI-DADE

51.5% FLORIDA

19.6%

Wholesale Trade

4.6% Other Services

U.S.A.

13.1%

13.4%

12.4%

Retail Trade

Leisure & Hospitality

Source: U.S. Census Bureau

1,135,900

Unemployment Rate (2015):

1.7%

4%

Information

15.3%

3%

7.0%

Education & Health Services

5.00%

SERVICE PROVIDING

5%

5.00%

Transportation, Ware housing & Utilities

6%

5.90%

6.2%

TOTAL

Florida

United States

Financial Activities 2%

6.6% 6.5%

Administrative & Waste Service

Professional & Technical Services

0.9%

1%

Management of Companies & Enterprises 0% Miami-Dade

Source: Florida Department of Economic Opportunity

Source: U.S. Census Bureau

Miami-Dade International Trade Through Q2 2015 (Millions of $ U.S.) Total trade

2015 YTD Imports

Exports

2015 YTD

2014 YTD

17,692.3

22,241.2

39,933.5

42,894.2

South America

4,959.4

11,984.9

16,944.3

19,162.1

Central America and Caribbean

3,988.8

5,297.7

9,264.6

9,963.1

Europe

3,318.8

2,828.0

6,146.8

5,252.3

Asia - Other

4,468.4

758.6

5,254.0

6,389.6

Asia Near East

47.9

676.7

724.7

716.0

North America

558.2

440.7

998.9

914.6

Asia - South

190.4

87.2

277.6

234.4

76.4

102.3

178.8

151.4

105.9

37.9

143.8

110.5

World Total

Africa Australia and Oceania

Source: U.S. Cencus Bureau, USATrade Online, Dept. of Research & Economic Analysis

14 | Invest: Miami 2016 | ECONOMY

Miami-Dade County: N

MIAMI-DADE’S 34 MUNICIPALITIES

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ECONOMY INTERVIEW

State support How state initiatives are bringing new jobs and diverse investments to Miami-Dade

Rick Scott Governor – State of Florida In your State of the State address, you announced an additional $250 million of incentives through the Florida Enterprise Fund. How is this initiative creating jobs in Florida and impacting Miami-Dade?

The purpose of the Florida Enterprise Fund is to recruit companies to move to or expand in Florida. So far, we’ve been able to add 1.25 million jobs in the first five years of the initiative, including 18,000 new jobs in MiamiDade from November 2014 to November 2015, bringing the county unemployment rate to 5.8 percent. We are ahead of economically significant states in job growth and have become the third-fastest growing job market in the country.

My administration’s job-growth goals include diversifying our economy by attracting more manufacturing and high-tech jobs through reducing taxes and making it easier to do business. For example, there is no sales tax for a three-year period when a manufacturer buys equipment, and we are working to make this permanent. In addition, we are working on removing the sales tax on commercial leases and the income tax for manufacturers and retailers.

We are also focusing on funding higher education to ensure that it caters to the jobs of the future. Florida International University and Miami Dade College are currently doing a great job teaching technology and innovation, and even Miami-Dade’s public school system is educating for the future by creating specialized business and technology programs.

What changes are being made to attract foreigners to Florida?

Florida is the most important state in the country because of its unique melting pot, which includes one of the world’s most vibrant and international cities, Miami.

To continue attracting international residents, we need to make them feel welcome. This is why I’ve focused on keeping our crime rate low by implementing standards

to hire the best sheriffs and police chiefs. We are also making communication as smooth as possible so law enforcement is more coordinated and implemented more effectively. We’ve reached a 44-year low in the state’s crime rate, which dropped 4.9 percent between 2013 and 2014.

Miami-Dade has seen an increase in foreign investment.

How is Miami-Dade making itself more attractive for foreign direct investment?

Completing the PortMiami Deep Dredge project in 2015 and the Port Tunnel in 2014 were significant shows of support to invite global trade and business. Miami is the first port on the U.S. Eastern Seaboard prepared for the Panama Canal expansion. Accommodating more ships means more investment in PortMiami, opening more routes and increasing commerce and the transfer of goods. www.capitalanalyticsassociates.com

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ECONOMY INTERVIEW

World-class city How the public sector is strategizing to make Miami a competitive global metropolis

Carlos A. Gimenez Mayor – Miami-Dade County What have been the most significant highlights in Miami-Dade County’s development from 2015?

Every day, we continue to invest in making Miami-Dade County a world-class community for our residents to live, work and play. For the first time, Miami-Dade has a balanced five-year forecast. We continue to lead the state in private-sector job creation. We have made significant investments in our infrastructure, which have yielded improved mobility and sustainability.

We have invested in equipping our police department with body cams and hiring more officers to create a safer community. We have also invested in our parks system and cultural offerings.

As Miami-Dade continues to grow, how have the strategies for urban planning evolved?

The unique challenge to Miami-Dade County when it comes to planning is how to retrofit a relatively lowdensity sprawled environment to one that provides for urban and cultural centers and to reduce the reliance on the automobile. The county is tackling this challenge in various ways, primarily by shifting land-use policies to encourage intensification around existing public transportation corridors. We are increasing residential densities in these areas, in conjunction with mixing of commercial uses and relief of old and outdated zoning controls. This promotes the development of mediumto higher-density communities, which not only provide for urban living opportunities, but also for cultural and inclusive communities that promote economic opportunities, a mixture of housing and a sense of place, all while utilizing existing infrastructure.

Workforce development is continually cited as a number-one problem for this county. How does the reality differ from the misperception?

Miami-Dade County has a multi-dimensional work-

force, supported by one of the best public school systems and some of the most esteemed educational institutions in the country. Our workforce is uniquely multilingual and multicultural and represents numerous nationalities. Miami-Dade’s recognition as the Gateway to the Americas has further enhanced our position as a global marketplace where professional local talent is readily available to compete and expand businesses worldwide, especially with Latin America and the Caribbean. Under our “One Community One Goal” economic strategy, developed by The Beacon Council, businesses, governments and educational partners have united and conceptualized an approach for developing and retaining talent while building economic opportunities to ensure our current and future growth in industries across a broad spectrum. www.capitalanalyticsassociates.com

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High profile: With the recent U.S. rapprochement with Cuba, a presidential election featuring multiple frontrunners with ties to the county, and robust FDI inflows, all eyes are on Miami-Dade Overall, Miami-Dade’s economy saw positive growth trends in 2015. Global factors like the strong U.S. dollar and the economic slowdowns in Europe and Latin America have had mixed short-term effects on Miami-Dade’s trade and tourism sectors. Economic performance also reflects mixed outcomes, especially in the bellwether construction sector, where growth has started to wane.

Employment mirrored this positive trajectory in economic performance, with most sectors seeing employment growth. Miami-Dade’s profile in U.S. politics was elevated as two homegrown politicians went through the presidential nomination process, while rapprochement with Cuba and the expansion of Chinese investment caused political and economic ripples. Finally, the state and county governments inaugurated or expanded initiatives that foster economic growth, while Miami-Dade continued its evolution from a mainly suburban to a mainly urban county.

Global factors Numerous national and global events affected Miami-Dade’s economy. The more noteworthy ones include the anticipated rise in overall interest rates, the strong U.S. dollar, the economic slowdowns in Europe and Bra22 | Invest: Miami 2016 | ECONOMY

zil and Miami-Dade’s continuing favorable tax regime.

These major macroeconomic factors impacted local economic development in the trade and tourism sectors.

The Federal Reserve raised short-term interest rates in December 2015, making dollar-denominated assets more attractive to global investors and strengthening the U.S. dollar. The last time the Fed raised interest rates was 2008, ushering almost 10 years of historically low rates that made credit exceptionally cheap. As the U.S. economy continued improving from the 2008 crisis, market players predicted a rise in interest rates.

The Fed announced the hike would be between 0.25 percent and 0.5 percent, with a rise of approximately 1 percent per year for three years if the economy continues to expand.

Other factors also helped a stronger dollar in 2015.

Major European and Asian economies have either not grown or slowed in 2015, lessening demand for the euro and major Asian currencies and creating greater demand for dollars due to the relative strength of the American economy. The stronger dollar, in turn, has had repercussions on trade and tourism in MiamiDade.

The stronger dollar had mixed effects on international

ECONOMY OVERVIEW

trade in Miami-Dade. According to a report by the Washington Economics Group, international trade in the county has had sluggish growth since 2013 due to a weak global economy. However, in 2015 there was a marked increase in total trade due to two factors: a lower total trade base calculated for 2014 and continuing dollar strength, which increased merchandise imports.

Export growth, however, remained muted due to the deep recession in Brazil, South Florida’s largest trading partner. A stronger dollar is also responsible for this tempered export growth because it makes Miami-Dade exports more expensive to importers in Latin America and farther.

The stronger dollar also had mixed effects on tourism. According to the Miami Herald, tourism promoters in Florida feared that a strong dollar would discourage European and other tourists from visiting the state. Considering that 3.8 million Europeans pumped nearly $3 billion into the state economy in 2013, changes in international tourist flows could have adversely affected Miami-Dade. However, mitigating circumstances likely countervailed such changes.

Rolando Aedo, chief marketing officer for the Greater Miami Convention and Visitors Bureau, told the Miami Herald that, even if European economies did not grow and the dollar remained strong, the improving U.S. economy would bring more domestic tourists.

Miami-Dade tax rates remained favorable in 2015.

For high-net-worth individuals, especially from New York City, Miami-Dade has a compelling allure—residents pay no estate, personal income or capital gains taxes to the state. Florida Governor Rick Scott, once a venture capitalist himself, strenuously resists taxing incomes derived from private equity, venture and hedge funds. Such tax advantages are attractive to wealthy New York City residents, where a new mayoral administration is seeking to increase tax burdens on the well-off.

Economic performance Miami-Dade’s real estate and construction sectors grew throughout 2015 as residential and commercial real estate steadily expanded and residential construction growth spiked. The residential and commercial real estate sectors grew in 2015 though not as robustly as in previous years. According to a county economic report, in the first quarter of 2015, the sales volume performance and rapid price appreciation that defined Miami-Dade’s residential housing market began to moderate, as the rate of single-family home sales grew 10.2 percent year-over-year. This was a marked decrease of the annual 26-percent average prevalent from

Larry K. Williams President & CEO, The Beacon Council

The economy in Miami-Dade is deeper and broader than people know. It includes a rich history in industries such as aviation, banking and trade and logistics. Today, we continue to see growth in these traditional sectors, but other knowledge-based areas, such as technology, life sciences and health care are also growing rapidly.

Miami is a natural for growing an innovation ecosystem. Many people may not realize this, but Miami is a “college town,” with over 250,000 students and two research universities. With leading organizations like eMerge Americas, Endeavor and the Knight Foundation investing in entrepreneurship activity, there’s a growing movement and an energy that is exciting and inspiring.

We also see great potential with the designation of Miami International Airport (MIA) as one of only two approved pharmaceutical hubs in the world.

To ensure talent development in these critical industries, we have the Academic Leaders Council, an unprecedented collaboration between the presidents of major higher education institutions and the superintendent of schools. They are working directly with business leaders to ensure academic curriculum meets the needs of our businesses.

One result of this is the Talent Development Network, a platform to connect employers with students looking for internships.

Global changes impact Miami’s economy as much or more than any other U.S. community. Miami-Dade continues to be a gateway for investment to the U.S. and the region. Our world-class infrastructure is getting even better, with MIA breaking records in passenger and cargo transported, and PortMiami ready to welcome mega-size cargo ships from the expanded Panama Canal. Over 50 percent of all companies coming to Miami are international. For these reasons, marketing Miami-Dade as a world-class business destination is The Beacon Council’s top priority. We continue to focus on countries in Europe and in Latin America, but we are also gaining much more interest from countries in the Middle East and Asia. www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

2009 to 2013. However, average residential prices continued to increase, with the median price of single-family homes 8 percent higher compared to the first quarter of 2014, reaching $247,500 in the first quarter of 2015.

The median single-family sales price has increased by 63 percent since a low point in the first quarter of 2011.

The same report also showed improvements for the commercial real estate sector. Office vacancy rates throughout the market demonstrated reliable gains, at 11.6 percent in the first quarter of 2015. This compared favorably to the 15 percent vacancy rates of 2010 to 2011. Despite this, the rates seen in early 2015 were still almost twice the rates that prevailed pre-crisis, at just over 6 percent in 2006. In the industrial market, warehouse/manufacturing/flex space continued its robust growth over the four quarters before the first quarter of 2015, with vacancy rates falling to 5.3 percent, equal to the lowest rate seen in the third quarter of 2007.

Construction grew robustly; the same report states that vigorous demand for multi-family rental buildings and condos is causing strong expansion in residential construction. After seasonal adjustment, residential construction permits have been steadily increasing since the first quarter of 2009, with a surge of nearly 4,100 units permitted in the first quarter of 2015. This is well beyond recent growth trends, matching the best quarterly performance since 2006. Multi-family units dominate this spike in construction growth, with most of it concentrated along the coast.

Increased employment Employment trends in 2015 were positive, as most sectors saw employment growth with continued expansion outpacing average national trends in recent years.

However, the local workforce did face challenges concerning the high cost of living for the average worker.

According to the 2014 American Community Survey from the U.S. Census Bureau, from 2011 to 2014, employment growth rates have exceeded national growth rates, with the most recent 2013 to 2014 rate of 4.2 percent much higher than the national 2 percent.

The Miami-Dade labor force has also experienced relatively more expansion, at 2.1 percent versus the national 0.7-percent growth rate between 2013 and 2014.

Except for the government, all major job sectors saw employment growth in 2015. According to a county labor report released in the second quarter of 2015, the information and financial services sectors had the most robust payroll employment increases, at 6 percent and 5.6 percent, respectively, between the second quarter of 2014 and second quarter of 2015. During this same period, other important sectors saw steady growth, with professional and business services at 2.4 percent, leisure and hospitality at 3.5 percent, construction at 2.1 percent and wholesale trade at 2.9 percent. Government was the only sector that had shrinking payroll employment, at -3.3 percent during the same period.

A challenge to workforce development was a high cost of living. A 2012 study from the Center for Housing Policy found Miami-Dade to be the most unaffordable large metropolitan area for the average worker, ranking at the bottom for both housing and transportation costs combined; moderate-income homeowners spent 75 percent of their income on these costs. Such a high cost of living presents a problem for the long-term economic health of the local workforce.

National spotlight With 2016 being a presidential election year, and with two major contenders for the Republican Party nomination having strong local ties to Miami-Dade, the area’s profile rose more in U.S. national politics in 2015

Bill Johnson Secretary of Commerce – State of Florida President & CEO – Enterprise Florida Today, Florida leads the nation in job creation. Our state has created more than 1 million new private sector jobs since 2010. Importantly, Florida is making great strides in diversifying its economy. In addition to the state’s traditional industries—tourism, agriculture, real estate—we continue to attract new 21st century jobs in industries such as aviation/aerospace, life sciences, financial services, information technology and trade and logistics. The future is bright in the Sunshine State.

24 | Invest: Miami 2016 | ECONOMY

ECONOMY OVERVIEW

than in past years. The U.S.-Cuba rapprochement has also put Miami-Dade concerns on the national spotlight.

At the time of printing, U.S. Senator for Florida Marco Rubio is among those contending for the 2016 Republican Party presidential nomination, while former Florida Governor Jeb Bush, whose primary residence is in Coral Gables, ran until late February 2016. Rubio, whose primary residence is in West Miami, placed third among all Republican primary nominees, according to polls in early February 2016. Both candidates announced their presidency bids at Miami Dade College (MDC) campuses. At the top of the same polls is New Hampshire primary winner Donald Trump, who has a connection to South Florida through his investments in golf resorts and hotels in Palm Beach and Miami-Dade counties, among other real estate holdings.

During the presidential primary season, eyes are on the county, as MDC is slated to host a Democratic candidate debate in March 2016, while the University of Miami is scheduled to host the Republican candidate debate the same month.

Rapprochement with Cuba Almost 60 years after relations between the two nations froze during the Cold War, the U.S.-Cuba rapprochement has deeply affected Miami-Dade. The response of the county’s Cuban-American community to the historic rapprochement has spanned the political spectrum. The immediate response from the Cuban-American community in Miami-Dade was shock after President Barack Obama announced the normalization of diplomatic relations with Cuba in December 2014. Opponents to rapprochement with the island’s Communist regime assailed the change in policy, calling it a betrayal by the president, while supporters of diplomatic normalization felt the Cold War policy of diplomatic isolation that commenced in 1961 had long ceased to be effective. Despite these polarized responses, the community’s overall reaction was tempered, especially compared to the protests that rocked the community during the Elian Gonzalez affair in 2000.

Rapprochement also affected travel; the Miami Herald reported that in mid-December 2015, the U.S. and Cuba agreed to re-establish regularly scheduled commercial flights in 2016. Such re-establishment represents the largest commercial deal struck so far by the two nations after diplomatic normalization. U.S. aviation executives and officials predict that Cuba is likely to admit more than a dozen flights from the U.S. every day. Diplomatic normalization has also affected ferry services, with at

At 4.2 percent, Miami-Dade’s employment growth rate exceeds the 2.0 percent national average.

least four companies notified in mid-2015 by U.S. federal authorities that they were approved to extend ferry services from Florida to Cuba. Cruise lines were also onboard with diplomatic normalization, with Carnival Corporation and MSC Cruises announcing plans to sail to the island. Carnival is waiting on Cuban approval to sail the Adonia, a 710-passenger cruise liner from its new fathom brand, from PortMiami to Cuban ports, including Havana, by May 2016. MSC Cruises started offering cruises to Cuba on the MSC Opera in December 2015.

According to the Miami Herald, remittances from the U.S. to Cuba are being used to invest in micro-businesses.

Western Union believes this phenomenon makes Cuba unlike other nations receiving remittances. Emilio Morales, president of the Havana Consulting Group, estimates that remittances grew from $3.13 billion in 2014 to $3.99 billion in 2015, with 62 percent of Cuban households receiving U.S. remittances. As part of the rapprochement, Obama increased the amount of nonfamily remittances from $500 per annual quarter to $2,000 per annual quarter.

Looking eastward As the second-largest economy in the world, China is a pivotal market from which foreign direct investment originates. Because of this, Miami-Dade has attempted to woo Chinese investors. Key developments and investments in 2015 from Chinese players have spanned the market, from changes in ordinances that www.capitalanalyticsassociates.com

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ECONOMY OVERVIEW

major Chinese cities Shanghai, Hangzhou and Guangzhou as well as Taiwan. Mission members will experience networking opportunities, one-on-one business matchmaking briefings, presentations and meetings with Chinese businesses.

A crucial tool in Miami-Dade’s efforts to attract Chinese investors is the EB-5 visa. The program allows foreigners to qualify for green cards for themselves and their immediate relatives if they invest at least $500,000 in the U.S. and create at least 10 permanent jobs. On December 15, 2015, the U.S. Congress extended the program, with no changes, to September 30, 2016.

Possible changes to the EB-5 visa program have therefore been postponed for roughly another year. The scrapped changes include capping visas at 2,000 annually to projects in rural regions and 2,000 in poor urban areas, likely leaving areas like Miami-Dade out in the cold. One high-profile Miami-Dade project dependent on the program is CCCC Miami Towers, the first EB-5 visa project in South Florida to cater to Chinese investors.

New developments and structural changes that reduce traffic are revitalizing Miami’s downtown area.

may usher more investment to new market entrants.

In October 2015, City of Miami commissioners supported the passage of a new ordinance that permitted Hong Kong-based Swire Properties to build on Brickell Key’s last vacant parcel by changing its land-use status from commercial to residential. A planned 668-unit residential property can now be developed on the parcel. In addition, in June 2015, Swire announced that potential tenants were in final talks for 90 percent of the retail space at its Brickell City Centre project, a $1.05-billion mixed-use development. At 5.4 million square feet, the development is under construction in Downtown Miami’s Brickell Avenue financial district and will open in fall 2016.

Another major player from China also expanded its presence in Miami-Dade. American Da Tang Realty opened in March 2015 as an outgrowth of American Da Tang Group, a concierge service for high-net-worth Chinese individuals who want to come to the U.S. The new venture will concentrate on raising Miami-Dade’s profile in China and helping Chinese buyers attracted to the county’s clean air, clean water and glamour invest in property. In December 2014, an American Da Tang Group affiliate bought a 2.39-acre site at South Miami Avenue in Brickell for $74.8 million. American Da Tang Realty will manage the site’s future contracts.

Miami-Dade is also attracting Chinese investors through trade missions. Though there were no trade missions to China between 2008 and 2015, the county is sponsoring one in April 2016. The tour will visit 26 | Invest: Miami 2016 | ECONOMY

Public sector initiatives The state and county governments, along with The Beacon Council, inaugurated new or broadened existing initiatives in 2015 to foster economic development in Miami-Dade. The county also adopted a budget for fiscal year 2015-2016.

The Florida government supports Miami-Dade’s economy by creating more jobs through various entities. One of these is the public-private partnership Enterprise Florida, the state’s principal organization charged with helping Florida’s economic development, international trade and statewide business marketing.

Its economic development process utilizes financial and other incentives to attract potential employers to operate in various Florida regions and create jobs.

For fiscal year 2014-2015, Enterprise Florida helped establish numerous competitive projects, many of them undertaken with partners in South Florida.

Within Miami-Dade, Enterprise Florida was involved in 29 competitive projects throughout the fiscal year, with 1,927 jobs created and new capital investments totaling $304 million.

The county government also established and expanded initiatives in 2014 and 2015 to foster economic development. In conjunction with the Neighbors and Neighbors Association and CareerSource South Florida, the county established Employ Miami-Dade, a program that alleviates unemployment and poverty by furnishing employment opportunities and job training in the construction industry to people in areas with high unemployment and crime rates.

ECONOMY OVERVIEW

The county also contributed to economic growth by granting certifications and contracts through its Small Business Enterprise program and the Federal Disadvantaged Business Enterprise Program while encouraging a more diverse and competitive vendor pool.

More than $106 million, about 9 percent, of the county’s architectural, engineering and goods and services contracts were awarded to these small businesses through the program goals and set-asides.

As the county’s official economic development partnership, The Beacon Council continued to help the economy. Its accomplishments in fiscal year 2014-2015 include bringing $412 million in new capital investment to the county, as well as creating 1,936 jobs and helping 44 companies with retention, relocation or expansion. The sector that benefitted most from the Council’s help was the technology industry, accounting for around 20 percent of companies that were assisted with relocation. Half the companies the Council helped relocate in the past year were based in Western Europe and Latin America.

The county budget for fiscal year 2015-2016 was adopted in December 2015. Mayor Carlos Gimenez highlighted how the economy was robust enough in 2015 to restore services that had been cut in leaner years. The 2015-2016 budget will fund the hiring of more police officers and will enhance capital investments in parks. In addition, over $2 billion will fund future transit corridor development over the next 30 years. Finally, more than $500 million in capital and operating expenditures will help prepare for climate change and extreme weather, strengthen the economy, expand renewables and energy efficiency and re-

new and strengthen infrastructure. Despite this funding, the county tax rate remained flat in 2015.

Urban development Miami-Dade has grown tremendously in population and density, fueling its transformation from a suburban to an urban county, while continuing to be as diverse as ever.

However, growing pains, especially with transportation infrastructure and congestion, have become more evident, and the county created a new department to address these ongoing issues.

Robust population growth is the common denominator of the issues defining Miami-Dade’s urban development.

According to census figures, the population increased 16.3 percent from 1990 to 2000 and an additional 10.8 percent from 2000 to 2010. Sluggish economic growth contributed to a smaller increase of 6.3 percent from 2010 to 2015. High population density, a sign of intensifying urban development, has also become greater, with persons per square mile in the county increasing from 1,316 in 2010 to 1,399 in 2015.

As the economy grows, population expansion is expected to increase between 2015 and 2020.

Population diversity has also increased. According to the 2014 American Community Survey from the U.S. Census Bureau, Hispanics grew from 62.5 percent of the population in 1999 to 66.2 percent in 2014, making the Hispanic population 1.76 million in 2014. During the same period, the foreign-born population also grew by 11 percent from a base of about 1.2 million in 2009.

This fast rate of population growth and density has predictably strained the local transportation infrastructure though Miami-Dade made progress in

High population density, a sign of intensifying urban development, has also become greater.

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ECONOMY OVERVIEW

large projects to alleviate congestion. For example, the toll-free PortMiami Tunnel opened in mid-2014 and links PortMiami with Interstates 395 and 95 and the MacArthur Causeway, improving access to and from PortMiami for more than 14,000 vehicles daily. This relieves congested streets in Downtown Miami. In another effort to decrease congestion in local streets, the Miami-Dade Expressway Authority (MDX) introduced the MDX Multi-Axle Frequency Discount in December 2014. The policy incentivizes truckers who frequently travel to and from the port to use expressways instead of local streets.

To better and more efficiently address transportation infrastructure issues, Miami-Dade created the Department of Transportation and Public Works in mid-2015, and Alice N. Bravo was appointed its director. The department unites the functions of county highway planning, construction, maintenance, traffic operations and others.

Looking ahead Positive growth trends defined Miami-Dade’s economy in 2015. Barring a large exogenous shock from a global financial crisis, the medium-term outlook for the county’s economy remains optimistic. Global factors like the strong dollar and the economic slowdowns in Europe and

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Latin America caused mixed short-term effects on Miami-Dade’s trade and tourism sectors but U.S. economic expansion picked up the slack. Economic performance is likely to remain robust (especially in the bellwether real estate and construction sectors), as Miami-Dade becomes a safe haven for greater amounts of capital leaving instability in other parts of the world. Employment is likely to mirror this positive trajectory in economic performance, like in 2015.

Miami-Dade’s profile in U.S. politics will continue to be high due to its large Hispanic population and its important role in Florida’s swing-state status in the Electoral College, while rapprochement with Cuba and the expansion of Chinese investment will become more influential to Miami-Dade’s economic development. Florida will continue to foster competitive projects under Enterprise Florida while Miami-Dade will introduce or expand initiatives that fight entrenched poverty and unemployment and provide small-to-medium enterprises with more opportunities. Finally, Miami-Dade County will progress in its evolution from a mainly suburban to a mainly urban county as its population and density increases, addressing this expansion with enhanced transportation infrastructure.

ECONOMY ANALYSIS

Ready, set, grow: Miami-Dade is finding a place in the international art market The global art and antiques market is valued at 51 billion euros, according to The European Fine Art Foundation’s Art Market Report 2015, and though Miami is ninth among American cities in terms of fine art turnover, the tempo is picking up in the Magic City, and Miami-Dade County’s cultural capital is on the rise.

Since the opening of Art Basel Miami Beach in 2002, international art dealers and collectors make a pilgrimage each December to one of the most celebrated events on the art circuit. The arrival of Art Basel Miami Beach, which greeted 77,000 visitors in 2015, officially welcomed contemporary art collectors while underscoring Miami as a cosmopolitan city capable of drawing global interest. Since then, a crop of younger fairs have entered the fold. As of 2015, over 20 other fairs, such as Art Miami, Pulse Miami Beach, NADA Art Fair Miami Beach and Untitled Art Fair were operating in the area. These new players, along with Art Basel Miami Beach, are collectively called Miami Art Week.

By no means is this proliferation of art fairs a coincidence. Miami is home to at least three of the world’s top art collectors: Rosa and Carlos de la Cruz, who have contributed to the Museum of Contemporary Art, North Miami (MOCA), opened the 30,000-square-foot Cruz Contemporary Art Space in 2009; Martin Z. Margulies, whose 4,000-piece collection has been displayed in the massive retro-fitted Warehouse since 1999 in the Wynwood Art District; and Mera and Donald Rubell, whose museum in Wynwood, open since 1993, boasts 28 galleries, a sculpture garden and a research library. These families have been amassing their contemporary art collections since the 1960s and 1970s, and their collections were already an asset to Miami when Art Basel considered expanding into the Americas. These prolific collectors and a number of others have garnered increased attention for Miami by creating their own privately funded (and nonprofit tax-exempt) institutions rather than leaving an endowment to an existing museum, a move known as the “Miami Model.”

One compelling example of Miami’s nascent philanthropic bend is Jorge M. Perez’s $40-million contribution to the former Miami Art Museum, now known as the Perez Art Museum Miami (PAMM). Since

Formerly industrial Wynwood has gained international attention for its popular galleries and colorful street art.

opening, the museum has seen ambitious projects, like an impressive retrospective of Brazilian artist Beatriz Milhazes in September 2014, and the hiring of Franklin Sirman in October 2015, formerly the department head and curator of contemporary art at the Los Angeles County Museum of Art. Sirman has conveyed his focus on embracing the community’s heritage by featuring artists from the Caribbean, South America and Latin America rather than compete with institutions that might have a more exhaustive modern or contemporary collection.

This attitude embraces the unique fact that Miami is home to a huge Latin American art community.

Miami’s proximity and ties to these countries is rife with opportunity. The Nader Latin American Art Museum will open in Downtown Miami in 2018, exhibiting the collection of Miami-based dealer Gary Nader. Additionally, with the re-establishment of diplomatic relations between the U.S. and Cuba, Miami’s geographical and cultural connection will likely prove pivotal in the education and taste creating of new art collectors.

Miami’s burgeoning neighborhoods are sure to feel this enthusiasm. The formerly industrial Wynwood neighborhood is home to Wynwood Walls, a street art exhibit of regularly changing murals, which are the focus of a district recently hailed as a fashionable foothold for artists and galleries. Due to an inevitable increase in rent prices—an average of $60 per square foot as of 2015, triple that of 2011 prices according to the New York Times— gallerists have started looking elsewhere. Little Haiti, www.capitalanalyticsassociates.com

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marked as the next “it” neighborhood, was originally a farming community and is now predominantly populated

by Haitian families. As restaurants, vegan cafes and vinyl shops pop up on its colorful streets, both established and trendy galleries, like Emerson Dorsch, Yeelen Gallery and Gallery Diet, have moved to the neighborhood and are buying spaces to avoid rent hikes, portending what is to come. It is no surprise that home values have increased by almost 25 percent in Little Haiti in 2015.

Outside the visual arts, the city is vibrating with activity. The well-attended Miami Book Fair International, featuring eight days of literary discussions, panels and other events, just celebrated its 32nd year in November 2015. The Adrienne Arsht Center for the Performing Arts, named after the business leader and philanthropist who donated $30 million for its development, opened in 2006 and features a black-box theater, public art and a concert hall. O, Miami is a Knight Foundationfunded organization whose largest event, occurring annually since 2011, is a month-long poetry festival with the goal of engaging Miami citizens through poetry readings and lectures. In the next few years, Miami will continue to experience cultural growth with the April 2016 opening of the Faena Forum, a

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massive 50,000-square-foot exhibit space, the fall 2016 reopening of the Bass Museum of Art in Miami Beach after renovations and the opening of the Institute of Contemporary Art’s new building in December 2016, which will coincide with Miami Art Week.

Despite developments over the last decade, Miami has much room for growth in civic support and cultural expansion as philanthropic activity is not as high as in other major cities. Outside of relying on long-standing trustees of the city’s institutions, it is imperative for Miami to entice a younger generation to get involved outside of the glitz and glamour of the December fairs.

Though private museums dedicated to influential contemporary collections create an alluring draw and ease the burden of public funding, an investment into the existing city and county museums is necessary to maintain Miami’s relevance as a cultural capital.

With such well-rounded attention on contemporary and Latin American art, the city has an opportunity to expand visual arts programs focused on other areas of art (and the market). Across its evolving reach into cultural programming, Miami is an enviable environment of innovation, showing its mettle as an international city of prospering creativity.

ECONOMY ANALYSIS

Active citizenry: Greater civic engagement is a mark of Miami-Dade’s growing sophistication Civic engagement transforms communities through participation in social change and economic opportunity, involving a roster of citizens, foundations, businesses and nonprofits. The most prominent civic engagement foundation in Miami-Dade County is the Knight Foundation, which supports transformational ideas by promoting quality journalism, advancing media innovation, engaging communities and fostering the arts. The foundation works in 26 U.S. communities; Miami is one of eight with a resident program director and also is the site of its headquarters. An example of its support of Miami is its Knight Cities Challenge, held for the second time in 2015; last year’s winner, floating laboratory Miami Science Barge, was granted $300,000.

The Miami Foundation is also a major player, connecting civic leadership for community change. Its fundraising event Give Miami Day 2015, which raised $7.1 million for more than 600 local nonprofits, has increased in fundraising feats by over a million dollars each year since its start in 2012. President and CEO Javier Soto tells Invest: Miami, “Miami is at an inflection point with regard to connection and attachment. Miami used to be a place where people came with the expectation that eventually they were going someplace else—either because this was a transient stop or because they were waiting for a change in government in their home country—or be buried somewhere else. That is changing today. There is a growing attachment to this community by people who were either born here or who have come here from outside, but who have no intention of leaving. That kind of attachment leads to greater civic engagement.”

From this civic engagement in Miami-Dade was born social entrepreneurship, the use of business principles to achieve social change. Approaches to social entrepreneurship vary widely as 60 percent of all social enterprises are less than eight years old, according to 34 | Invest: Miami 2016 | ECONOMY

Social organizations like Camillus House provide services and job opportunities for struggling populations.

Harvard Business Review. The tech sector, for example, has benefited business and community engagement.

Programs like Girls Who Code, sponsored by the Knight Foundation for $500,000 through 2018, engage the community (in this case, advancing girls in a femaledeficient field), provide long-term benefits to people and the economy by creating a stronger and more equitable workforce.

In addition, several private and public social enterprise initiatives have taken hold in Miami-Dade, empowering people and organizations to give back to the community.

A county grant of $450,000 funded EcoTech Visions in 2015, an incubator for 20 green businesses helping early-stage companies obtain capital and manage manufacturing. EcoTech offers co-working space, workshops and mentoring to companies like sustainable cutlery maker Earthware, natural sunburn soother and mosquito repellent producer Culito de Rana and electric motorcycle company Aeolus. Other social companies include Urban.Us, which invests in startups that improve city life, focusing on issues like water and energy efficiency and economic development, and HandUp, a website that connects donors to partner organizations to help the homeless. Meanwhile, the newly formed Community Justice Project is a Miami-based group of lawyers supporting racial and economic justice.

As the field continues to evolve, civic engagement and

ECONOMY ANALYSIS

social entrepreneurship in Miami-Dade County will continue to be positively influenced by millennials, who show interest in their communities by volunteering and participating in nonprofit young professional groups and leadership development.

Another organization serving the less fortunate is Camillus House, which offers numerous programs and housing for those struggling with addictions, PTSD, homelessness, mental illnesses and more. At its 48bed Beckham Hall facility, homeless people receive vocational and life skills education, and its Project Phoenix facility, which opened in January 2016, houses female victims of human trafficking. Camillus also partners with local organizations and the government.

Camillus and the Downtown Development Authority jointly operate the DWNTWN Enhancement Team, offering maintenance and landscape jobs to the economically disadvantaged. Camillus started as a Cuban refugee shelter in the 1960s and its commitment to helping vulnerable populations continues in its expansion of its 14 county locations, says CEO Shed Boren. “Though Miami emphasizes its luxury offerings, we must recognize the need to improve the community by helping the less fortunate,� he says.

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ECONOMY ROUNDTABLE

Marcelo Giusto

Consul-General of Argentina in Miami

Global hub: Miami-Dade’s international reach grows Miami-Dade has long been famed as the U.S.’s Gateway to the Americas, and the international community at large has started to take notice. From direct flights from Turkey, to Canada’s dedicated snowbirds, to Argentina’s vast culinary expertise, Miami continues to attract attention from markets around the globe.

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Miami has always been in the minds and hearts of Argentines, as shown by the fact that more than 427,000 Argentines arrived at the Miami International Airport in 2014. One of the advantages of this connectivity is it provides opportunities for Argentines to expand their businesses here. Many Argentine businesses are installing their regional headquarters in Miami to attract business from the U.S., the Caribbean and Latin America. The Argentine entrepreneur spirit is strongly felt in Miami-Dade County, where, for instance, there are hundreds of SME’s and startups driven by our nationals. Miami is a natural launch pad for Argentine entrepreneurs to take their first step into the U.S. The cooperation between authorities in Argentina and Miami helps to facilitate the arrival of approximately 70 small Argentine businesses per year to showcase their products and services across Miami’s top conventions and participate in B2B matchmaking events organized by the Consulate of Argentina. Meanwhile our country continues to seek to balance our trade deficit, with particular respect to the Miami Customs District, currently Argentina’s largest U.S. partner in millions of dollars of total trade. In addition to the products that have historically enjoyed great success in Florida such as wines, berries and leather related products, increasingly more Argentine companies in the creative and tech-driven industries are offering their services in Miami. Companies with expertise in digital marketing, audiovisual, media creation and software development, among others, are finding favorable market conditions in Miami.

The fact that Miami has a great number of Argentines in key leadership positions across multinationals, academia, the arts and health care among other sectors has allowed us to create a networking platform to promote Argentina in the local community throughout its people as well as provide Argentine companies opportunities to establish key relationships in this new market. As Argentina works toward strengthening its relationship with the U.S., it will continue to utilize Miami, Buenos Aires’ sister city, as a hub for its economic and cultural initiatives.

ECONOMY ROUNDTABLE

Louise Leger

Consul-General of Canada in Miami The bilateral economic relationship between Canada and the U.S. is the largest in the world, valued at $759 billion per year. Florida’s share of that is roughly $8 billion. When we look at industries like tourism and real estate, we see that the impact is not insignificant.

Each year, 4 million Canadians visit Florida. Considering Canada’s population of 35 million, that means that one in nine Canadians visit Florida annually. These visitors don’t just come for a long weekend; they stay for months at a time and spend $4.4 billion annually in the state. Canadians are also big real estate investors in Florida. Currently, there are between 500,000 to 600,000 Canadian homeowners in the state, a portfolio that is worth roughly $60 billion.

In addition to the attractive lifestyle that Florida offers to Canadians, there are growing business opportunities present in this market. One top-of-mind issue for South Florida is climate change, and Canada has much expertise in issues related to the environment and energy. Around 45 percent of the oil the U.S. imports comes from Canada, and equally important, Canada exports a great deal of electricity, much of which is renewable, whether it is hydro, wind or solar. Canada is also advanced in the treatment of water and wastewater. Moreover, as South Florida looks to build new infrastructure or replace aging infrastructure, it can benefit from Canadian expertise in the area of public-private partnerships (PPP). Not only does Canada have experience with utilizing PPPs to create roads and bridges, it also has much knowledge of using them for cultural infrastructure—schools, libraries, courthouses—which have different revenue-generation models.

This expertise has attracted the attention of companies active in Florida. NextEra Energy, the parent company of Florida Power and Light (FPL), has been making serious investments in Canada. In November 2015, the Everglades Foundation signed a memorandum of understanding with the Canadian province of Ontario to launch a multi-year effort to design cost-effective technology for the removal of excess phosphorus from freshwater bodies. As Miami continues to develop itself as a hub for technology and innovation, there will be even more opportunities for Canadian investments.

Ozgur Altan

Consul-General of Turkey in Miami The opening of a Turkish consulate in Miami is part of Turkey’s strategic plan to expand its commercial, diplomatic and consular presence in the U.S., and to deepen ties to the Caribbean and South America; the Turkish government recognized that to be successful in Latin America it must have a presence in Miami. To fulfill our goals in Miami, we worked to bring Turkish Airlines back to Miami International Airport after 14 years. Direct flights to Istanbul commenced in late 2015. Our next step is to improve our commercial ranking in doing business within the city and the State of Florida. Miami is strong in real estate, tourism, hospitality, aerospace technology and medical equipment and has much to offer Turkey in those areas in terms of mutual trade.

There is already significant business being done with Turkey in Florida, especially in construction: a great deal of stone and marble—key Turkish exports—are being imported by major Florida cities.

Other significant Turkish entries into the local market include a multimillion-dollar car modification center in Miami; Turkish conglomerate Suzer Group’s joint venture to develop a luxury hotel in Surfside; and the opening of Okan International University’s campus in North Miami. Turkey has also worked to established its local cultural footprint; for the past five years, Miami has hosted the Turkish Film Festival.

As an international medical tourism and cruise destination, and the sixth most-visited country in the world in 2014, Turkey shares many similarities with Miami, and there are many areas of collaboration between the two places. For instance, Miami has a vibrant cruising industry and serves as the headquarters of three of the major global cruise corporations.

Since three out of four tourists traveling to Turkey are doing so to take a cruise, we see many opportunities for strategic cooperation. Turkey also has a thriving jewelry industry; with the continued growth of luxury shopping destinations, like the Miami Design District, there will be more Turkish participation.

The cultural and commercial affinities between Turkey and Florida will only create more opportunities for growth and increased cooperation.

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Real Estate: Featuring insights from Carlos Rosso, President of Condominium Development, The Related Group, Edgardo Defortuna, President & CEO, Fortune International Group, David Martin, President, Terra, Camilo Lopez, Managing Partner & CEO, The Solution Group, JosĂŠ Luis F. Melo, Carlos F. Melo, Martin F. Melo, Directors, Melo Group and Michael Wohl, Partner, Pinnacle Housing Group, shared exclusively with Invest: Miami

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Strong fundamentals: Rising domestic demand, steady international interest and a stable economy support Miami-Dade’s diversifying real estate market The biggest question surrounding Miami-Dade’s real estate market performance in recent years is whether post-recession growth is foreshadowing a market bust.

Real estate figures reported by various sources including Miami-Dade County records, CBRE market reports and the Miami Association of Realtors (MIAMIRE) indicate that Miami-Dade experienced double-digit year-toyear growth despite a significant slowdown in the fourth quarter. According to MIAMIRE, 2015 was the fifth consecutive year single-family home sales broke records with 12,857 units sold by the end of November— just short of the 13,521 sold in 2014.

Condominiums experienced their third consecutive year of record-breaking sales as well, but, unlike singlefamily homes, are beginning to raise concerns about overdevelopment and market surplus. The retail, office and industrial segments grew as well, but are striving to keep up with a growing population, expanding industry and changing buyer demands. Affluent Latin American buyers have been one of the key recovery drivers, but as growth in Latin America slowed, so did the influx of liquid capital that reignited the development and real estate economy. Indicators that the condominium slowdown at the end of 2015 will extend into 2016 42 | Invest: Miami 2016 | REAL ESTATE

have generated concern for some, but many industry experts view this slowdown as a much-welcomed market stabilization, likely to reorient the real estate market away from condominium developments toward apartment and commercial sectors.

Robust recovery Miami’s economic recovery has been quicker than anticipated. Retail, commercial, office and residential vacancy rates have remained on a downward trajectory with rents rising due to increasing demand. In recent years, economic indicators including unemployment, trade volumes and retail sales have shifted positively and, undoubtedly, owe some of this economic recovery to the condominium market boom. However, the condominium market is nearing a peak with early signs of saturation including project cancellations and changes to purchasing structures present in 2015.

Tourism and trade remain two of Miami’s strongest sectors as the warm climate and proximity to Latin America continue to draw an increasing number of international and domestic visitors. The Miami-Dade Aviation Department saw a record-breaking number of arrivals with double-digit growth in domestic flights

REAL ESTATE OVERVIEW

indicated by official county statistics. Similarly, trade capacity and volume have increased with the $2-billion PortMiami expansion and enhanced air-cargo capacity at Miami International Airport. Along with these developments to bring more cargo is a need for industrial storage and transport capacity, creating a premium on warehousing real estate as well as more jobs in the trade and logistics sector, which, according to JPMorgan Chase & Co., is expected to grow 13 percent through 2022 and already provides one-tenth of valuable middle-skill jobs in Miami-Dade.

Employment is key to Miami’s economic health and has grown considerably in the past five years with an over 50-percent reduction in unemployment from a 13-percent recession high to a more stable 5.4 percent. Much of this has been due to the condominium development boom, which has even led to a shortage of construction workers. Ezra Katz, CEO of the Aztec Group Inc., tells Invest: Miami, “Construction prices have increased dramatically in the past three years—exceeding inflationary growth. This is a unique challenge that has driven Miami real estate costs up.”

The Bureau of Labor Statistics also reports that, in 2015, Miami-Dade exceeded national job-creation rates. Congruent to employment growth, there has been a growing population rate of 6.6 percent as estimated by U.S. Census Bureau data from 2010 to 2014.

An increasingly employed population and strengthening dollar have increased demands for staple retail offerings such as grocery stores and pharmacies, as well as greater desire and ability to purchase homes.

As the dollar strengthened and foreign buyers reduced, developers have shifted their real estate focus to domestic clientele. This shift, beginning notably in 2015, with northern development in Broward County, chang-

es to condominium deposit requirements and investment in rental apartments versus luxury properties, highlights Miami’s market flexibility to adapt to suit the needs of both foreign and domestic capital.

Growing and stable market sectors Miami-Dade real estate is a major economic driver that provides employment and the physical basis to accommodate the growing needs of a population. As the condominium market expansion reduces in terms of development, labor—currently scarce—will be freed up to less immediately profitable real estate sectors.

Whereas Miami condominiums are largely subject to a 50-percent deposit rule—single-family units are not. In the post-recession era, luxury properties were largely purchased by foreign cash buyers taking advantage of a weakened dollar and represented less risk to bustwary developers. As the Latin American economy slows down, condominium purchases have begun to wane, down 8.3 percent in year-to-year figures for October 2015 according to MIAMIRE figures. In recent years, particularly following 2013 when condominium sales broke sales records, development capital and projects have been focused on luxury condominiums. There are fears that overdevelopment, which made the real estate market particularly vulnerable to a crash during the recession, may stall the city’s growth.

Howard Taft, a senior managing director of Miami real estate investment bank Aztec Group Inc. stated in a January 2016 interview with Daily Business Review, “There is an abundance of capital for projects that have experienced and well-seasoned developers as their principals,” but also indicated that, “condo lending has become more challenging because of the number of units that will be coming online in 2016 to

Construction prices have increased dramatically in the past two years.

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2017.” CraneSpotters.com, which tracks condominium construction throughout Miami-Dade, reported that out of 370 projects announced since 2011, 20 have undergone major changes, including cancellations.

Major national developers, including Don Peebles, have opted to cancel smaller developments such as the Bath Estates in favor of re-selling the highly valued land. Developers such as Dev Motwani of Merrimac Ventures and The Related Group have been drawn to Broward County’s growing market in hopes of attracting more domestic clientele via more affordable properties. Related has also pursued a somewhat controversial policy of reducing deposits from 50 percent to 30 percent at some developments, indicating both market stability and concern that there are fewer wealthy cash buyers. Although most developers have not done the same, the lowering of deposits by one of Miami’s largest developers, is a significant move that may set a trend.

Single-family homes, however, have remained underdeveloped and both volume of sales and median prices are rising. According to Miami-Dade County data, the median home price has risen from $188,000 in September 2010 to $265,000 in October 2015. Due to concerns of another housing crisis, the profitability of condominiums and hindrances of labor and land shortages, developers have been reluctant to engage in developments with lower capitalization rates. The Miami-Dade housing market is estimated by EWM Realty International to have a short 4.6-month supply. This lack of single-family homes has ensured that homes sell quickly with the average number of days on the market decreasing from 78 to 65 in year-to-year data for September 2015. Currently, the market is working

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to absorb the present condominium supply, estimated by an EWM Realty International survey to be approximately 8.7 months in the third quarter of 2015.

Despite the relative ease of selling, realtors in Miami remain active in seeking clients throughout the county and not just in primary luxury markets such as Brickell or Miami Beach. Speaking with Invest: Miami, Duff Rubin, the Coldwell Banker Southeast Florida Regional VP, stated, “We believe in the submarkets and feeder markets. We’re paying attention to Doral, Kendall, Pinecrest, along with major markets in Miami. People move within this city, and we try to capture as much of this as we can.” Indeed, as an increasing number of residents, including the growing millennial population, migrate throughout the city, residential real estate markets are geographically expanding.

Adapting to consumer preferences Miami’s luxury real estate is prohibitively expensive for many to buy directly, especially with the 50-percent deposit structure for condominiums. Many foreign buyers and developers have good reasons to rent purchased properties. Zumper, a listing firm that tracks rental prices across the U.S., indicated that Miami began 2016 as the ninth most expensive national rental market with single-bedroom rents hovering around $1,820. More notable is that according to the same database, the year-to-year change rate from the beginning of 2015 to 2016 ranked fourth among the top 10 markets at nearly 10 percent, beating out San Francisco and New York.

The Melo Group Director, Carlos F. Melo tells Invest: Miami that the growth in the rental market can be attributed in part to a burgeoning young, profes-

REAL ESTATE OVERVIEW

sional demographic favoring more expensive rentals in attractive mixed-use downtown spaces that emphasize nightlife and retail over suburban single-family homes. In response to this market demand, the Melo Group has unveiled plans for a 500-apartment complex in Miami’s popular Omni neighborhood.

The Melo Group is not the only firm targeting renters. A third-quarter 2015 Marcus & Millichap report indicates that in the past year, apartment vacancies in Miami-Dade actually rose, due largely to a rapid increase in apartment development. The Real Deal reports that an estimated 3,000 apartment units are scheduled to become available in 2016, offering much welcome price relief to renters. Although rent prices stabilized in mid-2015, McCabe Research and Consulting reported a sharp increase in apartment rents. This trend will continue until new units enter the market, but it will likely require years of development to stabilize prices if population and employment rates continue to rise as they have in recent years.

Breaking records Miami-Dade has one of the most expensive real estate markets in the U.S. This is due largely to the luxury condominium dominated real estate market, ease of international access, attractive coast and vibrant nightlife—all of which come with the security of the U.S. economy. The weakened dollar in the years following the recession created an opportunity for wealthy Latin American investors seeking more stable markets to inject liquid capital. In 2015, the Knight Frank Wealth Report ranked Miami as one of the top 20 Prime International Residential Index cities in the world, valuing luxury apartment or condominium real estate in Miami at roughly $1,574.63 per square foot, ranking third behind New York City and Los Angeles in the number of wealthy residents.

Regarding condo and luxury home sales, 2015 was a record-breaking year, featuring a $60-million transaction for a Faena House penthouse. This figure far surpassed the previous record for a condominium sale of $27.5 million, set in December 2014. Previously, the record for most expensive residential real estate in Miami was held by the $47-million 3 Indian Creek mansion, set in 2014 as well. Indian Creek, a 256-acre island comprised exclusively of luxury waterfront homes, is home to two of the five most expensive realestate sales in Miami-Dade for 2015: $30-million 17 Indian Creek Drive and $25.7-million 9 Indian Creek Drive. Meanwhile, Key Biscayne saw its most expensive sale with the 11,600-square-foot mansion at 775 South Mashta Drive selling at $47 million, tying with another

2015 was a record-breaking sales year for Miami-Dade’s luxury housing market.

purchase for the most expensive single-family home transaction in the county.

A safe investment For the wealthy elite, Miami’s attraction is more than surface level. Latin American and European condominium buyers have benefitted from a weak dollar and pursued mass holdings of luxury real estate in a city with a growing trade and logistics sector and burgeoning tourism. PortMiami statistics reported by the county indicate that the 2015 fiscal year was the strongest in terms of container traffic in the past decade. Geographic proximity provides robust opportunities to establish trade connections and develop a global presence.

Brazilian elites in particular have sought to develop and purchase property in Miami-Dade and have begun to open businesses in the U.S. A 2013 survey of international homebuyers in Miami-Dade indicated that the top five countries of origin—Venezuela, Argentina, Brazil, Colombia and Peru—were all countries with currencies more volatile than the dollar. Miami Luxury RE, LLC, a firm specializing in high-net-worth individuals, acknowledged in Business Wire to be working with several HNWIs seeking to purchase in the $10 million to $50 million range.

Miami-Dade participates in the EB-5 visa program, which allows foreign citizens to accelerate U.S. residency acquisition by investing $500,000 in city development. Projects require city approval before visa sponsorship is granted. The Panorama Tower, an 83-story luxury residence with retail, medical and hotel space, launched in September 2015 as the www.capitalanalyticsassociates.com

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Miami is internationally recognized for its luxury condominium market.

first EB-5-funded development within the city. With the expansion of the Panama Canal coming in April 2016, there is growing Chinese interest in investing in Miami, which is set to receive a sharp increase in Chinese trade volume. Despite the slow inception of the EB-5 program, Jay Parker, Florida Brokerage CEO of Douglas Elliman, tells Invest: Miami regarding growing Chinese interest in Miami’s real estate market, “There is definitely Chinese flirtation with the Miami market. We are seeing early interest in the form of survey trips and informational sessions, which is vital to surpassing a threshold and making Miami a destination for Chinese high-net-worth individuals.”

In times of international political and economic uncertainty, Miami-Dade provides a safer investment than many emerging international economies.

Compared to a 6.9-percent Brazilian or 7.2-percent Russian Federation inflation rate, as reported by the World Bank for 2014, the steady sub-2-percent U.S. inflation rate provides a more robust investment over time. However, the dwindling condominium sales growth suggests that the luxury market has begun to level off; thankfully, Miami-Dade offers more than just waterfront properties.

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Healthy industrial market International investment is not limited to luxury real estate and has carried significantly into industrial real estate purchases and developments as demonstrated by the 2.8-percent increase in foreign capital investments in the industrial segment in 2015. International investment in industrial real estate comprised 29 percent of total industrial real estate investment in Miami-Dade—second only to private-domestic at 33 percent, which saw a 3.7-percent drop from 2014.

This change is due to Miami-Dade’s changing global reputation. As Albert E. Dotson, Jr., land development and government relations practice group leader at Bilzin Sumberg, tells Invest: Miami, while the city is known as the Gateway to Latin America, “with the various evolutions of Miami over the years, it is less the gateway to someplace as opposed to the portal from just about everywhere, and that has led to a diversification of investors and investment.”

Evidence of the growth in foreign direct investment (FDI) within the industrial segment can be seen in the major industrial acquisitions made by Global Logistics Properties, Norges Bank of Norway and China Life Insurance of Beijing in Miami-Dade. CBRE data on industrial real estate growth indicates a 3.4-percent vacancy rate, lower than 2014. Industrial vacancy rates in Miami-Dade have decreased since a 2010 peak of approximately 8 percent; 2015 exhibited a larger decrease than 2014 did over 2013. Congruent to the decrease in vacancy rates, CBRE data also indicates that the average asking price per industrial square foot in Miami-Dade has steadily risen and ended 2015 at $8.30. The most valuable submarkets were Northeast Dade, at $11.75 per square foot, and the Kendall/ Tamiami and Airport/Doral market, both at $9.91.

Overall, the absorption rate rose just slightly over 2014 figures at 3.2 million square feet—with more than a third of the absorption occurring in the fourth quarter.

The same CBRE data indicated that Airport/Doral and Medley were by far the two top-performing industrial submarkets, accounting for over 85 percent of total absorption. The most valuable industrial sector in 2015 was in the flex/research and development category at $11.46 per square foot, but the most absorbed and available was the warehouse and distribution sector, on average leasing at just below the market average at $8.20 per square foot.

Major developments in the trade and logistics sector, including increased air and sea cargo traffic, combined with retailers’ trends toward smaller spaces, have boosted the demand for warehouse storage and distribution. Despite accounting for more than ( )

REAL ESTATE INTERVIEW

Market resiliency How Miami’s world-class assets boost the long-term prospects of its real estate market

Carlos Rosso President of Condominium Development – The Related Group What strategies have developers employed to adapt to a more challenging real estate market?

Identifying and tapping into new markets is very important to us. We travel to different countries to connect with potential buyers who have the means and desires to live in and purchase in Miami. We are paying close attention to the Mexican market as well as several smaller wealth centers such as Bolivia’s Santa Cruz de la Sierra.

Strong North American economies mean we can continue to source new buyers from the U.S. and Canada, and we continue to offer the best in design, amenities and locations to attract local buyers.

We are also about to launch new micro unit developments to appeal to Downtown Miami’s new younger demographic.

Bottom line, successful developers are those capable of adapting to market conditions quicker than others.

In what areas is Related looking to direct its efforts and investments?

We are looking at possible development sites in the neighborhoods of Wynwood and Edgewater and continuing projects in Coconut Grove and Sunny Isles.

We are also focusing on developing the market for smaller apartments as we’ve noticed a large audience for them. There is a high demand for these units from local buyers because of the lower prices. At the same time, we are also looking at sites in Miami-Dade to develop luxury condominiums at $575 per square foot and $700 per square foot.

What challenges must urgently be addressed for Miami-Dade to continue on its growth trajectory?

The good news is that, compared to international cities like Los Angeles and New York, Miami offers the best value for real estate and is growing faster than any other

city. Part of the allure is that more than a dozen worldrenowned architects are living and working in Miami, attracting international buyers searching for a different look not found anywhere else in the world. They are looking for the best, and Miami is offering it. In fact, last year, we saw buyers of nearly 300 different nationalities, solidifying Miami’s reputation as a premier real estate destination. The biggest challenge now is to create a larger salary base that can support the real estate we’re building. The more cultural offerings there are in South Florida, the more the area will attract intelligent people to live and work here. Miami sells itself on its natural beauty, as the beaches and the weather are popular reasons people come to Miami. However, we also need to portray ourselves as a world-class city, whose identity is not so much rooted in having a good time or being retired, as much as it is in being a professional center attracting the best in finance, banking and innovation. www.capitalanalyticsassociates.com

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( ) 80 percent of all CBRE accounted industrial real estate, warehousing and distribution maintains a 3.7-percent vacancy rate and rising rental prices. Other sectors, including retail and office, have also grown in the past five years, but with more nuanced trajectories.

Retail surges ahead The retail sector, explored in-depth in the retail chapter of this book, has seen major investment and lowered vacancy rates throughout Miami-Dade. Developers have embraced the “live, work, play” concept and unveiled major mixed-use development projects including Swire Property’s $1.05-billion Brickell City Centre and the $3.8-billion Resorts World Miami in Biscayne Bay, funded by the Genting Group, and slated to be the largest real estate development in North America in over a decade. Occupying 13.9 acres, the site features six highrise towers and 250,000 square feet of luxury retail. According to JLL, asking rents have risen to their highest post-recession point, averaging $25.76 with occupancy at 95.9 percent throughout Miami-Dade. By all accounts, the county’s retail sector remained on a growth trajectory and even included one of the largest real estate purchases in Miami-Dade history: a $370-million purchase on Lincoln Road by Spanish billionaire Amancio Ortega.

real estate. We’re seeing Wall Street, hedge funds and tech startups view Miami as an attractive option for the taxes, the weather and, I think, Miami’s changing character.”

Developers are building mixed-use spaces or condominium-based offices that offer long-term savings by allowing for outright purchase and more rapid capitalization for developers. Although the job market has improved considerably in the post-recession years, professional services and other high-skilled jobs have not seen growth to make it comparable to that of New York or Boston. Hence, developers have shied away from massive office spaces relying on pre-lease sales to gauge market need. This is beginning to change as the county’s population grows and more firms open branches or relocate to Miami-Dade. Major office space transactions in 2015 included a 65,000-square-foot lease by Humana/ CAC Medical Centers at 6101 Waterford and a 40,000-squarefoot lease for $14-million by Univision at 9250 Doral. The year ended with 769,539 square feet of office space under construction, with over 500,000 of this located in Downtown Miami and Brickell.

Developers are building mixeduse spaces or condominiumbased offices that offer long-term savings by allowing for outright purchase and more rapid capitalization for developers.

Office real estate takes off Office real estate performed well with a dropping vacancy rate and increased lease rates. However, with major projects such as Gateway Plaza in Doral with 80,000 square feet opening in 2015, the net-absorption rate for 2015 was lower than 2014’s. This is consistent with a post-recession trend in which the vacancy rates have steadily decreased from a near 20-percent high in 2011 to 12.7 percent in 2015. Similarly, lease rates have increased from around $30 per square foot in 2010 to $33 in 2015 throughout Miami-Dade. However, key markets such as Brickell and Aventura are outperforming the county average at $46 and $44, respectively. Overall, MiamiDade’s office market is the best performing in Florida and is outperforming the national 13.9-percent vacancy rate.

Speaking with Invest: Miami, Camilo Lopez, president of the The Solution Group, opined that, “Miami used to be a condominium city. This is changing. In the next couple of years, I am expecting to see a boom in retail and office 48 | Invest: Miami 2016 | REAL ESTATE

Looking ahead Miami-Dade’s real estate market is poised for growth across all sectors, with the surge in condominium sales beginning to adjust to decreasing foreign demand. Increased tax rates in other parts of the country and a stronger dollar congruent to increased employment have improved domestic demand, maintaining competitive growth in the residential real estate market. Challenges for the sector are adjusting to lower capitalization rates, as domestic buyers do not make as many cash purchases as foreign buyers and addressing a middle-class housing shortage. Commercial real estate (CRE) sectors have maintained post-recession growth and rents are up.

More foreign investors are entering the CRE market, spurred by projected trade increases associated with the Panama Canal. The market’s biggest driver in the past five years, condominium development, is slowing down; however, increased trade, tourism and retail performance, combined with falling vacancy rates, unemployment and divestment, indicate that MiamiDade’s real estate market remains robust through diversification and steady demand.

REAL ESTATE INTERVIEW

In love with MIA How strong sector fundamentals and sophisticated design buoy Miami’s real estate market in trying times

Edgardo Defortuna President & CEO – Fortune International Group Given that Miami’s real estate sector relies heavily on international buyers, how has the local market been impacted by a strong U.S. dollar?

Miami is particularly sensitive to events taking place in other parts of the globe—whether this pertains to currency exchange rates or government policies. At Fortune, we believe that the world is in love with Miami so we don’t worry so much about what is happening in particular countries; rather, we focus our efforts on opening up new markets and forging new partnerships with those who may still be unfamiliar with Miami. Everyone wants a piece of the Miami pie. Our job is to find the right mix and the right timing for them.

Miami’s strategic location and good climate are no doubt attracting investors and buyers. What role do the actual buildings in the market play in elevating Miami’s global profile?

Developers today are not just concerned with how buildings look from the exterior, but also with how they function and interact with the environment.

For instance, thorough sun studies are conducted, especially for buildings on the beach, to analyze how shadows are created and to ensure that said shadows do not render certain areas, like the pool, unusable after 1 o’clock.

We are also seeing innovations that make more efficient use of space. For example, our architecture partners Herzog and de Meuron came up with the brilliant idea for our Jade Signature project in Sunny Isles to put the parking underground—40 feet under water that is. It makes a big difference and makes everything in the building work—the integration of the pool, the beach, the restaurants and all the amenities. It really makes a difference in the lifestyle of the consumers. Having this level of attention to

detail makes for really spectacular buildings and makes Miami far more attractive to a larger audience.

What are the greatest concerns facing Miami’s real estate market?

I worry most about perception because perception becomes reality. The media and others who report on this market often do not understand how the new financing model in Miami is working. They talk about a supply of 10,000 or 15,000 units, but don’t mention that 80 percent to 90 percent of those units have already been sold, with 50 percent deposit. Those deposits are used to finance construction so the leverage today is significantly below what it was in the previous cycle. We are financing less that 30 percent of costs through bank leverage, and these are signs of a healthy market. www.capitalanalyticsassociates.com

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Intelligent luxury How temporary slowdowns do not undermine the strength of Miami’s real estate

David Martin President – Terra Real estate demand in Miami, whether for residential, office space, shopping centers or industrial, is vibrant and strong—especially over the long term.

For exurban development, what are the key trends?

Whether you are talking about urban or suburban development, people are looking for better quality of life. In the urban core, that exists in walkability, access to parks, shops, restaurants and culture. Buyers accustomed to life in a single-family home are drawn to the idea of living in a high-rise that is home to likeminded residents and new quality-of-life offerings. In suburban areas, you have peace, natural environments, top-rated schools, a village-like community. Critical mass is building in suburbs like Doral, Dadeland and Weston; we’re finding nodes with urban characteristics emerging. We’re seeing mini urban cores with office, hotel and residential being developed around anchors.

In the case of Dadeland, it’s Dadeland Mall. In Weston, it’s Cleveland Clinic.

How are developers coping with the slowdown in the luxury condominium market?

There is an assumption that demand has cooled, but you have to realize that Miami is comprised of different neighborhoods, some of which have higher barriers to entry than others. There is scarcity of oceanfront product, developable areas in Coconut Grove and land in Doral for single-family homes.

With scarcity comes an opportunity to develop special projects, as Terra is doing in Coconut Grove, Weston and North Beach, areas that are still seeing thriving demand and price appreciation. In the end, the value proposition offered by certain real estate asset classes in particular submarkets will dictate what pricing will bear. That’s why Terra invests in neighborhoods with high barriers to entry and “voids” in the market.

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How might you characterize the evolution of the residential luxury product in this market?

Miami is about people discovering it, falling in love with it and then moving here or buying a place. Much of the world is looking to Miami as a stable place to invest.

We’re seeing flight capital enter the market from Europe, Latin America and Asia, with the ultra-premium buyer segment being particularly active. What’s interesting is where and how they spend their money once here.

Our developments are attracting worldly, sophisticated buyers coming from Latin America, New York and the U.S. If you can pique their intellectual interest with your product, then you are contributing something to the market. We’re seeing a shift toward “intelligent luxury,” which I define as buyers looking to “be” more, rather than “have” more.

REAL ESTATE ANALYSIS

Vibrant neighborhoods: Greater density is building in Miami-Dade’s infill areas, which are seeing big investments and dramatic revitalization Real estate development in Miami-Dade is expanding vertically, as high-rise condominium towers dot the waterfront, and horizontally, as residents seek new and cozier neighborhoods outside the popular Downtown and saturated coastal markets. Wynwood, Edgewater and the Miami River area have emerged as popular markets, drawing attention from major developers such as The Related Group, Moishe Mana, Goldman Properties, Thor Equities and RedSky Capital. Little Haiti, a historically economically depressed market, is rising in popularity among young, urban crowds seeking affordable spaces. Unlike more established real estate markets, such as the burgeoning Brickell and high-value Miami Beach, these emerging neighborhoods are becoming popular among buyers for niche characteristics. Wynwood, which is gaining global recognition for its art scene, was once comprised of a series of abandoned warehouses. It has since been repurposed by David Lombardi, Tony Goldman and others.

The recent sale of the LMNT entertainment venue, reported in county records for $10.4 million in summer 2015, an almost 500-percent increase from its 2008 $2.1-million value, highlights the rapid growth in value of properties in Wynwood. Increasingly, developers are seeking the next big market, raising concerns from long-time residents who fear they may be priced out.

Edgewater and Miami River Edgewater is a coastal neighborhood north of Downtown Miami drawing investment and interest from developers. Formerly a working-class neighborhood with plenty of historic single-family homes, Edgewater is converting to a “live, work, play” dominated space with rising office and residential real estate centered around local shopping, dining and entertainment venues. A property at Northeast 31st Street that sold for $11.5 million in 2012 sold for more than double that at $29 million to Related only a year later in 2013. The Miami Downtown Development Authority (DDA) estimates a 66-percent growth in Edgewater’s

An emerging art scene and new residential developments are reviving Miami-Dade’s established neighborhoods.

condominium market from April 2015 to August 2015; its long-term growth may overtake Wynwood’s by mid2016. Developers have purchased and built on much of Miami-Dade’s waterfront space, pushing Edgewater’s coastal property values up.

In pursuit of dwindling waterfront properties, developers are focusing on the oft-neglected Miami River.

Related’s One Miami and the EPIC Miami Hotel near the mouth of the river represent a seemingly natural progression down the shipping-oriented corridor. Current designs and allocation approved by the Miami River Commission allow for condominium towers toward the coast and a focus on mixed-use spaces further inland. One River Point by KAR Properties, is a two-tower luxury development on the river with units ranging from $850,000 to $12 million. Other major properties on the river include Related’s three-tower One Brickell and the Melo Group’s four-story dining project further west. Both the economic boom and rising property costs are driving toward more riverfront development.

Residential concerns Emerging neighborhoods such as Little Haiti, alternatively Little River, and Little Havana draw millennials seeking affordable rents for businesses and living. &gallery, a unique art gallery founded in 2014 by Jordan Trachtenberg and Annie Berkowitz in Little Haiti, highlights how the process of gentrification in Miami www.capitalanalyticsassociates.com

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is inextricably tied to both rising rents and dwindling real estate space. The Miami New Times, a weekly newspaper, has highlighted concerns of local neighborhood residents that as younger professionals with disposable income enter these communities, rents will rise, as they have in Wynwood and Edgewater, thus becoming unaffordable for current residents.

The average home price in Little Haiti is $143,400— about a third of $402,800 in Brickell, as reported by Zillow in early 2016—raising fears that rents in Little Haiti will soon reach Brickell levels. Home values throughout Miami-Dade follow the same pre- and post-recession trajectory, but Brickell, an already popular district, was far above the $245,500 county average in early 2016. Wynwood, under development since the early 2000s, has maintained housing prices above the county average but below Brickell and Downtown Miami’s prices.

Little Haiti in particular, which has recently seen the establishment of boutique record stores and limited novelty shops, has been targeted by developers due largely to its proximity to Wynwood and the Design District as well as the below-county-average prices. Little Farm Mobile Court, an RV park occupied by low-income Little Haiti residents, was purchased by a Chinese investor in a transaction that has since raised concerns among community members unable to maintain rent payments.

Art and development Wynwood has emerged as a submarket with great growth potential, comparable to Edgewater in recent years, according to DDA figures. Developers have not ignored this potential and have made major purchases including New York-based RedSky Capital’s $26-million purchase of the Wynwood Block retail property.

Similarly, Thor Equities, another New York basedfirm, executed the largest deal in Wynwood, purchasing an entire block for $41.5 million. The payment was to Lehman Family Partnership, Ltd., which bought

Lower-income neighborhoods like Edgewater, Overtown and Little Haiti received attention from developers in 2015.

the property in 1995 for $200,000. Even when adjusted for inflation, this represents an increase of over 100 times the value in 20 years. Much of Wynwood’s draw comes not only from its abundance of local shops and restaurants that allow for attractive walkable and mixed-used spaces to be developed but also from recent government approvals for denser residential developments.

Goldman Properties—of the late Tony Goldman, largely credited with converting Wynwood and New York City’s SoHo neighborhood into profitable real estate markets—continues pursuing developments, including an eight-story car garage with 44,000 square feet of mixed-use retail and office space. The firm is also developing Wynwood 2.0 as an expansion of the Wynwood Walls project. As was done with SoHo in New York, expanding the project, a series of street art

Camilo Lopez Managing Partner & CEO – The Solution Group

Miami used to be a condominium city. This is changing. In the next couple of years, I am expecting to see a boom in retail and office real estate. We’re seeing Wall Street, hedge funds and tech startups view Miami as an attractive option—for the taxes, the weather—and, I think, Miami’s changing character.

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REAL ESTATE ANALYSIS

José Luis F. Melo, Carlos F. Melo, Martin F. Melo, Directors, Melo Group

murals, maintains the community vibrant and attractive to buyers while giving creative freedom to artists.

Craig Robins of Dacra, the development firm credited with the $2-billion Design District, explained in a May 2015 interview with British newspaper, The Independent, that much of Dacra’s creative direction centered on providing an art-focused experience alongside a high-end luxury shopping and dining experience. Developers like Gil Dezer of Dezer Development, Carlos Rosso of Related and Michael Comras of Comras Company have expressed development interest in Midtown, Wynwood and the Design District. James Provencher, managing partner for Barry’s Bootcamp, indicated in early 2016 that approximately 20 to 30 percent of interest in the Design District comes from New York clients, who now see more value in Miami-Dade due to hip and walkable spaces being developed in emerging neighborhoods.

Looking ahead Miami-Dade is growing both vertically and horizontally and with the scarcity of land in core neighborhoods, an increasing number of residents are moving inland.

Developers are eager to find the next Wynwood and invest heavily, as the returns thus far, even in a recovery economy, have been notable. Challenges may arise as the city government addresses concerns of displacement and economic sustainability in these markets.

When Melo first began developing in the Edgewater neighborhood in 2001, there was nothing here, but we always understood that this was premium space. While many people believe it is easy to purchase property with water views in the City of Miami, today there are fewer and fewer lots that offer this. Edgewater is the last waterfront frontier in the City of Miami, and, as such, we began acquiring land with long-term plans to develop it.

Our current project, Aria on the Bay, is the last and largest parcel and we refer to it as the “queen of the block.” Apart from the cutting-edge design and world-class amenities, this building benefits from its Edgewater location, which offers excellent views, quick and easy access to Miami Beach, surrounding parks and proximity to important cultural institutions: the Perez Art Museum Miami, the Adrienne Arsht Center for the Performing Arts and, very soon, the Frost Museum of Science, which is currently under construction.

Edgewater is no longer the blighted area it was when we first started, and word has gotten out. We have seen strong interest in our condominium projects from international buyers. These buyers are coming from very diverse places--from Austria, Morocco and Italy—in addition to the traditional markets from Miami: Argentina, Brazil, Colombia and Venezuela. With recently announced direct flights from Miami to Qatar and Turkey, we will see more newcomers to this market.

Because Miami’s real estate market relies heavily on international buyers, there is concern when you have a strong U.S. dollar like we have been seeing this year. While there has been some impact on condominium sales as a result of the exchange rate, the allure that Miami has for foreign buyers will outweigh the effects of currency devaluation. At the end of the day, the opportunity to live in the U.S.—with all of the associated political freedoms, the physical security, the stability of its economic system, the soundness of its judicial system and processes—is priceless.

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Affordable options: While the influx of capital into Miami-Dade’s luxury real estate segments continues, the need for affordable options is pressing Affordable housing, defined by the U.S. Department of Housing and Urban Development as costing less than 30 percent of a family’s income, is rare in Miami-Dade despite rising employment and wages.

Increasing rents and strong economic performance have unfortunately not translated into ease of house purchasing or renting, especially for lower-income households. Luxury sales have broken records and both condominium and single-family home sales are up for the third and fifth consecutive years in 2015. However, middle-class buyers, with a median income of around $50,000 for those in the South Florida corridor, are likely to spend over 40 percent of their income each year paying a 30-year mortgage, according to Realtor. com. A 2014 study from housing advocacy nonprofit Miami Homes for All noted that a renter paying over the federally recommended 30-percent ceiling on rent is more at risk to miss utility payments and not have health insurance and is increasingly vulnerable to homelessness. A challenge in Miami-Dade is providing truly affordable housing for low- and medium-income workers that the service and tourism industries rely on.

Pockets of affordability Several emerging neighborhoods are changing the county’s economic demographics. Allapattah, located close to the popular Wynwood and Design District neighborhoods, has seen a 24-percent increase in housing prices according to Zillow.com. Investors have begun purchasing many of the historic homes in anticipation of a housing boom. The median price for a single-family home in Allapattah for June 2015 was $123,000, more than half the $280,000 median sale price reported for the same month by the Miami Association of Realtors. As developers rush to acquire properties in the area, low- and middle-income residents risk being locked out, exacerbating the lack of affordable housing.

Country Club, a border neighborhood between Broward and Miami-Dade counties is emerging as a pocket of affordability, offering pre-recession homes

Both the public and private sectors are building much-needed affordable housing for local residents.

at just below the county median of $245,500, according to Zillow.com. In the opposite direction, West Flagler has gained notoriety for affordability despite a rough rate of foreclosures at the peak of the recession in 2008 and 2009. Whereas nearby areas have seen prices increase to impossible rates for most first-time buyers, West Flagler’s price for a single-family home remains $25,000 below the county median despite a 16.5-percent year-to-year increase in 2015. Westward, Kendall is converting from a mostly rural and agricultural area to a suburban hotspot with median prices changing by zip code from $200,000 to $400,000. With a new development utilizing previously rural lands, Kendall’s growth rate has remained closer to the county average of 8 percent. These neighborhoods are nominally affordable to employed middle-class residents, but a $200,000 home on a minimum wage or service-industry salary seems untenable.

Notable projects Pinnacle Housing Group, a Miami-based developer, proposed several affordable housing projects in 2015, including a 250-unit apartment complex south of Downtown near Cutler Ridge and the 191-unit Verbena apartment project in North Miami. Pinnacle President Michael Wohl tells Invest: Miami that part of their development strategy involved using federal and local subsidies, as well as focusing on transit-oriented development (TOD) to ensure residents can access www.capitalanalyticsassociates.com

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public transportation. Meanwhile, Liberty City Rising is a $74-million revitalization project announced by the county in February 2015 with $48 million designated for the reconstruction of Liberty Square. According to county projections, the project will be completed in 2019 and will create over 2,000 jobs, giving new homes to residents currently living in more than 700 units. However, critics worry that these projects are not enough and leave much of the population without affordable housing options.

Forging strategic partnerships Local government leaders are responding to the affordable housing shortage in several ways. For instance, the City of Miami, a designated EB-5 regional center, has sought to leverage EB-5 funds to finance low-income housing. The EB-5 visa program allows foreigners who invest in qualified projects that generate a minimum of 10 permanent full-time jobs the opportunity to apply for permanent U.S. residency.

Other key stakeholders have collaborated to find housing solutions. The University of Miami and Florida International University, for instance, have paired to form the South Florida Housing Studies Consortium to provide intellectual leadership and guidance on locationefficient communities, mixed-use developments and the implementation of TODs that could alleviate growing traffic congestion while providing affordable housing. Pinnacle has focused on both TOD and mixedincome spaces, allowing for a broader residential base per development. Other developers have also embraced mixed-use developments with major projects including retail, dining and even office space to provide a “live, work, play” atmosphere. The possibility of expanding this practice to affordable housing markets and not just luxury locations would relieve a strained infrastructure.

Looking ahead Just as an employed population is key to the mid- and long-term prosperity of Miami-Dade’s economy, so is affordable housing. Impoverishing rent rates can be as economically deleterious as underemployment, depriving low- and middle-class households of the means to effectively participate in and contribute to the economy.

With foreign capital and cash buyers drawing away from a saturated condominium market, developers, realtors and long-term investors are seeking to attract more domestic clientele whether by assisted lending access, investment in non-luxury developments or better responsiveness to domestic demands. A common thread in any possible solutions, however, is that they will require collaboration between Miami-Dade’s government and developers.

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In Miami-Dade, housing costs, relative to wages, is quite high. Demand for affordable housing continues to rise, but so do the costs of land and construction. Traditionally, affordable housing funds are comprised of federal, state and municipal subsidies. In Miami-Dade County, we have a surtax—an excess tax levied on the sale of land and commercial property— which annually generates between $50 million and $70 million, which can be used to facilitate affordable housing. Another financing vehicle is funds issued through the Local Housing Finance Agency.

Some of our projects are “mixed-income,” comprised of affordable and market-rate housing.

Funding from the affordable components covers the costs of building the parking garage, the infrastructure and much of the construction. Using the savings from that reduced expense, we are able to offer a rent that is below market rate. For instance, our rents at Brickell View Terrace, a project in West Brickell, will be 25 percent less than the market-rate.

That project has 100 units of affordable housing and 76 units of market-rate housing. Our Gibson project in Coconut Grove has 56 units, six of which are market-rate. It will provide predominantly senior housing, and also have a school that offers daytime adult education.

We also invest heavily in the public spaces of our projects, installing prominent works of art and incorporating attractive design features. We want to change the public perception of affordable housing, as well as create an attractive community for our residents. Broadly speaking, I think there should be obligations for major developments to provide affordable housing, and these should be enforced. Frankly, I don’t think that major development should go on unless there is an indication that the workforce and the affordable housing needs of that community have been taken care of.

Michael Wohl Partner, Pinnacle Housing Group

Miami’s top producers:

58 | Invest: Miami 2016 | REAL ESTATE

Construction: Featuring insights from Jeffrey Gouveia, President & General Manager, Southeast Region, Suffolk Construction, Brad Meltzer, Southeast President, Plaza Construction, Stephen Owens, President, Swire Properties and Joseph Kavana, CEO, K Group Holdings, shared exclusively with Invest: Miami

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Peak performance: Despite a strong dollar and a saturating condominium market, the industry saw high spending and much foreign investment Spending and growth South Florida construction spending grew in the first three quarters of 2015 by 19 percent but began to dip in the last quarter, signaling a shift from high growth toward stabilization, particularly in the real estate sector. According to construction intelligence firm Dodge, Data & Analytics, awarded contracts between January 2015 and November 2015 amounted to $8.9 billion, exceeding figures from the same period in 2014 by about $200 million, a growth of about 2 percent.

Residential development continued to dominate the market, even with the fourth-quarter decline, with over $405 million in new residential contracts in November compared to $289 million in non-residential contracts awarded throughout South Florida. However, an emerging trend, particularly toward the end of 2015, was divestment from residential housing—dropping 53 percent year-to-year from $758 million to $354 million in October 2015, and 60 percent year-to-year from $1.01 billion to $405 million in November 2015.

Challenges for developers present in 2015 likely to affect development in 2016 include labor shortages, rising property costs and a resurgent dollar eroding an important foreign financing base.

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Rising residential and non-residential markets Post-recession construction continued an upward trend with residential construction its primary driver. McGraw Hill Financial estimated that in the first nine months of 2014, residential developments accounted for almost 70 percent of South Florida construction projects—a ratio that remained static until at least October 2015. According to county records, Miami-Dade issued 4,100 residential building permits in the first quarter of 2015, compared to 9,000 for all of 2014, indicating a trend toward pre-recession levels of 5,000 per quarter. Since 2011, developers have announced over 400 new condominium towers for South Florida, delivering 56 by end of 2015. According to CraneSpotters.com, 3,050 condominium units were delivered, with an additional 12,600 units under construction—7,800 of which are scheduled for delivery in 2016. The Miami Downtown Development Authority (DDA) reported that, by August 2015, condominium deliveries increased 33 percent since the beginning of the year in the downtown area.

Congruent to this increase in deliveries was a 34-percent decline in awarded contracts during the same period, suggesting the market may be nearing a cyclical peak.

Integra Realty Resources’ (IRR) 2016 report describes the

CONSTRUCTION OVERVIEW

real estate market at the tail-end of an expansion period nearing “hyper supply” with moderate to high levels of new construction expected in 2016 as units are delivered.

Non-residential construction spending throughout South Florida grew 25 percent from September 2014 to September 2015—even during the fourth quarter residential dip—according to Dodge, Data & Analytics. A second quarter JLL report indicated nearly 30 percent of Florida retail construction was in Miami-Dade, featuring large, billion-dollar projects such as the 565,000 square feet of retail in Brickell City Centre by Swire Properties and the 765,000-square-foot Miami Worldcenter, managed by Art Falcone and Nitin Motwani. In a 2016 outlook, IRR noted that the planned retail supply— including the $4-billion American Dream Mall, slated to be the largest U.S. mall at 6.2 million square feet—placed retail construction at a peak, also nearing “hyper supply.”

In a 2015 third-quarter market analysis, JLL highlighted that rising occupancy rates—up 30 basis points yearto-year—and retail rents—up 6.5 percent year-to-year in the second quarter, according to CBRE data—are spurring the 1.9 million square feet of retail construction, 1.2 million of which was slated for delivery by the end of 2015. Similarly, office construction, historically less active than other construction sectors in Miami-Dade, ended 2015 with 664,199 square feet under construction, reported by JLL, indicating a rising market. Notably, JLL reported no major office construction deliveries for 2015. Developers have embraced mixed-use projects, pegging office construction to retail and residential spaces, such as the Brickell City Centre’s two 12-story office towers and Brightline’s 9-acre MiamiCentral station, which will feature more than 100,000 square feet of mixed-use space. Despite these increases, Ezra Katz, CEO of the Aztec Group, Inc., tells Invest: Miami, “Office construction has been the least robust of all the sectors, and, even with some growth, will remain difficult to finance.”

Construction of MiamiCentral is accompanied by the $275-million Frost Museum of Science, the $430-million Miami Cancer Institute at Baptist Health South Florida and the $400-million Sun Life Stadium renovation as large non-residential or commercial developments underway in 2015 and 2016. Similarly, the $478-million Miami Beach Convention Center’s renovation and 60,000-square-foot expansion by Clark Construction Group is a major non-residential development slated for completion in 2018. These developments include anticipated projects such as development of 2.6 acres at Miami Dade College’s downtown campus, which took bids in early 2016, and the Miami Innovation District, which, if approved, will be a tech hub with over 3 million square

Jeffrey Gouveia President & General Manager, Southeast Region, Suffolk Construction

Miami is a progressive market when it comes to construction and development. The proof can be seen in the amazing projects that have gotten approvals and are under construction. Buildings in Miami are getting more complex. They are not just functional, but they are making bold statements.

This is a testament to the creative environment that Miami fosters. This creativity allows for a broad diversity of products to be developed. You don’t see much conformity here like you might in other cities.

One challenge to this market’s growth potential is labor costs. We have seen these surge tremendously, and it is a concern for the industry at large.

Fortunately, we at Suffolk have a consistent group of trade partners that we work with on many of the larger projects that draw the most labor, allowing us to come up with the most efficient design and make decisions that are calculated, rather than reactive. Intensive planning is key. Part of our strategy is to get people involved as early as possible so that we can make the best plans and begin assembling our teams and allocating labor before construction begins.

The South Florida market continues to show strong potential. High-end luxury residential product remains viable, mostly because there is a limited number of the super high-end units, and these projects are intended for a select group of buyers.

So long as the balance remains consistent, that market will continue to see strong performance.

Another high-performing area is retail. The fact that there are two giant mixed-use projects— Brickell City Centre and Miami Worldcenter—with massive retail components being built so close to each other speaks to the level of demand for more shopping options in this city. When people think of Miami they think of style; they think of highend brands. All of these things speak to the fact that Miami is an international city—a true global destination. There is a certain energy here. And because of these factors, people continue to come in droves. www.capitalanalyticsassociates.com

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feet of office space and 2.4 million square feet of residential space.

Related to Miami’s robust tourism market is the hotel industry; 19 hotels opened in 2014, with 17 scheduled for delivery in 2015. By October 2015, the total number of rooms rose by 4.3 percent year-to-year according to STR, Inc. Hotel developments, much like office space, are increasingly being built into mixed-used spaces such as the 236-room EAST Miami in Brickell City Centre and 1,800room Marriott Marquis Hotel and Expo Center in the $1.75-billion Miami Worldcenter.

Foreign capital Post-recession construction in Miami-Dade has been dominated by condominium towers that, in lieu of loans from wary domestic banks, were largely financed by buyer investment via the informally adopted 50-percent deposit rule. Common in Latin America, the practice requires buyers to invest 50 percent of the unit cost, 90 percent of which can be used to finance construction.

The practice is not a regulatory obligation, and in 2015, Swire and The Related Group opted to temporarily reduce deposits to 30 percent at select properties. Reasons for reducing the rate and raising commission rates indicate difficulty in selling, perhaps due to devalued foreign

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currencies, and could sway developers away from a saturated condominium market sitting on over eight months of inventory as reported by the DDA. Despite a strengthening dollar, foreign real estate investment represented 36 percent of South Florida real estate investment at $6.1 billion, according to Miami Association of Realtors—including condominium deposits. However, with a struggling Latin American economy and the Panama Canal expansion, the dynamics of foreign construction investment are changing, particularly with increased Asian interest.

CBRE reported $913 million in foreign commercial real estate investment in Greater Miami for the first half of 2015, dramatically raising its global ranking as a foreign commercial capital recipient from a top 50 recipient to a top 10. A 2015 Marcus & Millichap report highlights that though data is limited, a substantial number of foreign condominium buyers are transitioning to incomegenerating retail properties valued below $50 million, demonstrated partially in a 17-percent year-to-year rise in transaction velocity for this type of retail properties. If the condominium market experiences an expected cyclical plateau, foreign investors may transition to incomegenerating retail and commercial real estate markets.

CONSTRUCTION OVERVIEW

Increasing loans Lending from regional and local banks has increased from original pre-recession lows as evidenced by record-breaking transactions and lending volumes, but developers have continued to embrace alternative financing tools. Overall, commercial lending volumes in Miami-Dade, as measured by lending firm BridgeInvest, have risen significantly between 2009 and 2014, increasing from $3.5 billion to $11.4 billion. Stringent post-recession lending conditions in local and regional banks drove developers to alternative financing sources, including the aforementioned 50-percent deposit practice and increased reliance on out-of-state specialized real estate development firms.

In 2015, major condominium loans included $118 million for Related’s ONE Paraiso in Edgewater and a nearly $134-million loan to the Property Markets Group and S2 Development for Muse, a 47-story residential tower in Sunny Isles Beach. Florida East Coast Realty’s 83-story Panorama Tower, slated to be the tallest building in Miami-Dade, secured a record $340-million loan in May 2015 and is also receiving Chinese investment via the EB-5 visa program to help complete the $800-million project. In early 2016, the Miami-based Terra Group acquired a $91.2-million loan for Eighty Seven Park from United Overseas Limited, a Singapore-based bank.

Going green and embracing multi-use Two trends of major residential and retail construction projects are mixed-use and environmentally conscious designs. The $4-billion mega projects—American Dream Mall, headed by the Triple Five Group and scheduled to begin construction in early 2017, and 183-acre SoLe Mia, headed by LeFrak and Turnberry Associates, which broke ground in June 2014— embrace a combination of office, retail and hotel space with the latter including residential as well.

The mixed-use $1.05-billion Brickell City Centre incorporates LEED certification into its residencies while its retail section will include a Climate Ribbon. Other major developments with LEED certification include a part of Dacra’s growing 1.2-million-square-foot Design District and Lionheart Capital’s 2.8-hectare Ritz-Carlton Residences in Miami Beach. Reasons for developers to be environmentally-conscious include marketability, reduced energy expenditures and the incentive of an expedited county review processes. LEED certification can also increase asset value as energy consumption savings can be significant to buyers; the U.S. Green Building Council reported in 2015 that LEED certification increased office property values an average of 6 percent when adjusted for occupancy rates and, on average, raised

Compared to major global cities, Miami is an infant.

When folks look back on this market, they will say that this is the moment when Miami matured from a vacation destination to a city with strong cultural offerings and business opportunities. Many people in our industry are coming to Miami because of the growth opportunities, not just because their families are rooted here. The more highly trained and educated entrepreneurs that come here, the better “fertilized” this market will be.

A trend in the residential segment is a movement toward larger units. Luxury buyers want more space while out-of-town buyers are bringing their families here, not simply using units as investment property or vacation homes/rentals. Another key development is the 50-percent deposit requirement for preconstruction sales. This has strengthened the buyer pool and validates the market.

Though there is a labor constraint, it is not localized at the general labor level. The volume of development has dramatically increased and the industry is stressed, from general contractors to architects, engineers and developers. In addition, city inspectors are stressed, affecting our ability to get timely inspections needed to maintain schedules.

To keep pace, we recruit qualified staff from outside South Florida, while firms in the market are routinely poaching labor from one another.

For a long time, South Florida was stigmatized as an unsophisticated market for construction and design. As an increased level of savvy buyers entered the market, and projects started to command higher prices, the quality of developments and design improved. Today, world-class architects are designing sophisticated and innovative projects here. Additionally, South Florida is emerging as a leader in green buildings. LEED requirements spur builders to integrate eco-efficient, low-voltage systems, temperature and climate control and glazing materials, to name a few.

Brad Meltzer Southeast President, Plaza Construction www.capitalanalyticsassociates.com

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planning,’ integrating both technology and infrastructure design in order to find the most efficient solutions to accommodate the city’s growth,” Noreiga says. “In the future, we will employ such methods as creating higher parking structures, increasing parking rates at peak times, along with other strategies to ensure that the city runs smoothly from the perspective of parking.”

Downtown Miami saw a marked increase in condominium construction in 2015.

construction costs by less than 2 percent. A 2014 CBRE report identified Miami as a top-10 U.S. city for green building adoption for its high rate of LEED certification.

Just as builders are considering the environment in terms of preservation, they are also coping with South Florida’s subtropical weather. In anticipation of Tropical Storm Erika in August 2015, construction projects were halted and precautions were taken to secure sites to prevent damage that would delay project delivery.

Related to environmental concerns is traffic congestion, which has increasingly become a construction issue in Miami-Dade. On the construction side, developers are building mixed-used spaces that allow residents to limit driving and are seeking to build around emerging transportation hubs in what is known as transit-oriented development (TOD). Projects such as MiamiCentral, or the smaller Metrorail-based 184-unit Grove Station Tower apartments, developed by Grass River Property, LLC, are demonstrative of TOD. The City of Miami is also promoting TOD by seeking proposals for developments near Metrorail stations and the Omni bus terminal. Proposals to upgrade and develop around the Douglas Road Metrorail station ranged from $191 million to $310 million, indicating that these are substantive projects. Despite the rise of TODs, the city is improving current transformational infrastructure for the long-term. As Miami Parking Authority CEO Arthur Noriega tells Invest: Miami, parking will continue to be a challenge alongside mass transit as Miami grows, requiring thoughtful problem solving. “The Miami Parking Authority has begun the process of ‘smart 64 | Invest: Miami 2016 | CONSTRUCTION

Looking ahead Condominium and commercial developments were credited with creating a skilled construction labor shortage as early as 2013. Even with job fairs and federally sponsored construction training programs, labor shortages persisted throughout 2015. Swire reported a labor deficit for Brickell City Centre in June 2015 despite offering competitive pay. Miami Worldcenter is slated to create 10,000 jobs but has faced community criticism while negotiating with city officials and unions for subsidies developers claim will create labor opportunities in economically depressed neighborhoods. Another challenge to construction projects is financing as Latin America’s economic growth is projected by the International Monetary Fund to hover around 1 percent. Economists cited by the Miami Herald in January 2016 reported that Latin American economies already negatively impacted county-wide employment growth. With a high condo inventory and slated deliveries for 2016 and 2017, Alicia Cervera Lamadrid, managing partner at Cervera Real Estate, noted in July 2015 in the South Florida Business Journal that some developers may opt to sell properties rather than develop. These transactions create fiduciary benefits for development companies—especially with property values as high as 15 percent in Key Biscyane and Sunny Isles Beach according to the county’s property appraisal office—but delay actual construction.

Another challenge to construction is county impact fees, which have steadily risen according to a county schedule. The fees increase upfront development costs as they must be paid before construction and have base rates as high as $14,000 for single family homes and $10,000 per condominium unit depending on location and square footage. Projects such as NR Investments’ Canvas, a 513-unit, 36-story tower, show that these fees can be as high as $4.85 million.

With the projected plateau of the condominium market and scarcity of both land and labor, construction costs in 2015 have risen, but so has spending. In 2016 and 2017, major challenges will include transitioning a skilled construction labor force into more diverse projects and away from a saturated condominium market, securing domestic financing from cautious banks and addressing local infrastructure concerns.

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Attracting the world How mixed-use developments are bringing world-class buyers to Miami and making it a global real estate destination

Stephen Owens President – Swire Properties Does the fact that Brickell City Centre is a mixed-use development insulate it from the slowdown affecting other projects in the Miami market?

Today, retailers across the globe are a little more cautious about expanding because of economic conditions in Europe, Asia and Latin America—all of which have struggled in 2015. While Miami’s condo market remains active, and while Swire continues to sell units at a good pace compared to other developers, this activity is half of what we were seeing in 2013 and 2014. All of these factors have been exacerbated by the strong U.S. dollar, which contributed to the late 2015 cooling of Miami’s condominium market. On the other hand, Miami’s hotel market—the third best in the country—continues to be promising. The benefit of the multi-use concept is that—whether we find ourselves in a booming economy, or one that, like today’s, is a little bit more stable—the synergistic sum of the parts is collectively greater than the individual parts.

What does the future for mega projects in Miami look like?

As the conditions of the market become more difficult, one’s ability to deliver another project with the same elements as Brickell City Centre becomes much more challenged. We can attest to the complexity of executing a project like this—and in our case, there was only one developer who controlled all aspects of the project. We did not have to coordinate between multiple developers, contractors, architects, owners and lawyers, and it was still a challenge. Developers will have to face these challenges in building mega projects while helping Miami’s transportation issues and contributing to the city’s economy.

In October 2015, Swire submitted building plans for the remaining undeveloped land on Brickell Key. What are the company’s plans for this land?

Some would argue that the undeveloped waterfront land on Brickell Key is the most valuable and prestigious real estate left in Miami’s urban area. We think the site is appropriate for luxury residencies. Moreover, the area’s proximity to Brickell City Centre, with all the new retail and dining options it will offer, will make this land even more valuable than it already is.

The more value we create for Brickell City Centre, the more value is added to Brickell Key. It’s like having a fine wine in your cellar that you can only drink once in your lifetime. From our perspective, this land will only become more valuable the longer we wait as there are only a few sites left and we are thinking about what to do with the best one—there is an enhancement value in simply holding. We are going to take our time in the future developing this final site. www.capitalanalyticsassociates.com

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Community building: Commercial structures in Miami-Dade are being designed to reflect a more collaborative work culture Digital technology and cloud-based data sharing promise the ability to work from almost anywhere. However, recent developments in non-residential construction in Greater Miami reveal that the market for designated office space continues to generate significant economic impact for the region. Collaborative workspaces and community-oriented buildings increasingly motivate the contemporary design and marketing of offices, urban campuses and master plans for neighborhoods throughout Miami-Dade.

In 2015, Pipeline Workspace added a added Coral Gables and Doral sites to its network of co-working facilities in Miami-Dade. Philippe Houdard, co-founder of Pipeline Workspaces, tells Invest: Miami: “We are currently experiencing a significant and irreversible change in the way people are working… many individuals and companies have begun to acknowledge that certain benefits of working face to face have been lost.”

Pipeline is premised on flexibility and networking. In addi­tion to social and career development programming, it offers memberships for the use of varyingly sized spaces (ranging from common areas to full office suites) rather than long-term rental agreements.

As a result, its members include both mature, “bluechip” companies, like Microsoft or Uber, as well as young startups or new overseas companies looking to enter the Miami market. The goal is to curate an entire work experience that encourages spontaneous communication and business development among members. The Brickell/Downtown Miami area alone boasts over 20 co-working offices, according to a listing by the Miami Downtown Development Authority.

These numbers are projected to rise in 2016, alongside growth in the number of startups and research industries supported by a burgeoning shared economy in Miami-Dade County.

A spike in local entrepreneurial activity and global shifts in work habits have contributed to the growth of co-working spaces in Greater Miami. According to a 2015 report from the Kauffman Foundation, Miami

The rise in startups has boosted the number of co-working spaces, especially in the downtown area.

ranks second in startup activity among 40 metro regions surveyed across the U.S.—an increase from its third place position in 2014. The region’s upsurge in co-working spaces also reflects a large number of freelancers and home-office workers. Indeed, the percentage of American workers who work entirely from home, while still low, grew from 4.8 percent in 1997 to 6.6 percent in 2010, according to one U.S. Census Bureau report. However, working remotely also produces a feeling of alienation. Co-working facilities, which offer space for solo and collaborative work alongside areas for relaxation and play, provide a key social component for freelancers and startups.

The trends in Greater Miami also reflect a global upsurge in co-working spaces, which increased by 36 percent in 2015. Tere Blanca, president and CEO of Blanca Commercial Real Estate, tells Invest: Miami “Co-working spaces appeal to companies with up to 15 employees, which is consistent with Miami’s high concentration of entrepreneurial small and mid-size businesses.” Presently, approximately 7,800 co-working spaces operate around the globe, reported Deskmag, an online platform that covers developments in co-working and published the first Global Coworking Survey in 2015. www.capitalanalyticsassociates.com

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Brickell City Centre is one of several mutli-use developments under construction in Miami-Dade.

The view that providing more spaces for cross-disciplinary socializing also leads to new business collaborations and financial gains has changed office design beyond commercial co-working facilities like Pipeline. Skanska USA, the construction managers for the Stempel Complex at Florida International University and Chris Evert Children’s Hospital at Broward Health in Fort Lauderdale, made communal spaces crucial to both projects. MacAdam Glinn, senior vice president for South Florida at Skanska USA, tells Invest: Miami, “Builders need to take the surrounding environment into consideration when they begin a new project. Every community has its own personality and its own needs.”

Rather than starting with a design framework that prioritizes efficient spatial arrangement, Skanska designs according to the needs of the work performed in the space. “Rather than basing construction solely on industry standards and cost-effectiveness, our approach also asks how buildings can enhance the work performed in the space and in turn benefit the people and purpose it serves,” Glinn says. Skanska’s emphasis on “building centers of communities” in Greater Mi68 | Invest: Miami 2016 | CONSTRUCTION

ami extends to the company’s working process. Collaboration guides negotiations with owners, architects and other stakeholders—an approach, Glinn emphasized, that increases the opportunity to include expansive communal spaces in buildings for science and technology industries, for whom collaboration is key.

Bill Hunter, project leasing manager at the University of Miami Life Science and Technology Park, defines moments of interaction between like-minded, highly-educated individuals as “creative collisions.”

Encouraging such “collisions,” whether in hallways, at public events or on lunch breaks, motivated the design of urban research parks in the Miami Health District (the second largest in the nation) because they encourage worker productivity, attract investors and secure financial success for regional innovative tech and biotech companies. In recent projects by Zyscovich Architects, such as the Miami Dade College Wolfson Campus Student Support Center, the architectural footprint of creative collisions appears as a large, central staircase and widened corridors, with meeting pockets outside of classrooms for conversation. Bernard Zyscovich,

CONSTRUCTION ANALYSIS

the firm’s founder, summarized this approach to Invest: Miami as “purposeful design”: “every single square foot of the building is a learning space.”

Recent work by Zyscovich Architects includes several projects that address collaboration at the neighborhood scale. In a master plan for Moishe Mana and his holdings in 30 acres of Wynwood, Zyscovich is creating a unique development and investment opportunity based on a collaborative co-venture in a neighborhood rather than

tourism or real estate condos. “What is great about Miami is that we are full of neighborhoods,” Zyscovich tells Invest: Miami. “We build around the neighborhood’s character rather than its form. People no longer wish to be out in a suburban office park with surface parking lots.”

Such projects indicate that business leaders, developers and government officials in Miami-Dade now believe that companies and their workspaces need to integrate within increasingly safer and cleaner urban centers, connect to public transportation and provide employees with access to cultural and educational facilities.

According to Blanca, the growing attention to building workspaces in neighborhoods and closer to residential areas results in part from the region’s transportation challenges. Blanca tells Invest: Miami, “Pockets of urban development are also sprouting up in historically suburban markets, which reflects how workforce demographics are impacting office development.” A lack of public transportation and long commute times remain commonly cited problems among experts and the general public—and, most importantly, arenas for future development.

While co-working spaces provide the flexibility needed by entrepreneurs in tech startups and life sciences, architects and developers are also recognizing Miami-Dade’s strong need to invest in attracting a diversity of skilled workers. For Blanca, the key to successful growth in the office market is a strong employment base. This requires affordable living spaces, strong transportation infrastructure and education. Zyscovich, who has designed several secondary schools and cultural spaces, including the 7th Avenue Transit Village, argues that a strong, local employment base means providing workers with access not only to capital but also to knowledge. “In a world of luxury, the real luxury is space, safety, landscape and beauty,” Zyscovich says. Greater Miami’s strongest future asset will be establishing spaces in which workers and employees in a variety of fields can be productive—individually as much as socially.

www.capitalanalyticsassociates.com

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Heading north: As developable land becomes more scarce in Miami-Dade, developers and buyers seek opportunities in neighboring Broward County North of Miami-Dade, in Broward County, investment and development in residential, retail and commercial real estate is growing. Although the county—whose most famous city is Fort Lauderdale—is no stranger to development, the pace and clientele is different from the predominantly foreign-born wealthy elite associated with Miami-Dade. Rising prices in Miami-Dade’s market have driven people north in pursuit of more affordable oceanfront and downtown real estate. The Fort Lauderdale Downtown Authority estimates the downtown population will grow by over 25 percent in the next two to three years, from the current 12,000 to over 15,000.

Seeing this underserved market’s potential, developers are introducing major residential and retail projects. Due to rising property costs and market saturation in Miami-Dade, developers have moved north along the 24-mile coastline, adding 83 new residential towers with about 8,000 units.

Big savings Miami’s median home price rose from $180,000 in December 2010 to $291,000 in February 2016 as reported by housing firm Zillow. Although Zillow also reports Fort Lauderdale’s home prices have risen, the median home price in February 2016 was $275,000. Even with an hour-long commute, the savings of living in Fort Lauderdale—where the average rent in December 2015 was $1,851 compared to Miami-Dade’s $2,109—combined with the ease of finding housing, make the city a viable option for commuters. An August 2015 New York Times article noted the cost of a condo per square foot in Broward was nearly half of what a similar property in Miami-Dade would be. As Jean Francois Roy, founder and president of Ocean Land Investments tells Invest: Miami, “The majority of our buyers are coming from Broward County; however, we see more and more buyers coming from Miami because of issues related to traffic and price per square foot.” Major developers, including Miami-based Related Group, Kolter and Oak

Broward County offers more affordable real estate options compared to Miami-Dade.

Tree, have pursued projects in Broward. Commercial real estate brokerage Marcus & Millicap reports that though Broward’s rent grew an estimated 8.2 percent year-to-year in November 2015, prices were not slated to eclipse Miami-Dade’s given its market value growth.

The residential influx is palpably affecting Broward. The median age of residents in Hallandale Beach dropped from the 70s in 2005 to 47 in 2015. Similarly, young professionals, unable to afford spaces in Miami, are gravitating to “live, work, play” spaces in downtown Fort Lauderdale. Dev Motwani, president of Merrimac Ventures, purchased the 250,000-square-foot Las Olas Riverfront in downtown Fort Lauderdale in 2011, seeking to redevelop it as a mixed-use space with retail, entertainment and residential spaces. Real estate developers have proposed office towers in Fort Lauderdale to draw urban professionals and increase its multi-use appeal.

Although headlining developments are primarily big firm condo projects such as Kolter’s 46-story Las Olas condo/hotel tower or Related’s 42-story Icon Las Olas, apartment buildings are increasingly valuable. In downtown Fort Lauderdale, numerous properties such as The Manor at Flagler Village—originally from Related—and Related’s New River Yacht Club are offered as apartments, not condos, while Stiles Residential Group and Rockefeller Group are still deciding whether a new Las Olas tower will offer apartments or condos. This addresses an apartment deficit in Miami-Dade that has exacerbated the housing shortage and is likely to boost Fort Lauderdale’s appeal to those priced out of Miami-Dade. Downtown Fort Lauderdale is molding to a “live, work, play” model financially unattainable for many in Miami-Dade. www.capitalanalyticsassociates.com

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Retail boom Along with an influx of residential developments, including coastline condos and apartments centered around urban cores, Broward’s retail centers are growing, including popular mixed-use developments. Broward is beginning to provide experiences comparable to Miami’s world-renowned shopping. Hallandale Beach, previously a community of mostly retirees, will be the site of a Chateau Group development with more than 140,000 square feet of retail, 280 hotel rooms and 727 residential units in two 53-story towers. With a population of less than 40,000 and 4.55 square miles of land, the city is set to be the site of more than 20 developments, including offices, government buildings and more retail.

Downtown Fort Lauderdale’s retail markets have grown, with rents pushing upward to an average of $60 per square foot as reported the South Florida Business Journal. Still, prices are below the $100-plus rents reported by CBRE for Miami Beach markets. Driven by residents’ desire for walkable shopping environments and low vacancy rates, Fort Lauderdale’s retail market has been growing steadily for the past five years according a 2015 JLL report.

Larger developments like the $1-billion mixed-use Galleria Mall expansion, with a 45-story residential tower, show how spaces are being remodeled to adjust to changing consumer demands. Few developments are as lofty as Metropica, which broke ground in October 2015. As K Group Chairman and CEO Joseph Kavana tells Invest: Miami, Metropica will develop a new urban core for Broward. The $1-billion project will have 1,250 residential units, almost 500,000 square feet of retail and 650,000 square feet of office space.

Looking ahead Broward’s demographics, real estate market and funding sources are changing. While Miami historically attracted much of South Florida’s international capital, Broward is becoming attractive to foreign investors. According to industry publication Hotel Management, Miami drew about $641 million in foreign hotel investment from 2012 to 2014, and Broward followed closely with $614 million. Although foreign capital is beginning to drive development in Broward—Metropica is built heavily on capital from Latin America—it remains a largely domestic market focused on locals. The question is not whether Broward will continue to grow for the next few years but if this growth will transform Broward into an extension of Miami-Dade with a mirror economy or if Broward will find its own path to growth.

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When we purchased the land for Metropica over 20 years ago, we recognized development could move in two directions: north from Miami-Dade or west from Eastern Broward. Sunrise was an ideal location as it is at South Florida’s epicenter, close to four counties and four highways, including I-95 and the Turnpike. Despite proximity to these highways, we don’t have the traffic issues other areas have.

Sunrise’s enormous potential is no secret. Companies are migrating to the area, portending job growth.

In 2014, American Express relocated its regional headquarters to Sunrise. The building is currently under construction and will bring over 6,000 jobs to the area. Organizations contributing to job growth and critical mass in West Broward include Cleveland Clinic, Nova Southeastern University, Florida Atlantic University, Broward College, HBO Latin America, the FBI Miami Field Office and the BB&T Center—all close to Metropica.

Setting Metropica apart from similar mixed-use projects is its design and the size of its land. The 65 acres have office, residential and retail areas, with the residential area in the center. Spanning 20 acres, a park and recreational areas surround eight luxury condominium towers. Residents will easily access amenities and enjoy unique dining, shopping and entertainment. Although these elements are close by, the project balances peaceful living and a lively downtown area to cater to buyers’ needs. Though Broward sees much business activity, people move here to find peace and harmony and avoid chaotic city life.

We are creating an oasis in a suburban setting.

Moreover, as a transit-oriented development, Metropica promotes pedestrian life and bike use. Because we are located at the edge of the Everglades, it is important to minimize our environmental impact.

Ultimately, not only are we creating a place to enjoy your days, but a place you will love to live in.

Joseph Kavana CEO, K Group Holdings

Environment & Infrastructure: Featuring insights from Jose R. Mas, CEO, MasTec and Vincent Signorello, President & CEO, Florida East Coast Industries, shared exclusively with Invest: Miami

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Climate agenda: Miami-Dade is creating strategies to face environmental issues and ensure its infrastructure can sustain growth Miami-Dade County continues to be in the limelight for one of the world’s top issues: climate change. The county has used this spotlight to raise awareness of rising sea levels and has even considered creating water cities as a legitimate option in the ever-challenging opportunity to adapt to and capitalize on its environment. Adding to this, a growing population puts more strain on the aging infrastructures built in this unique and vulnerable environment. However, technological innovation in uncharted waters, such as new pumps successfully keeping Miami Beach streets where they have been installed, is a short-term testament to an evolving long-term challenge as Miami-Dade embraces its role as a resiliency leader.

The continuing threat of climate change The perplexingly warm winters seen across the globe that closed out 2015 were attributed to strong occurrences of the Arctic Oscillation and El Niño, yet they are a palpable daily reminder of climate change. The World Meteorological Organization reported that atmospheric concentrations of carbon dioxide, the primary greenhouse gas emitted from human activities, surpassed 400 parts per million in spring 2015. Equal76 | Invest: Miami 2016 | ENVIRONMENT & INFRASTRUCTURE

ly alarming, the Met Office and the Climatic Research Unit at the University of East Anglia reported that Earth’s average temperature has increased 1.02 degrees Celsius. In November 2015, the United Nations Conference on Climate Change held in Paris (also known as COP21) made headlines for setting stringent targets for global emissions and temperatures: a net zero increase in emissions for the second half of the 21st century and a 2-degree Celsius (35.6 degrees Fahrenheit) limit on global temperature rise from pre-industrial levels.

At COP21, President Barack Obama remarked that “when it’s flooding at high tide on a sunny day, fish are swimming through the middle of the streets” in Miami, referring to king tides. King tides happen every year, especially during the fall, and are experienced most in low-lying Miami Beach. However, in parts of Miami Beach where new pumps were installed in 2014 as part of a $200-million project, there was no flooding. An additional 50 pumps at the cost of $400 million are planned for construction as sea-level readings from mid-September to mid-October have been consistently 6 to 12 inches above predictions.

About 60 percent of Miami-Dade County is less than 6 feet above sea level. Because of this, the coastal areas

ENVIRONMENT & INFRASTRUCTURE OVERVIEW

of the county such as the cities of Aventura and Coral Gables and the barrier islands of Miami Beach, Virginia Key, Key Biscayne and Fisher Island, along with low spots more inland, are the most vulnerable to sea-level rise. Floods also occur on sunny days due to the porous limestone subsurface geology, which causes water to bubble up from the ground and into the streets. Nuisance flooding, in effect, has become chronic flooding.

One of the most daunting results of climate change is sea-level rise, which is occurring at accelerating rates.

Financial risk projections associated with this rise are staggering. Without considering climate change, Miami has $400 billion in assets vulnerable to flooding—the most of any city in the world, according to studies conducted for an upcoming book called “How the World Breaks: Life in Catastrophe’s Path, from the Caribbean to Siberia.” Considering sea-level rise and economic growth, the exposed assets could reach nearly $3.5 trillion by 2070, the highest for any urban area in the world. In 2015, experts at the Risky Business Project, led by Michael Bloomberg, Henry Paulson and Tom Steyer, quantified potential storm-related economic losses. They concluded these losses are projected to increase to an average of $1.3 billion yearly

by 2030 and by $4 billion yearly by 2050. Additionally, $69 billion in Florida coastal property currently not at risk for flooding could flood at high tide by 2030. By 2050, the figure climbs to $152 billion.

As part of resiliency initiatives, Miami Beach plans to elevate 30 percent of its lowest-lying streets. This will require massive amounts of fill soil, which is not locally available as dredging in Biscayne Bay is prohibited. Innovative solutions, such as a 15-foot artificial plateau made of recycled construction fill, have been built by city engineer Bruce Mowry. However, there is speculation that the adaptation measures are concentrated where economic activity is strong, leaving the western part of the county unprotected—places like the City of Sweetwater, which has a median household income of $34,000, and where streets flood with heavy rains. Although unpopular, one plan suggests gradually allowing towns between 1 and 4 feet above sea level to gradually become wetlands again, while cities, the county or the state offer relocation assistance to homeowners.

International attention and grassroots initiatives South Florida maintains its reputation as “the poster

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during 2015 with goals of restoration, advocacy and alliance building. Similarly, the Miami Foundation, with its broad mission of connecting local philanthropists to community needs, has recently decided to support climate-change initiatives. Grassroots events continue in Miami-Dade, such the Adopt-a-Tree program, the Seventh Annual Model Water Tower Competition for high schoolers and Baynanza 2015, which included the 33rd annual Biscayne Bay Cleanup Day. Improvements to water and sewage infrastructure Miami-Dade’s unique intersection of global metropolis, agricultural center and fragile ecosystem makes maintaining adequate water and sanitation infrastructure monumentally challenging. In fact, the Miami-Dade Water and Sewer Department (WASD), one of the largest utilities in the nation, treats 300 million gallons of water and disposes of 315 million gallons of wastewater daily. In 2014, the WASD unveiled its 20year, $13.5-billion Capital Improvement Program (CIP) that will have a projected economic impact of 16,470 new jobs and $24.9 billion. Achieving these major water-related feats in such a delicate ecosystem requires coordinated efforts by several parties spanning public and private sectors. Reflecting this, the Coral Gables Estimated Water & Sewer Bill to Average Customer/Monthly (Fiscal Year 2015-16)

$73.62

$70

$60

$40

$51.11

$50

$74.92

$80

$55.25

child for the impacts of climate change” as Florida U.S. Representative Debbie Wasserman Schultz once said.

In September 2015, Miami hosted the Climate Reality Leadership Corps, training sessions from former Vice President Al Gore’s Climate Reality Project. The sessions aspired to gather a “climate corps” for grassroots action, drawing a crowd of 1,200 from 80 different countries, according to the Miami Herald. The summit coincided with a king tide and was held before COP21 as a way to promote the conference.

Also drawing international attention, 2015’s Art Basel featured a visceral environmental piece called “Holoscenes.” A display of adaptation and surrender, “Holoscenes” featured people doing common activities in aquarium tanks that filled and emptied with water at varying speeds based on real-time environmental data. Participants sometimes held their breath for more than three minutes. Meanwhile, a November 2015 Vanity Fair spread highlighted Miami Beach’s ability to continue to evolve and thrive as a booming real estate and art hot spot despite active sea-level rise.

National attention continued as a December 2015 article in the New Yorker highlighted University of Miami geological science professor Hal Wanless’ prediction that sea levels will rise 10 to 30 feet, much more than previous projections ranging from 3 to 6 feet.

In October 2015, the U.S. Department of Energy granted $800,000 in technical assistance to the Southeast Florida Regional Climate Change Compact, a coalition comprised of Miami-Dade County and three other contiguous counties that was named one of 16 White House Climate Action Champions in 2014. The money will allow local governments to finance energy efficiency upgrades in public buildings and green community programs, including public transportation improvements. This will help the Compact achieve its goal of cutting the region’s emissions 80 percent by 2050. Miami-Dade County commissioners unanimously passed six climate change resolutions recommended by the Miami-Dade County Climate Change Advisory Task Force, including engaging federal agencies and the insurance industry and integrating climate change into the county’s master plan. Furthermore, Miami-Dade added a chief resiliency officer position.

The county also passed a resolution toward strategic implementation of the Environmentally Endangered Lands Program. However, despite national spotlighting by Obama’s visit to Everglades National Park for Earth Day, the Everglades Restoration Plan continues to be tied up by politics, with no action yet taken despite saltwater intrusion and sawgrass retreat. The Everglades Foundation implemented a grant program

$30

$20

$10

$0 Palm Beach County

Broward County

Fort Lauderdale

Miami-Dade

Source: Miami-Dade Water & Sewer Department

ENVIRONMENT & INFRASTRUCTURE OVERVIEW

Chamber of Commerce and the Latin Builders Association adopted resolutions to support the county’s CIP in September 2015.

WASD was awarded a $15.4-million loan by the Florida Department of Environmental Protection’s (DEP) Drinking Water State Revolving Fund for 16.5 miles of new piping to replace expired pipes with 2,330 water service connections and 1,400 water service conversions in Shenandoah. The first phase will be completed in February 2017, and DEP has committed to an additional $9 million in 2016 to complete the project.

Due to continuing nutrient pollution concerns, future state law will prohibit disposing treated wastewater into the ocean by 2025. To obey this future law and to avoid contaminating the Biscayne Aquifer—the subsurface aquifer that supplies much of the county’s water—the WASD drilled a 10,000-foot-deep well to dispose treated wastewater—much deeper than typical injection wells. The project required a custom-built 2,500-horsepower drill with a drill bit diameter of more than 6 feet. Similarly sophisticated technology, WASD’s new Tunnel Boring Machine, designed and manufactured in Germany, was unveiled to connect the Central District Water Treatment Plant on Virginia Key to a sewer main on Fisher Island. Additionally, fall 2015 saw the groundbreaking of a 72-inch wastewater line that will replace a line that ruptured in 2010. Contracts exceeding $12 million and $6 million were also awarded to Lanzo Construction and Insituform Technologies, LLC, for lagoon improvement and pipe-laying projects, respectively.

MWH Global, one of America’s largest employee-owned companies and a natural resources and engineering firm, was awarded a $1.6-billion contract for engineering design improvements to the three main wastewater treatment plants in the WASD. Scheduled to be completed December 1, 2019, these improvements demonstrate the intersection of the old (infrastructure more than 30 years old) with the new (the use of laser-reality capture to understand the current system and the use of 3D building information modeling for new designs). MWH will also improve the community through this project as the company is a participant in the Community Business Enterprise program, which partners with community business leaders to maximize the economic benefits of local projects.

However, even with such milestones, challenges remain. Miami-Dade County gave the City of Miami Beach a cease and desist order for operating unpermitted temporary pumps. Permits for these temporary pumps have been sought as more than 50 permanent pumps will be placed throughout the city in the next

State legislators are supporting laws to increase Florida’s alternative energy production.

five years. Additionally, adhering to an already-large budget while keeping bills low will be a challenge.

Even with these projects and a 6-percent increase in water bills, Miami-Dade prides itself on having one of the lowest water bills in the country. dvances in solar and alternative energy A One of the COP21 agreements was for participating countries to double their current investments in clean energy technology research by 2020, which bodes well for Florida’s universities and businesses. One partnership born in 2015 was between Florida Power and Light (FPL), Miami-Dade County’s sole power provider, and Florida International University (FIU); FPL will erect 5,700 solar panels with a power capacity of 1.6 megawatts over a 600-space parking lot at FIU. FPL also plans to triple its solar capacity by the end of 2016. Additionally, Conergy, an international solar firm, moved its U.S. headquarters to North Miami in 2016 to continue expanding its U.S. and Latin American business.

Despite these milestones, Florida state policies and major power providers have long been criticized for being anti-solar. The state ranks third for solar rooftop potential, yet less than 1 percent of its generated power is solar. According to the Miami Herald, Gore harshly criticized this at his summit believing it “robs the state of one of the best solutions to combat climate change.” FPL phased out reimbursements for residential solar panels by the end of 2015. Current legislation only allows the state’s four major utilities to sell elecwww.capitalanalyticsassociates.com

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tricity, blocking solar companies from competition.

An amendment to the state constitution supporting solar power is being advocated by Floridians for Solar Choice, and Florida Representative Fred Costello is proposing a bill to change the law so that residents and businesses generating more than two megawatts can sell electricity to their neighbors or back to the grid. Both proposals are still up for debate.

Other forms of alternative energy, such as wind, don’t have nearly as much potential as solar but are being explored. For example, WASD completed a $25-million waste-to-energy unit at the South District Wastewater Treatment Plant in summer 2015. The unit uses methane landfill gas to run the plant and generate electricity but continues to experience technical difficulties for which solutions are currently being designed.

environmental challenges as its delicate ecosystem requires innovative and costly solutions, sometimes with a trial-and-error approach. While state legislation appears reluctant to assume the role of a ready enabler, the world is watching as strides made at local and grassroots levels take hold. MiamiDade County’s WASD is well under way in implementing its CIP, which will be an example for the rest of the world in terms of improving aging and failing infrastructures while combating coastal flooding and circumventing climate change.

Although solar energy has faced contention, the upcoming tripling of solar power output

by FPL and the relocation of a major international solar company should prove solar energy fiscally and environmentally beneficial. The county’s precarious situation has and will continue to necessitate innovation to protect its sun-and-fun-andthen-some ambiance, attracting people and business from all parts of the world.

Miami Beach plans to elevate 30 percent of its lowest-lying streets.

Looking ahead Miami-Dade County continues to face monumental

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ENVIRONMENT & INFRASTRUCTURE INTERVIEW

Building capacity How Miami-Dade’s public and private sectors are addressing the strain of rapid growth on the county’s underlying infrastructure

Jose R. Mas CEO – MasTec How is Miami’s development boom affecting the county’s infrastructure?

We are growing up as a city and to sustain this, we need to think about infrastructure. One issue that is not a priority, but should be, is our water and sewer systems. Our physical plant hasn’t been updated in decades and it is decaying fast. This is a hard political issue because we would have to spend money on it.

We are also seeing limitations in terms of electricity.

We don’t have the land to create big power-generation plants to support the pace of development. One option is to expand the existing power plants across the state, but this would mean putting in power lines, which is difficult because of environmental issues. Florida Power and Light (FPL) is trying to build a new transmission line from Turkey Point all the way to Downtown Miami and they are facing some community opposition. No one wants to see those big power lines on their street, but we have to find the right balance between aesthetics and meeting our growing needs.

If something doesn’t happen soon, construction will have to slow down because electric utilities will not be able to meet the demands of those buildings. In terms of a viable renewable resource, there has been discussion about putting wind turbines in the Gulf Stream to generate hydroelectricity. Solar is another promising frontier for us.

How will the use of public-private partnerships (PPPs) address South Florida’s infrastructure needs?

PPPs are more efficient than wholly public sector-managed projects because private companies are more efficient when it comes to deploying capital.

The major challenge comes about when public amenities turn into business ventures. Right now, we pay very low rates for water. But if Miami-Dade Water and Sewer Department (WASD) becomes a public-private

venture, rates may go up. WASD is a significant monetary contributor for the county. What will happen if we take that source of income away from the county’s general budget? While there is a tradeoff, we need to invest in our infrastructure for our long-term needs.

MasTec is also active in building telecommunications infrastructure. How will this evolve in Miami-Dade?

Technology is a big driver for our future, and we are going to see a massive expansion of gigabyte speed internet. Although we have a great telecommunications infrastructure, most of the facilities in Miami are still copper-based and it would take rebuilding the infrastructure to increase of the amount of fiber that is needed to give consumers higher speeds and much higher bandwidths. www.capitalanalyticsassociates.com

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Leveraging assets How transportation companies prepare for the future using the infrastructure of the past

Vincent Signorello President & CEO – Florida East Coast Industries The Florida East Coast Railway has long been an economic catalyst for the state, strategically moving both people and goods. When it comes to Miami’s logistics sector, what are the growth drivers?

Miami’s advantage in logistics is linked to the fact that its industrial complex is highly connected to Latin America. In fact, a significant amount of the warehousing in South Florida is occupied with many products that are ultimately destined for the region, whether that comes in through PortMiami or other South Florida ports. Miami’s unique position as a logistics hub helps companies like ours expand our industrial footprint. To do this, we are making smart investments in both Latin America and the Caribbean, and also leveraging the hub—that is, we are using Miami-based human resources, technology and ownership of assets to benefit the projects that we develop elsewhere.

What advantages does Florida East Coast Industries (FECI) hold when it comes to Florida’s infrastructure development?

Established more than a century ago by American pioneer Henry Flagler, Florida East Coast Industries is the parent company of many leading real estate, transportation and infrastructure businesses. Our primary assets—namely Henry Flagler’s railroad infrastructure and prime land holdings—laid the foundation for our companies. We are continuing to leverage these unparalleled assets to either promote the businesses that have historically been built around them, or to build new businesses that help contribute to our overall goals.

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FECI is also investing greatly in Florida infrastructure, specifically transit-oriented development. What trends do you see in that space?

The next generation of Floridians want to live, work and recreate near transit. We are actively addressing that demand by developing a network, some of which, like Brightline, is transportation infrastructure, and some of which is real estate infrastructure. From these projects, there are number of lessons. For one, we are financing and executing Brightline without any public funds. Because private entities are concerned with the time value of money and because private projects are less subject to bureaucratic processes that bog them down, such projects can be completed in a more timely and cost-effective manner. For another, our transit-oriented developments capitalize on existing assets, namely rail infrastructure, to build a pedestrian-friendly environment and connect residents and commuters with transit options.

Transportation: Featuring insights from Michael Reininger, President, Brightline, Marilyn DeVoe, Vice President, American Airlines, Gary J. Spulak, President, Embraer Aircraft Holding, Inc., Alice N. Bravo, Director, Miami-Dade County Department of Transportation & Public Works and Kasra Moshkani, South Florida General Manager, Uber, shared exclusively with Invest: Miami

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Better connectivity: Investments in public transit and sustained growth in passenger air traffic bolster connectivity in Miami-Dade Transit is a critical component of Miami-Dade’s dynamism for use by commuting residents and tourists. Miami-Dade is the Gateway to Latin America for people as well as cargo, receiving more international flights from Latin America than any other U.S. city. Increasingly, visitors are becoming permanent residents, straining its transportation system. Although Miami-Dade offers significant and varied means of transportation, a challenge for the county has become managing operational costs, which can be as high as $1.5 million daily, according to the Miami Herald, while facilitating growth and addressing the costly traffic congestion. With transit as a top priority for all stakeholders, local leaders and business community members have continued to invest and collaborate on solutions to keep Miami-Dade moving, whether its cargo arriving at PortMiami or visitors on the upcoming Brightline train system.

Improving public transit To ease highway congestion, a $70-million Tri-Rail expansion to downtown Miami is scheduled for April 2016.

With funding from various sources—including the county, the City of Miami and the Downtown Development Authority (DDA)—it is part of several projects improving Miami-Dade’s ease of transportation. Alternatively, the 86 | Invest: Miami 2016 | TRANSPORTATION

proposed Bus Rapid Transit (BRT) system along four primary Miami corridors garnered support from county officials and local leaders based on successes in Cleveland, Ohio and Bogota, Colombia, and would be a fractional cost compared to train system expansion. Whereas the Orange Line Metrorail expansion to Miami International Airport (MIA) cost $506 million, a BRT system covering the same 2.4-mile route would be $150 million.

Advocates have also pointed to the success of the shuttle bus and circulator routes, which, according to Miami Commissioner Francis Suarez, averaged over 360,000 monthly riders with service in 27 of the county’s municipalities in November 2015. Suarez noted this success led to the decision to double the program’s size in 2016. Metrorail added a pilot express route in December 2015, providing service between Dadeland South and Palmetto to Brickell and downtown. Despite concerns over raised tolls and development cost overages, Miami-Dade approved expansion of circulator routes and Metrorail stations in November 2015 and is promoting more transit-oriented development (TOD) to incentivize residents and tourists to utilize public transit.

Goals for local transportation The Miami-Dade Transit (MDT) 10 Ahead Transportation

TRANSPORTATION OVERVIEW

Development Plan, published in August 2015, outlined short-term and long-term goals for improving the reliability, safety and convenience of Miami-Dade’s Metrorail, Metromover and Metrobus services, serving almost 1.5 million monthly riders. According to the report, $1.12 billion worth of fully funded projects, as well as $87 million in partially funded projects, will start or finish before 2025. These projects add an estimated annual operating cost of $15.24 million. With over $1 billion in funded projects, MDT is seeking financing for over $750 million in unfunded projects between 2016 and 2025. Funded projects include a $22-million bus route linking Dolphin Station to Downtown via an intermodal terminal, $37 million worth of bus upgrades with new stations, WiFi and GPS tracking and a $51-million Golden Glades intermodal terminal in northern Miami-Dade. Changes to the Miami-Dade government organization are aimed at easing investment and promoting TOD. New director, new direction In 2015, Miami-Dade County Mayor Carlos Gimenez combined public works and transportation under a new Transportation and Public Works Department and appointed Alice Bravo as its director. The department is tasked with maintaining roads and operating public transit with the hope that a holistic approach will allow for collaboration between transit route operators and transportation providers, both public and private. Part of this new direction was unveiled at the 2015 Transportation Summit held by the Citizens’ Independent Transportation Trust (CITT), which highlighted four themes, including demand for greater public-private partnerships (PPPs) to fund improvements. An emphasis on TOD, securing project investment and diversifying transportation options were other conference themes. Addressing short-term development goals feeds into longer-term goals of reducing congestion and promoting greater ridership across the county’s public transportation resources.

Reflecting state strategies Miami-Dade’s emphasis on intermodal stations and stronger inter-regional connection, such as the Brightline rail system connecting Central and South Florida, fits into a state-level strategy. In early 2016, speaking with the Jacksonville Business Journal, Florida Department of Transportation (FDOT) Secretary Jim Boxold highlighted the need for agency collaboration and the effective use of technology, instead of just increasing access, as key to reducing congestion. Florida’s government has committed to a $10-billion-per-year transportation budget—supplemented by billions provided by a federal highway bill approved in December 2015. As of August 2015, Brightline

America’s love affair with the car grew from important societal developments. For baby boomers, the automobile represented access and social mobility.

Getting a license meant freedom. Today, the car is increasingly becoming a hindrance to freedom.

What sets Brightline apart is that we are heavily invested not only in the idea of transit-oriented development but also in owning and operating a major component of the transportation resource as well.

Almost everywhere else, the real estate component is the purview of the private sector entity, and transportation the purview of a public sector entity; we are invested in both. Individually, they represent robust businesses, but combined, one leverages the other, giving us a position nobody else has replicated. Our approach is decidedly private sector, different for example, from New York’s subway, which is necessarily public. This allows us to focus on profitability and serving clients, rather than maximizing ridership by keeping prices low at a profit loss.

South Florida is ideal for the Brightline train service.

Historically, city development in Florida occurred along rail lines that have been maintained for the past 120 years, creating distances too long to drive comfortably and too short to fly efficiently. We want riders to be able to tap into existing and emerging modes of transportation to increase accessibility throughout South Florida. When we started, services like Uber and city bike-share programs were not around, but since then, have grown immensely and we are finding ways to connect with these. Meanwhile, in developing our stations, we focus on variety, which means diverse uses of space—whether office, retail or entertainment. Looking ahead, multi-modal transportation development will continue to present more growth opportunities.

Michael Reininger President, Brightline, Brought to you by All Aboard Florida. www.capitalanalyticsassociates.com

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was authorized to receive $1.75 billion in state funding, signaling a state commitment to multi-modal transportation and intrastate connectivity.

Tourism, an essential economic driver to the state and Miami-Dade, exceeded records with over 105 million tourists in 2015. Increasingly, tourists prefer to drive due to the sub-$2-a-gallon gas prices, stressing Florida’s congested roads. Brightline President Michael Reininger tells Invest: Miami that tourists seeking easier access between Orlando and South Florida present a major market for the train.

Handling inner-city traffic woes Miami-Dade is also improving transportation by diversifying modes of transportation—be they bus, rail, car or even biking—as well as increasing access points via multi-modal development to promote alternative and non-driving transportation. In Miami-Dade, according to driving intelligence firm INRIX, average time spent in traffic increased from 28 hours in 2012 to 37 hours in 2014.

Traffic is an inconvenience, causing employee tardiness and dissuading consumers from going out; a May 2015 Miami Herald survey found 70 percent of surveyed business people believed traffic hurt local business.

With a growing population and a tourism boom, the state and county are ensuring transportation access.

Though the county operates 800 buses with more than 95 routes, a Miami Herald examination of 27,000 complaints found an unreliable schedule accounted for 44.5 percent of them. Residents have cited long travel times as incentives to drive. At a November 2015 government event— during which local transportation officials introduced improvement plans—Miami Commissioner Francis Suarez said daily work commute ridership on public transit is 12 percent, approximately 80 percent of city residents preferring their personal vehicles.

MDX initiatives Joining citywide efforts to reduce traffic congestion, the user-funded Miami-Dade Expressway (MDX) announced on August 3, 2015, it was seeking community input for its Strategic Master Plan. In partnership with the Miami-Dade Metropolitan Planning Organization, MDX has proposed development for multi-modal park-and-ride facilities serving as rail platforms and offering rail services. Other options explored by MDX include express bus routes to support metro bus services.

Local politicians are backing a plan to use 25 percent of MDX revenues, combined with auto tag renewals, to fund public transportation. The idea, originally proposed

by County Commissioner Xavier Suarez, would issue $1.2 billion in bonds to address congested corridors including parts of Northwest 27th Avenue, U.S. 1, Baylink and State 88 | Invest: Miami 2016 | TRANSPORTATION

Road 836. In 2015, MDX instituted open-road tolls and raised prices, contributing to an “A” rating from credit firm Fitch. MDX reported in December 2015 that revenue for the last quarter exceeded projections by 5.5 percent, but Executive Director Javier Rodriguez warned the monthly average of $20 million may not be sustainable.

Expansions and updates to rail systems To relieve inter-county congestion, the Tri-Rail is expanding to downtown, connecting Broward and Miami-Dade.

Slated to begin operation in early 2017, the expansion is projected to cost $70 million—of which the state is expected to provide $20 million. Following local and state development strategies, the expanded stops, such as slated Brightline hub MiamiCentral, are being built as multi-modal and TOD sites. This expansion is part of a larger set of developments, including service to MIA, which began April 2015. In July 2015, County Commissioner Esteban Bovo indicated the expansion will cost $102 million and could be operated by either Tri-Rail or Metrorail pending usage negotiations with rail owners CSX. Baylink, a proposed light-rail connecting downtown to Miami Beach, has lingered in the development phase since the 1980s, but garnered renewed interest when French firm Alstom offered to pay for a $148-million 5-mile portion of the total $532-million 15-mile system in exchange for a 35-year operational contact. In December 2015, the Miami Beach Commission authorized the development and commenced development assessments.

Alstom estimates a daily ridership of 23,000 along the 5-mile route, and officials have stated it could be linked later to a downtown system as originally proposed.

Expanding air networks MIA serviced a record 44.3 million passengers in 2015, compared to almost 41 million in 2014. The 8.3-percent increase was most felt in the over 11-percent surge in domestic travelers. International travel grew approximately half of this rate at 5.5 percent—hindered by Latin America’s economic downturn. Over 450 aviation companies in Miami-Dade provide about 21,500 jobs with an average wage of $71,740, according to The Beacon Council. MIA data estimates a $33.7-billion economic impact with related jobs accounting for almost 25 percent of county employment.

Following a strategic plan laid out in MIA’s $6.4-billion Capital Improvement Program, over $1.6 billion, of a permitted $1.9 billion, has been issued in bonds to pay for MIA infrastructure improvements, including a fourth runway, 4 million square feet of terminal space and 130 new gates. Another financial tool authorized in February 2016 allows for quick capital generation via a commer-

TRANSPORTATION OVERVIEW

cial paper program authorized for up to $200 million in short-term notes for a five-year period. Approved infrastructure enhancements include a $32-million contract with Florida Power and Light (FPL) Services to upgrade utilities and save over $40 million in energy and water spending and a $65-million expansion of Concourse E to accommodate American Airline’s increased traffic.

Concourse H is slated for a $63-million renovation— using local, state and federal funds—to accommodate the world’s largest passenger craft, the A380.

MIA’s service by seasoned companies and newcomers has grown at MIA. In October 2015, Turkish Airlines started daily nonstop flights between Istanbul and Miami, and British Airways unveiled A380 flights and twice daily flights to London. Air France announced seasonal A380 flights set to last through March 2016.

SWISS expanded weekly flights from seven to 11. Budget airline Frontier began flights to Las Vegas in October 2015 and newcomer VivaColombia began twice daily service to Medellin, Colombia in December 2015.

Historically a Latin America-focused hub, MIA is expanding its Asian travel market. Though MIA has a China Airlines cargo route, there is no nonstop passenger flight to East Asia. With total passenger growth between Asia and Miami at 3.6 percent since 2009, considerably below yearly total averages, creating growth is a challenge MIA hopes to address. As of early 2016, MIA officials were in talk with China Airlines to establish nonstop flights to Taiwan. Expanding its service to Latin America, MIA will likely offer commercial flights to Cuba as the island nation and the U.S. formally re-established air service on February 16, 2016. American Airlines, JetBlue, United Airlines and other airlines have expressed interest in submitting flight proposals to the U.S. Department of Transportation with American specifically mentioning MIA. In 2014, the Federal Transportation Department ranked MIA as third for small business development due to added local business presence. Promoting local economic investment, MIA announced negotiations in early 2016 with Chef Creole and Jackson Soul Food to expand its restaurant selection and provide visitors a Miami-based culinary experience. Other user-focused improvements include adoption of the Global Entry kiosk entry customs program, expediting entry for U.S. citizens, and improved connectivity through the Tri-Rail. In addition, Tri-Rail is developing an app to provide instant train location updates using GPS. Funding new initiatives CITT oversees the 2002 People’s Transportation Plan and manages the $250 million generated annually by the half-penny tax. Created to fund local planning and

Marilyn DeVoe Vice President, American Airlines

Two years ago, American Airlines merged with US Airways, becoming the largest airline in the world.

Since then, our efforts have been centered on becoming the greatest airline in the world for our customers, employees, stakeholders and partners.

Miami International Airport (MIA) is our third-busiest hub, following Dallas/Fort Worth and Charlotte, and our largest hub for international flights.

We continued to pursue growth in this vibrant city. Just last year, we added six new destinations from MIA: San Antonio, Austin, Kansas City, Salt Lake City, Barranquilla, Colombia and Monterrey, Mexico. But our growth is not just measured by the number of flights and destinations we serve; it is also seen in the number of widebody aircraft—that is, double-aisled planes—we operate at MIA. Each widebody added to our hub has a significant economic impact, contributing, on average, 16 new pilots and 45 flight attendants.

As the largest airline operating at MIA, accounting for roughly 70 percent of traffic and servicing a high volume of international passengers, it is more important than ever to ensure our processes are streamlined. Technology is playing a key role, from online check-in, to the free mobile passport app that allows U.S. and Canadian citizens to be granted clearance within four seconds of arriving at U.S. Customs. American’s crewmembers are provided with Global Entry, which further eases the effect of our people on the Customs and Border Protection system. We are also working to create more exit lanes and recently began connecting international baggage, thus easing the flow for international customers arriving to or transiting through MIA. MIA remains important to American’s present and is key to our future success. Apart from its strategic location, what makes Miami unique is the supportive, collaborative spirit of the government and the business community. In the past couple of decades, American Airlines and the Greater Miami area have both experienced incredible growth. And, looking ahead, we see a promising future for both.

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TRANSPORTATION OVERVIEW

development transportation initiatives, it is intended to funnel transit taxes to local municipalities. Instead, the tax has struggled to cover operational transit costs due to a cost-service deficit wherein the $1 million generated in fares every three days fails to cover the daily $1.5-million operational cost in 2015, raising criticism of the tax. Local leaders have recommended charging for the Metromover—free since 2002—siphoning MDX revenues and returning $81 million commandeered by Miami-Dade in 2008 to address deficits and allow the Transportation Trust to alleviate transit woes. Another 2015 proposal includes allowing public services like the Metromover to be privately operated, with the hope of saving money and perhaps generating profitability.

Local leaders also want to expand PPP projects, allocating $250,000 in the county’s 2016 budget for PPP consultants to help fund infrastructure development and maintenance. Although the county relies on federal, state and local revenue to fund transportation developments, it is embracing private sector collaboration.

An example is the $34-million 7th Avenue Transit Village—located on 7th Avenue and 62nd Street—a multi-modal, mixed-use development providing I-95 and bus route access as well as apartments and community spaces. Brightline, a largely private endeavor with limited government funding, is an example of multi-modal, mixed-use spaces that create small neighborhoods with retailers, residences and offices near transportation hubs—Tri-Rail and Metrorail—promoting city services, thus increasing ridership and reducing congestion.

Another major change in which PPPs can play a major role is in the bottom-up design of projects. Rather than relying on FDOT to bring project proposals to Miami-Dade, allowing local firms to design and recommend advancements would increase private-sector innovation, community involvement and government responsiveness. To control future project costs, Mayor Gimenez has considered expanding PPP funding by allowing developers access to property taxes along new routes.

Looking ahead Miami-Dade’s strength as a trade hub and tourist destination comes with a cost. Local leadership and residents are reluctant to accept new taxes in light of controversies surrounding the half-penny tax. Instead, leaders want to expand the role of PPPs and attract industry experts while pursuing inter-agency planning and operational collaboration—changes likely to create investment opportunities in real estate, technology and project financing. Miami-Dade’s congestion is deleterious to its economy, but with proposals like the BRT, light-rail and regional rail connections, its transit situation is poised for change.

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In 2015, Embraer celebrated its 36th year in South Florida. Embraer’s arrival in Florida was our first step toward globalization by establishing our U.S. presence. The U.S. was the most important aviation market at the time, and North America continues to be the strongest global market for Embraer aircraft. We arrived with a vision to become a major player in global aerospace and are now the highest aggregate value exporter in Brazil, a traditional commodities exporter.

For us, 2015 was filled with milestone achievements, notably a record sales order book value of $22.9 billion and the highest delivery volume of business and commercial aircraft in five years. Last year, Florida was key to the 10th anniversary of our executive jets business, launched in 2005 as a pillar of our diversification strategy. Since 2011, we have produced over 130 executive jets, valued at over $1 billion, in Florida. Most of these jets operate in the U.S., but we have also exported aircraft from Florida to 12 other countries. In 2013, we established a production facility for our defense and security business in Florida, and last year, it achieved its primary goal of delivering the first light-attack aircraft to the U.S. Air Force for Afghanistan.

To sustain global competitiveness, investment in innovation, research and development, new technologies and process enhancements.

Our corporate presence in South Florida is critical to our business development activities across the world. Over the last three decades we have witnessed Miami’s evolution from a hub of the Americas to a global platform for international business. As more businesses, industries and aviation companies recognize Miami’s key role in the global market, we will see more customers for commercial and business aircraft in our community.

Gary J. Spulak President, Embraer Aircraft Holding, Inc.

TRANSPORTATION INTERVIEW

Car-optional city How transit solutions are being devised for a geographically challenging metropolis

Alice N. Bravo Director – Miami-Dade County Department of Transportation & Public Works What are the unique factors that shape transportation development in Miami-Dade?

Congestion is a national issue, but it plays out differently at the local level. We have to provide our own solutions, and, thankfully, we have amazing assets: our Metrorail system, the free downtown people mover, and an expansive bus system that all together move nearly 350,000 people per day. As to unique factors, I think our geography provides some challenges. For example, Downtown Miami is on the water and we have to work with bridge systems. Moreover, Miami-Dade— bordered on the west by the Everglades and on the east by the ocean—is highly land-constrained. For transit purposes, the fact that our development is constrained to north-south is actually a benefit. We are fortunate we are not like, say, Denver, which doesn’t have natural boundaries that limit how far from the city center a person can live as the more remote someone finds themselves, the greater the challenge to provide a viable transportation option.

Finding transit solutions is a leading agenda item for the county. What are your department’s top priorities?

We want to ensure our transportation system is clean, safe and reliable. Another goal is improving convenience, and this is being done through adjusting existing routes using data analysis that tells us where the greatest bottlenecks lie. We are also integrating tech solutions to improve signal timing and rider information and developing mobile apps that provide accurate, to-the-minute information of the location and arrival times of buses. While expanding the current infrastructure is part of the long-term solution, this involves decisions that are made outside of our department’s control. For us, it is equally important to increase ridership and utilization of existing assets, not simply adding more to the mix.

How is the department working to increase ridership?

We have hired on team members whose work focuses on “ridership enhancement.” Our marketing initiatives involve developing critical partnerships with key stakeholders—for instance the Miami Downtown Development Authority (DDA), the Greater Miami Convention and Visitors Bureau (GMCVB), local chambers of commerce, as well as corporate entities. We want to spread the message to the public that “hey, you are part of the mobility solution—and what’s more, you can save money and make better use of your time by using mass transit.” Furthermore, we are working to promote the opportunity for employers to join the corporate discount pass program. Employers receive a $130 tax break per participant and can help employees save on parking and ease their commutes. www.capitalanalyticsassociates.com

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Innovating transit: Miami-Dade turns to technology to address its traffic woes Like many other major metropolitan areas in the U.S. and around the world, Miami-Dade is turning to technology to transform transportation not only to make it more efficient for systems, but also to make transportation easier, faster and more enjoyable for users.

Although it remains technically illegal since it began operating in June 2014, ride-sharing service Uber continues to operate virtually without enforcement as Mayor Carlos Gimenez says a legal operating agreement with Uber is in the works. Ride-sharing services show no signs of declining popularity as UberPool, a ride-sharing version of Uber and a win-win for lower prices and less traffic, was launched in November 2015.

Additionally, transportation startups have taken off in 2015. Many were featured at Miami’s second annual Smart City Startups festival, Urbantech.

One featured startup at the event was Placemeter, a NYC-based startup that uses data taken from smartphones and securi­ty cameras in its proprietary soft­ware.

The software then analyzes traffic, pedestrian and behavioral patterns for use by businesses, cities and agencies in order to make cities more efficient. Similarly, and potentially beneficial for local governments, TransitMix is an online tool that brings together public information for transit planners to analyze routes and calculate costs and view area demographics to easily improve transporation models through all forms of transit, including unregulated transit that has never been mapped in places like the Philippines and Vietman. This technology has the potential to revolutionize transit planning through easily-accessi­ble quick analysis that can potentially replace paper drawings and extensive spreadsheets. RallyBus proclaims itself as “pop-up mass transit,” with a fleet of luxury coaches, school buses, limo-buses and other shuttles that can be ordered online for transportation to large events like concerts, festivals and sports games. Individuals reserve a spot and, once there are a minimum number of res­ervations, users receive confirmation. A Washington, D.C.-based startup, Transit Labs, launched a pilot program called Transportation Application Program in Miami-Dade County as well as Atlanta and Macon, Georgia and Birmingham, Alabama

Technology startups are giving commuters more transportation options, helping alleviate congested roads.

in 2014. Public transportation officials use the program to become more efficient and effective when planning budgets and new projects. The program uses multiple sources of data and algo­rithms to compare to similar metropolitan areas and traffic systems. Many of these startups use technol­ogy and publicly available data, with the emphasis that much of the smartphone data that is obtained is not stored, but only aggregated for an overall analysis.

Miami-Dade consistently ranks in the top 15 cities for worst traffic and remains in the national spotlight as highlighted in a November 2015 article in Reuters on Miami’s traffic gridlock problems. Despite limited Metrorail expansion (which in 2014 connected Miami International Airport with Downtown Miami yet still lacks connections to places like Miami Beach), the Metrorail ridership has increased 24 percent in the last five years.

Water buses, which would not require the massive capital that a Metrorail expansion would, are be­ing pushed www.capitalanalyticsassociates.com

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TRANSPORTATION ANALYSIS

as a serious option. In addition to adding hybrid buses to the fleet, a $2-billion bond has been proposed to equip Miami-Dade Transit buses with WiFi and to develop a new mobile app to track the buses in real time.

Improvements to public transit are not just proposed for professionals, however. In Miami-Dade, the fourth largest school district in the U.S., some students spend more than two hours on the bus each day. Verizon has partnered with the county to provide WiFi connectivity and GPS tracking in school buses to maximize learning time. As the largest complaint by riders in Miami-Dade is the schedule and improving bus travel times, eight traffic lights in the Kendall area were recalibrated to match bus tracking software in 2015, meaning lights now stay green when buses approach, improving schedules. Smart­phone tracking was also brought on board to 10 percent of the bus routes, with the other 90 percent set to adopt the tracking system by spring 2016.

However, as the vast majority of commuters still drive, the county is also aiming to improve its roadways.

Started in 2009, a $560-million construction project includes a revamp of the massive interchange connecting State Roads 836 and 826. Partially funded by federal stimulus money, it is expected to be completed in the first quarter of 2016. Furthermore, another nearly $150-million project is dedicated to adding a lane to 836 and rebuilding interchanges, providing more efficient right-hand ramps, with expected completion in 2018.

Much of the new project is funded through the conversion of 836 into a toll road in 2013. Although met with backlash, Miami-Dade Expressway Authority (MDX) greatly increased the number of tolling spots in 2015: for example, in an 18-mile stretch of highway, the number of tolling spots increased from six to 26, and one toll increased by 5 cents. MDX plans to use much of the tolling revenue in order to implement several projects over the next five years, such as adding a flyover ramp near 82nd Avenue, eliminating left-lane exit ramps at one of 836’s most congested spots, creating connection patterns from 836 to NW 27th Avenue and creating an extra lane in each direction where 836 nears Interstate 95. In September 2015, the Miami Downtown Development Authority announced that it would train and staff 22 traffic management officers. While a short-term fix to a long-term problem, New York City employs full-time traffic management officers. Another idea by MDX is being studied in 2016 to convert cargo rail to handle passenger trains, an idea which would cost $130 million as opposed to $3-billion price for expanding the Metrorail in the same area. Cumulatively, Miami-Dade County is exploring and pursuing several tech-inspired options to ease future traffic headaches.

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Uber’s mission is to make Miami more livable and better connected. South Florida is one of the company’s fastest-growing markets, driven both by local and tourist demand. Tourists think of Miami as a worldclass city and expect transportation options like Uber to exist here. Meanwhile, local riders tell us that Uber complements existing public transit options. Because ours is a 24/7 service, we are also providing an alternative to drunk driving, which has traditionally been a concern for a city like Miami, which is known for parties and nightlife.

Over the next few years, we want to continue to leverage our partnerships with the government and the private sector and launch initiatives to create transportation solutions for the community. The transit challenges in the region mean that South Florida offers many opportunities for innovation.

This is one reason that Miami is the eighth city where we’ve launched UberPOOL, our carpooling service. During Art Basel Miami Beach 2015, we launched UberBOAT in partnership with Stella Artois to provide an alternative transportation option connecting the mainland to Miami Beach.

Innovation is also fostered by the fact that Miami is emerging as a center for tech innovation and entrepreneurship. This allows us to forge creative partnerships with those who want to change the area for the better.

Our impact on the local community is also seen in the economic opportunities we generate. Our driver-partners come from diverse socioeconomic backgrounds—some are students at Miami Dade College, while others are retirees looking for extra income. In 2015, Uber launched UberUP (our urban partnership program), an initiative to work with urban communities to recruit 50,000 drivers in the U.S. East Coast region by the end of 2016, and we expect to meet at least 20 percent of that target in South Florida.

Kasra Moshkani South Florida General Manager, Uber

TRANSPORTATION ANALYSIS

Green solutions: Conscious of environmental sustainability, county stakeholders are seeking new transit solutions Providing adequate transportation within the nation’s eighth largest metropolitan area is not only challenging in general but also poses environmental concerns. Climate change is a threat that Miami-Dade County aims to disburden. Utilizing public transportation, especially for daily commuting, is one of the most significant ways citizens can reduce their environmental impact. Miami-Dade has been improving public transportation; November 2015 saw the start of the service of 60-foot, diesel-electric hybrid buses on the South Miami-Dade Busway, serving some of the most congested corridors such as Biscayne Boulevard and 27th Avenue. The buses are equipped with WiFi and can carry up to 100 passengers, as opposed to standard 40-foot buses carrying approximately 60 passengers. About half of the 43 planned hybrid buses are already in service. Additionally, Miami-Dade Transit (MDT) is testing biodiesel for their potential use in the new buses and has added over 900 bus shelters with solar-powered lighting. MDT is also allowing passengers to bring their bikes on board. Miami-Dade County also partnered with the National Renewable Energy Laboratory in March 2015 to launch a program to test hydraulic hybrid refuse trucks to compare their performance and emissions to the older conventional diesel vehicles. The study will also determine the best routes to maximize fuel economy for the vehicles. The county operates 35 of these hybrid vehicles and has ordered 29 more.

Alternative transportation methods are also one way local residents enjoy a more sustainable lifestyle. The City of Miami Beach is ranked 10th in the U.S. for bicycle use during work commutes, according to the 2010 census. Miami Beach uses the Atlantic Greenway Network (AGN) to create a regional alternative transportation network of bicycle and pedestrian trails and transit facilities by connecting various hot spots such as business districts, cultural centers, tourist attractions, residential neighborhoods, parks, schools and beaches. Eventually, the AGN, through the use of public-private partnerships, will link to a county-wide network of greenways and aims to integrate coastal resiliency and Citibike bike-sharing stations.

Miami-Dade’s sustainability plan GreenPrint is supporting the use of alternative transportation options.

These plans are part of GreenPrint, a sustainability plan currently being implemented in Miami-Dade County. Changing land-use planning and urban planning are also critical pieces, specifically transit-oriented development, the building of residences and commercial activity where there is access to public transportation. GreenPrint aims to add 10 million boardings to MDT between 2010 and 2020 and increase walking and biking trips from 10 to 16 percent of all trips. Unveiled in November 2015, a 2040 regional transit plan will bring together the transportation systems in Miami-Dade, Broward and Palm Beach counties. This will benefit those who commute to and from different counties daily for work. The plan will place a hub near Miami International Airport and aims to encourage more compellingly that more residents take public transportation. Furthermore, South Florida Commuter Service offers free transportation programs and services, such as carpool matching, vanpooling (allowing larger groups a subsidy to lease a van), public transportation assistance and emergency rides. Sustainable transportation improves the quality of life of residences and visitors, which can have major implications for the county’s economic vitality. www.capitalanalyticsassociates.com

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Trade & Logistics: Featuring insights from Charlotte Gallogly, President, World Trade Center Miami and Emilio T. Gonzรกlez, Director, Miami-Dade Aviation Department, shared exclusively with Invest: Miami

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More volume: Expanded infrastructural capacity, strong trade promotion and cutting-edge innovations are boosting Miami-Dade’s trade and logistics sectors Miami-Dade County has seen considerable positive development in its trade and logistics industries over the past year, and future developments, such as the opening of the Panama Canal in 2016, promise even more domestic and international growth. Florida boasts the second largest Foreign Trade Zone (FTZ) network in the nation, as $160 billion of goods flow through its airports and seaports. According to the Miami-Dade government, Miami Customs District #52 (South Florida) saw a trade surplus of $15.05 billion in 2014, one of the few districts in the country to see a surplus. Further emphasizing the county’s strategic role in the industry, large trade and logistics corporations are headquartered in Miami, including Ryder Systems, Inc., a Fortune 500 company, Japan’s Crystal Mover Services, Inc. and China’s Uni Logistics America, LLC. Miami-Dade’s local initiatives of developing trade and logistics curricula in secondary and post-secondary education ensures that county-based workforce development occurs in the sector. Moreover, Miami-Dade dominates in trade with Central and South America: while the county’s trade activities account for only 2.2 percent of the U.S.’s total trade, they made up 16.4 per98 | Invest: Miami 2016 | TRADE & LOGISTICS

cent and 20.1 percent of trade with South and Central America and the Caribbean, respectively, in 2014.

Global trade impacts Miami-Dade County is a dynamic global trade and Miami’s Top Trading Partners (December 2015) RANK

DESCRIPTION

Total YTD

1

Brazil

2

Colombia

$7,615,161,782

3

China

$6,417,715,149

4

Dominican Republic

$5,429,555,682

5

Chile

$4,954,784,069

6

Honduras

$4,433,569,528

7

Peru

$3,890,747,495

8

Argentina

$3,244,884,461

9

Venezuela

$3,153,143,222

10

Costa Rica

$3,109,329,871

$14,247,098,416

TOTAL TRADE

$106.85 billion Source: US Trade Numbers

TRADE & LOGISTICS OVERVIEW

logistics hub, despite facing challenges stemming from market fluctuations and geopolitics. For instance, the dollar steadily appreciated during 2014, contributing to the national trade deficit of $43.9 billion—a gap that has also impacted Miami-Dade. The county’s trade gaps, as documented by the 2014 Miami-Dade County International Trade Report, include declines in trade with Europe and Asia. Shifts in the types of commodities traded via Miami-Dade’s seaports and airports were also noted in the report, with machinery (communications and data processing equipment) down by 13 percent in 2014 compared to 2013. Stone and glass (gold and other precious metals) trade also dipped by 17.5 percent over the same time period. However, transportation represents a growing category in commodities trade, with a $322-million increase in imports and exports such as airplane and spacecraft parts.

Though the strengthening dollar and trade fluctuations impacted Miami-Dade County in negative ways, the area enjoyed gains over West Coast ports such as Long Beach and Los Angeles in 2014. The West Coast ports faced a nine-month labor dispute that led to East Coast counterparts seeing almost as much activity as the West. In February 2015, East Coast ports handled only 3 percent less cargo than West Coast ports, a significant difference from the 33 percent seen in July 2014. Despite reaching a resolution, the strikes meant that many shippers have rerouted their cargo to hubs along the East Coast, including PortMiami.

Other developments affecting PortMiami and the flow of goods include new safety and environmental regulations for the trucking industry introduced by the national government. Measures include a new rule introduced by the Federal Motor Carrier Safety Administration in December 2015 to combat driver fatigue; truck drivers will be required to carry electronic devices that log driving time. Slated for introduction in 2016, a new measure from the Environmental Protection Agency and the Department of Transportation mandates increased fuel efficiency for large rigs. This will impact trucks built from 2019 to 2027. It is unclear how these new regulations will impact transportation in and out of PortMiami.

Miami has also seen changes in trade levels with key partners, including Brazil, Colombia and China, with interesting implications for future investments.

Though Brazil’s gateway for U.S. trade is South Flori-

da, the Miami Herald reported that trade was down by 11.16 percent, or $3.5 billion, in early 2015. This can be attributed to Brazil’s economic problems, its currency, the real, dipping to a 10-year low earlier in 2015 and issues with Brazilians’ access to credit. Thus, it is predicted that Brazil will export far fewer high-tech products to Miami. China ranks third among South Florida’s trade partners, though in terms of volume, South Florida imports more from China than anywhere else.

However, counter to the situation with Brazil, trade between South Florida and China increased to $1.62 billion in the first quarter of 2015. Lastly, Colombia has seen nationwide trade drop, though South Florida’s trade numbers with Colombia have been less severe: U.S.-Colombia trade went down 21.49 percent in the first quarter of 2015 while South Florida’s trade with the Andean nation dropped only 13.3 percent.

Trade promotion at the state and local levels State and local initiatives have enhanced Miami-Dade’s standing in logistics and trade. At the state level, the Florida Department of Transportation (FDOT) has expanded and modernized seaports, spending $148.8 million in 2011 and $562.7 million in 2013. Key to Florida’s success is the development of intermodal centers, which facilitate cargo movement through various forms of transport, such as ship to rail and then truck. The growth in such centers can be attributed to Florida House Bill 599, which prioritized intermodal centers (along with increase trade flow in airports and seaports). FDOT funded the increase with the Intermodal Logistics Center Infrastructure Support Program.

In a follow-up to the Florida Trade and Logistics Study released in 2010, the Florida Chamber Foundation and FDOT outlined some of the accomplishments in 2014 since the first study, including the statewide establishment of global trade and logistics as a priority industry. With this emphasis, the state has created 23,000 new jobs in trade, transportation and logistics and 9,000 in manufacturing between 2010 and 2012.

Strategic goals identified by the study for the next three to five years include expanding Florida’s trade-related value-added services and expanding its share within global trade lanes.

An example of a local-level initiative includes the future creation of a new FTZ hub, overseen by PortMiami and operated by Prologis, an industrial property

Trade between South Florida and China increased to $1.62 billion in the first quarter of 2015.

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TRADE & LOGISTICS OVERVIEW

In 2014, Miami Customs District #52 saw a trade surplus of $15.05 billion.

owner. Prologis seeks to operate a 320,000-square-foot hub in Northwest Miami-Dade County, which will see a boom in warehouse space for merchandise. Furthermore, the FTZ enables merchandise to come through Miami without any customs charges or other tax levied and ensures that Miami grows as a major player in the distribution of goods to both Latin American and North American markets.

The Beacon Council has developed other initiatives to support trade and logistics. One involves developing training curricula for students to help them understand opportunities in the sector, develop the requisite skills and acquire positions. In conjunction with the The Beacon Council, local universities and colleges have supported the investment in workforce development by enabling the formation of student trade and logistics societies and the creation of a trade and logistics accelerator. Students enrolled in the new logistics and supply chain management major at Florida International University’s College of Business have seen firsthand what international logistics and global trade looks like by touring PortMiami, a field trip that enabled students to see the unique port in action.

This emphasis on trade and logistics is present even at Miami-Dade County public schools. A new global trade and logistics magnet program was introduced at Miami Central High School in 2015. Meanwhile, the Miami Dade College Homestead campus held a twoday event in July 2015 called the Trade and Logistics Summer Immersion Program to introduce new career opportunities to high school students at Miami Central Senior High School and Ronald Reagan High School.

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Deeper waters Started in 2011, the PortMiami Deep Dredge project deepened the port’s main harbor channel from 42 feet to 52 feet, allowing the berth of Post-Panamax vessels (Panamax vessels have a capacity of 4,400 20-foot equivalent units (TEU) while post-Panamax vessels allow a carrying capacity of 12,600 TEU). Both county and state governments celebrated its completion in September 2015, with the former investing $108 million and the latter $112 million. Governor Rick Scott had made the dredging a priority, promising to fund the $77-million federal shortfall the project faced in 2011.

Alongside the dredging project, other purchases and projects demonstrate the emphasis on increased efficiency and connectivity in the different types of logistics. New cranes enable servicing of the larger post-Panamax ships; the restoration of on-dock intermodal freight rails in partnership with the Florida East Coast Railway links PortMiami to the rest of the U.S. with quicker turnaround time; and a new tunnel directly from the port to the U.S. Interstate Highway System ensures faster movement of goods.

PortMiami is the only U.S. Atlantic logistics hub south of Virginia that can accommodate Post-Panamax vessels. Supporters of the project, beyond Miami-Dade and state officials include the Panama Canal Authority, with CEO Jorge L. Quijano saying of the project, “We are proud of our longstanding partnership with PortMiami and are certain that the synergies achieved through the Deep Dredge and the Panama Canal expansion projects will boost international trade and contribute to future economic growth by increasing job opportunities and revenues at both PortMiami and the Panama Canal.”

PortMiami currently supports 200,000 jobs across the state and contributes $27 billion annually to both local and state economies; the dredging at PortMiami is expected to increase jobs by 30,000 and increase its economic impact to $34 billion. The port also manages FTZ 281, which has over 3 million square feet of logistics and warehousing space. This means that companies providing logistics and import/export services have a competitive advantage through FTZ 281, with duty-free treatment and space within a major logistics hub.

In November 2015, PortMiami reached a 15 percent increase in container traffic, breaking a 10-year record. From September 30, 2014 to September 30, 2015, PortMiami moved 1.01 TEUs. This upward trend will only continue given the new multi-modal investment in the port. Trade partners that boost the movement of containerized cargo include Seaboard Marine,

TRADE & LOGISTICS OVERVIEW

which handles trade to Latin America and the Caribbean, and carrier alliances such as 2M, 03 and G6 that move cargo to Asia weekly.

PortMiami continues to make trade easier beyond its connections to the Panama Canal and investment in infrastructure. For instance, U.S. Customs and Border Protection has designated PortMiami as the Center for Excellence for Agriculture and Prepared Products.

This gave the opportunity for a consortia including PortMiami, the Greater Miami Chamber of Commerce and other businesses to pilot a perishable foods import program, focusing on blueberries and grapes from Peru and Uruguay.

Charging ahead in air freight Miami International Airport (MIA) plays a considerable role in Florida’s international trade, with more than $61.5 billion of international freight moving through the cargo hub in 2014. This value ranks MIA at the top of the nation, leading in specific sectors, including 55 percent of fish imports by air, 71 percent of perishable imports and 91 percent of flower imports.

In 2014, 1 million tons of international cargo passed through the airport. The top three exports include computers/peripherals ($5.47 billion), industrial ma-

chinery/parts ($2.2 billion) and telecommunications equipment ($4.17 billion).

Key infrastructure that supports MIA’s freight commerce includes cargo facilities that include 18 warehouses with more than 3.4 million square feet of office space. Additionally, MIA has access to 4.4 million square feet of cargo parking and to airside-to-landside facilitation of cargo movement. MIA has invested in new air route development as well by establishing trade routes to the Middle East/Gulf region and Africa. Other business expansion and promotional efforts are targeted to the Latin American/Caribbean region, ensuring it remains a dominant trade region. Furthermore, MIA offers financial incentives to carriers who consider servicing Miami. MIA’s long-term goals include making the hub an international airport of choice rather than solely a hemispheric hub as it stands now.

MIA saw its third consecutive year of growth in 2014, handling 2.2 million tons of goods, about 55,000 more than in 2013. New infrastructure needs to be developed to cope with this growth, and as a result the FDOT is working on a reconstruction project that aims to separate commuter and cargo truck traffic and connect the airport’s cargo area to Northwest 82nd Avenue. This project is slated for completion in 2016.

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TRADE & LOGISTICS OVERVIEW

Industrial real estate MIA and PortMiami’s high volume of cargo necessitates a vibrant industrial real estate market. Demonstrating the need for such space, the county vacancy rate in the second quarter of 2015 was 3.8 percent, and there was a net absorption of 836,000 square feet of industrial space. To keep up with demand, developers have built 462,000 square feet of industrial space during the second quarter with an additional 1.2 million square feet started for completion by the end of 2015. Still in the works is 3.4 million square feet of extra space.

Key developers include GBX Capital, a new Brazilian-based entrant in the market. The company is planning a 1.6-million-square-foot business park in Homestead to capitalize on Miami’s thriving industrial sector. Yet, that demand has not driven prices up; as of October 2015, prices for leases remained at $8 a square foot for the past two years due to developers seeking to fill spaces as quickly as possible.

However, some industrial warehouses, such as those in Wynwood, are marketed closer to $430 per square foot when positioned for large-scale redevelopment.

One such warehouse in Wynwood sold for $12.5 million. Developers are also repurposing industrial warehouses for multi-purpose projects, such as hotel, retail and apartment complexes. The rezoning of areas such as Wynwood from mainly industrial to mixed use is also raising rent prices.

Trade policies Many supporters of the Trans-Pacific Partnership (TPP) claim it will expand Florida companies’ reach into Asian Miami-Dade Industrial Stats by Market DESCRIPTION

INVENTORY (SF)

AVG. VACANCY ASKING RATE RENT (SF)

Airport, Doral

56.8 million

7.7%

$9.60

Central Dade

38.2 million

5.3%

$5.97

Hialeah

12.5 million

2.4%

$7.07

Kendall, Tamiami

12.3 million

1.9%

$9.83

Medley

38.7 million

4.7%

$8.22

Miami Lakes

6.3 million

7.1%

$8.16

North Central Dade

35.5 million

6.0%

$6.36

North East Dade

2.8 million

1.6%

$11.72

South Dade

4,5.8 million

5.4%

$9.72

Source: The Real Deal, November 1, 2015

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PortMiami supports 200,000 state jobs and has an annual economic impact of $27 billion.

markets as partner countries in the trade pact include Australia, Brunei, Canada, Japan, Malaysia, New Zealand, Singapore and Vietnam. Though Florida ships most of its exports to Latin America, 21 percent of exports are then sent to TPP partner nations, amounting to $12.5 billion in exports to TPP nations in 2014.

Amongst these countries, Japan was the biggest trading partner, with exports totaling $1.1 billion. Furthermore, in 2013, more than 14,000 companies in Florida exported to TPP countries, 93 percent of them small- and medium-sized companies. For example, Concept II Cosmetics, looks to launch a new collection targeting the Asian market, as they look to leverage the growing middle classes in Asian countries and their desire for U.S.-made goods.

The majority of U.S. products such as chemicals, transportation equipment, health products, information and communication products and consumer goods will enter TPP countries duty-free. Another purported TPP benefit is market access for food and agricultural products, which will affect the export of Florida products such as processed fish, grapefruit,

TRADE & LOGISTICS OVERVIEW

for another treaty, the Transatlantic Trade and Investment Partnership (T-TIP), with U.S. and European Union officials meeting in October 2015 to discuss details.

The proposed T-TIP would govern one-third of globally traded goods. Local Miami groups and individuals were present, including the Miami-Dade Green Party, which advocated for a more transparent process to understand environmental implications, and a Miami international trade lawyer who represents the American Association of Exporters and Importers and advocated against complexity in the trade process. Another round of negotiations took place in Brussels in December 2015 and more will take place throughout 2016.

beef and orange juice that have faced high tariffs in TPP countries. The TPP is believed to enable easier and greater access to TPP markets, as it is predicted to end 18,000 American tariffs.

Initial opposition centered on environmental issues, which previous trade agreements had shortchanged; however, the TPP will require signers to follow existing environmental treaties while limiting illegal fishing and wildlife trafficking.

Miami was the site for the 11th round of negotiations

Looking ahead Miami is poised to be a global logistics hub on an even larger scale, given developments such as TPP, the Deep Dredge, investments in industrial real estate and other state and local policies. Logistic and trade companies in Miami can take advantage of the fact that MIA is a worthy competitor in the air cargo trade, especially with Latin America: MIA exported $29.9 billion to the region in 2012 compared to New York City’s John F. Kennedy International Airport’s $1.6 billion. However, this also poses a challenge in that other air cargo hubs, such as Newark, Charlotte and Houston seek to take slices of the Latin American trade pie, not to mention competition from within Florida itself, such as Fort Lauderdale, Jacksonville, Orlando and Tampa. Another challenge that presents itself as an opportunity is that Florida’s trade activity lags in Asian markets compared to its booming commerce with Latin America.

This means that the county, with the new infrastructure at PortMiami and MIA along auxiliary services, can and should position itself as gateway for trade with Asian, Middle Eastern and African markets. Overall, the prospects for Miami-Dade County look bright and companies can take advantage of the unique talent supply, business climate, availability of infrastructure and intermodal facilities for international commerce.

Charlotte Gallogly President – World Trade Center Miami

Miami-Dade companies are experiencing an increase in trade with Asia, and we expect a further increase with the completion of PortMiami’s Deep Dredge Project and the opening of the Panama Canal expansion.

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Smart trade: In the era of third-party logistics, Miami-Dade is a leading market for the development of traderelated innovations Miami-Dade logistics companies innovate to meet the challenges of growing global trade. The global economy is projected to more than double by 2040, according to an Organization of the Petroleum Exporting Countries report. With this growth comes many challenges. Constant innovation, a willingness to engage difficult markets and a commitment to logistics training and education, established Miami as a top city for its business environment in Global Trade magazine’s 2015 rankings of America’s Best Cities for Global Trade. Looking ahead, these success drivers are building on firm market access and Miami-Dade’s history as a global trade hub. With the Panama Canal expansion slated to be completed in 2016, and the introduction of larger Post-Panamax freighting, a recent PortMiami estimate projects that Miami-Dade’s shipping volume will increase by a range of 100 percent to 400 percent. As reported in trade publication Inbound Logistics, the use of third party logistics (TPL) firms is increasing with client base growing about 5 percent annually across the board from 2014 to 2015, as TPL firms offer specialized skills, knowledge and connections related to customs brokerage, shipping solutions and warehouse storage. As Miami-Dade’s inbound and outbound shipping grows, TPL firms are staying competitive in a changing environment.

Interport Group of Companies and Flagler Global Logistics are two Miami-based firms offering TPL services that are growing in material capacity and services offered.

Chief Strategy Officer at Interport Gary Goldfarb tells Invest: Miami that while “[some] companies view logistics as nothing more than routes, we’re looking beyond that; we’re looking at how we can become integrated logistics solutions that address our customer’s needs beyond shipping from point A to point B.” The growing global economy poses challenges ranging from theft to customs compliance to quality assurance, and Miami-Dade’s TPL firms are evolving to face them whether it is technological innovation like tamper-proof Global Positioning System (GPS) tracking or organizational restructuring that better integrates customs checks and promotes synergy among different logistics sectors.

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TPL firms are becoming more popular in the trade and logistics industry due to their specialized services.

A legacy of innovation Goldfarb, an accomplished TPL veteran who has been part of the logistics industry since the 1970s, goes on to say, “Prior to the late 1960s, TPL did not formally exist, but because of its role as an entry point to the U.S. market, Miami was seeing developments in TPL, through warehousing and shipping solutions, virtually before anyone else. We practically invented what TPL is today.” Due to this necessity in establishing integrated logistics solutions to meet changing exporter and importer needs, Miami-Dade has crafted a path forward in a variety of ways.

A salient issue for TPL firms is loss prevention. While this form of tracking is widely used, for the complexity of 21st shipping, GPS technology can be dated. Interport has collaborated with universities and tech firms to create tamper-resistant GPS mechanisms that allow real-time tracking and provide container meta data, including temperature, when the container was last opened and when the container was moved off a ship.

“Once we were shipping a container with $1.5 million worth of plasma to Holland when we noticed a temperature drop en route. We were able to stop the ship­ment before it left the U.S. and address the issue for our client before they received a spoiled shipment,” notes Goldfarb. Container theft, prevalent in developing markets, has driven advances in GPS. Instead of relying on item scanning at entry and exit points, new systems provide real-time tracking independent of confirmation at ports

TRADE & LOGISTICS ANALYSIS

and can be accessed by clients via the web and mobile devices. These systems give clients confidence and allow TPL firms to identify vulnerabilities in supply chains.

These mechanisms allow companies like Interport to provide security in insecure markets. “We conduct business with 33 countries, in seven languages, and in markets that are prone to theft. Brazil, El Salvador, Mexico—these are places where we want to know where our containers are, when they’ve been opened and, ideally, who has them,” says Goldfarb. The expansion of the Panama Canal will drive more trade and cargo through the canal and through PortMiami, which can now accommodate Post-Panamax vessels.

Perishable products with lasting profits Miami-based TPLs play a key role in the perishable items market, including pharmaceuticals, flowers and produce. South Florida receives more than 90 percent of all cut flowers imported into the U.S. MIA’s recent pharmaceutical hub accreditation means that the more than $3.3 billion of pharmaceuticals moving internationally through MIA is likely to increase.

Produce, a staple item with significant demand inelasticity, represents a major import that requires customs processing and environmental controls.

TPL firms handle these issues and have been growing congruent to trade expansion in Miami. Flagler Global Logistics, a leader in the coldchain perishables business, opened its 600,000-square-foot South Florida Logistics Center in 2013 and has been expanding since. Located adjacent to MIA with on-site rail and highway access, the facility processed 8,000 pallets of flowers in 2015 and is expecting that figure to reach 30 percent in 2016, according to David Bouchard, president of Flagler Global Logistics.

The facility is a designated Foreign Trade Zone, allowing importers and exporters to reduce or potentially eliminate customs duties. Alongside its strategic location and integrated customs processing is a patented, USDA-approved cold-chain fumigation treatment process proven to extend shelf life an additional 10 days compared to traditional methods. Flagler Global Logistics’ other value-add services include on-site repacking, allowing firms to better respond to market demand. “For 50 years traditional fumigation methods have been to open a shipping con­tainer and toss what is essentially a bug bomb in. Our patented process is safe, more environmentally friendly and part of a larger array of supply

chain management services we offer,” notes Bouchard in an interview with Invest: Miami.

With perishable items being one of the fastest growing trade sectors in the U.S. market and Miami’s advantage as a natural point of market entry and infrastructural capacity for land, sea and air freight, the relevance of TPLs seems undisputed.

Tomorrow’s jobs today Interport and Flagler Global Logistics are among more than 2,000 trade and logistics firms operating in Miami. Major industry players such as FedEx, DHL, UPS and Miami’s own Ryder Integrated Logistics are either headquartered or have hubs in Miami and are important job creators. According to state government figures, Miami’s 2010 unemployment rate was an alarming 12.5 percent. In 2015, despite an 8.1-percent growth in population, the unemployment rate dropped to 6.3 percent. According to a JPMorgan Chase & Co. report on employment in Miami, the trade and logistics sector accounted for 52,000, or 10 percent, of middle-skill jobs, those requiring more than a high school diploma, but not a four-year college degree. In Miami, these account for nearly 40 percent of the available 1.2 million jobs and are vital to the city’s economic well-being.

As the Panama Canal expansion finishes in 2016, Latin American markets recover growth and the local government and industry commit to keeping Miami open for business--combined with Miami’s geographic advantage over other eastern ports--the trade and logistics sector will remain a lifeblood for commerce. With access to major shipping railways, truck routes, one of the world’s busiest airports and the expanded PortMiami, Miami remains an ideal location to trade. Furthermore, as the sector grows, so will Miami-Dade through job opportunities, economic stability and a more skilled labor force.

However, it is not enough to be present in the market to be successful. Increasing­ly, TPL firms are handling a retailer or manufacturer’s logistics concerns, and as they grow, so do their spe­cializations, ranging from tracking software to security hardware and trade banking. Areas to watch for growth are in the establishment of dominant TPL firms with an increasing array of services, development of smaller and more specialized logistics support firms and devel­opment of logistics sites to accommodate the increased trade volume coming over the next two decades.

Trade and logistics accounted for 52,000, or 10 per­cent, of middle-skill jobs in Mi­ami.

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Pharma hub: MIA’s designation as a pharma hub will boost air freight In November 2015, the International Air Transport Association (IATA) certified Miami International Airport (MIA) as a pharmaceuticals freight hub—the first U.S. and second global airport designated. The certification involved assessment and enhancement of facilities, operations, equipment and staff, ensuring shipping and handling met standards like the European Union Good Distribution Practices and the World Health Organization Annex 5. Since 2005, medicine in dosage has been among South Florida’s top 10 exports.

U.S. Census Bureau data indicate an 88.08-percent increase in medicine exports between 2005 and 2015 compared to an overall 76.66-percent export increase.

Romaine Seguin, president of UPS International in the Americas Region, tells Invest: Miami, “We are seeing more pharmaceutical transit through Miami whether it is from Central America to Chicago or vice versa— Miami is serving as a major transit point.”

Keeping cool Pharmaceuticals, especially biopharmaceuticals like vaccines, require temperature control and maintenance of a cold-chain environment. Logistics data firm CargoSense estimates temperature failures caused $35 billion in losses for global cold-chain pharmaceutical sales. Pharmaceutical Commerce Magazine notes that between 2000 and 2013, global share of air-transported pharmaceuticals fell from 17 percent to 11 percent, because of improved sea-shipping reliability. IATA’s certification creates an international standard to reduce loss and ensure best practices.

More international freight Brazil accounted for about 40 percent of South Florida’s pharmaceutical exports in 2015 according to U.S. Census Bureau data. However, its economic difficulties caused a $106-million drop—two-thirds of South Florida’s $164-million decline in pharmaceutical exports from 2014 to 2015. Still, nine of the top 10 South Florida importers were Latin American—over 82 percent of nearly $900 million in pharmaceutical exports from January to September 2015. According to the European Commission, pharmaceuticals account for 8 106 | Invest: Miami 2016 | TRADE & LOGISTICS

Many of South Florida’s pharmaceutical importers are Latin American countries.

percent of EU exports to Latin America, growing about 20 percent from 2010 to 2014 and showing MIA can offer European exporters logistical flexibility.

Health Technologies Distribution Alliance The Health Technologies Distribution Alliance (HTDA) facilitates and standardizes drug development and health technology, including clinical trials, packaging and transportation. HTDA engages with IATA, The Beacon Council, Enterprise Florida, BioFlorida, PortMiami and others to improve capabilities and solutions for the life sciences industry. Chairman Leandro Moreira tells Invest: Miami, “The recent IATA designation is an example of one of the initiatives HTDA spearheaded. The airport embraced the vision, and proactively promoted the needs for handling and transportation specialization.”

Latin America’s increased health care access and the rise of heart disease, obesity and diabetes are mirrored

by Miami Customs District’s increased pharmaceutical exports in recent years, competing with hubs like Buffalo.

In 2012, Miami was fifth in U.S. pharmaceutical exports, behind Buffalo. It moved to fourth in 2013, staying there in 2014 with a year-to-year growth of 4 percent.

Looking ahead Latin America’s economic slump contributed to 2015’s 15-percent decline in pharmaceutical exports for South Florida compared to 1-percent national growth.

However, Miami-Dade’s reputation as a gateway to the Americas creates a niche market that top medicine exporters like Chicago, New York and San Juan are not as engaged with. The designation may draw diverse clients but its value will be pegged to Latin America.

TRADE & LOGISTICS INTERVIEW

Diversification plans How the leading U.S. airport in air freight is crafting strategy for the long term

Emilio T. González Director – Miami-Dade Aviation Department How has the strengthening U.S. dollar impacted passenger air traffic?

Our numbers have dipped as a result of the currency exchange rates, particularly when it comes to Latin American visitors. At the same time, we are expanding into new markets and seeing more diversification in our passenger lists. The net result was that 2015 was our best year for passenger growth, with 3 million more travelers year-over- year and a new record of 44.3 million annual passengers. Last year, Miami International Airport (MIA) also added eight new airlines and is now home to 101 carriers—the most of any U.S. airport.

Additionally, MIA welcomed five new international nonstop passenger routes: Cordoba, Argentina; Istanbul, Turkey; Manchester, England; Monterrey, Mexico; and Vienna, Austria. These developments speak to the fact that Miami is becoming more than just the Gateway to the Americas but the new gateway to the world.

For Miami-Dade’s business community, deepening ties with China is a top priority. What is MIA doing to facilitate direct air connection to the country?

Miami is the furthest geographic point from China in the mainland U.S., posing a significant barrier to bringing direct flights from China here. MIA’s strategy is not strictly focused on generating traffic to China, but building connectivity to Asia. Our studies show that mainland China on its own would not generate enough traffic to route a direct flight there, as they project that passengers from the country would only make up 25 percent of the demand for Miami-bound flights. However, Japan, South Korea, the Philippines, Indonesia, Vietnam and other Asian countries boast tremendous potential to fill planes. We are presently engaging with Asian air carriers that are investing significantly in ultra-longhaul aircraft and looking to expand their routes, such as EVA Airways and Cathay Pacific.

In 2015, MIA was designated by the International Air Transit Association (IATA) as a pharmaceutical freight hub. What is the impact of this distinction?

Pharmaceutical air cargo is a huge industry, and so far we have only captured a small portion of it. In 2015, we became the first airport in the U.S.—and only the second in the world—to be IATA-certified as a pharma hub. In early 2016, MIA hosted our first, and well attended, workshop for key pharma stakeholders.

This fits perfectly with our strategic plan to grow and diversify our cargo facilities. Pharma cargo at MIA has grown 80 percent in the last five years. And with this designation, and the partnerships we’ve developed with our freight forwarders and customs brokers, I think we are well positioned to capture a huge portion of the lucrative global pharma business. www.capitalanalyticsassociates.com

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Banking: Featuring insights from Jorge Salas, President & CEO, Banesco USA, Israel Velasco, Florida Region Executive, Popular Community Bank, Teresa Foxx, Director & General Manager, Barclays Bank Miami, Antonio Cassio Segura, President & CEO, Banco do Brasil Americas, Margaret Callihan, President & CEO, SunTrust Bank South Florida, Ernie Diaz, Florida Regional President, TD Bank, Jorge Gonzalez, President & CEO, City National Bank and Joe Atkinson, South Florida Region President, Wells Fargo, shared exclusively with Invest: Miami

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Growing strong: Commercial lending remains a key driver for Miami-Dade’s banking sector, while consolidation trends continue to shape the landscape Overall, the Miami-Dade banking sector saw positive growth trends in 2015. Performance indicators among community and regional banks have been mostly favorable, while nontraditional financial institutions, like private equity (PE) firms, investment banks and hedge funds, continue to expand. The competitive landscape has remained unchanged with no chartering of new banks. Meanwhile, growth drivers are mixed, with commercial lending growing quickly while small-to-medium enterprise (SME) lending grows at a measured pace. The Florida homeowner insurance market continues to improve from the disruptions of a decade ago. Regulatory, market and criminal risk trends provide some headwind, as well as some opportunities, to banks, nontraditional financial institutions and Miami-Dade’s general economy.

State performance indicators According to the South Florida Business Journal, aggregate deposits held by Florida banks increased throughout 2015, with $132 billion in the second quarter growing to $135 billion in the third quarter. Deposit growth indicates healthier banks, as reflected in the Problem List from the Federal Deposit Insurance Corporation (FDIC), on which the number of problematic Florida banks has shrunk 110 | Invest: Miami 2016 | BANKING

from 228 to 203 in the third quarter, continuing a sevenyear-long slide.

Linked with growth in aggregate bank deposits is growth in lending and profits. In 2015, Florida banks grew loans at more than twice the average percentage growth of other U.S. financial institutions. In the third quarter, Florida banks grew loans by almost $4 billion, or 2.58 percent, according to the FDIC. This indicates that appetite for credit among large investors and regular consumers in Florida and Miami-Dade is healthier than the U.S. average. Though this growth is lower than the second quarter rate of 2.9 percent, bank profits also increased, reaching $382 million in the third quarter, up $35 million from the second quarter’s $347 million.

No new charters Recent conditions in South Florida’s banking sector are such that no parties or entities have been incentivized to charter new banks. The last chartered South Florida de novo bank—not including new banks chartered to purchase failed banks—was organized in 2009: the Fort Lauderdale-based Broward Bank of Commerce.

This entity no longer exists since an Arkansas-based bank acquired it in late 2014. The absence of new char-

BANKING OVERVIEW

tering starkly contrasts with previous years, when 72 charters were issued from 2000 to 2009. Meanwhile, during the fourth quarter of 2015, Capital Bank moved its’ headquarters from Coral Gables to North Carolina. Local jobs at the bank will remain, with no major change in overall employee numbers. The post-recession regulatory climate is partly responsible for the absence of new chartering in South Florida. Regulators require that a de novo charter have $8 million minimum capital, up from $2 million. Other factors that discouraged new charters include the now eightyear-long, low-interest-rate environment—which cuts long-term banking profits for all banks, especially affecting small community banks—high operating costs and expensive compliance burdens imposed by the federal government in the wake of the crisis.

Regulatory impacts As federal authorities continue enacting numerous bank regulations, Miami-Dade banks, together with the entire banking industry, continue to face changing market conditions. For instance, a rule within the DoddFrank Wall Street Reform and Consumer Protection Act— the Volcker Rule—was recently implemented. The Volcker Rule, which all U.S. banks should have implemented

by July 1, 2015, was enforced later that same month, five years after its inception. The rule bans banks and their affiliates from engaging as principal in proprietary investing and trading in investment funds for short term profits, greatly effecting the profitability of this activity.

For the Miami-Dade international banks routinely undertaking transactions with foreign financial institutions, there was much uncertainty as to how the rule would apply to foreign transactions. Although the final December 2013 rules clarified the ban’s scope, the application of the ban to fund investments with foreign banks as fund investors was broader than anticipated. In response, banks are identifying permissible and impermissible investments as well as divestiture strategies to comply with the rule. Only time will tell how this will affect Miami-Dade banks, but compliance could remove current sources of bank financing, making it harder for foreign banks to see Miami-Dade as a destination for investments via bank-owned investment funds.

The Volcker Rule is one example of the regulatory uncertainty Miami-Dade banks faced in 2015. Traditional banking was once the linchpin of the area’s finance industry but more disclosure and other regulations dissuade foreign clients from opening accounts.

“When it comes to regulations, the medicine has, in some cases, become worse than the disease,” David Schwartz, president and CEO of the Florida International Bank-

Jorge Salas President & CEO, Banesco USA

As Miami’s banking sector has grown significantly in recent years, it has become highly competitive.

Competition is particularly strong for community banks; today, there are approximately half as many such banks in this market as there were 10 years ago, partially due to the cost of complying with new regulations. But this story is not the same for all banks.

Banesco USA, a community bank based in Coral Gables, is thriving. Why? Banesco USA is part of Banesco Financial Group, which has a presence in over 15 countries and manages over $100 billion in assets. It therefore offers the best of both worlds: the financial strength and expertise of a large corporation and superior personalized service.

Despite South Florida’s promising growth, the banking industry faces challenges, particularly in the real estate sector. The strengthening of the U.S. dollar is already affecting Miami’s condo market, given that at least 70 percent of sales are made to foreign nationals whose currencies devalued (against the U.S. dollar) in the latter half of 2015.

Most of these countries are South American.

One of Miami’s greatest assets is its highly international character. This ensures diversification: when certain global markets are struggling, money will still flow into South Florida from other regions.

Miami-Dade is seeing an influx of capital from New York and other northeastern U.S. cities, as well as Canada and many European countries, like Spain.

(Such is the growth in Spanish investments that the affluent village of Key Biscayne has been nicknamed Key Bis-Spain.)

A good example of this internationalization is the influx of Venezuelans fleeing economic and political instability. The impact of this migration is felt in the rapidly growing South Florida cities of Weston and Doral, which have high numbers of Venezuelan residents and businesses. The Venezuelans coming here are young, educated and driven to succeed. They greatly appreciate their new homes and are here for the long haul. In about 10 years’ time, they will be what many Cuban-Americans are today—Miami’s political and business leaders. www.capitalanalyticsassociates.com

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ers Association (FIBA), tells Invest: Miami. “Anti-Money Laundering and Terrorist Financing regulations have placed undue burdens on banks in terms of cost and regulatory risk. This has led to ‘de-risking’ and the unintended consequences of account closures, reduced finance of trade and blocking of remittances relied upon by families in poorer countries.”

Carlos Fernandez-Guzman, CEO of Pacific National Bank, describes the impact of regulations on the local banking sector by highlighting the change in his bank’s clientele. In 1990, approximately 85 percent of Pacific National Bank’s clients were from overseas. Now, foreigners comprise one-third of his bank’s customers. Further underlining the impact of regulations, from 2013 to 2015, three large foreign banks retreated from Miami-Dade: the Royal Bank of Canada, Lloyds of London and BNP Paribas. However, as these and other Miami-Dade banks withdraw from international finance due to regulatory burdens, new players are filling the gap.

Commercial lending growth Among the activities shaping Miami-Dade’s banking sector in 2015 are commercial and SME lending, as well as the continuing influx of PE firms and other nontraditional lenders, which are impacting traditional banks.

Commercial lending grew in 2015 and in preceding years. According to a study published in early 2015 by BridgeInvest, a Miami-based private mortgage lender, the volume of South Florida commercial mortgages grew robustly, from $3.5 billion in 2009 to almost $11.4 billion in 2014. Miami-Dade County accounted for the majority of this commercial lending growth, seeing 57 percent of the volume in South Florida as of 2014. Miami-Dade’s growth was also quite pronounced during the period, with a yearover-year increase of 42 percent. This makes growth in Palm Beach and Broward counties during the same period pale by comparison, with an increase of 13 percent in the former and a decline of 26 percent in the latter.

The study scrutinized seven commercial mortgage categories: retail, industrial, hotel, office, multi-family, land and construction and others. Mortgages for land and construction projects represented the highest volume at $10.1 billion, or 23 percent of South Florida’s total. Retail projects represented the second highest volume at $9.4 billion, while multi-family projects represented the third-highest volume at $7.1 billion.

PE firms are becoming important sources of money in this recent run-up in South Florida commercial mortgage volume. As Alex Horn, managing partner at BridgeInvest, tells the South Florida Business Journal, “We’re seeing more and more [mortgages] in the private space and more and more of our competition is coming from 112 | Invest: Miami 2016 | BANKING

Israel Velasco Florida Region Executive, Popular Community Bank

One of our goals at Popular Community Bank is to maximize profitability while using fewer resources. To accomplish this goal, we are focusing intently on markets where we know we have the greatest competitive advantage. In 2014, Popular Community underwent a major restructuring, selling off its operations in California, Chicago and Orlando, leaving those in New York, South Florida and Puerto Rico. While we continue to function and present ourselves as a community bank, we have the benefit of a large, deep-pocketed parent company, Popular Inc. We access the extensive resources of our parent company to streamline and enhance our operations, particularly in the area of compliance. In this sense, we like to think of ourselves as a “super community bank.”

Looking forward, the sectors that will drive the growth of the local banking industry are those of commercial and industrial real estate, aviation and import/export. Following a “hub-and-spoke” model, our South Florida growth strategy will rely on the acquisition of branches, rather than opening new ones. Given today’s regulatory climate, it is difficult for new bank charters to be awarded.

Along with growth in the sector, there will also be continued consolidation. More regional and so-called “big banks” will enter the market, and community banks will have a hard time remaining afloat, given the soaring costs of compliance.

Despite these challenging constraints, there will continue to be a place for community banks in this market. While larger banks have the advantage of more assets and technology, this does not mean they are necessarily more competitive when it comes to providing a high level of care and paying close attention to customer service.

Despite the trends towards increased mobile banking and electronic transactions, at the end of the day, banking culture, especially in South Florida, is still very much “high touch”—that is, clients like to see and know who their banker is and we can provide that.

BANKING OVERVIEW

equity players that are starting to compete in the debt space.” Proof of the expanding PE firm presence is growth of mortgages they’ve originated; private lending grew from 11.1 percent in 2012 to 13.3 percent in 2014.

Competition is also increasing with commercial mortgage volume. Horn says, “We’re seeing an unprecedented amount of competition…both in the private and institutional lending space.” Such heightened competition among mortgage lenders may lead to lower rates and more risk appetite for leverage to attract clients. This, in turn, may lead Miami-Dade banks to extend higher-risk loans in the short- to medium-term future to compete with the new PE players in the commercial lending market.

SME lending, however, has not grown as robustly as commercial lending in recent years. Though Florida has more than 2 million businesses, the third-largest number of any state, the main challenge when establishing a Florida-based small business is finding adequate financing. A mid-2015 study from Miami-based professional services firm K.H. Thomas Associates concludes that most South Florida banks are falling behind on SME lending compared to banks in the state and the U.S. The study analyzed U.S. Small Business Administration (SBA) data on loans extended by Florida banks in 2014.

To uncover the best and worst SME lenders, the study ranked banks according to an ideal SBA loan-to-deposit ratio of close to 1 percent. Florida banks came far lower than the benchmark, with their average ratio at 0.22 percent. Among the top 10 ranked banks, only five banks with deposits of at least $500 million had ratios above the benchmark. Banesco USA was the only South Florida bank in the top 10 group, coming in at number six with a ratio of 0.8 percent. Four banks from other parts of Florida rounded out state representation among the top 10.

Another metric demonstrating Florida’s modest SME lending growth is the state’s share of loans disbursed nationally. According to the South Florida Business Journal, approximately $19.2 billion of approved loans were disbursed to U.S. SMEs through the SBA 7(a) Loan Program, the SBA’s premier lending vehicle for established SMEs and startups. Florida represented $1 billion of these disbursals, the third highest by state in 2014. However, according to the study, even this $1 billion likely underserved Florida SMEs by almost 30 percent. Much needs to be done to improve SME lending in Florida, as SMEs are a crucial part of the state economy, employing 3 million workers.

Despite such modest growth, SME lending continues to be vital to business seen by Miami-Dade banks.

Some local banks are addressing this demand from SME entrepreneurs through innovative programs. As Continental National Bank Chairman Jacqueline Dascal Chariff tells Invest: Miami, “Helping small and medium-sized businesses has been at the very core of our institution from day one. The bedrock for [Continental] has been to build our community by helping these individuals achieve their goals and ambitions through financial assistance and guidance.”

In seeking to do more for SME entrepreneurs beyond simply offering loans, Continental has begun educational and consulting outreach efforts. “Recently we launched our GROW initiative, a program that seeks to educate entrepreneurs with training modules designed to help them manage, build and grow their respective enterprises more effectively. This grassroots model will serve as a catalyst in creating the business leaders of tomorrow,” Chariff says. Considering that Miami is among the top three MSAs with the most entrepreneurial activity,

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such SME lending initiatives will remain crucial to the health of the local SME sector.

Community banks The top banks in Miami-Dade have had a good year overall. Performance indicators have been disparate but mostly positive for community banks and regional banks, while national and international banks have played a significant role in SME lending.

Mirroring the aggregate loan growth, community banks have seen strong loan growth in 2015. Eight South Florida banks, each of which held total assets between $500 million and $999 million, saw collective loans grow from $94.9 million in the second quarter to $114 million in the third quarter. The top bank by assets, Banesco USA, saw loans increase by more than $18.8 million during that period while the smaller Apollo Bank, with roughly half the assets of Banesco USA, saw the most pronounced loan growth at $44.8 million.

Community banks have been profitable overall, but there are some long-term weaknesses. The South Florida community bank with the highest profits in the third quarter was Biscayne Bank at $2.01 million while U.S. Century Bank’s third-quarter profits were $903,000. However, among the eight banks profiled, their collective noncurrent loan ratio, a metric of longterm bank health, is at 1.51 percent for the third quarter, a ratio greater than the South Florida regional average of 1.07 percent as of June 30, 2015. This indicates average loan quality is lower among top community banks than among other classes of South Florida banks.

Regional banks have also seen aggregate profits grow from the second to the third quarter. Eleven South Florida banks with more than $1 billion in assets saw profits grow from $130.5 million to $189 million. BankUnited, with assets of $22.44 billion, saw the highest third-quarter profits with $104 million in net income. Florida Community Bank, which is less than

a third the size of BankUnited by assets, reported the second highest third-quarter profits at $21.4 million.

In terms of loan growth from the second to the third quarter, regional banks didn’t do as well as community banks, but the quality of their loans is better. These top banks saw aggregate loan growth shrink from $2.86 billion to $2.24 billion during that period, according to the South Florida Business Journal. However, their collective noncurrent loan ratio stood at 0.93 percent in the third quarter, lower than the South Florida regional average of 1.07 percent. This indicates loans carried by the top regional banks are on average healthier than those of the top community banks.

National and international banks in Miami-Dade play a significant role in the banking sector as they dominated a subclass of SME financing: SBA 7(a) loans. According to the South Florida Business Journal, from October 1, 2014, to March 31, 2015, SunTrust Bank led the way in SBA 7(a) lending, extending $55.1 million. During that same period, Wells Fargo, a global banking giant, came in second, having approved 152 loans totaling $39.9 million. No South Florida banks broke into the top 10 among SBA 7(a) lenders. As earlier analyzed, SME lending has grown modestly in South Florida, so national and international banks are filling a crucial need in the Miami-Dade lending market.

Property insurance Though Florida experiences more than its fair share of natural disasters, the state’s homeowner insurance market is remarkably healthy as of 2015. This is the conclusion drawn by William Standler, executive director of the Florida Property & Casualty Association.

As Standler discusses in the South Florida Business Journal, this positive situation is a marked contrast to the health of the homeowner insurance market 10 years ago when powerful hurricane landfalls in quick succession forced many private Florida insurers to leave the state.

Nonrenewal notices from long-standing insurers that quickly downsized were sent to Florida homeowners,

Teresa Foxx Director & General Manager – Barclays Bank Miami

Most of the businesses that want to increase their activity in Latin American and the Caribbean choose to be based here in South Florida. Accordingly, Miami is positioned as a gateway for international trade and presents tremendous opportunities for the financial services sector, as well as the FIBA member banks.

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BANKING OVERVIEW

leaving millions of suddenly vulnerable people to search for affordable property coverage. To prevent billions of dollars of property liability from falling on the shoulders of ordinary citizens—thereby triggering a large economic contraction the next time a destructive hurricane made landfall—the state government, working with private insurers, set up the Citizens Property Insurance Corporation (CPIC). CPIC helped fill the insurance gap, providing private insurers the time to amass the proper licenses, reinsurance, capital and management to re-enter Florida.

As of 2015, CPIC only represents less than 9 percent of the direct written premiums (DWPs) in Florida, with Florida private insurers more than able to underwrite 72 percent of DWPs. Regulatory agencies also found the market in good shape in 2015.

The Florida Office of Insurance Regulation (OIR) undertakes catastrophe stress tests to gauge the homeowner insurance market’s resilience in case a powerful hurricane makes landfall. Of the 112 insurers that OIR tested in the 2015 Annual Reinsurance Data Call, including 67 Florida insurers, all reported satisfactory surplus, capital and reinsurance to cover policyholder claims in a scenario in which a once-in-a-century storm hits.

The improving homeowner insurance market, which is crucial for the Florida housing and real estate industries to run smoothly, has allowed some private Florida insurers to grow, with CPIC retaining the top spot. The South Florida Business Journal ranked the largest South Florida property and casualty insurers for 2015 by the volume of Florida homeowners’ direct premiums these scrutinized entities held in 2014. At number one is CPIC with $795 million in 2014 premium volume. Two of the top five companies— Universal Property & Casualty Insurance at number two

and Federated National Holdings Company at number four—are based in South Florida. Among the top 25, the only one new entrant is Auto Club Insurance Company.

Sector challenges Miami-Dade banks and financial institutions faced numerous challenges in 2015. The effects of regulatory impacts have been far-reaching for the county’s international banking sector. In response, investment banks, PE firms and hedge funds are filling the gap by serving the financial needs of foreign clients as international banks withdraw due to regulatory burdens. One study done by the Newlink Group, a public relations company, tallied more than 150 nontraditional financial institutions and investment funds conducting business in Miami-Dade.

Financial managers are also expanding to fill the gap left by departing international banks.

Ian McCluskey, a vice president at the Newlink Group, tells the Miami Herald that he estimates South Florida is home to roughly $300 billion in private wealth that is actively managed, the highest amount of investment activity McCluskey has ever seen. Higher regulatory risk faced by international banks in recent years has therefore had an unintended consequence: accelerating the growth of Miami-Dade’s nontraditional financial institutions, which tend to be less regulated than traditional banks.

However, this robust growth of nontraditional financial institutions will contend with one major market challenge that has long characterized Miami-Dade: the shallow pool of local human capital from which financial firms can draw. While the situation has greatly improved in recent years, the market must continue to battle the perception problem, as well as continue to culti-

Eleven South Florida banks with more than $1 billion in as­sets saw profits grow from $130.5 million to $189 mil­lion.

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vate strategies that address this problem in the long term. As Apollo Bank Chairman and CEO Eddy Arriola tells Invest: Miami, “Miami is not a city where you can poach talent from other firms. Your talent strategy needs to be to develop and retain. Invest in your own people and create a workplace they will love.”

Financial crime South Florida banks also have a higher crime risk profile than other comparable Florida banks. On average, South Florida banks registered more Suspicious Activity Reports (SARs) than banks doing business in other parts of Florida, according to a study by Miami-based accounting firm Kaufman Rossin Group. This study also highlighted that close to 10 percent of South Florida banks registered 50 SARs or more per month. No banks in North and Central Florida registered as many per month. The higher rate of SARs indicates that South Florida banks are more accustomed to expecting and spotting suspicious account activity, which may be a consequence of the higher prevalence of suspicious activity in South Florida. This suspicious activity, in turn, is driven by the nature of the South Florida banking sector, which engages in far more international transactions and is home to larger and more complex banking institutions. By having banks register mandatory reports like SARs and keeping federal and state authorities informed of potential criminal activity, this criminal risk can be minimized.

Some Miami-Dade banks have also become victims of fraud crimes in 2015. In October 2015, BankUnited disclosed that a fraud committed against one of its borrowers impacted the bank’s noncurrent loan ratio.

The Florida-based borrower had a long-established relationship with BankUnited, having taken out $44 mil-

lion of commercial credit. The borrower was defrauded by one of its customers, which led BankUnited to convert that $44-million loan to nonperforming status in the third quarter. This caused a sudden 51-percent increase in BankUnited’s noncurrent loan portfolio from the second quarter of 2015, driving its noncurrent loan ratio from 0.31 percent in the third quarter of 2014 to 0.67 percent in the third quarter of 2015. The post-fraud noncurrent loan ratio, however, still kept BankUnited below the average 1.07-percent noncurrent loan ratio for all South Florida banks.

Looking ahead The overall positive growth trends of the Miami-Dade banking sector in 2015 are likely to continue into the medium term. Given the recent local economic climate, favorable performance indicators among community and regional banks are likely to continue. The expansion of PE firms, investment banks and hedge funds will be fueled by the fast growth of commercial lending as more international banks, burdened by new regulations, leave the Miami-Dade financial market. Factors such as high regulatory burdens and a low-interest-rate environment will continue to discourage the chartering of new banks.

Meanwhile, crucial growth drivers such SME lending will continue to grow moderately, but there are indications that national and global banks will fill the financing gap.

Barring unpredictable natural disasters hitting the state, the Florida homeowner insurance market should continue improving. Market risks, especially as they pertain to the planned rise in interest rates by the Federal Reserve Bank in December 2015, as well as regulatory and criminal risk trends, are likely to provide headwinds and opportunities for banks, nontraditional financial institutions and Miami-Dade’s economy.

Billion-Plus South Florida Banks Assets Q4 (Billion $ U.S.)

Loans Q4 (Billion $ U.S.)

2015 income (Million & U.S.)

Net income Q4 (Million $ U.S.)

Deposits Q4 (Billion $ U.S.)

23.78

16.51

256.03

58.15

17.05

Mercantil Commercebank

8.15

55.46

20.63

38.11

6.56

Capital Bank

7.45

55.77

60.65

16.75

5.96

Bank BankUnited

Florida Community Bank

7.16

51.64

52.13

27.18

5.44

City National Bank of Florida

6.48

40.39

47.38

11.44

4.48

Sabadell United Bank

5.27

36.77

34.93

12.17

4.07

Ocean Bank

3.29

24.65

20.35

23.65

2.79

TotalBank

2.76

19.23

15.84

41.04

1.95

Stonegate Bank

2.38

18.39

25.16

72.64

2.03

BAC Florida Bank

1.77

13.71

12.70

30.24

1.42

Source: South Florida Business Journal

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BANKING INTERVIEW

Foreigners’ bank How Miami’s thriving international population creates lucrative opportunities for the banking sector

Antonio Cassio Segura President & CEO – Banco do Brasil Americas What encouraged Banco do Brasil, the largest bank in Brazil, to establish a presence in Miami?

Miami is an international gateway that welcomes foreigners who are both short-term tourists and long-term visitors. Given their different interests, this is a perfect opportunity for Banco do Brasil Americas, which seeks to provide comprehensive international banking solutions for foreigners, not simply people living in Brazil. The average foreigner stays in South Florida an average of three months a year. During their stay, they need full access to a variety of banking services.

We provide valuable assistance to these foreigners by offering credit cards, checking accounts, auto loans, mortgages and investment options in their preferred languages: English, Portuguese or Spanish.

How has the perception of Miami evolved within the Brazilian business and investment community?

Brazilians love Miami. They see the city as an ideal second-home destination because it is very similar to the environment they are used to back home in Brazil. It has the same good weather, beautiful beaches, high-quality restaurants and amazing nightlife that they can find at home, as well as good infrastructure, good schools and security, both in terms of physical safety and safety of assets. Increasingly, Brazilians are buying businesses and commercial property as well.

For those Brazilian investors seeking business opportunities in Miami, what are their preferences and what interests them in terms of property?

There are two kinds of Brazilian investors we are seeing in South Florida. One type is looking to buy commercial property to lease later. These investors want income in U.S. dollars and are looking forward to further diversifing their investments. They don’t simply want to put their “eggs” (money) in different “baskets”

(types of investments). They also want to put these “baskets” into different “wagons”—in other words, they want to invest outside of Brazil. These investors are buying stores like CVS and Walgreens, as well as strip malls and shopping centers. The second type of investors have already achieved great success in Brazil and want to further their reach to Miami. Because they want to expand on their assets in Brazil, they are opening affiliates or branches of their existing companies or institutions—especially clinics and schools— in Miami. However, these groups share similar goals for their activity in Miami in that they want to continue succeeding in the market for the long-term. From where the international market stands, it is clear that the investment flows going from Brazil to Miami and back is an irreversible trend. There is no going back. www.capitalanalyticsassociates.com

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BANKING INTERVIEW

Unique specialties How banks are strategizing to cater to middle-market clients

Margaret Callihan President & CEO – SunTrust Bank South Florida for serving the Americas. Moreover, businesses of every size are looking for access to capital and new and innovative exit strategies. As the financial needs in our community have become more complex and specific, specialized services have become more necessary than ever before in the market. Consequently, SunTrust has deployed a robust specialty strategy.

What types of businesses are expanding the types of services that South Florida banks offer in the area?

South Florida is comprised of many different businesses and at SunTrust, we focus on delivering our purpose of Lighting the Way to Financial Well-Being to meet all of their unique needs. In this year’s SunTrust Business Pulse Survey, we found that four out of five businesses across the U.S. are preparing for growth. They are planning to stimulate growth primarily by introducing new products or services and some anticipate M&A. We are seeing that trend not only nationally but in South Florida as well.

The entrepreneurial climate in South Florida has nurtured a variety of industries from multinational companies to local businesses. Some of the industries include information technology, life sciences, health care and trade and logistics due to our strategic location 118 | Invest: Miami 2016 | BANKING

How does having investment-banking services accessible to the middle market impact South Florida?

The economy has changed significantly in recent years, becoming more global and less tied to specific markets.

Today, a company headquartered in Miami can do business all over the world without ever having to open additional locations, giving business owners the ability to continue building and growing from Miami. In time, owners may seek to expand their business through acquisitions, sell their business or have a need to raise capital to undertake an expansion of facilities. Much of the business growth in our region can be found in the middle market. Our team of bankers has the ability to leverage the full suite of the investment banking capabilities of SunTrust Robinson Humphrey to better serve these needs when local companies decide it’s the right time to make those moves.

How has the influx of foreign investors and high-networth individuals into Miami-Dade County positively affected the economy in terms of local wealth?

What’s exciting is that so much of the wealth we see today is being generated locally, which is different from the historical trend of wealth being retired here. We also continue to benefit from foreign direct investment, as well as organic growth from local business and additional investments into new industries. All of these factors are contributing to the economy’s diversification. It bodes well for the health of a local economy.

BANKING ANALYSIS

More consolidation: M&A trends will shape MiamiDade’s competitive banking landscape in years to come As the post-recession economy continues to strengthen, banks are merging to better serve customers and increase the number of services they offer. This trend has been notable throughout South Florida, reflective of the national trend noted in a BankDirector survey on mergers and ac­quisitions (M&A), which uncovered driving factors prevalent in 2015 in major U.S. markets.

The survey inquired about the current attitudes and challenges regarding M&A among 260 CEOs, chairmen, independent directors and senior executives from U.S. banks, ranging from small community banks with assets of $250 million to banks with more than $10 billion in assets. Close to half of these national respondents reported that their bank conducted an acquisition since the financial cri­sis of 2008, with 23 percent of all respondents disclosing that they had made an acquisition in 2015 alone. This is a marked upward trend from 11 percent of respondents stating that they made an acquisition in 2014 and 9 percent stating that they made an acqui­sition between 2011 and 2013.

For banks in the U.S. South, which includes Mi­amiDade banks, the number of respondents disclos­ing they had made an acquisition in 2015 was lower than the national average, at 18 percent. For 2014, the percentage stood at 14 percent, higher than the nation­al average, and for the period between 2011 and 2013, it stood at 9 percent, equal to the national average. The survey reflected this growing confidence in the market, with 62 percent of national respondents disclosing that the 2015 environment was more favorable for bank M&A transactions. Meanwhile, 59 percent of respondents in the U.S. South responded with similar confidence about the 2015 climate, a higher percentage than was found among bankers in the U.S. Northeast and the West. The South also had the lowest percentage of respondents stating that the 2015 environment was less favorable for M&A deals, with only 5 percent saying this, well below the averages for other regions.

Of the national respondents who stated that the current environment was favorable to M&A activity, 77 percent reported that more banks wanted to sell in 2015, with 47 percent stating that target banks had

By the end of September 2015, the number of South Florida banks shrank from 59 to 53.

improved credit quality. Other favorable factors men­ tioned included higher stock valuations, a stronger economy and the fact that potential purchasing banks had more capital to undertake target acquisitions. A good number of respondents were also eyeing the pos­ sibility of expanding their banks through M&A and not through organic growth, with fully 67 percent believ­ ing that their banks needed to expand considerably due to current marketplace pressures.

Despite these positive factors that stimulate activity in the banking M&A market, there are also some nega­ tive factors that dampen enthusiasm. According to the BankDirector survey, 46 percent of national respond­ ents disclosed that they were beginning to see deteri­ oration in bank loan underwriting standards that could lead to credit quality issues in the future. Such cred­it quality issues have been among the most frequent­ ly cited obstacles that prevent banks from finalizing acquisitions. However, when compared to other parts of the U.S., this concern is less pronounced in banks in the South, where only 40 percent of respondents believed underwriting standards were loosening, in comparison to 58 percent in the Midwest and 57 per­ cent in the West.

Within Miami-Dade, one particular trend that con­ tinues to shape the industry is the shrinking number of community banks due to consolidation. According to the South Florida Business Journal, by the end of September 2015, the number of South Florida banks www.capitalanalyticsassociates.com

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shrank from 59 to 53. Further consolidation was ex­ pected in the near term, with one acquisition already closed and two banks already having signed acquisi­ tion agreements since October 1.

Perhaps the most important M&A activity in the sector concerned the acquisition of Miami-based City National Bank of Florida by the Banco de Credito e In­ versiones (BCI), based in Chile. This acquisition is the largest undertaken of a U.S. bank by a Chilean entity.

The acquisition falls within the aforementioned trend of com­munity banks consolidating with larger entities endowed with greater resources and deeper pockets. The bank will remain focused on and based in Miami-Dade, with its Mi­ami board making bank-related decisions.

BCI, which has had a Miami-Dade presence through a branch office that catered exclusively to Chilean na­ tionals and companies, had long wanted to expand its South Florida footprint. Florida is attractive because, as BCI CEO Eugenio Von Chrismar noted the acquisition provides BCI a way to expand in a market larger than Chile’s, whose relatively small economy has inhibited BCI’s plans for greater growth.

When City National came up as a potential target, the BCI board found it too good a deal to pass up. BCI valued the acquisition so much that it undertook a substantial

120 | Invest: Miami 2016 | BANKING

and drawn-out reconfiguring of its holding structure to pass muster with regulators at the Feder­al Reserve. As City National Bank President and CEO Jorge Gonzalez tells Invest: Miami, the investment BCI was willing to make in the acquisition reflects the promise they see in the South Florida market. City Na­tional Bank’s strong growth in the past two years enabled the deal’s financials to be favorable to the bank and its owners, with the purchased price closing in October 2015 at $946.5 million, $65 million more than the $882.2 million agreed upon at the time of signing in May 2013.

There were other acquisitions of note in 2015. Brickell Bank signed an acquisition agreement in May 2015 that put its fair market value at $10 million. A Venezuelan group of investors and bankers purchase the bank at 22 percent lower than its book value, indicating the entity was underpriced at the time of signing.

Two Homestead-based community banks—Community Bank of Florida and 1st National Bank of South Florida—also signed acquisition agreements with CenterState Banks as pur­chaser. These two upcoming acquisitions will continue CenterState’s expansion in South Florida, with the institution having previously purchased the Palm Beach Gardens-based SouthBank for $1.96 million.

BANKING INTERVIEW

Growth drivers How banking services are evolving to accommodate a more diversified market

Ernie Diaz Florida Regional President – TD Bank What does it mean to be a Canadian bank operating in the Florida market?

TD Bank has seen tremendous growth throughout South Florida and it caters to the entire market, not simply internationals. We are seeing growth in all product lines, in particular commercial, small business, health sector and real estate lending, as well as our in-store distribution. The fact that there is such an influx of Canadians in this market gives TD Bank a competitive advantage, as the brand is familiar amongst that demographic, who have been active here for many years. While they initially flocked to South Florida because of the favorable climate and quality of life, they are now seeing this market as advantageous for conducting business.

How have regulations impacted the local banking sector?

Banks have been greatly affected by the current regulatory environment, especially in the realm of international transactions. Regulations have particularly impacted the way we finance foreign trade. This means that Small Business Administration (SBA) loans and export-import programs become even more critical, especially for a market like Miami that relies so heavily on trade. What we are seeing is that as traditional financing options have stalled, private equity and finance firms are filling the gap in financing some of this trade.

What have been the drivers of growth for commercial lending in the past year?

Florida has become an increasingly important market within the U.S. The state’s population growth has outpaced New York’s. The state has seen healthy growth in manufacturing, wholesaling and services, as well as the number of startups. In South Florida, we are seeing high volumes of foreign investment. Real estate has

rebounded. We are seeing more capital expenditures.

Companies are starting to come back into the black.

As a banking executive and the incoming chair of The Beacon Council, how do you view the development of Greater Miami’s business community?

This is an exciting time in Miami-Dade’s development.

There are high concentrations of financial and human capital. This factor, in addition to the fact that there are relatively low barriers to entry in this market, creates an inviting environment for new immigrants and businesses. We’ve proven we can recruit talent to this market—the question is how do we retain this talent. The Beacon Council has been actively cultivating mentorships and linking educational institutions and the private sector. These efforts are building a foundation for long-term growth. www.capitalanalyticsassociates.com

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BANKING INTERVIEW

Bridging gaps How operating in the middle space between big and small banks is a sound strategy

Jorge Gonzalez President & CEO – City National Bank a financial institution, you need more size. But the overall metrics in the industry—the costs of retaining talent and technology—also serve as contributing factors.

While consolidation is happening nationally, what developments set Greater Miami’s financial sector apart?

Miami is unique in that it has attracted capital from all over the world. One trend we are seeing is the entry of hedge funds and private equity firms in this market. This generates growth and brings greater liquidity to the marketplace, but also creates more competition. Much of the capital coming in, however, does not directly compete with traditional commercial banks. Non-banking financial institutions offer a different profile of investment than is needed in the marketplace. They complement what banks do and contribute to the maturation of this market.

City National Bank was recently acquired by a large Chilean company. How does this event fit within other trends in South Florida’s banking sector?

What happened with City National is unique. Not many community banks in South Florida are foreign-owned.

We will continue to see a separation in the marketplace between the large banks and the smaller ones. Any organization that can fill that middle space, where you still have scale and technology, a good product offering and qualified bankers, but can conduct business in a small bank, “high-touch” way, is well-positioned. This is the niche that City National—which benefits from having a $40-billion parent company—occupies. From a broader standpoint, consolidation will continue to take place, in part because of the impact of regulations; in order to absorb the expenses related to providing proper oversight of 122 | Invest: Miami 2016 | BANKING

What are some of the other indicators of the maturation of the South Florida market?

From a financial services standpoint, many banks here have already been through an economic cycle or two.

These institutions have matured simply because they have been in existence and are seasoned, and the same can be said for local management teams. While Miami is relatively young compared to most major metro markets, this city has much more global visibility today than ever before. This means that even if we see a momentary pullback in values, either the capital is already here, or those who control it are already acquainted with this market and its offerings and will step in much sooner to deploy it. We are seeing capital coming from different markets— Europe, Asia, South America and even Mexico. It signals another stage of development when global investors feel there is enough opportunity and financial sophistication to warrant continued and large-scale investments. This is another indication of further development, progress and confidence in the overall marketplace.

BANKING ANALYSIS

Under management: As more wealth enters South Florida, new opportunities arise in the market’s thriving wealth management industry The Miami-Dade wealth management industry continued to be in a state of transition in 2015, as fundamental changes were starting to be felt in the market.

As Oti Roberts, managing director at Deutsche Bank, tells Invest: Miami, “Miami is undergoing a cultural and economic renaissance. From a wealth management proposition, this presents huge opportunities as folks move to the area who need advice not only on managing their personal wealth but also on raising capital for their business. While it is widely known that Miami attracts high-net-worth individuals, it is equally important to note that these individuals are highly entrepreneurial.”

Among the key trends identified at the October 2015 Florida International Bankers Association (FIBA) Wealth Management Forum as likely to impact the industry were the growth of the millennial consumer segment and the emergence of new technologies.

According to Patricia Soldano, a consultant from GenSpring Family Offices speaking at the conference, there are now more millennials than baby boomers alive, while the wealth management industry remains uncertain on how to best advise millennials and cultivate relationships early in the financial life cycles of millennials. This need to relate to the younger generation brings to the fore a major longterm weakness in the wealth management industry: the lack of younger financial advisors. According to John Ward, a managing director at Pershing LLC, there has been a national shortage of approximately 25,000 financial advisors since the financial crisis.

Getting financial advisor numbers up to pre-2008 levels will require changes in the provision of wealth management advice, catering and adopting to newer technological paradigms with which millennials are comfortable. This is a major medium-term challenge facing Miami-Dade wealth management firms.

Another driver of change has been technology.

Newer startups employing disruptive technologies are more attractive to millennials and are challenging the hold of established firms. An example of disrup-

Miami’s wealth management industry is changing to adapt to new technology and the needs of millennial consumers.

tive technology is the robo-advisor, a computer program that provides automated investment services similar to what financial advisors furnish. The appeal of robo-advisors to millennials stems from lower fees, though millennials still want to retain personal interaction with traditional financial advisors. As reported

by Forbes, a recent survey by Salesforce.com uncovered trends in the millennial market, with 81 percent of surveyed millennials admitting they “wanted their advisor to either manage their money completely independently or collaboratively with them.” As many as 47 percent of millennials also disclosed they get face-to-face interactions with financial advisors, on par with 46 percent of baby boomers.

Despite these disruptive developments, strong fundamentals in the Miami market will ensure continued growth in wealth management. This is due in part to the market’s thriving international commerce, friendly tax climate and new opportunities presented by stringent banking regulations. As Michael Corcelli, chief investment officer of Alexander Alternative Capital and founder and chairman of the Florida Alternative Investment Association, tells Invest: Miami, “Florida is fast becoming an integral part of the savvy businessperson’s investment strategy. As Dodd Frank regulations have crippled traditional banks, the market has seen an influx of asset managers coming in and stepping up to service the financial needs of the market. www.capitalanalyticsassociates.com

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BANKING INTERVIEW

Keeping pace How banks are evolving to meet the needs of small businesses

Joe Atkinson South Florida Region President – Wells Fargo through wellsfargoworks.com, a website designed for small business owners.

How have the needs of South Florida small businesses evolved in recent years?

The studies we conducted in 2015 showed that small business owners are looking to make investments into their businesses, including owning their buildings. In addition, interest rates on five-year loans under the SBA 7(a) program have become fixed, so more small businesses are taking advantage of the program. As a result of these trends, small business owners are becoming more intentional about learning how to borrow money and manage credit. Wells Fargo is adding more bankers and opening new branches in Miami-Dade to respond to the needs of all of its customers, particularly in growth areas like Doral, as well as helping small business owners develop sound strategy, like building effective business plans 124 | Invest: Miami 2016 | BANKING

Miami-Dade is market dominated by small and medium enterprises (SMEs). What progress has been made to expand access to credit to these entities?

New models of lending are being created to suit the needs of SMEs. We have teams of experts who are familiar with the needs of particular industries and this understanding allows us to accept more types of borrowers. For example, we found that private medical practices need credit for certain types of medical equipment, which cost a certain amount. We subsequently created a lending model to help these practices based on our knowledge of their anticipated needs. We have also noticed that some SMEs are seeking to consolidate or acquire other businesses, and we are facilitating these needs as well.

One growing segment in Miami-Dade is tech startups.

As with all startup businesses that are not traditional recipients of bank loans, banks still have a responsibility to help these businesses. Banks need to take an active role in serving startups by offering financial services, like facilitating cash flow and credit management.

What are some of the key challenges South Florida’s banking sector faces?

One challenge is addressing fraud, which, although is a global challenge, we see a high incidence of in MiamiDade. Today, we are seeing more instances of click jacking, or the use of social media to mislead people into giving up their bank account information. In these schemes, people click on a link promising to deposit checks into their accounts and end up compromising their accounts. Banks have to pay close attention to how fraudsters are using technology and develop ways to counteract it, as well as invest in educating its customers of these dangers.

Technology & Innovation: Featuring insights from Xavier Gonzalez, CEO, eMerge Americas and Nabyl Charania, Co-Founder & CEO, Rokk3r Labs, shared exclusively with Invest: Miami

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Maturing ecosystem: High-profile events and increased venture capital are among the makers of growth in Miami-Dade’s tech hub In 2015, Miami-Dade County saw much progress in its quest to become an international tech hub. The year saw numerous international tech events accompany the launch of a plethora of startups, especially those focused on health care technology and innovation. This development stems from Miami-Dade’s longstanding and ever-expanding system of health care institutions, research universities and hospitals and medical centers. Relocations from major players and the launch of new regional branches were seen are a result of the business-friendly atmosphere in the county and the state. Adding to this atmosphere, local support for startups can be seen in the continuing proliferation of co-working spaces, as well as the increase of tech training programs. Public sector support can make or break entrepreneurial activities, and Miami-Dade has proven this by establishing a close and successful rapport with the tech industry.

Flourishing startups In August 2015, Miami was ranked second among U.S. metropolitan areas for startup activity by the Kauffman Foundation, a national nonprofit that focuses on research in education as well as entrepreneurship. The Kauffman ranking is based on startup density, the rate 126 | Invest: Miami 2016 | TECHNOLOGY & INNOVATION

of entrepreneurship and opportunity share—a metric showing the percentage of entrepreneurs starting a business out of opportunity rather than necessity.

A strong startup scene is indicative of Miami-Dade County’s continuing evolution into a tech hub and its supportive business atmosphere.

Another indication of this growth is the attention a number of Miami-based startups are receiving.

Prominently featured at the Emerging Technologies and Business Showcase was Miami Beach startup Videoo, a company which offers software-as-a-service technology that pulls videos from various social media sites and presents them together as a way to better reach viewers. Videoo’s customers already include the Huffington Post, A&E, the Bob Marley Family, Fusion and Mitu Network. Another Miami-based social startup is Yodel, formerly called Tracks, an app that uses visuals to make texting more like faceto-face communication. Yodel won Reader’s Choice Startup of the Year and LiveAnswer won Best Pitch at the grand opening of Miami Beach’s 40,000-squarefoot co-working space WeWork. LiveAnswer is a subscription and cloud-based answering service that connects calls between 25,000 agents.

TECHNOLOGY & INNOVATION OVERVIEW

Although the average exit time for startups is eight to 10 years, many startups in Miami have seen quick milestone successes. Organizations like Endeavor Miami have contributed to startup growth and success by mentoring entrepreneurs, helping startups to accelerate their path toward those milestones. For instance, the Miami-Dade Entrepreneurial Development Organization has united funding from institutions such as the Miami Downtown Development Authority (DDA) and the Miami-based Knight Foundation, which is giving $210,000 to expand Venture Hive, a business accelerator. Venture Hive provides public programming on investing and entrepreneurship, as well as grants, free office space and a 13-week mentoring course. For its own part, the DDA provides fiscal incentives in downtown’s Enterprise Zone and is also soliciting proposals from experienced IT firms to work in various IT management services. DDA is also providing property improvement grants and business development loans to local businesses.

Tech-based education is also seeing growth in Miami-Dade. For example, the coding school Ironhack opened in fall 2014. Ironhack not only offers its students eight-week coding courses but also encourages students to use their new skills by hosting a competition called Hackshow. Ironhack has firmly established itself in the tech scene; leaders from Ironhack were also on the panel for the pitch competition at Startup Weekend—where organizers boasted a business could be launched in 54 hours—held at Florida International University (FIU) in November 2015. Joining the mobile app scene in 2015 was Miami-Dade County’s Community on Patrol Application (COPA), announced by Miami-Dade County Mayor Carlos Gimenez at eMerge Americas. Developed by the county’s information technology department, the Miami-Dade County Police Department, Microsoft and ZCO Corporation, the app will allow 2.6 million residents to report criminal or suspicious activity by submitting tips, videos and photos. Users will also be able to file police reports and commend police officers.

South Florida saw the highest venture capital activity in 2015 than in most of the last 20 years: firms invested $75 million in deals during the third quarter of 2015. Total funds investing are down slightly from 2014, but the deals are bigger, with health care becoming one of the biggest recipients of venture capital. Miami-Dade’s deals included Yellow Pepper raising $19 million, Brickell Biotech, $7.3 million and Vigilant BioSciences, $5 million. The growth in venture capital firms, paired with the rise of startup supporters, is boosting the Miami tech industry.

Xavier Gonzalez CEO, eMerge Americas

Miami is becoming the technology hub of the Americas, and eMerge Americas plays a critical role as the pre-eminent B2B technology event of the Americas. eMerge Americas was established three years ago to catalyze the development of a tech ecosystem and encourage connections between the world’s most important technology companies and top decision makers from Latin America. Building on the foundation of the investments we have attracted and the name recognition we’ve established in South Florida and Latin America, we are becoming the premier platform for the advancement of technology, a launchpad for innovation and an idea exchange.

One of the drivers of our success is the summits under the eMerge umbrella. One of these is WIT (Women In Technology), inaugurated in 2015. Over 6,000 people attended the 2014 conference, 17 percent of whom were women. In 2015, we had over 10,000 attendees—over 33 percent women—and we attribute this increase to the success of WIT. Another successful addition has been the eGov— Government Innovation Summit. eGov is crucial to world governments looking for ways to address issues affecting their constituents like transit. Meanwhile, the private sector, whether emerging startups or multinational corporations like Cisco, IBM and HP, is developing disruptive technologies and seeking to launch public-private partnerships. eGov brings these two groups together, allowing them to strategically connect.

The eMerge Americas Startup Showcase has featured the most innovative startup companies from Latin America, North America, Europe and Israel, with hundreds of investors connecting with the top entrepreneurs leading these companies. The connections between these innovators and strategic investors resulted in significant investments for many of the participants.

With partnerships with organizations like NBCUniversal, eMerge Americas has established itself as the Americas’ must-attend technology event.

This success has helped Greater Miami and Latin America’s tech ecosystems grow slowly but surely. www.capitalanalyticsassociates.com

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Scout Ventures made its first investment in a Miami startup in January 2015 in LiveNinja, which provides video chat services. Additionally, closing out 2015, 500 Startups launched a 10-week growth marketing program called Miami Distro Program, bringing mentors from Latin America and Silicon Valley to help startups with scaling customer acquisition, retention and revenue. The program partners with the Knight Foundation, the Simkins Family Foundation, Softlayer and Building.co.

World-class events Miami-Dade County hosted numerous tech events in 2015, the largest of which was eMerge Americas, hosting more than 10,000 people from 500 companies and 50 countries—almost double its 2014 attendance. Partnering for the first time with NBCUniversal News Group, the conference held demonstrations of surgical robots and entertainment systems, and speakers emphasized the importance of developing and preserving local talent. The winner of the startup competition was VSNMobile, a developer of 360-degree photo technology, which received a $100,000 investment from the judges. eMerge also featured a Women In Technology (WIT) speaker track as well as a speech by Deepak Chopra.

Meanwhile, Miami Dade College (MDC) hosted its inaugural Black Tech Week during Black History Month, highlighting the need for diversity in the tech industry. Roy Clay Sr., one of the developers of HP’s first computer in the 1960s, spoke at the event, along with innovators from Google, Snapchat and Coca-Cola. Panel discussions on diversity were led by PartPic CEO Jewel Burks, a Google employee who described her experiences with sexism and highlighted the fact that less than 5 percent of Silicon Valley technologists are black.

The event also illuminated business opportunities in Africa, Cuba and Jamaica.

Miami-Dade County also hosts longer-running and established tech events. It was home to the 18th annual Emerging Technologies and Business Showcase, held in November and hosted by Space Florida, Enterprise Development Corporation of South Florida and Florida Venture Forum. At the showcase, 24 Florida

startups competed for $150,000 in prizes. Rounding out 2015 in tech events was Miami Techweek, a weeklong festival where startups pitched ideas to judges, through several events and competitions such as Hatch Match, an evening of networking speed dating. Additionally, the third annual Sime MIA brought a unique international event (with a sister conference in Europe) intersecting tech, art and media and focused on tech and media trends as well as financial tech. Collectively, these events connected local startups with investors, offered training opportunities and exposed Miami to international corporations.

Higher education initiatives Investments in higher education are imperative to providing a pipeline for an evolving tech industry. Consequentially, MDC has a new digital marketing training program: MarketHack, launched in August 2015

by MDC’s The Idea Center. Sponsored by the Knight Foundation, the 16-week course was taught by online marketing experts from Open English and Offercraft and has already launched its second edition. The program aims to fill a void in digital marketing expertise in Miami-Dade, where demand for this education is high, providing not only connections but also apprenticeships and internships. The Idea Center, which recently partnered with the Entrepreneurs’ Organization South Florida, hosted an innovation course during which students created solutions and prototypes to solve common problems. MDC also hosted the Goldman Sachs 10,000 Small Business program, a 13-week business development program.

FIU opened the College of Architecture and the Arts Innovation Lab in September 2015. The lab features a 3D printing and laser-cutting lab, sponsored by the Knight Foundation and MakerBot, a global player in the 3D printing industry. FIU is the first university in the U.S. with a focus on design in the arts to house a MakerBot Innovation Center. In 2015, FIU also opened its $3-million Tech Station, an 8,000-square-foot building at the College of Engineering and Computing. Tech Station features prototypes such as RoboCop, a device that would allow disabled policy and military officers to patrol remotely. Next on the horizon for FIU is Startup FIU, a one-stop shop for students with startup ideas, similar to MDC’s Idea Center.

The FIU lab features a 3D printing and laser-cutting lab, sponsored by the Knight Foundation, and MakerBot, a global player in the 3D printing industry.

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TECHNOLOGY & INNOVATION OVERVIEW

Many tech-related scholarships have been awarded in 2015. As more are distributed, they will draw more talent to the area, strengthen universities’ programs and fortify the area’s tech talent pipeline. MDC received almost $13 million in federal grants for STEM initiatives, while two students in the Health Information Technology program were chosen from the Siemens Technical Scholars Program. Coding bootcamp Wyncode Academy received $75,000 from the Knight Foundation for scholarships for low-income students.

Furthermore, a partnership was formed between contact service software provider Fenero and nonprofit enterprise Lighthouse Works, which provides job training and employment for the visually impaired.

A supportive ecosystem Support for technology and innovation in Miami-Dade County is not only evident in universities. The largest contributor to these activities has been the Knight Foundation, which made 164 investments totaling $16 million in the last three years. One such initiative is Venture for America, which matches bright college graduates from across the U.S. with Miami-area startups. Some of these jobs could be housed in the upcoming Cambridge Innovation Center, which chose University of Miami’s (UM) Life Science and Technology Park as its second U.S. location outside of Cambridge, Massachusetts. The center will house 500 startups in up to 120,000 square feet and is expected to be completed by fall 2016. As of October 2015, 98 percent of the first phase is already leased. UM is doing more than providing the acreage, however, as its supervised law students will give startups free legal advice about business entities, financing, patents and trademarks, corporate organization and human resources.

On the other hand, the development of the Miami Innovation District has faced opposition by the city, mostly related to its proposed Miami Innovation Tower and its 633 feet of LED billboard space. This observation tower is the landmark of the proposed 7.4 million-square-foot business district, supported by the Knight Foundation and big players such as HighRidge Global and 500 Startups—companies who have a presence in Miami. Miami Innovation District Developer Michael Simkins spent $120 million on 10 acres near downtown for the project to attract companies such as Google and Yahoo, creating another Silicon Valley in support of the popular cluster innovation mentality. As Simkins tells Invest: Miami, the Innovation District’s design will create a transit hub that will attract urban millennial workers. “The architect working on the Miami Innovation District has

Nabyl Charania Co-Founder & CEO, Rokk3r Labs

The lack of professionalized or institutional investment has been an issue for this market and affects companies needing to access growth capital. A startup can raise the initial $200,000 to $2 million from angel investors, but getting to that next phase is more difficult. Recognizing these challenges, Rokk3r Labs launched Cross Valley Capital, a $20-million venture fund, to back emerging fund managers at Iterative Instinct, another $20-million early-stage fund. But it’s not just us: established funds like Accelerate Ventures, Scout Ventures and Mosley are realizing that a lot of good ideas are coming out of Miami.

South Florida has no shortage of wealth, but most investors do not know how to valuate tech investments. Many investors come here for the real estate, but once here, are open to other opportunities.

However, unlike real estate, which is a tangible product, investors unfamiliar with tech need to be guided through the valuation of a tech investment.

Everyone talks about exponential technologies and understands we are living in a special moment. The next step is to help a would-be investor understand the power of these technologies—to walk them through where we are and how far we have come in a few years.

Take drones. Eight years ago, you could not buy a drone. Six years ago, they were prohibitively expensive. Today, you can buy one for $30 and use it for your business. Communicating the potential of these technologies is crucial—someone may have made a lot of money on real estate, but where is the money to be made in the future? Opportunities lie at the intersection of exponential technologies. Seizing those opportunities requires, not just a certain knowledge base, but also a sense of imagination.

Building an ecosystem is a long-term project.

We need support from public and private sector alike in innovation and entrepreneurship to develop the skillsets people need to become employable. We need to come up with a cohesive way for foundations, like the Knight Foundation, and government entities to become part of the framework as opposed to being the people you go to for money. www.capitalanalyticsassociates.com

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South Florida health care companies received $176.8 million in venture capital from January to November 2015.

worked on the headquarters of Google and Uber, and we have spent thousands of hours with them working on how to bring about the most collisions, the most interactions,” Simkins said. “Once we have the anchor tech tenant, there are many smaller companies who will be excited to move into the area.”

Innovations in health care The health care industry continued to drive Miami-Dade’s tech industry forward as 2015 was another explosive year for technology and innovation in the health sector. Numerous national accolades were awarded to several Miami-Dade-based health care organizations such as the Building a Healthy and Resilient Liberty City project, a collaboration between Florida Institute for Health Innovation, the Miami Children’s Initiative, Catalyst Miami, the Florida Department of Health in Miami-Dade County and the Jackson Health System. The project received a $75,000 grant from the BUILD Health Challenge to improve health in Liberty City, a Miami neighborhood with high crime rates. Each partner focuses on different tasks 130 | Invest: Miami 2016 | TECHNOLOGY & INNOVATION

such as leadership training for parents and residents to lower poor health outcomes such as stroke, depression, anxiety and physical, substance and sexual abuse. The initiative will examine the connection between violence and health through the integration of law enforcement and public health data analysis.

Receiving the National Healthcare Innovation Award was UM’s Expanding Activities of School Health Initiative. Partnering with Medicaid, the University of Florida College of Dentistry, the Center for Haitian Studies, the Larkin Residency program and Overtown Youth Center, the program has received $4 million in funding with an estimated three-year savings of over $5.6 million. The program focuses on expanding care services, engaging school-health stakeholders and enhancing the use of health information technology to combat asthma, obesity, Type 2 diabetes and sexually transmitted diseases in children in four Miami-Dade communities.

2015 was an economically healthy year for Miami-Dade health care. The Miami Herald reported the average salary in the county’s life sciences industry

TECHNOLOGY & INNOVATION OVERVIEW

based Bird Biotech America is bringing its U.S. headquarters to UM’s Life Science and Technology Park, which will create 10 full-time positions.

More state-of-the-art research and care facilities have recently opened or on the horizon for 2016. In 2015, UM opened a sterile clean room for cutting-edge nanotechnology research, the first nanofabrication facility in South Florida and the result of a $7.5-million grant from the Dr. John T. Macdonald Foundation. 2016 will witness of the completion of the Miami Cancer Institute at Baptist Health South Florida, with nearly 400,000 square feet of clinical and research space costing $430 million. The facility will be the first in Florida to offer proton therapy, the use of proton beams to precisely attack cancer tissue. This institute will also provide people from Latin America and the Caribbean access to proton therapy. Additionally, in 2016, the Global Virus Network, representing centers in more than 25 countries, will draw virology experts from around the world to build a world-class HIV/AIDS institute at the UM Miller School of Medicine.

is nearly $80,000 whereas the average wage for the county is just over $44,000. Florida’s biotech industry has grown 92 percent (based on the number of companies) since 2008, more than double the U.S. average.

Further, $176.8 million of venture capital was invested in South Florida health care and life science companies from January to November 2015.

Many health technology startups entered the scene in 2015 such as Neocis, which is creating a robot a dental surgeon can use to insert dental implants while reducing surgery time and increasing accuracy while being minimally invasive. The surgeon can pre-plan the surgery in the software but make real-time adjustments. Biscayne Pharmaceuticals merged with Insero Health, uniting the companies’ two areas of expertise: cancer and epilepsy.

2015 also saw the launch of FIGS, a startup that makes fashionable yet functional scrubs made of anti-microbial material for health care professionals. The startup also has a humanitarian component: it has donated about 75,000 sets of scrubs in 26 countries, reducing infection transmission rates by 66 percent. Furthermore, Spain-

Looking ahead Overall, 2015 saw huge gains in capital and collaborative building spaces being leased faster than they can be built, numerous international events and local support for more investment in the regional tech hub.

Health care entrepreneur and investor Samuel Reich told the Miami Herald that while Miami-Dade boasts strong research universities and institutions, it still needs stronger financial and human capital. Startups, especially those related to health care, are not without challenges since funding is hard to secure, as the state receives less than 1 percent of the nation’s venture capital.

On the horizon for 2016 in technology and innovation is the rise of the digital media industry, including the video game industry and the film production industry. MDC’s new animation studio, Miami Animation and Gaming International Complex (MAGIC), opened in late 2015—a 9,000-square-foot facility offering degrees in animation and game art as well as game development and design. These programs aim to fill 1,500 available jobs that are 85 percent filled by out-of-staters and startups like Shiver Entertainment, a digital gaming startup that created 60 jobs in the last two years, according to Miami Today. Furthermore, Viacom International Studios, which has operated its Latin American, U.S.-Hispanic and Canadian markets from Miami, is building an 88,000-square-foot twostage production studio in the downtown area. However, further development may heavily rely on the reinstatement of certain tax incentives. www.capitalanalyticsassociates.com

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Health: Featuring insights from Jeffrey Freimark, President & CEO, Miami Jewish Health Systems, Steven Sonenreich, President & CEO, Mount Sinai Medical Center Miami Beach, Richard Ballard, CEO, Sylvester Comprehensive Cancer Center, George Foyo, Executive Vice President & Chief Administrative Officer, Baptist Health South Florida, Rachel Sapoznik, President & CEO, Sapoznik Insurance and Steven Altschuler, CEO, UHealth, shared exclusively with Invest: Miami

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Care for the future: With new cutting-edge facilities under construction, MiamiDade’s health sector continues on a growth trajectory even as it grapples with changing regulations Miami-Dade’s health system performance indicators in 2015 demonstrated growth, with the announcement of a large facility expansion and the completion of a new health facility. Macro trends over the past year have also signaled expansion of health systems. There was also sustained job growth in the health services sector.

The health system’s impact on the Miami-Dade economy has steadily increased. According to the U.S. Bureau of Economic Analysis (BEA), health care and related social assistance represents 7.52 percent of the 2014 Miami Metropolitan Statistical Area (MSA) economy in real 2009 dollars. This has been a marked increase from the 7.47 percent calculated for both 2013 and 2012. Recent BEA data for hospitals and nursing and residential care facilities only goes back to 2013, but here too there has been an economic impact, with 2.7 percent of the 2013 Miami MSA economy represented by this subdivision.

In terms of health employment, according to the U.S. Bureau of Labor Statistics (BLS), as of September 2015, approximately 171,000 people were employed in the county’s health services and education sector.

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Big expansions One the most important hospital system expansion announcements was the University of Miami’s (UM) in December 2015. The expansion will enlarge UHealth, a system that represents UM’s largest division, its operations making up 53 percent of UM’s $2.7 billion revenue as of the fiscal year that ended May 2015.

Meanwhile, Miami-Dade’s public hospital network, the Jackson Health System, announced that a rehabilitation medical center will be built as part of its $1.4-billion building campaign. It is the first large building project to be financed chiefly by funds from the $830-million bond endorsed by Miami-Dade voters in November 2013 to expand the Jackson Health System.

Another milestone from 2015 was Nicklaus Children’s Hospital celebrating the completion of construction of its Advanced Pediatric Care Pavilion after four years.

The 212,000-square-foot facility will house the hospital’s pediatric, cardiac and neonatal intensive care units when interior construction is completed in late 2016. The expansion was subsidized through a major $150-million fundraising campaign spearheaded by the Miami Children’s Health Foundation. Funds from

HEALTH OVERVIEW

this campaign will also expand the hospital’s emergency department and telehealth networks.

One of the major events of 2015 was the expansion of health care systems triggered by the Affordable Care Act (ACA). According to Allan Baumgarten, author of the most recent Florida Health Market Review, the ACA incentivizes Florida health systems to search and find new populations of insured patients. These patients, in turn, provide the market power for health systems to negotiate rates with major insurance companies.

Despite the challenges, coverage was greatly needed in Miami-Dade as Penny Shaffer, Florida Blue market president, tells Invest: Miami that the county had two or three of the top 10 enrollment zip codes in the country. “When the ACA was introduced, Miami-Dade was an important site for education on the ACA,” Shaffer said. “Going into it, we had 700,000 uninsured in this county alone, which was more than the entire state of Massachusetts.”

This expansion seems to have contributed to job growth as well. According to the BLS, the Miami MSA gained 8,000 local health service and education jobs as of September 2015, a 2.2-percent increase from September 2014. In Miami-Dade, 3,800 jobs in education and health services were created from November 2014 to November 2015.

Legislative milestones Of the recent federal health care policies that affected Florida health systems in 2015, the most consequential was the Supreme Court ruling that upheld the nationwide health insurance subsidies provided under the ACA in mid-2015. Approximately 1.3 million Floridians depend on these subsidies for health insurance coverage, so the decision upholding their legality preserves an important aspect of the health systems. Health insurance companies and hospitals feared a repeal of these subsidies would create market chaos, as subsidized Floridians would drop health insurance coverage en masse.

Another federal policy change was the government’s six-month extension of a moratorium on the licensing of new home health agencies in Miami-Dade County.

According to the Miami Herald, the extension lengthens a countywide moratorium that started in July 2013. The Centers for Medicare and Medicaid Services, which manage the public health insurance programs, said the extension was needed to continue to monitor fraud and abuse in home health billing.

The most important state-level health policy change was the Florida Legislature’s June 2015 rejection of a proposal to extend Medicaid. Such an expansion would

Jeffrey Freimark President & CEO, Miami Jewish Health Systems

When people think of Miami-Dade, they tend to focus on the glitz and the glamour. But this community, like much of the rest of the nation, faces significant challenges when it comes to elder care.

Moreover, rising cost of care in this space is exacerbated by the fact that South Florida is an epicenter of Medicare fraud. While many institutions, like ours, operate according to the highest ethical standards, we are all affected by the prevalence of fraud. When the federal government does their audits, we are included.

Costs are also rising because people are living longer, a reality that we as a country have not fully prepared for. The fastest growing demographic in this country percentage wise is the 85 and up age group. The average age of a patient in our custodial living facility has increased by 10 years over the last 15 years. People are living longer and they are outspending their savings.

These costs are placing a burden on our nation’s health care system. The vast majority of health care spending takes place as individuals are closing in on the end of life—in the last year or so. Americans are accustomed to pursuing every course of treatment available, and as caretakers we often hear, “We want everything done.” Those extra steps may add a little bit of time, but does it add more quality to life? A long-term strategy to mitigate rising costs must involve setting and defining expectations for families and loved ones, as well as for the medical community.

The elderly care sector will continue to see growth, particularly in the areas of Alzheimer’s, dementia and cognitive disorders. As a response, we will start to see the creation of “memory care villages”—facilities for folks with cognitive disorders, staffed by caregivers specially trained to work with this class of patients, who can address their medical and mental health needs, and provide a quality of life that is familiar for them. At Miami Jewish Health Systems, we are evolving our care model to one that is solely patient-centered, for more enriched lives. www.capitalanalyticsassociates.com

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have provided approximately 800,000 low-income Floridians access to health insurance. The proposal’s defeat came even though Florida business leaders, consumer groups and state health care organizations and hospitals strongly supported expansion.

In September 2015, Governor Rick Scott expanded an order to develop a statewide model of integrated behavioral health services. The executive order will expand pilot programs in three counties to reform Florida’s highly fragmented mental health system.

Meanwhile, at the county level, four community health-center systems in the county received more than $2.1 million in ACA funds in May 2015. These funds will go toward the construction of new health center sites that will increase access to health care for thousands of Miami-Dade residents as they serve uninsured people, charging them on a sliding scale according to their income.

An evolving insurance market The Miami-Dade health insurance market is seeing lower numbers of uninsured residents. According to figures compiled by the U.S. Census Bureau in late 2015, the number of uninsured residents in the Miami MSA dramatically decreased from 24.8 percent in 2013 to 19.4 percent in 2014. The percent covered by public health insurance increased as well, from 31.9 percent in 2013 to 33.1 percent in 2014. The same trend held true for those covered by private health insurance, with coverage rates increasing from 50.5 percent in 2013 to 54.7 percent in 2014.

These increases are reflected in Miami-Dade as well.

Approximately 428,000 of county Hispanics were uninsured in 2014, a marked drop from the 554,000 who were uninsured in 2013. However, there is still a relatively high number of uninsured residents. According to the U.S. Census Bureau, the rates of uninsured people in 2014 in Miami-Dade was at 22 percent, or 580,000 county residents.

According to the South Florida NPR affiliate WLRN, the true cost of health care is difficult to determine.

However, the Health Care Cost Institute published a report in 2015 where the latest available health insurance prices for large metropolitan areas are compared to national average prices through a price index for both inpatient and outpatient metrics. According to this report, in 2013, the latest year for which there is data, the inpatient price index for the Miami MSA was 0.91, indicating that local market prices were slightly lower than the national average. Meanwhile, the outpatient price index for 2013 was 1.07, indicating local market prices were slightly higher than the national average.

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Steven Sonenreich President & CEO, Mount Sinai Medical Center Miami Beach

With 5 million visitors coming to Miami Beach annually, the importance of Mount Sinai Medical Center and its strong emergency department cannot be overstated. Moreover, the economic impact that Mount Sinai has on its surrounding community is tremendous, falling somewhere between $5 billion and $6 billion a year. We are the only hospital in this city, and with 3,700 employees, we are also the largest employer in Miami Beach.

We have a $250-million building program, which is allowing us to build a state-of-the art surgical tower with 154 private rooms and 12 operating rooms. As medicine moves more and more into the outpatient space, hospitals are evolving to become surgery centers with intensive care components.

This building will further enhance our position as a surgical destination hospital.

Beyond surgical excellence, we are concerned about wellness. About five years ago we made the decision not to hire people who utilize tobacco products. To enforce this, we test our potential hires for tobacco use, in a manner that is legal and appropriate. For our existing population who smoke, we offer an assortment of smoking cessation programs and medication at the hospital’s expense. At the end of the day, we want people to take ownership and become responsible for their health.

If you were to ask what is the number one thing that keeps health care CEOs up at night, I would venture to say that 99 percent of them would answer Medicare and Medicaid reimbursement. Given that on average these funds make up 50 percent of the revenues of most hospitals, and an even greater percentage of revenues when it comes to long-term care, efficiency becomes the most important operational responsibility. Apart from reimbursement, one area where we still have a ways to go is transparency in the pricing of health care, medical devices and pharmaceuticals. Although we live in an age where we have access to all sorts of data and ratings, whether this is coming from U.S. News and World Report or The Leapfrog Group, there continues to be minimal knowledge when it comes to pricing.

HEALTH OVERVIEW

Tied to health care prices are health care premiums under the ACA. Individual premiums charged by major medical plans are predicted to climb an average of 9.5 percent in 2016. This high increase, however, is still below the 13.2-percent average increase in ACA premiums that occurred in 2015. This average was estimated using rate filings from 19 health insurance companies, including Humana Medical Plan Inc. and Aetna Health.

Specialized care Geriatric care in Miami-Dade saw some beneficial legal changes in 2015. Recent media coverage on the abuses inflicted on powerless senior citizens by some court-appointed professional guardians brought community and political attention on this issue. As a result, a bill that reformed the legal guardianship program run by state courts was passed into state law by the Florida Legislature and Governor Scott and took effect on July 1, 2015. The new law clarifies the duties of court-appointed professional guardians, incorporates criminal penalties for exploiting or abusing senior citizen wards and makes it harder to suspend a family member’s power of attorney during a guardianship litigation process.

Another major event affecting geriatric care in Miami-Dade was the Miami Jewish Health Systems’ (MJHS) June 2015 announcement of an innovative expansion to its Miami campus to address problems faced by geriatric patients suffering from dementia.

Modeled after the experimental Dutch village of Hogeway, where all 152 residents have some form of dementia and have freedom of movement within the confines of the village, the expansion seeks to replicate Hogeway’s innovations in end-of-life care. This expansion, named the EmpathiCare village, will take two to three years to construct and will replicate newer long-term care models that seek to make living environments less institutional. MJHS, a nonprofit facility, projected costs for the expansion to be approximately $50 million, which it is presently fundraising.

Among the 2015 developments in cancer care in Miami-Dade, Baptist Health South Florida announced that its new $430-million Miami Cancer Institute installed its first CEO and executive medical director. Dr. Michael Zinner is leaving Harvard Medical School and the Dana-Farber/Brigham and Women’s Cancer Center to help build and staff the institute, an innovative hybrid academic-community model that is becoming commonplace throughout the U.S. The Miami Cancer Institute, which is scheduled to fully open in late 2016, is also a welcome evolution for the health sys-

Miami is becoming an international cancer treatment destination, and the groundbreaking research, comprehensive diagnostics and discoveries of targeted treatments at Sylvester Comprehensive Cancer Center at the University of Miami are big reasons.

A Memorial Sloan Kettering study published in JAMA found Sylvester is one of 11 national cancer centers with the best patient outcomes, meaning our patients are more likely to survive than those at nearly any other hospital.

Sylvester is one of three Florida academic centers— the only one in South Florida—that Governor Rick Scott funded to achieve National Cancer Institute designation, allowing us to treat patients in more personalized ways with targeted therapy and treatment based on patients’ genetic makeup.

To offer these treatments, we invest in advanced technology. With radiation technology ViewRay— only five exist in the world—we deliver radiation in real time to avoid destroying healthy tissue and reduce side effects.

We also partner with centers researching therapies in clinical trials, including Memorial Sloan Kettering in New York, MD Anderson in Houston, and Dana-Farber in Boston. Our collaborations with South Florida and out-of-state medical centers will become important as the federal announcement of the National Immunotherapy Coalition supports cancer research.

Today, 36 percent of our patients come from Miami-Dade, while 47 percent come from Broward and Palm Beach counties and 8 percent are international, mostly from the Caribbean and Latin America. With a diverse population, we can conduct ethnic-specific research, advancing prevention and shaping diagnostics and treatments. Miami-Dade’s demographics, geographic position, growing population and improving economy are strong fundamentals for it to become a cancer research hub.

Richard Ballard CEO, Sylvester Comprehensive Cancer Center

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From November 2014 to November 2015, Miami-Dade added 3,800 jobs in education and health services.

tem, which for years had provided various oncology services through scattered private providers. Recently, Baptist Health started to bring oncologists as full-time staff and created the Miami Cancer Insitute to bring all oncology and cancer-related services under one roof.

Another 2015 development in cancer care was a $450,000-grant given by Susan G. Komen to the Sylvester Comprehensive Cancer Center at the UM Miller School of Medicine. The funds, the 20th grant the medical school has received from the organization since 2000, will fund the study of a protein called RAGE and its role in cancer cells. According to the grant’s lead researcher Barry Hudson, if the research goes as planned, a drug could be developed that could slow cancer cells’ aggressive growth. Such a drug could also serve as a chemotherapy additive or alternative.

Looking ahead Miami-Dade’s health system saw growth in 2015 as new health facilities were either announced or completed, while new federal health laws incentivized health systems to expand. As a result, there was a modest increase in the number of county residents employed in 138 | Invest: Miami 2016 | HEALTH

the health sector. Changes in federal, state and county policies also shaped Miami-Dade health systems with mixed results. The Supreme Court upheld ACA health care subsidies, while the state rejected an extension of Medicaid coverage to thousands of low-income county residents. Offsetting this decision at the county level, the ACA disbursed millions of dollars in funds to increase health access to uninsured county residents.

Health insurance markets demonstrated mostly positive growth, with the number of insured Miami-Dade residents, including the large Hispanic community, increasing substantially in the last few years. On the other hand, average health insurance prices remained mixed in the years before 2015, while ACA health insurance premiums will increase in the medium-term.

In terms of health system specializations, geriatric care improved in 2015 due to the passage of a state law that reformed guardianship procedures for senior citizens, while new and innovative facilities will be built to address the needs of people with dementia. For cancer care, new cancer facilities are slated to open while new research is being undertaken to find the curative drugs of the future.

HEALTH INTERVIEW

Consumer choice How incumbent systems in South Florida are making big changes to adapt to a rapidly evolving tech-driven health sector

George Foyo Executive Vice President & Chief Administrative Officer – Baptist Health South Florida How have demographic shifts in South Florida changed the way Baptist Health administers its services?

Both the millennial and baby boomer populations are growing significantly, and Baptist Health is adjusting its methods to best serve their needs. For example, millennials want to use electronic devices to talk to doctors and use the internet to research symptoms, while baby boomers rely on face-to-face visits. Our rule is “know your customer,” so we strive to deliver services our customers appreciate. Consumer choices drive business success. To better serve our population, we are investing in tools that enhance our digital interactions with patients, and have established social media presences on Facebook, Twitter and Instagram.

Where do you see technology making the most prominent marks on the health landscape, and how is Baptist Health responding?

Like other industries, the health care industry is transitioning, partly because regulations and technology are impacting health care systems.

Medical technologies, such as telemedicine, including mobility, as well as advanced medical equipment and procedures, are driving the industry’s evolution, creating efficient health care delivery mechanisms that are reducing the number of overnight patients.

For example, patients can use smartphones to interact with doctors. Non-invasive treatments like robotic surgery are minimizing hospitalization. As a result, the outpatient business is growing at a higher rate than the inpatient business. Though regulations are controlling how much technology can be utilized for patient care, telemedicine is becoming prominent and changing the way the industry delivers services. To adjust, Baptist Health is reinforcing its outpatient, urgent care and diagnostic centers for patients expecting quick turnarounds.

What are the key regulatory issues affecting health care in South Florida?

The Affordable Care Act created a new revenue model, and we are reducing our cost structure to adjust. State legislators are prioritizing health care cost management and scrutinizing insurance companies, hospital systems and current regulations to lift regulatory constraints and create competition.

Part of this means lifting restrictions on where new hospitals can be opened and allowing overnight stays at ambulatory surgery centers. In addition, the federal government has created the Federal Healthcare Exchange to make insurance accessible to uninsured, lower-income individuals. This has meant that a significant number of uninsured or underinsured patients now have access, but typically with high deductibles. We as a health system are adapting to the changing health care landscape. www.capitalanalyticsassociates.com

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Mobile medicine: While local stakeholders explore telemedicine, state legislators weigh its potential benefits South Florida health insurers and care providers alike have touted the benefits of telemedicine, in terms of both improving the patient experience, as well as re­ducing costs, while state policymakers continue to wrangle with the issue in the legislature. The first legislative proposal addressing telemedicine at the state level first arose in 2013. Some state legislators believe that telemedicine is a means by which residents of isolated communities can access proper medical care. However, complicating factors have prevented telemedicine bills from becoming law, including whether out-of-state physicians without Florida licenses can practice telemedicine in state and what entities will be responsible for reimbursement.

These same issues emerged when legislators discussed telemedicine proposals in the 2014 legislative session.

During the same session, another contentious problem arose that split the Florida House of Representatives and the Florida Senate. While the House favored language in the bill that would have permitted several types of health care professionals to practice telemedicine, the Senate, on the other hand, favored more restrictive language that limited the practice to licensed physicians. Similar disagreements dominat­ed debate in 2015. In March 2016, the Florida House passed a bill that would allow doctors to see patients via the internet and other remote means. Voting on the bill was nearly unanimous, and the House has sent it to the Florida Senate, which has yet to vote on it.

In the meantime, the Florida Department of Health’s Florida Board of Medicine is actively supporting the use of telemedicine. The board proposed rules to standardize telemedicine practice in December 2013, which became effective in July 2014. The board then proposed additions to the rules that would properly address how doctors prescribe controlled substances to patients with psychiatric disorders via telemedicine. These amendments became effective March 7, 2016.

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While the use of telemedicine increases nationwide, Florida legislators are voting on laws that would regulate the practice in the state.

Nationally, telemedicine is moving forward. In July 2015, investment bank RBC Capital Markets released a report stating that the national telemedicine services market of $250 million may jump to $20 billion over the next decade due to telemedicine becoming a standard treatment method for minor illnesses as well as patients’ rising comfort with the technology of telemedicine. Both the U.S. Senate and House of Representatives presented bills in early February 2016 that would waive Medicare’s payment limitations on telehealth and remote-patient monitoring services for certain providers.

Prominent South Florida health systems have been strong supporters of a telemedicine law. Prior to the start of the 2015 legislative session, Baptist Health South Flor-

HEALTH ANALYSIS

ida, the Associated Industries of Florida and the Florida Hospital Association convened a conference in Tallahassee to forge support for telemedi­cine, backed by the Florida Chamber of Commerce. At the conference, a Baptist Health executive stated that telemedicine programs have saved the health system $18 million. Telemedicine also reduced mortality rates at the health system by 40 percent. Further evidence regarding telemedicine’s efficacy was provided in a report released in late 2014 by Florida Tax Watch that concluded the state could save approximately $1 billion through telemedicine and other digital communication technologies.

Despite slow progress on the legislative front, in­ dividual health practitioners and corporations have continued to implement the use of telemedicine. In addition to offices and pharmacies, telemedicine has also been launched in schools. Dr. M. Narendra Kini, president and CEO of Nicklaus Children’s Hospital, tells Invest: Miami, “We are seeing a huge migration of telemedicine into the environments where kids are.”

In March 2016, the University of Miami (UM) received a $454,500 grant from the U.S. Department of Health and Human Services to purchase more telemedicine equipment to better assist students through the Dr. John T. Macdonald Foundation School Health Initiative. The grant will also allow UM to create electronic medical records for the students tracked in the initiative, which includes schools in North Miami Beach, Overtown and North Miami. UM has also used telemedicine outside of Florida. Quality emergency medicine is now more available in Haiti as a result of a program that enables trauma experts at the Miller School of Medicine to guide Haitian physicians in the diagnosis, treatment and surgery of various ailments that might have been fatal. Though only available in Haiti’s sole critical care hospital, UM seeks to expand the program to the remote rural interior of the impoverished nation in the future.

Rachel Sapoznik President & CEO – Sapoznik Insurance

Imagine an employee being able to go into a secure environment at her workplace when she is sick and having a telemedicine session with her doctor. She will be able to save time and money, while her employer will also be able to do the same by not having to have an employee out of the office for a doctor visit. These are the benefits telemedicine offers, not only to the employee but to the employer.

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HEALTH INTERVIEW

Changing models How health institutions in South Florida are adapting to industry change and creating new ways of delivering care

Steven Altschuler CEO – UHealth provider and insurance markets. New care models will be implemented that improve access, quality and outcomes and simultaneously reduce cost. The South Florida region will also become a hub for international medical tourism as the care model changes and the cost of care is reduced.

What distinguishing trends mark the South Florida health care market?

Broadly speaking, we should all expect significant transformation in the health care market. We will continue to see consolidation in all segments of the market, from national insurers to local providers.

Finally, the federal and state goverments will exert significant influence over the patient care model through Medicare, Medicaid and the exchanges.

In South Florida, the population is distinctly older than other parts of the country, resulting in the highest Medicare cost structure in the U.S. At the same time, Florida is now the fastest-growing state in the country, which also makes it an attractive health care market. These two demographic factors will result in consolidation and disruption of the 142 | Invest: Miami 2016 | HEALTH

UHealth is both a care provider and an educational institution. How is medical education evolving to keep pace with new models of care?

The care model is evolving to become more patientcentered (ideal patient experience) with dramatic increases in outpatient care and significant decreases in inpatient bed capacity. Inpatient facilities will become highly regionalized and will be primarily devoted to intensive care services and complex medical and surgical care. Medical students are now being trained in this new care model and are being exposed to its hallmarks of new technologies and new sites of care. This exposure is driving the increased focus on simulation experiences and the construction of new educational centers where students can practice using advanced technology.

As an incoming CEO to UHealth, what are your top priorities?

UHealth is South Florida’s only academic health system with the tripartite mission of clinical care and population health management, translational patient-oriented research and medical education.

The health system will evolve quickly to become an integrated, value-based, translational enterprise focusing on tertiary and quaternary care—the ideal patient experience and cutting-edge patient-oriented research that moves quickly from the “bench” to the “bedside.” UHealth’s ultimate goal is to improve the health status of the South Florida community.

Education: Featuring insights from Alberto Carvalho, Superintendent, MiamiDade County Public Schools, Juha & Johanna Mikkola, Co-Founders, Wyncode Academy, Dr. Mark Rosenberg, President, Florida International University, Eugene W. Anderson, Dean, University of Miami School of Business Administration, Jose M. Aldrich, Dean, Florida International University College of Business and Dr. Tomislav Mandakovic, Dean, Barry University Andreas School of Business, shared exclusively with Invest: Miami

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Exceeding standards: As a growing international city, Miami is preparing students for the global workplace As communication technology allows for more efficient information sharing, Miami has become an epicenter for individuals and organizations from all over the world to meet, share and execute new ideas. In response, Miami’s educational institutions have been proactively overcoming cultural clashes and communication barriers that can hinder people of diverse origins and goals from effectively collaborating. These institutions teach cooperation and cross-cultural communication to those coming of age in South Florida and older students from the U.S. and the world seeking academic and professional training, ensuring that Miami students are ready for global business.

Educating to heal One venerable health care training institution is the University of Miami (UM). Formerly headed by Donna Shalala, former U.S. Secretary of Health and Human Services and Clinton Foundation president, UM is now headed by Dr. Julio Frenk, former Mexican minister of health and former dean of Harvard University’s T.H. Chan School of Public Health. At a press conference announcing his appointment, Frenk said he appreciates the value of Miami’s geographic location as a gate144 | Invest: Miami 2016 | EDUCATION

way to Latin America and looks forward “to continue building lasting academic bridges across our hemisphere.”

The Interdisciplinary Stem Cell Institute at UM’s Miller School of Medicine received a $25 million donation from the Soffer Family Foundation to further stem cell research and its applications to cardiology, sports medicine and ailments related to aging. Meanwhile, the UM Health System’s (UHealth) new Infectious Disease Research Unit is working on finding a vaccine and cure for HIV/AIDS. Through this innovative research, UM is attracting international attention and students while strengthening ties to the community.

Further establishing Miami as a hub for educating and preparing the world’s health care leaders, Florida International University (FIU) was one of 20 medical schools selected to join the American Medical Association’s Accelerating Change in Medical Education Consortium in November 2015. The Consortium’s purpose is to spread medical school curriculums that best meet the needs and challenges of providing patient-centered health care. To accomplish this goal, the Consortium will provide $75,000 to each school over the next three years to help them fulfill the challenge.

EDUCATION OVERVIEW

Preceding this change, the FIU HealthCare Network (FIU-HCN), the clinical arm of its Herbert Wertheim College of Medicine, promoted Dr. Eneida Roldan as interim CEO in October 2015. Roldan will continue to manage FIU Health’s relationship with the community and its own health care education.

Focus on entrepreneurship Since fall 2013, the county’s college and university enrollment has steadily increased and institutions are expanding their facilities for further growth, especially in fields expected to surge such as business entrepreneurship, health care, architecture and construction. The Idea Center at Miami Dade College’s (MDC) Wolfson Campus in Downtown Miami opened in 2014, providing spaces for training and co-working as well as mentoring for entrepreneurs. MDC is also consulting with various developers on the best use for a parking lot adjacent to Wolfson. Additions to the facility may include a conference center, a performing arts venue, a Latin American art museum or residential units, all possible sources of prestige and revenue.

Adding to Miami’s space for education and entrepreneurship, the Cambridge Innovation Center will open a center at UM’s Life Science and Technology Park in 2016, with the goal of housing 500 startups. Led by Natalia Martinez-Kalinina, the center at South Florida high schools and Harvard University, the center will provide co-working and office spaces.

At its Coral Gables campus, UM broke ground on the Thomas P. Murphy Design Studio Building, an addition to its architecture school.

Regarding its physical expansion, FIU received unanimous support from the City of Homestead for relocating the Miami-Dade County Fair and Exposition from Tamiami Park to South Dade. Although plans are pending, the space would allow FIU to build a teaching hospital and new buildings for classrooms, offices and meeting spaces. Another of FIU’s new facilities will house the Steven J. Green School of International and Public Affairs, renamed for Ambassador Steven J. Green after he donated $20 million to the school in spring 2015. The school will offer interdisciplinary training in transnational studies, security policy and more. To support students at the School of Computing and Information Sciences, FIU invested in its technical infrastructure with the new Tech Station. The $3-million, 8,000-square-foot facility will provide space for students to practice their skills, collaborate, attend lectures and receive mentorship from local leaders in the South Florida tech industry.

Alberto Carvalho Superintendent, Miami-Dade County Public Schools

In 2015, Miami-Dade County Public Schools (M-DCPS) implemented rigorous academic standards that mirror Miami-Dade’s economic and industrial needs. Without compromising on standards, we decommissioned dozens of examinations, focusing on fewer but more effective assessments.

Due to these changes, our graduation rate increased and the district now has the highest percentage of students passing college-level classes in the country. As important as our performance is our efficiency: M-DCPS boasts the highest return on investment of any public school district in the U.S., according to a study conducted by WalletHub in 2015.

We expanded the portfolio of digital content for teachers and students and achieved full high-speed WiFi connectivity in over 400 schools. We also deployed over 104,000 portable devices into the hands of students and installed 11,000 interactive classroom boards with internet access and surround sound. Additionally, we increased the number of choice programs and now lead the nation with over 64 percent of our students enrolled in non-traditional education.

As we complete the implementation of a $1.2-billion county bond in the next three years, we will have fully renovated educational environments.

M-DCPS has a present and future impact on the economy, as it is the state’s second largest employer.

Florida’s future relies on how Miami-Dade’s trade, commerce, tourism and other sectors perform, and it falls on M-DCPS to teach our students—representing 13 percent of the state’s K-12 population—the critical skills needed for these industries.

Rather than rejecting the cultural and socioeconomic diversity of our market as a challenge, we embrace it as an opportunity. Being smart about this means ensuring that linguistic diversity is a must, whether it is in Spanish, Portuguese, German or Mandarin. This way, we equip our students to participate in the global marketplace. But we also ensure that our students receive a complete education—that we instill civic and moral values and infuse a sense of engagement and responsibility needed to navigate a democratic society. www.capitalanalyticsassociates.com

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EDUCATION OVERVIEW

One Community One Goal Recognizing that corporate recruitment was half the challenge of developing Miami’s economy, the university presidents who make up The Beacon Council’s One Community One Goal Academic Leaders Council launched the Talent Development Network in July 2014. The network gives students access to paid internships, facilitating employers’ ability to directly target students from area universities. Paid internships give lower-income students access to training for middle-skill positions, while allowing employers to find potential employees early in their careers. The Academic Leaders Council is planning to raise the network’s number of internships to 200 by spring 2017.

These objectives connect to Miami-Dade’s larger goal of increasing the area’s talent pool. In addition to attracting talent from all over the world and major U.S. cities, the county is actively building its citizens and students for work in Florida’s rising industries. As Johnson & Wales University North Miami President Larry Rice tells Invest: Miami, “The issue we should raise is not whether there is a shortage of fine talent in this community, but how can we better connect academia with industry and how we can better facilitate praxis—that is, integrate practice with theory.”

Career development Florida will be resuming autonomy in major decisions for its public schools under the Every Student Succeeds Act (ESSA), which replaced the No Child Left Behind Act (NCLB) in December 2015. As outlined by the White House, ESSA will eliminate NCLB’s excessive testing while preserving rigorous standards for student achievement in career and college readiness. One

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challenge for Florida was to establish the passing score for the Florida Standards Assessments (FSA), exams measuring whether schools are adequately preparing students to be college or career ready, but are not overly punitive like NCLB measures. In response to software mishaps and a disorganized rollout for the 2015 FSA and End of Course tests, Miami-Dade County Public Schools Superintendent Alberto Carvalho cancelled most testing for the 2015-2016 school year. Testing for 2016-2017 is expected to proceed, and the school board is working with administrators and teachers to ensure testing does not disrupt classroom learning.

Miami-Dade elementary, middle and high school students will be up to the challenge of facing these new assessments as they recently outscored their peers not only in the state but the country on the National Assessment of Educational Progress (NAEP) in reading and mathematics. The NAEP is billed as the “Nation’s Report Card” as its measurements of fourth and eighth graders’ skills are consistently reliable throughout the country and across demographics despite the recent changes in teaching standards and methods.

To increase student interest and encourage students to take ownership of their education, Miami-Dade County Public Schools is focusing on increasing access to programs that include real-world application in the curriculum, such as the agricultural science course at South Dade Senior High School. Through the pilot program sponsored by the Florida Farm Bureau, the University of Florida and Embry-Riddle Aeronautical University, students are trained to pilot drones for farming tasks like surveying crops for disease or damage. At Hialeah-Miami Lakes Senior High School, a new magnet program in digital media and entrepreneurship is

EDUCATION OVERVIEW

transforming the school’s culture as students engage with a business-focused curriculum and a myriad of projects in which to apply their new skills.

At local private schools in Miami-Dade, the movement toward a rigorous curriculum that incorporates real-life career application is also growing. St. Brendan High School in Westchester broke ground this year on its new Innovation Center that will include classrooms and labs for its growing academies of medical sciences, law, global business, visual and performing arts and STEM (science, technology, engineering and math). Even at the elementary school level, Miami-Dade schools are incorporating robotics and coding into after-school clubs, in-class projects and organized courses and programs to give their youngest students hands-on experience with engineering. Doral College, located on the same campus as charter school Doral Academy, is fulfilling the requirements to be accredited by the Southern Association of Colleges and Schools (SACS) so high school students enrolled in the college’s dual enrollment program can receive an associate degree upon completing high school.

Looking ahead Investors, students and residents in Miami-Dade have many reasons to be optimistic about the future as collaborations between the public and private sector take shape, giving students new opportunities to be trained with professionals in emerging fields like technology, health care, business entrepreneurship or any of the other industries flourishing in South Florida. Schools and universities must be prepared to not only equip their students with 21st century skills whether they be coding, learning foreign languages, mastering the art of negotiation or synthesizing ideas through writing. These institutions must also ensure that these skills can be applied across a variety of careers and industries, so students will not be confined within a set of too-specialized skills without the general knowledge needed to adapt to cultural or technological changes. Administrators and teachers will not be too surprised to find that the old “reading, writing and ‘rithmetic” are still at the center of these skills, but the methods of teaching them and their applications in the globalized workplace may seem only slightly unfamiliar. Never before has American culture been so anxiously aware of the desperate need to make content comprehensible to multitudes of students of differing goals and abilities. But for some time already, Miami-Dade’s educational institutions, administrators and instructors have had the skills, technology, resources and space to conquer the task.

There is a real renaissance taking place in Miami right now, but it faces challenges when it comes to workforce development. We are looking to address those needs by providing education, training and job placement in the technology sphere.

The fact is, today, every company is a technology company. Every industry is a tech industry. By 2020 there is expected to be 1.4 million open computing jobs, for which there are only a projected 400,000 candidates. As a result, there is a growing demand for developers that isn’t being met by traditional education outlets.

Since it was launched in May 2014, Wyncode has graduated 138 students and maintained a job placement rate of 90 percent within three months of completing the program. Our model is unique in that we focus, not on theory, but on developing practical skills. We have experienced developers training new developers.

Following this success, we opened a new school in Fort Lauderdale in spring 2015. In 2015, we also became the first code school to be licensed by the Florida Department of Education. The issue of how to license code schools is a nationwide matter, and we are proud to be leading the nation in this matter. We have been invited to the White House twice to consult as part of the New Economy Skills Training Association (NESTA), an initiative of U.S. Chief Technology Officer Megan Smith.

Looking ahead, Miami will only continue to build off of its existing tech ecosystem. The biggest obstacle to this growth is the ability to acquire senior-level developers locally, but in time this will change. There continues to be a critical mass of local entrepreneurs who want to stay here, build here and seize on the opportunities offered by this dynamic market.

Juha & Johanna Mikkola Co-Founders, Wyncode Academy www.capitalanalyticsassociates.com

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EDUCATION INTERVIEW

Change agents How universities in South Florida are playing a critical role in catalyzing MiamiDade’s vibrant economy

Dr. Mark Rosenberg President – Florida International University We are building partnerships around important issues like closing the education achievement gap, solving health disparities, dealing with transportation gridlock or undertaking the challenge of sea-level rise.

What impact does Florida International University (FIU) have on the Miami-Dade community?

FIU hires the best and brightest faculty, who excel in advanced research. We are identifying key challenges in the community. Our community sees us as a solutions center and we like that. We want our community to know that we are agents of good and change. For example, we started a teacher preparation program that identifies ninth graders who want to be teachers and monitors their performance throughout high school. Meanwhile, we created FIU EMBRACE, a program to provide medical and behavioral health care for adults on the autism spectrum or who have other neurodevelopmental disorders. To address the needs of students aging out of foster care, we launched an initiative that provides opportunities to succeed academically and graduate from college.

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How does FIU cater to its diverse student population while meeting the needs of Miami’s highly international market?

Diversity is a core part of our strength that we cannot take for granted. To make our curriculum relevant to a globalized society, recently Steven J. Green, his wife Dorothea Green, daughter Kimberly Green and the Green Family Foundation gave $20 million to make the Steven J. Green School of International and Public Affairs one of the world’s top academic centers dedicated to international understanding, economic development, peace and security. With policy, history, languages and social science courses, the school plans on enrolling over 9,000 students. We already have funding from the European community and plan to work in Latin America, Asia and Africa. Thanks to technology’s global reach, we are learning to be more efficient at delivering education online.

How has FIU adapted to technology’s disruptive impact on higher education?

Technology has been a major driver in breaking down the monopoly universities had on education. Before, we monopolized what product was offered, when it was offered and where it was offered. Technology has disrupted those three elements, so we have to be better at being 24/7 providers of quality education. We also have to be consumer-centric. That doesn’t mean students will be spoon-fed, or that there won’t be rigorous standards. Our challenge is to figure out how to effectively deliver our product as a consequence of the reach technology now gives us.

EDUCATION ANALYSIS

Gaining momentum: Miami-Dade’s cultural diversity continues to shape K-12 schools and higher education alike From preschools to universities, Miami-Dade’s educational institutions owe their success to insight and experience gained through linguistic diversity, economic cycles and waves of multicultural immigration the community experienced through the 20th and early 21st centuries. Such challenges may inevitably pose barriers to students attempting to grasp knowledge and master skills, but Miami’s elementary, middle and high schools have adapted various methods and programs for students, regardless of their home language, parent income or neighborhood location. Even the simplest problem of geographical barriers is being solved by the new Flex Stops program, instituted by Miami-Dade County Public Schools for the 2015-2016 year to pick up and drop off students attending magnet programs in schools outside their neighborhoods. Superintendent Alberto Carvalho also announced 16 new magnet programs in 12 schools and 37 choice programs in 30 schools, creating diverse and rigorous programs from which students can choose.

To teach high schoolers the critical thinking and communication skills needed to succeed in a global economy, the county has six public schools that offer the International Baccalaureate Diploma, compared to Los Angeles’ four and Washington, D.C.’s two. Setting the county apart from its big city peers is that many of these educational programs are located in Title I schools in lower-income neighborhoods that have traditionally missed out on these opportunities.

Miami’s inclusive educational landscape has achieved national acclaim. In 2016, the Princeton Review ranked the University of Miami 12th in the country for “Lots of Race/Class Interaction” while Richard Florida of the Creative Class Group placed the Greater Miami area at 11th for “Tolerance.” Through partnerships between educational institutions and public and private sector organizations, like The Beacon Council’s One Community One Goal, business initiatives acquire contacts to gain startup capital, hire workers, build a client base and serve the local community. For example, in November 2015, Genetic Networks, which

Miami-Dade County Public Schools introduced 16 magnet programs and 37 choice programs in the 2015-2016 school year.

uses technology from UM, received funding from the Florida Institute for the Commercialization of Public Research to gather data on genes to best maximize drug impacts. In January 2016, Florida International University’s Nicole Wertheim College of Nursing and Health Sciences re-opened a clinic at Miami Northwestern Senior High School to provide clinical practice for FIU students and Northwestern’s medical magnet students and give primary care to Liberty City residents. Partnerships like these throughout Miami allow for the cross-pollination of ideas to connect investors, entrepreneurs and clients, with the ultimate result of further prospering Miami.

Miami’s diverse industries are gaining momentum and international recognition. In August 2015, Miami Dade College’s (MDC) Idea Center started a knowledge-sharing partnership with Tel Aviv University’s Entrepreneurship Center (StarTAU), from which both region’s entrepreneurial ecosystems are expected to benefit. In October 2015, MDC was visited by King Felipe VI of Spain and will host a televised Democratic presidential debate in March 2016.

Whether students from abroad come to Miami or creative local graduates seek the seed money to start the next Fortune 500 company, Miami-Dade’s educational institutions have the resources to meet the needs of its diverse population, from the youngest preschooler learning Mandarin in Hialeah, to the middle-aged adult returning to college in Kendall to jump start a new career, and every student in between. www.capitalanalyticsassociates.com

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EDUCATION ROUNDTABLE

Eugene W. Anderson Dean, School of Business Administration

Specialized success: Business schools are keeping up with Miami-Dade’s reputation as a hub for developing business by offering robust international programs As a growing major city with close ties to Latin America, Miami-Dade’s diverse population provides a strong foundation for preparing students for the international business world.

From the University of Miami’s Miami Executive MBA to Barry University’s emphasis on ethics and social responsibility, the area’s schools are equipping students to succeed in the major industries that dominate trade and business across the world. In addition, programs like Florida International University’s Small Business Development Center and global sales and capital markets labs teach students to navigate a better-connected world while providing real-world experience.

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Miami’s cultural diversity, international ties and location in one of the world’s fastest-growing connectors make it an ideal place to prepare for a future where all business will be global. Although our actual curriculum does not differ much from that of other U.S. business schools, there tends to be more international content in our classrooms.

For instance, students learn from the international experiences of their classmates, 25 percent of whom are fully international, while another 15 percent have dual nationalities. We have about 90 regular, tenuretrack professors who come from over 35 different countries. Additionally, we have an entire degree program in Spanish, and we have almost enough staff to do one entirely in Portuguese.

As a business school, we build strong recruiting relationships with companies in South Florida. One aspect of this is that we are hosting more alumni and corporate connections events. We want as many people as possible to become engaged with the school at different levels so we can have a better understanding of the needs of the business community.

Looking ahead, our objective is to become the most global U.S. business school and we are well positioned to do that. We launched eight new programs this year, including four specialty master’s programs in business analytics, finance, international business and economics, and two executive MBA programs. Our flagship executive MBA program is the Miami Executive MBA for the Americas, while the other is the Miami Executive MBA for Artists and Athletes.

We are still at a stage where, when local companies are thinking about developing their executives, they are not sending them to schools here in Miami. This is a problem of perception. We would like companies to understand that we know this market and how it operates better than schools they are sending their people to up north. I am not sure the market here fully recognizes how high quality the local educational institutions have become, because it has really happened in a very short time. One of our challenges is getting the word out.

EDUCATION ROUNDTABLE

Jose M. Aldrich Dean, College of Business

As an international community, South Florida reflects what the U.S. will be like in 30 years. Seeing as major global events impact not only large businesses but medium and small ones as well, we make sure that as our students are developing their own business skills, they are doing so with an eye to the international.

Our Small Business Development Center, for instance, has a trade specialty program that teaches students that competition comes in from unexpected areas wherever they go. We have a capital markets lab that examines international investment flows, and this year we launched a global sales lab, with competitions conducted in English and Spanish. Additionally, we have dual-degree opportunities and partnerships with over 40 universities around the world to help us facilitate cross-cultural exchanges.

We are constantly assessing the skills we need to develop for this community. Some of those are in the areas of data analytics, logistics, marketing, finance and international business. Our programs address topics that spread across several industries, including mortgage lending, flower importing, consulting, international human resources and Latin American health care—all of which are relevant industries for the South Florida market. Given this curriculum, it’s a winwin when our students get internships with companies in the area. The companies get manpower with specialized training, while our students gain experience in their field.

For its 2016 edition, U.S. News & World Report ranked our undergraduate program sixth for international business, while our graduate school was ranked 15th for its International MBA program. We are proud of this recognition, but among FIU’s most important roles is to be a pillar that trains the talent in the community to drive South Florida’s economic development and growth. FIU’s community programs, and its partnerships with local businesses and alumni, are accomplishing this. More than 30,000 of the 50,000 alumni FIU’s College of Business has graduated have stayed in the community, while thousands are based in 40 major cities around the U.S. and the world, creating a network that leads back to South Florida.

Dr. Tomislav Mandakovic Dean, Andreas School of Business

In Miami, globalization is not just talk or theory; it is actually unfolding before our very eyes. We see its effects every single day, and this is the reason why most of our business school graduates are choosing to stay in this market, and are even willing to take a cut on their salary to do so.

Because globalization is within the reach of our fingertips, new opportunities are emerging every single day. In the past, Miami was viewed principally as a tourist destination. As it has evolved into a center of commerce and the economic capital of Latin America, we are seeing growth in new industries. For instance, there is a tech boom underway today. Moreover, as cross-border activities generating from Miami continue to grow, there is a corresponding demand for legal, accounting and advisory services, with special emphasis on international business. For anyone interested in doing business with Latin America, Miami is the number one place to be.

For these reasons, and the sheer fact that it is an attractive city with many cultural and lifestyle offerings, Miami is an ideal location to study business. There are four AACSB (Association to Advance Collegiate Schools of Business)-accredited institutions in Miami-Dade County, one of them being Barry University’s Andreas School of Business.

What sets the Andreas School of Business apart are the values we impart on our students. As a Catholic university founded by the Adrian Dominican Sisters, we emphasize principles of social responsibility and corporate sustainability. Not only is this what we believe to be the ethical approach in business, but it is becoming increasingly necessary for business leaders to understand these principles to effectively engage with their consumers and stakeholders.

Looking ahead, we see the business community in Miami-Dade growing, thriving and becoming increasingly more competitive. To get ahead, it is necessary to have mastery over technology and principles of entrepreneurship—these are areas the Andreas School of Business focuses on in our curriculum.

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Retail: Featuring insights from Carol Brooks, President & Co-Founder, CREC, Matthew Whitman Lazenby, President & CEO, Whitman Family Development, Oscar Feldenkreis, CEO, Perry Ellis International and Beverly Raphael, President & Co-Founder, RCC Associates, shared exclusively with Invest: Miami

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Shopping haven: More investors eye retail opportunities in Miami-Dade as the county continues to develop a more complete “live, work, play” experience Miami-Dade’s retail market witnessed a year of strong growth that appears likely to continue well into 2016.

Despite the 2010 slump in commercial real estate and retail metrics, 2015 saw continued development investment and rising retail occupancy. Vacancies are at their lowest since recession-era highs, and rents have risen to match increased demand. Despite widespread market challenges associated with the rise of e-commerce and the decline in popularity of massive single-purpose shopping centers, the retail market proved adaptable to changing consumer demand. The City of Miami’s retail market growth depends on its reputation as a global city that attracts tourists and its ability to meet local consumer demands as higher population density creates greater demand for retail outlets.

Stable growth According to JLL, 2015’s retail occupancy rate in Miami-Dade rose to 96 percent—the highest in Florida and an increase from 95.6 percent in 2014. Third-quarter vacancy rate figures from CBRE indicate an occupancy rate of 96.5 percent, suggesting 2015 ended stronger than anticipated. As expected, the market became more competitive and retail sector rents, as 154 | Invest: Miami 2016 | RETAIL

reported by SVN Real Estate, an international commercial real estate advisory group, have grown approximately 11.2 percent. Compared to 2014, the most observable trends were continued growth and a shift from plateaued vacancy rates to sustained growth. As predicted in 2014, the trend toward growth continued, becoming more than an anomalous spike. Growth is expected to continue through 2016 as the market stabilizes with a firm base in consumer demand. This stability is based on trends that continued from 2014 through 2015.

Population density and economic stability have bolstered retail performance across Miami-Dade: Miami is the fifth fastest growing large city in the U.S., according to U.S. Census Bureau data. Population growth brought more consumers with retail needs into the neighborhood and community commercial real estate categories. In the first quarter of 2015, these subcategories lagged behind the average aggregate retail market with vacancy rates of 4.9 percent and 8.7 percent for community and neighborhood sectors, respectively.

Neighborhood and community sectors are shopping centers that provide staples such as food, medicine and clothing. According to Savills Studley Research,

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these cross-sector vacancy rates declined 0.8 percent in the community sector and 0.1 percent in neighborhood market sector in 2015. Both figures indicate retail growth and market stability in the sectors most associated with meeting basic population needs.

The county’s retail sector growth and stability depend largely on a firm local consumer base. The completion of major projects in 2016 and 2017 may cause a temporary rise in unemployment and produce a small dip in retail growth. Although unlikely to affect the greater growth trend, this short-term shift will likely not affect luxury brand nor major development sector performance.

A beacon among its peers Miami-Dade’s retail market demonstrated manageable growth from 2014 to 2015. This sustained growth and commercial expansion makes it competitive on the national and regional levels. With its enviable 4-percent vacancy rate, the city is a strong national performer against the national 13-percent average. Its reputation as a global city and attractiveness to wealthy consumers bolsters growth spurred by local economic improvement and population growth. Miami remains a destination for top spenders, attracting domestic and international tourists.

Foreign spending remained high with Mastercard reporting more than $6 billion spent by foreign visitors in 2015, an increase of more than $1 billion from 2012.

On a national level, Miami is neither Manhattan nor San Francisco in terms of retail rents. However, it offers a higher capitalization rate (cap rate) of approximately 6.5 percent, as reported by JLL. Manhattan and San Francisco are extremely high-value markets and represent less risk; however, their capitalization rates are below 4 percent and 5 percent, respectively. Conversely, markets with higher cap rates such as Orlando and Houston are more prone to risk. Miami offers a higher profit margin among similar large-city retail markets in the U.S. This market relies on a strong historic base of attracting retail consumers that has expanded in recent years due to the recovering economy, increased development and population growth. As the market becomes saturated and remains stable over a medium-to longterm period, cap rates will likely steadily decrease and plateau due to an increase in the price per square foot.

Regionally, Miami’s closest market peers are Fort Lauderdale and Orlando. Both are poised for growth in the coming years and have seen similar unemployment rate decrease and population increase. However, Miami remains a major international point of entry for many tourists eager for an American shopping experience. Rents in Miami and Fort Lauderdale are project-

Carol Brooks President & Co-Founder, CREC

This is an exciting time for Miami’s retail market, as national and international brands are expanding their presence, and new mixed-use developments, mega malls and neighborhood centers will create new investment opportunities. But the Miami-Dade market is still under-retailed based on its urban and suburban population (2.6 million) and the more than 14 million visitors who travel to Miami and spend more than $23 billion annually. In fact, Miami has become one of the world’s premier shopping destinations, particularly for luxury brands.

The rise of the luxury segment in Miami-Dade’s retail market has resulted in escalating rental rates in high-demand areas like Lincoln Road and Wynwood. While rents were $100 to $150 per square foot five years ago on Lincoln Road, today they are $300 per square foot. More luxury retail space is being developed in the Miami Design District, Brickell City Centre and Mediterranean Village in Coral Gables.

Meanwhile, investors and property owners are transforming existing retail complexes into lifestyle centers infused with local character that satisfy consumers’ craving for unique shopping and dining experiences. Because Miami-Dade is such a diverse region, with varied neighborhoods and communities, there is a wide range of new construction and redevelopment opportunities to cater to this sophisticated retail market. In the grocery segment, there are now multiple options for an anchor tenant.

Whole Foods, Fresh Market and other high-quality national chains are looking to expand and other brands have recently entered with plans for growth, such as Trader Joe’s, Earth Fare and Lucky’s Market.

While Miami is steadily becoming a more urban hub, infrastructure and transportation improvements are needed to make this a reality. In the next three to five years, Miami’s growth as a retail destination will be felt from its urban core to its most popular suburbs. Instilling local character into a lifestyle retail center or mall has the power to lure new tenants and draw consumers, and as a result, investors will be able to maximize asset value and help tenants achieve long-term success. www.capitalanalyticsassociates.com

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ed to increase by an average of 17 percent between 2015 and 2019. For Miami, this would mean an increase from $22.62 to $26.25 in the average price per square foot of retail space over a four-year period.

Impacts of strong dollar Despite the strength of the U.S. dollar, Miami’s tourism market and spending by consumers from abroad remained strong in 2015. According to Mastercard survey data, overnight international visitor spending totaled $6.4 billion in 2014, and onsiderably more than $5.28 billion in 2012. Miami International Airport (MIA) announced 44.35 million total passengers in 2015, an increase of 8.32 percent. PortMiami remains the number one cruise port in the world, with nearly 5 million passengers in 2015. This number is projected to increase as Royal Caribbean expands its PortMiami operations. Overall, Florida tourism grew significantly in 2015, and with 70 percent of those travelers coming internationally. Miami sees the large majority pass through its ports.

Shopping is a hallmark Miami tourist activity with international visitors accounting for more than half of tourist spending. Miami tourism is heavily associated with high-end shopping. Luxury brands such as Breguet, Audemars Piguet, Vilebrequin and Krug Champagne see Miami as a priority market, and the first three have stores in the high-tier Bal Harbour Shops. Other retail centers such as Coral Gables’ Miracle Mile and the Design District attract designer labels and unique brands that appeal to wealthy and fashionable clients.

Outlet and discount fashion retail centers also draw budget-minded international shoppers seeking deals on American brands.

The most recent figures on most-liked features for overnight Miami visitors reflect the importance of retail markets to international visitors. Close to 60 per-

cent of international visitors surveyed by the Greater Miami Convention and Visitors Bureau in 2014 named the shopping opportunities their most-liked feature of Miami. Retail spending, which has increased in recent years as a portion of tourism expenditures on a per-capita basis, represents approximately a third of tourist spending in Miami and is the largest reported expense.

A strong U.S. dollar may be driving down international tourism numbers slightly, as this was the first year MIA reported a higher ratio of domestic-to-international passengers. However, Miami continues to attract wealthy visitors, particularly from Latin America, and ongoing developments reflect luxury brands’ commitment to remain in Miami.

Shifting consumer preferences E-commerce poses a challenge to brick-and-mortar retail outlets as consumers have become increasingly reliant on the convenience of online shopping. However, as retail firms adjust and are guided by investors to maintain lower retail space-to-profit ratios, a new shopping experience has emerged. Open-air shopping combines niche cafes and restaurants with boutique stores and retail outlets. Traditional malls still perform strongly in Miami with sub-2 percent vacancy rates as reported

by CoStar, but this has not prevented developers from adapting to the market’s preference shift.

Major developments, such as Brickell City Centre by Swire Properties and SoLe Mia Mainstreet by Turnberry Associates, have been designed with this combination of community and retail in mind. The former, a $1.05-billion project, features the innovative $30-million Climate Ribbon, an expansive glass-roof structure that reuses rain water, uses sea breezes to regulate temperature and protects visitors from inclement weather.

Walkable commercial real estate holds great value as demonstrated by the record-breaking $370-million sale

Matthew Whitman Lazenby President & CEO – Whitman Family Development While e-commerce has most certainly transformed the world of retail, for the luxury segment, the evolution has not been one that has strayed from traditional stores, but one toward creating an omnichannel strategy that utilizes digital avenues, but not at the expense of brick and mortar. Luxury must always remain sensitive to the need for an experience, and because this is what Miami excels at, luxury retail will continue to be a sustainable industry in the local market.

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of the 1001-1035 block on Lincoln Road by the Comras Company of Florida to Playa Retail Investments.

This shift in consumer desire reflects Miami’s transformation from a suburban to urban market. Walkability, design and atmosphere are key features driving consumer preferences, and Miami is uniquely situated both culturally and geographically to provide such an experience. Home to Art Basel Miami Beach, one of the largest U.S. art fairs, and a mecca for designers from around the world, Miami is no stranger to art and its incorporation into attractive, open-air plazas. Similarly, with its subtropical climate, Miami has a competitive advantage over colder climates as it allows for outdoor experiences year-round.

Another feature drawing consumers to physical retail locations is a desire for unique dining that extends beyond conventional fast-food options. JLL figures indicate that fast-food presence grew about 1.5 percent from 2014, but fast-casual locations such as Chipotle and Panera Bread expanded by about more than 7 percent, and such restaurants are increasingly replacing mall food courts. These shifts in consumer demand are evident in the major retail construction projects heading into 2016.

Projects in the pipeline According to CBRE, in 2015, Miami-Dade’s completed and planned commercial real estate development grew more than a third from 1.6 million square feet to 2.2 million square feet. Miami-Dade has nearly 44.15 million active retail square feet and another 2.35 million under construction, an expansion of more than 5 percent. The two mega projects representing the bulk of these figures are the aforementioned Brickell City Centre in Downtown Miami and and SoLe Mia Mainstreet in North Miami.

Brickell City Centre is set to open in fall 2016 and aims to provide a vertically oriented, high-end shopping experience. Internationally renowned designers, such as Bally, La Perla and Giuseppe Zanotti Design, are slated to open stores alongside local favorites Pasion del Cielo and Pubbelly Sushi. At 565,000 square feet, the project is located in one of the most expensive submarkets where the average commercial leasing rate is approximately $130. Including office and residential spaces, the development focuses on the “live, work, play” concept and hopes to attract firms to address the city’s lack of specialized, higher-level jobs.

SoLe Mia Mainstreet is slated for completion in 2018 and is located outside Miami-Dade’s urban core in suburban North Miami. Despite its location and traditional flat layout, it is close in size to Brickell City Centre at 500,000 square feet and aims to provide a similar chic “live, work, play” experience with a purposeful outdoor

Oscar Feldenkreis CEO, Perry Ellis International

Today’s retail landscape is dramatically evolving and companies need to quickly adapt. Perry Ellis is no exception. For instance, more consumers—including many millennials—shop online, rather than visiting a store. We continue to increase our investments in web-based retailing and direct-to-consumer advertising, one of our fastest-growing businesses.

Recognizing that reduced spending by foreign tourists, given the strengthening of the U.S. dollar, has impacted retailers, we have weighted our retail strategy toward local consumers. We have also accelerated our calendar to bring our products to market earlier, ensuring they are relevant to consumers’ changing tastes.

As a global firm with roots in this community, we are optimistic about Miami’s future. Our evolution from a family-founded company to a publicly-traded corporation has coincided with Miami-Dade’s evolution into a thriving international city. We are committed to investing in this community, as demonstrated by the recent 40,000-square-foot expansion of our corporate headquarters in Doral.

Our Hispanic heritage, and the fact that our headquarters is based in the predominantly Hispanic Miami-Dade market, gives us an advantage in terms of knowing the preferences and tastes of Hispanic consumers. These insights allow us to educate our retail partners on how best to capture market share in this fast-growing demographic.

A challenge facing Miami pertains to talent cultivation. Perry Ellis has endeavored to address this by bringing on a chief talent officer and by partnering with local universities to train their graduates at our facilities. Plus, our executives teach classes and are guest speakers at local design schools.

While we have offices in New York, Portland and Los Angeles, Miami is our home, and we look forward to fortifying our presence here. Miami shows much cultural potential, as demonstrated by the growth of retail centers such as the Miami Design District, and art institutions like the Perez Art Museum Miami. We believe these developments will drive Miami to become a significant national and international fashion city. www.capitalanalyticsassociates.com

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design and proximity to major housing developments and Oleta River State Park. The average asking lease rate in North Miami is a below-average $16.88 per square foot.

Both projects demonstrate how developers are responding to market demands. As consumers demand integrated retail structures where they can address their shopping and social needs, developers are embracing mixed-use projects over the monolithic single-purpose shopping malls that reigned for decades.

The Brightline MiamiCentral station in Downtown, slated for completion in 2017 and part of a larger $3-billion project managed by SMO, will include 200,000 square feet of retail space next to two residential towers and an office building with an integrated grocery store. Similarly, the $800-million mixed-use CityPlace Doral, slated for completion in 2016 by The Related Group and Shoma Group, will give tenants and consumers a holistic shopping, living and entertainment experience. With an estimated 250,000 square feet of retail space and more than 1,000 new residences, CityPlace Doral fits consumer desires for walkability and sociability within retail spaces.

Lincoln Road and Bal Harbour are two retail staples whose expansions are driven by retail sector growth.

With the record-breaking Comras sale in 2015 and a 34-percent increase in average asking rent between 2012 and 2015 reported by the Miami Herald, Lincoln Road’s value is rapidly increasing. Bal Harbour Shops, owned by Whitman Family Development, will grow by more than 360,000 square feet in a $400-million expansion with Barneys New York introducing a flagship store.

Larger than these projects however is the American Dream Mall. Though an official project application will not be submitted to Miami-Dade County authorities until late 2016, developer Triple Five has acquired more than 100 of the 225 planned acres off Interstate 75 near the Florida Turnpike. The American Dream Mall is slated to feature shopping, living space and entertainment, including an indoor ski slope, a skating rink, amusement park rides and a sea lion show.

Looking ahead Miami-Dade County’s retail sector is poised for growth in 2016 and beyond. This growth is based largely on economic stability and population growth as well as retail developers’ adaptability to the market. Retail developers have responded to consumer preferences for greener and walkable spaces that integrate community as seen in the focus on mixed-use spaces in new developments and the expansion of major retail centers like Lincoln Road and Bal Harbour Shops.

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Beverly Raphael President & Co-Founder, RCC Associates

When I moved to Florida in 1981, the Miami Design District had just a couple of furniture showrooms. Now, it’s become the SoHo of Miami with high-end shopping destinations like Hublot, Hermes, Louis Vuitton, Prada, Bvlgari and Tom Ford. Watching it develop has been nothing short of spectacular.

More recently, we completed a three-story Harry Winston store in the Design District and are building two restaurants at Brickell City Centre. One measure of this market’s rapid growth can be seen in the fact that competition in the construction sector today is more intense than ever. Developers and general contractors from the U.S. Northeast have seen what’s happening in Miami and want to get a piece of it. They’ve opened satellite offices here, driving prices up. These developers are taking exciting risks and the highend residential products they are introducing are giving Miami a posh feel, different from anywhere else in Florida. We’ve also seen an evolution in the aesthetic preferences of retailers. For instance, a lot of European designs are moving from an “Old World” look to a much more contemporary and minimalistic look with clean, straight lines.

Retailers and restaurateurs are trying to create designs that aren’t “cookie-cutter,” looking here and abroad for new concepts. We are also seeing big players entering the retail space; in Downtown Miami, Forbes is helping develop the mega mixed use project Miami Worldcenter, bringing together great shopping, entertainment and restaurants. RCC Associates has responded to this market demand for high-quality retail, restaurant and entertainment spaces. Five years ago, we built Zuma, which continues to be one of the top restaurants in Miami.

Looking ahead, we will continue to benefit from the influx of European, Asian and Latin American money, and I’m confident in the opportunity here.

Miami has seen recessions over the years, and it always comes back stronger. We haven’t seen the bulk of the growth yet. This is just the beginning.

Tourism: Featuring insights from Robert Hill, General Manager, InterContinental Miami, Arnold Donald, President & CEO, Carnival Corporation and William D. Talbert III, President & CEO, Greater Miami Convention & Visitors Bureau, shared exclusively with Invest: Miami

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Open for visitors: Miami-Dade County combines the traditional and innovative, the local and global, to open new frontiers for 21st century tourists While Miami-Dade’s tourism has grown over the past few years, its reinvention and adaptation to historic changes are steering the sector toward exciting territory. In the first quarter of 2015 alone, the sector overshot its performance compared to 2014’s first quarter with a record-breaking 4.3 million overnight visitors, setting the trend for the rest of the year. The result was an increase in hotel room occupancy, averaging 78 percent throughout the year, boosting its ranking to third (up from fifth) among U.S. cities (behind Oahu Island, Hawaii and New York City) for hotel occupancy, according to the Greater Miami Convention and Visitors Bureau (GMCVB). Meanwhile, sector employment has been rising over the past decade, up nearly 30 percent since 2008 to account for 135,800 jobs in the county in 2015.

As the sector’s fundamentals remain strong, it continues creating capacities to attract and accommodate an increasingly diverse and savvy tourist population. Sector leaders are aggressively pursuing new luxury and transportation ventures in light of the restoration of U.S. diplomatic relations with Cuba, facilitating passage to a previously closed part of the world for Americans.

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Growth trajectory With its strategic location—one end attached to the U.S. mainland and the other anchored in the Gulf of Mexico, Caribbean Sea and the Atlantic Ocean—Miami-Dade has long attracted international visitors. According to the most recent U.S. census, 51.3 percent of the county’s population is foreign-born. The multi-layered cultural and economic texture of this demographic is bolstered by rising numbers of international overnight visitors: 7.4 million in the 2014 to 2015 fiscal year as reported by the GMCVB, representing an annual increase of 2.9 percent and nearing parity with the number of domestic visitors at 7.8 million, an impressive increase of 15.4 percent likely propelled by the strong dollar. From September 2014 to August 2015, the impact of overnight visitors amounted to $25.1 billion, a 7-percent increase from the previous period.

Miami’s appeal to international and domestic visitors is key for its prominence in Brand USA’s campaign to attract 100 million international visitors to the U.S. by 2021. CEO and President Christopher Thompson says, “Miami is the only city that can claim 50 percent of its visitors are international,” according to Miami Today.

Another initiative sure to spread the Miami brand is the

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announcement of Miami-born music superstar Pitbull as Florida’s global tourism ambassador by Visit Florida.

The artist boasts 100 million social media followers and has committed to promoting Florida as a vacation destination, contributing to the marketing company’s goal of attracting $100 billion in tourism spending by 2020.

In August 2015, Visit Florida President and CEO Will Seccombe noted that tourists are also coming from previously less likely markets, such as China and India. Brazil, however, continues to hold the number one spot among Miami’s international visitors, reaching 582,416 visitors in 2015. Canada is a close second, Colombia—Miami’s fastest-growing South American market—is third, followed by Argentina and Germany. One noticeable shift in 2015 was the 10-percent reduction of visitors from Venezuela, likely caused by the country’s political and economic instability, as noted by GMCVB Senior Vice President of Marketing and Tourism Rolando Aedo.

In the 2014-2015 fiscal year, 13.5 million international and 21.9 million domestic arrivals were recorded in Miami and Fort Lauderdale-Hollywood international airports combined. By September 2015, Miami International Airport (MIA) alone was set to break its previous record to host 43 million travelers embarking from and landing at the airport. In October 2015, the new record included 17.2 million domestic travelers, a 10.1-percent increase from the previous year, and 15.9 million international travelers, a 5.43-percent increase year-over-year.

Already hosting more than 100 carriers, MIA expanded its offerings with new flights announced in the last quarter of 2015. These include direct flights between Miami and Vienna by Austrian Airlines, expanded services to Munich by Lufthansa, daily service to Las Vegas by Frontier and new flights to Aruba and Córdoba by Aruba Airlines and Aerolíneas Argentinas, respectively. Even more is on deck for 2016 with Eurowings beginning service from Miami to Cologne in May 2016, and the first direct flights from Oslo and Copenhagen to be launched by Scandinavian Airlines in the fall.

Finally, following President Barack Obama’s announcement on July 1, 2015, to re-open American and Cuban embassies in Washington D.C. and Havana, opportunities are burgeoning for Miami to be a gateway to a world that was closed to Americans for decades. MIA has long been the main point of departure and arrival for the half a million Americans who have been visiting the island through charter flights. In 2015, the number of passengers departing for and arriving from Cuba at MIA reached 907,000. However, charter flights require a cumbersome booking process, a four-hour check-in and the federal requirement requirement that travelers fall into one of the 12 approved categories of visit.

With a preliminary agreement announced in late 2015 between U.S. and Cuban officials to begin regularly scheduled flights, American Airlines plans to be the first carriers to serve passengers between the two countries within the first half of 2016, with Miami its primary hub.

JetBlue has announced a new service to Cuba following the announcement, and other carriers in line include United Airlines, Southwest and Delta. The U.S. may approve up to 20 daily flights to Havana and 10 daily for nine other Cuban cities that have international airports.

With such growth in visitor numbers and even more anticipated, it is important that Miami-Dade reinvests its new revenues to expand infrastructural capacity. For instance, with the second highest international passenger traffic in the U.S., there is demand to improve customs processing and shorten wait times at MIA, which would make it even more viable for visitors and complement another major project, the MiamiCentral station at MIA. In April 2015, MiamiCentral opened connections to the Tri-Rail, the regional commuter-rail transportation linking Miami, Fort Lauderdale and West Palm Beach. Greyhound services have started with Amtrak service scheduled to begin in 2016. When fully completed, MiamiCentral will be Miami-Dade’s first all-inclusive ground transportation hub, including facility provisions for bicyclists and pedestrians and the capacity to accommodate 150,000 daily passengers.

Cruise capital According to the GMCVB, more than 7.5 million cruisers embarked from Port Everglades and PortMiami in 2015, excluding December, setting off for luxury and adventure in the Bahamas, Caribbean, Mexico, Key West, South America and beyond. PortMiami has 18 cruise lines and 42 ships in its ports, while Miami-Dade serves as the headquarters for three of the top lines in the world: Carnival Corporation, Royal Caribbean Cruises Limited and Norwegian Cruise Line. A Cruise Lines International Association study released October 2015 showed the cruise industry contributed almost $8 billion in spending in Florida in 2014, almost 38 percent of the $21 billion spent nationwide. Statewide, this expenditure generated a total impact of 146,401 jobs, an increase of 4.3 percent from the previous year, and $6.8 billion in wages and salaries, an increase of 4.6 percent. These figures make Florida the number one state to benefit economically from the cruise industry, followed by California, Texas, New York and Alaska.

Miami’s title as Cruise Capital of the World is well earned, and developments are in place to keep it that way. In December 2015, berthing agreements with MSC Cruises, based in Geneva, and Disney Cruise Line, based www.capitalanalyticsassociates.com

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anywhere between a few hundred to more than a thousand passengers, cost less than flights and provide much greater free luggage allowances for imports that do not break the trade embargo. This is significant for many Cuban-Americans who take food, appliances and other supplies to family members and private businesses in Cuba.

Greater Miami saw 15.1 million visitors stay overnight from September 2014 to August 2015.

in London, were both extended to October 1, 2027. The agreements are expected to bring $9.6 million and $7.8 million, respectively, over the next two years. MSC is guaranteeing $90 million by the end of the 11-year agreement, a figure that could reach as high as $150 million with the addition of its year-round MSC Seaside vessel in 2017. In exchange for the agreement, PortMiami will spend $25 million upgrading the berthing terminal, and potentially expand, depending on other contracts it might secure.

That time is likely to come sooner than later, as in 2015 several additional ships made Miami their homeport, including the Norwegian Escape of Norwegian Cruise Line, named World’s Leading Large Ship Cruise Line for the fourth consecutive year by the World Travel Awards, which began sailing over 4,200 passengers in November 2015. PortMiami also became home to Aida Cruise Line’s Aida Mar and Aida Vita. Although Carnival is moving the Carnival Miracle to Shanghai, it has also selected Miami to base the Carnival Vista, which will begin sailing in 2016, as well as a 710-passenger ship from its new brand fathom, sailing to Cuba and the Dominican Republic.

The fathom brand is meant to foster “impact travel” or “voluntourism” whereby passengers participate in educational programs, environmental efforts and economic development initiatives—for instance, reforestation or helping with chocolate production. Virgin Cruises also plans to use PortMiami as its base when it launches in 2020, an agreement projected to bring in $2.9 million in fiscal year 2019-2020, according to Miami Today. PortMiami is also the port of choice for a new 400-passenger cruise ship for LGBT travelers, launching in April 2017.

Lastly, although service will likely not begin until late 2016, at least six Florida companies have been licensed to offer ferry service to Cuba by the federal Treasury and Commerce departments: Havana Ferry Partners, United Caribbean Lines, America Cruise Ferries and the Miami-based International Port Corporation, Baja Ferries USA and Airline Brokers Company. The ferries carry 162 | Invest: Miami 2016 | TOURISM

Big gains for hospitality The influx of visitors has extended significant economic boons to Miami-Dade’s hospitality industry, particularly as, on average, overnight visitors are extending their stays to six nights. According to GMCVB, collections from the 2-percent hotel, food and beverage tax are up 8.3 percent from the previous fiscal year and up 19.4 percent from its 1-percent restaurant food and beverage counterpart, with a revenue per available room (RevPAR) average of $152.43 in 2015.

In real estate terms, the Miami-Dade hotel market is boasting luxury-tier mainland values of $400,000 per key and up, with oceanfront values ranging from $700,000 to well over $1 million per key, according to hospitality consulting firm, HVS. Upscale hotel values range from $150,000 to $200,000 per room and upper midscale hotels value from $115,000 to $160,000 per room. Even lower midscale hotels are valued at impressive prices; for instance, in November 2015, Sound Hospitality sold the Holiday Inn-Express in Hialeah to a group of hospitality investors for $82,191 per room and sold another Holiday Inn in Downtown Miami for $65 million to Brazilian developer Gilberto Bomeny. Summit Hotel Properties, on the other hand, bought the 156-room Hyatt House Miami Airport in October 2015 for $37.7 million, valued at $18.4 million in its last sale in 2011.

Luxury, of course, has long been a staple of the Miami tourist experience. Tourists from all over the world come to experience food, spas, pools and the social high living of its resorts and hotels. In 2015, Forbes awarded Travel Guide Star Awards to The Setai in Miami Beach and The Ritz-Carlton Bal Harbour. The $1-billion Faena Hotel on Collins Avenue is a notable addition that opened its doors in December 2015, adorned by meticulously curated South American-inspired art and a 100,000-squarefoot beachfront. The hotel was designed by film director Baz Luhrmann and his wife Catherine Martin as a renovation of the historic Saxony Hotel. The brainchild of Argentinian developer Alan Faena and his business partner Len Blavatnik, Faena boasts 169 lavish rooms and is part of the Faena District development, which is revitalizing a neglected stretch of Miami Beach.

Currently in progress is the $2-billion Miami Worldcenter in Downtown Miami, which will offer retail, restaurants, entertainment, residential and commercial

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space, including the 1,800-room Marriott Marquis Miami Worldcenter Hotel and Expo Center set to open in fall 2018, which will become the largest hotel in South Florida.

Several highly anticipated 2016 openings are sure to attract more of the traveling hip and elite. These include EAST Miami, part of the $1-billion mixed-use Swire Properties development Brickell City Centre, with 352 rooms, each with floor-to-ceiling windows and an oversized balcony overlooking Miami and Biscayne Bay. Another is the multimillion-dollar launch of the Nobu Hotel within the Eden Roc Miami Beach, set to open in 2016, with 210 rooms, a beachfront restaurant, 20,000 square feet of spa and gym facilities, two pools and more than 70,000 square feet of meeting and event space. The enhancement, conceived by Chef Nobu Matsuhisa, actor Robert DeNiro and Hollywood producer Meir Teper, will be financed by a $51.8-million mortgage from CitiGroup Global Markets Realty Corp. and Cantor Commercial Real Estate Lending. The Langford Hotel is a 1920s-themed boutique hotel that opened in late September 2015 in the historic Beaux Arts style building of the Miami National Bank, and the Chilean-based Atton Hotels will open Atton Brickell Miami, with 275 rooms on 12 floors, the third international brand debuting in the U.S. via Miami in 2016.

For tourists looking for luxury on a budget or a more intimate scale, Miami Beach’s boutique hotels offer a compelling alternative. These typically independent properties offer style and personalized hospitality, each creating a world with its own unique Art Deco aesthetic.

They are primarily located in the National History District in South Beach, at values ranging from $220,000 to $360,000 per key. The $300-per-room, 18-room Sense Beach House, for instance, is located within walking distance of Ocean Drive and designed to emulate a chic beach house. The 50-room Vintro Hotel and Kitchen, which opened in August 2014 and earned a Top 25 TripAdvisor Travelers’ Choice award in 2015, features Mediterranean fare and a view of the Collins Canal with prices ranging from $400 to &500 per night. Open since October 2015, the 250-room Nautilus, a SIXTY Hotel, was designed by Morris Lapidus. Prices range from approximately from $400 to $500 per night. Historic hotels are also seizing on the popular Art Deco trend. For instance, begun in 2015, preservation, renovation and expansion of Miami Beach’s Park Central Hotel, founded in 1937, will transform it into a four-hotel property honoring the Art Deco movement. The new fourth structure will include 12 suites with balconies and a rooftop glass-bottom pool.

Another exciting development in Miami’s hospitality

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scene is the rise of hotel brands focused on holistic living. In 2015, Condé Nast named Metropolitan by COMO in Miami Beach one of the top 25 hotels in the U.S., highlighting its serenity and wellness-focused menu.

Health-conscious tourists can also look forward to the groundbreaking of the $32-million, 189-room EVEN Hotel Miami planned for the third quarter of 2016, the brand’s debut in the southeastern U.S. With its goal to help guests “Eat Well, Rest Easy, Keep Active and Accomplish More,” guest rooms will be outfitted with training and yoga equipment, and meal options will be organic, vegetarian, low-fat and portion-controlled. It is expected that the hotel will create 240 to 290 jobs.

With this kind of range and attention to consumer needs, it is no surprise Miami-Dade saw 14.4 million hotel rooms sold in 2015, up 3.7 percent from last year, with the RevPAR up 6.8 percent. Gross tourist development taxes, excluding Bal Harbour, Miami Beach and Surfside properties, have generated over $26 million for the county, an increase of 9.5 percent from the previous year, while Miami Beach resort tax collection has earned $67.7 million, up 9.2 percent from the year before. More is to come with more than 7,500 new hotels planned for completion before the end of 2017—2,300 of them set to be completed in the 2015-2016 fiscal year.

Looking ahead Miami-Dade’s tourism sector has grown consistently and is poised to maintain its significant economic contribution. Central to its strategy has been pursuing bold projects that expand its capacity as a global hub and revitalizing its luxury offerings to stay one step ahead of trends. Some uncertainties do lie ahead.

Cuba is one example. Speaking to Bay News, Eckerd College Professor of Political Science Mary Meyer McAleese raised the possibility that Cuba may become a competitor for South Florida tourists. Miami-Dade County Mayor Carlos Gimenez pitched a $40 million plan in July 2015 to maintain Miami’s beaches, ensuring they can compete with Cuba’s beaches. Additionally, the trade embargo on Cuba may last for a while, and questions remain about how economic reciprocity with regard to passenger travel could be implemented with many unknown variables around costs, adequate infrastructure and processing on the Cuban side.

While there is reason to be cautious, every foundation is in place to be optimistic about tourism’s future. Through consistently robust growth and commitment to shape consumer trends, Miami-Dade can adapt not only to meet new challenges, but also to preserve its status as a premier American and global destination.

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Miami’s hospitality industry continues to be a strong driver for its economy. We see remarkable occupancy rates of 90 percent in this market. At InterContinental Miami, we have seen double-digit growth rates over the past three years. This year the rate has settled back to single-digit levels but continues to be strong. In particular, our growth is driven by corporate meetings, which comprise 65 percent of our business. Within that, we are seeing a higher level of meetings and events choosing Miami as their destination; that is, more managed funds and banking groups that are willing to pay a premium for quality of service.

With respect to food and beverage, we continue to see double-digit growth, both on our banquet side, generated by our core business of meetings and events bookings, as well as our signature restaurant, Toro Toro. An interesting development is that the restaurant numbers reflect an increasingly local consumer base; 60 percent of Toro Toro guests are area residents.

Miami’s distinct flavor is hip, cool and reflective of an international vibe. This flavor is reflected in our aesthetic choices. For instance, moving images and light displays on LED screens on the hotel’s exterior light up the skyline, which works with the energy, mood and the feel of Miami.

While international visitors continue to drive Miami’s tourism industry, we are seeing domestic growth. Latin American economies have slowed this year, resulting in a decline in visitors from the region. Yet our numbers are up because the majority of meetings and events business is coming to us from the U.S. As Miami continues to develop its infrastructure and expand its cultural offerings, the community will continue to attract more guests from new markets. This way, we can offset the shortfall in the down times.

Robert Hill General Manager, InterContinental Hotel Miami

TOURISM INTERVIEW

Guest satisfaction How Miami-Dade’s rise as an innovation hub dovetails with the modernizing efforts of its pillar cruise industry

Arnold Donald President & CEO – Carnival Corporation How does Miami factor into Carnival Corporation’s strategy for growth?

Our top priority is to exceed guest expectations and deliver double-digit return on investor capital, which we are on track to achieve in the next two to three years, while prioritizing safety and environmental standards. Miami plays an important role in furthering our mission, beginning with the port, but also as a home base for a significant portion of our workforce. Meanwhile, PortMiami is an important departure point for many guests, as several of our brands—including our flagship Carnival Cruise Line brand, which is headquartered in Miami—operate from PortMiami. Perhaps no other port in the world handles more cruise ships daily as PortMiami. With its proximity to Cuba, Miami will also play an important role as commercial relations with the country evolve, as more people will be coming through Miami, whether to cruise with us or to take a ferry to the island nation.

Miami-Dade stakeholders are working to deepen commercial ties with China. How do these campaigns align with Carnival Corporation’s China plans?

China is the largest outbound tourism market with tremendous growth opportunities. It can become the world’s largest cruise market—as large as the entire cruise industry today. Carnival Corporation, already the market leader in China, is maintaining its large share of this booming market. For example, we entered a joint venture partnership with the China State Shipbuilding Corporation and the China Investment Corporation to create China’s first multi-ship domestic cruise brand.

How might the cruising industry, a pillar of Miami-Dade’s economy, synergize with its budding tech ecosystem?

Innovation is critical to our business; we have con-

structed an innovation center in Miami that will allow us to develop and test new technologies and generate new jobs locally. Technology plays a crucial role in the ability for cruise lines to know and satisfy their customers. For instance, we regularly engage with our database of 30 million previous guests. We examine what they liked about their cruise and how they spent their time to understand which features of our different ships are working well with our brands. Some of the tech initiatives we have introduced are enhanced WiFi on some of our ships and a social smartphone app. We continue to develop ways for guests to use their phones to, in effect, design their own cruise. Our ultimate goal is to exceed guest expectations by empowering each guest with technology to customize their travel experience. www.capitalanalyticsassociates.com

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Beyond beaches: An increasing variety of attractions are diversifying Miami-Dade’s tourism industry as well as its contributing to its cultural offerings Beyond the sunshine and glamour of oceanfront life, Miami-Dade is also home to an impressive and increasingly dynamic range of tourist attractions. From December 2014 to November 2015, visitors to area attractions numbered almost 4.1 million, representing an increase of 3.9 percent from the previous year, and a wide range of new projects are underway to diversify Miami’s offerings. Business leaders are harnessing Miami’s flamboyant spirit, cultural wealth, vast biodiversity and infrastructure to draw families, adventurers, artists and professionals from every field.

Family fun Families can look forward to the end of 2016, when Zoo Miami is scheduled to open its new Florida: Mission Everglades exhibit, a state-of-the-art attraction that will bring visitors up close and personal with more than 50 species of animals like Florida. The park’s first ride, an eight-passenger boat which will navigate a winding river and encounter animals, will debut in 2017.

Thrill-seekers will have the opportunity to take in aerial views of Miami via helicopter tours offered by Miami Helicopter Inc., a new service announced by the company in November 2015. Clients are flown over Brickell, the Miami Seaquarium, Fisher Island, Virginia Key, Key Biscayne, Miami Beach, Sun Life Stadium and Sunny Isles with tours starting at $95.

This Hollywood-scale of development seems to be a catching trend. Set to open in 2018, Skyrise Miami in downtown will feature a 1,000-foot observation tower, a free-fall ride, a 590-foot bungee jump, a ballroom, a moving movie theater attraction featuring Miami sights and a nightclub. The proposed 6.2-millionsquare-foot, $4-billion American Dream Mall Miami in 166 | Invest: Miami 2016 | TOURISM

Miami-Dade is home to Biscayne National Park, Big Cypress National Preserve and Everglades National Park.

northwest Miami-Dade will surpass the Mall of America in Minnesota as the largest mall in the U.S. when completed. According to Iranian-Canadian developer Eskandar Ghermezian, it will include 3.5 million square feet of retail space, a 16-story indoor ski slope, a 20-slide water park, a submarine ride in a man-made lake, a climate-controlled theme park, a 14-screen 3D movie theater and a 2,000-room hotel.

Cultural attractions On April 2, 2015, the Arts and Business Council of Miami and the Greater Miami Convention and Visitors Bureau (GMCVB) hosted the 11th Annual Breakfast with the Arts and Hospitality Industry, inviting hospitality companies to partner with the arts. The arts contribute more than $1 billion and create 30,000 jobs in Miami-Dade; it is a thriving market and “an integral part of [Miami’s] local brand,” as Robert Hill, general manager of InterContinental Miami stated at the event. Indeed, Miami-Dade has been harnessing its cultural riches toward an artistic renaissance. The county attracts artists, musicians and aficionados with its array of galleries, museums, theaters and venues like the South Miami-Dade Cultural Arts Center in Cutler Bay, housed in a $51-million building by Arquitectonica International, and the Wynwood Arts District, a hub for the county’s creative businesses and home to the one of the largest open-air street art installations in the world.

TOURISM ANALYSIS

Major cultural events also bring hundreds of thousands of people to Miami. For instance, held in March each year, the Ultra Music Festival brings 165,000 dance and electronic music lovers to Downtown Miami. Ultra is a parallel event to the Winter Music Conference, which organizes hundreds of events ranging from workshops to raves. Meanwhile, Urban Beach Week, held on Memorial Day weekend, attracts about 300,000 hip-hop lovers annually. The annual Art Basel Miami Beach, the premier art show of the Americas that takes place in early December and is hosted at the Miami Beach Convention Center (MBCC), brings in 75,000 people and is estimated to have an economic impact of $500 million to $1 billion. This is in large part because those who attend the fair are not ordinary tourists but elite art collectors from all over the world; while many return to their countries, some stay and purchase local luxury condos, driving up real estate in top Miami neighborhoods. The Miami Book Fair International, organized by Miami Dade College, brings 200,000 visitors over eight days in November, with more than 1 million books on sale and contributions from corporate sponsors and foundations reaching $500,000. Finally, from November 6 to 8, 2015, the 25th ExpoNica was held on the Miami-Dade County Fair and Exposition Grounds, celebrating Latin American culture.

Diversity and heritage neighborhoods Miami’s cultural renaissance does not stop at grand

parties. The county’s innovative It’s So Miami campaign, which is supported by the GMCVB’s new multicultural department, also capitalizes on the county’s unique cultural history and heritage communities such as Coconut Grove, Little Havana, Liberty City, Miccosukee Indian Village and Opa-Locka—site of one of the largest collections of Moorish Revival architecture in the U.S. Notably, one of Miami’s historically iconic neighborhoods, Coconut Grove, has been making a steady comeback since an economic slowdown six years ago.

According to the GMCVB, the area saw 27 percent of county visitors in 2014. Annually, the Coconut Grove Arts Festival, which celebrated its 54th anniversary in February 2016, attracts approximately 120,000 visitors. Little Haiti, heart of Miami’s Haitian diaspora, has also received increased attention with its galleries, book and music stores, the Little Haiti Cultural Center, which hosts dance and theater performances, as well as a wide variety of small businesses. Similarly, the historically black neighborhood of Overtown is undergoing revival with its murals of African-American heroes and the historic Lyric Theater, where names like Count Basie, Aretha Franklin and Patti LaBelle once performed. In February 2015, Visit Florida released a video promoting Overtown in a national commercial branding it as “The Harlem of the South.”

Through the It’s So Miami campaign, local historians and community leaders are providing layered overviews of these neighborhoods, providing a sociocultural context for discerning visitors. Residents are mobilized to share specific insider tips with tourists through the campaign’s Go Native initiative, and tourists participate in outreach by sharing their experiences at various sites through social media. This campaign facilitates engagement between local and global diversity, following the trend toward in-depth and multi-layered interactions with a particular place.

Ecotourism As a subtropical destination, Miami-Dade features some of the most unique ecosystems in the country.

In celebration of the National Park Service’s 100th anniversary, Miami-Dade County partnered with award-winning photographer Clyde Butcher to showcase black-and-white photographs of South Florida’s national parks—Biscayne National Park, Big Cypress National Preserve and, possibly the world’s most famous wetland, the Everglades National Park—in Miami International Airport’s south terminal.

Biscayne National Park, which preserves Biscayne Bay and its offshore barrier reefs, attracts approxiwww.capitalanalyticsassociates.com

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mately 500,000 visitors each year who come to boat, snorkel, camp and explore wildlife. Meanwhile, the Big Cypress National Preserve and the Everglades have each welcomed more than 1 million annual visitors for the past few years. Big Cypress preserves 729,000 acres of freshwater swamp and is home to the elusive Florida panther. The Everglades is home to 1.5 million acres of sawgrass prairies, hardwood hammocks, saltwater marshes and wildlife ranging from bald eagles to the Florida alligator. As the main source of drinking water for South Florida and the watershed for South Florida’s coastal estuaries, it plays a key role in the broader infrastructure of Miami-Dade and is currently undergoing a $2-billion restoration through a joint state and federal initiative.

Convention center expansion In addition to building new attractions, elevating cultural tourism and preserving its eco-tourism sites, Miami-Dade is enhancing its convention business to its portfolio. MBCC already hosts some of the nation’s premier events such as the Miami International Auto Show, as well as major annual trade shows such as the Jewelers International Showcase and Seatrade Cruise Global. In 2016, MBCC has already hosted the Graphics of the Americas Expo and Conference.

GMCVB President and CEO William Talbert said the bureau supports the renovation of the MBCC, which is projected to include an 800-room Art Deco-inspired hotel. In December 2015, Miami Beach commissioners unanimously approved a measure on the March 15 primary ballot that will allow the city a 99-year lease on public land for the construction of this hotel. Part of the $615-million renovation is a state-of-the-art LEED-certified facility with over 500,000 square feet of exhibit space, a 60,000-square-foot ballroom and meeting rooms—improvements that have already attracted major bookings from the American Health Information Management Association, the American Society for Therapeutic Radiology and Oncology and the Risk Management Society.

Looking ahead Miami-Dade is successfully pursuing a bold, multi-pronged strategy to round out its traditional beach and luxury offerings, demonstrating increased versatility and upward drive to become the premier destination for ever wider swaths of the domestic and global populations. Beyond its beaches, it offers a new generation of travelers and visitors the kind of vibrant lifestyle—chic, savvy, multicultural and ambitious—that embody 21st century travel.

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William D. Talbert III President & CEO, Greater Miami Convention & Visitors Bureau

Miami tourism is not just about beaches. Just look at what’s happening with conferences: the current expansion and enhancement of the Miami Beach Convention Center will attract different industries—financial, medical and technological—to Miami for business tourism. In March 2016, Miami voters will be asked to approve a lease agreement for the 800-room headquarter hotel, which will generate revenues for the city without contributing to congestion on the roads as convention-goers will simply walk between the lobbies of the headquarter hotel and convention center.

Meanwhile, our award-winning It’s So Miami campaign continues to educate locals and visitors about Miami’s many multicultural neighborhoods.

We’ve opened new visitors’ centers in historical areas, such as Historic Overtown, Little Haiti, Little Havana and the West Grove, and partnered with the Big Bus to route their buses through these neighborhoods. Their business has boomed as a result. Our goal is to have visitors extend their Miami stay to visit our vibrant heritage neighborhoods.

Miami continues to benefit from traditional tourism drivers, such as cruising. In 2015, around 6 percent of our 15 million overnight visitors were here for a cruise. Today, we are working with the cruise lines to develop pre- and post-cruise programs. We’re excited about the rollout of Brightline, a passenger rail that will operate between Orlando and Miami. Additionally, the opening up of Cuba will also have a positive impact on our cruise ship economy.

One indicator of the sector’s health is the growth within hospitality development. We continue to see increase in luxury hotels. EAST Miami, a six-star hotel with 350 rooms, opens in Brickell in early 2016, while Atton, the South American hotel chain, recently opened their first U.S. location, also in Brickell. Marriott meanwhile has proposed a 1,800-room hotel in the Miami Worldcenter project, with meeting and conference space in Downtown. As inventory grows, occupancy rates may soften, but will stay strong. So far, we’ve been absorbing the inventory, which means the customers are here.

Sports: Featuring insights from Eric Woolworth, President of Business Operations, The HEAT Group, David P. Samson, President, Miami Marlins, Adam Barrett, Director & IMG Executive Vice President, Miami Open, Chris Bosh, Player, The HEAT Group and Tom Garfinkel, President & CEO, Miami Dolphins, shared exclusively with Invest: Miami

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Scoring goals: Successful major league teams and outdoor sports continue to impact the local economy 2015 was another prosperous year for professional sports in South Florida. The area’s three major league sports teams—the Miami HEAT, Miami Marlins and Miami Dolphins—took in close to $700 million in revenue, and all of them increased their overall value. Besides these teams, Miami also hosts two college teams and is in the process of becoming home to a Major League Soccer (MSL) team.

The region has something to offer to everyone as its international appeal makes it an ideal location for outdoor sports that complement the professional sports scene. The county hosts annual international golf and tennis tournaments, bringing significant revenue and exposure to South Florida. Auto racing has also sped its way onto the county’s sports scene. These sports benefit from Miami-Dade’s pleasant climate, which also allows runners, sailors and boaters to practice their respective hobbies year-round.

Professional success 2015 was a tough time to be a Miami sports fan. The HEAT, Dolphins and Marlins all finished with losing records in their most recent full seasons. Of the three, the HEAT were the most successful, missing the play170 | Invest: Miami 2016 | SPORTS

offs by only one game last season and starting the 2015-2016 NBA season with a winning record. The HEAT have been in the top four of the NBA’s Eastern Conference standings for most of the season and are projected to make the playoffs this season. Finishing with a winning record and earning a trip to the playoffs will mean more positive exposure and economic revenue for South Florida because of nationally televised home playoff games. A successful 2015-2016 season also bodes well for the future of the HEAT because it increases their chances of signing marquee free agents in the upcoming offseason.

The Marlins ended the season in September 2015 with a 71-91 record. The team lost six more games than the previous season despite signing perennial MLB All-Star Giancarlo Stanton to a 13-year, $325-million contract in November 2014—the highest in MLB history. The team struggled due to injuries suffered by Stanton and starting pitcher Jose Fernandez. Still, they earned third place in the National League East for the first time since 2010.

A disappointing start to the season prompted Marlins management to fire manager Mike Redmond after 38 games. Dan Jennings replaced Redmond but

SPORTS OVERVIEW

was fired soon afterward in October. The Marlins then hired New York Yankees legend and former Los Angeles Dodgers skipper Don Mattingly in November 2015 to be the next manager. Mattingly led the Dodgers to three division titles before leaving Southern California for South Florida. However, he may find it difficult to emulate the success he had with the Dodgers because of personnel differences: the Dodgers had a payroll of $289.6 million in 2015, compared to just $64.9 million for the Marlins. Despite this discrepancy, the Marlins have plenty of young talent that Mattingly can leverage to create a successful team.

The Dolphins also required a coaching change after firing head coach Joe Philbin in October 2015 because of a 1-3 start to the season. The team ultimately finished the 2015 NFL Season with a 6-10 record after going 8-8 the previous season. The Dolphins recently hired former Chicago Bears Offensive Coordinator Adam Gase to be the next coach, making him the youngest head coach in the NFL at 37. Gase has a reputation for quarterback development, which could help the growth of Ryan Tannehill, whom the Dolphins signed to a sixyear, $96-million extension contract in May 2015. Gase can help Tannehill take the necessary steps to become a franchise quarterback, improving a Dolphins offense that ranked 26th in the NFL this past season.

Miami-Dade’s major league sports teams continued to have a tremendous economic impact on the region.

In any given year, the Miami HEAT and AmericanAirlines Arena, where they team plays, account for $1.4 billion in economic impact for Miami-Dade County.

The HEAT support 21,000 jobs for Miami-Dade residents and contribute $27 million in public revenue for state and local governments. For the 2014-2015 season, the team earned $180 million in revenue, matching its total from the previous year. This number should grow in 2016, as the team is projected to make the playoffs and will likely host additional home games in May. Fans have continued to support the HEAT, as the team ranked sixth in the NBA in average attendance for the second season in a row.

The HEAT’s economic growth mirrors that of the NBA; the league signed a nine-year, $24-billion television deal with ESPN and Turner that goes into effect right before the 2016-2017 season. The HEAT have also benefited from their own TV deal with Fox’s Sun Sports. The team is now worth $1.3 billion, having almost doubled its value since 2013. It is the NBA’s 10th most valuable franchise, despite playing in the league’s number 16 market.

The NBA’s growth is also tied to its international outreach, particularly to China. The league has seen

Eric Woolworth President of Business Operations, The HEAT Group

At the start of the 2014-2015 season, we had a bit of uncertainty coming off of LeBron James going back to Cleveland. Later we encountered injuries and other setbacks, resulting in a rather disappointing season; last year was only the fourth time in 20 years that we did not make the playoffs. These experiences put us into soul-searching mode.

For some time, we have felt that we were on the right track in terms of building long-term loyalty and establishing commitment from the fan base in Miami, but until you get tested, you don’t really know.

Last season was a real test, and we were gratified by the response we got. Despite our struggles on the court, we sold out every single game. We were fourth in the NBA in television ratings. Our social media base continues to be the second-largest in all of professional sports—just behind the Los Angeles Lakers—and our corporate support is stronger than ever.

In October 2015, we launched a new mobile platform that provides fans with a continuous stream of customized content and allows for users to control nearly all aspects of ticketing and purchasing through their mobile device. While having a high-profile, championship-winning team is the foundation of building a strong fan base, maintaining engagement is linked to our efforts to raise the bar on providing new, interesting, creative content—whether that is giving player or game stats, showcasing players behind-the-scenes or providing inside looks at players’ lives. Exceptional content keeps folks coming back.

When we set out to grow our social media presence, it wasn’t necessarily with the global audience in mind. Today the Miami HEAT is very much an international brand. Of the nearly 22 million Facebook followers we have, over 50 percent are not based in the U.S. Only 15 percent are based here in South Florida. Clearly there has been an explosion of interest in the HEAT from around the world, and I think part of that is about Miami. Miami is an exciting destination. People are drawn to the energy of this place.

We have carried the Miami brand around the world, but our affiliation with this city has also helped us.

Miami has allowed us to explode on the world scene. www.capitalanalyticsassociates.com

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viewership numbers in China increase every year since 2011, and American and Chinese companies have invested $253 million into NBA China. Similar investments were made in Latin America through a $100-million contract with Spanish bank BBVA and games in Mexico, the Dominican Republic and Puerto Rico. The HEAT should especially benefit from this growth in the coming years because of Miami-Dade’s proximity to Latin America.

Unlike the HEAT, the Marlins have struggled to bring fans through the gates at Marlins Park, ranking 28th in average attendance in the MLB. Though attendance was down from the previous season, Marlins revenue actually increased from $159 million in 2014 to $188 million in 2015, and its value also grew from $500 million to $650 million. This growth can be attributed to two new TV deals signed by the MLB that went into effect in 2014: a $5.6-billion deal with ESPN and a $12.4-billion total in arrangements with TBS and Fox. The Marlins’ value should continue to increase along with the MLB’s as it gets back on track on the field in 2016, after an injury-filled 2015 season. The team will also benefit from the positive exposure it will receive hosting the MLB All-Star game in 2017. In fact, City of Miami Mayor Tomas Regalado estimates that All-Star weekend in Miami will result in $100 million of economic revenue for the region.

Of Miami-Dade’s three major league sports teams, the Miami Dolphins rank highest in value with a net worth of $1.85 billion. The team’s value has increased by $550 million since 2014 and now ranks 16th in the NFL. Revenue also increased from the previous season to $322 million despite the team dropping three spots in average attendance to 17th in the league. Helping the Dolphins is the fact that the NFL continues to be the most profitable sports league in the world and, like the NBA, it has seen unprecedented growth in China.

The Dolphins should continue to grow in revenue and value in coming years because of the NFL’s growing domestic and international popularity.

Embracing local culture Every year, the Miami HEAT join the NBA to celebrate Hispanic culture. Last season, the HEAT took part in the NBA’s ninth annual Latin nights program called Noches Ene-Be-A, changing the name on their jerseys to El HEAT for the night. In October 2015, the team hosted a Hispanic Heritage Month Celebration in Little Havana. Over 700 guests attended the event, which included a basketball clinic and a presentation of a $50,000 donation from the Miami HEAT Charitable Fund to the Kiwanis of Little Havana and Amigos for 172 | Invest: Miami 2016 | SPORTS

Marlins Park is home to Miami Marlins games as well as events like the Miami Beach Bowl and the 2017 Baseball All-Star Game.

Kids. The HEAT Group Enterprises also recognized the county’s Hispanic culture through a concert series featuring Hispanic artists at the AmericanAirlines Arena.

The HEAT Group, which manages the team and is the arena’s marketing arm, started hosting the series on September 19, 2015, which will run through April 2016.

Concerts like these also give Miami the benefit of international exposure.

The Marlins have especially emphasized Hispanic outreach since rebranding as the Miami Marlins in 2011 and opening Marlins Park in 2012. For instance, the ballpark’s culinary selections include Cuban sandwiches, tacos, Argentinian empanadas and arepas.

Marlins Park also hosted Grand Slam Party Latino, featuring 20 of the biggest names in Latin music including Grammy Award winner Ricky Martin.

In addition, Marlins Park hosts numerous other events throughout the year like the Miami Beach Bowl in December 2015 where the Western Kentucky Hilltoppers won against the South Florida Bulls in a close game. The event generated close to $20 million in economic impact for Miami-Dade County. Marlins Park also hosted a soccer match between Mexico’s and Senegal’s national teams in February 2016.

Like the HEAT, the Dolphins also actively cele-

SPORTS OVERVIEW

David P. Samson President, Miami Marlins

brate Hispanic heritage. The team hosted a Football Fiesta”at Dolphin Mall (not affiliated with the team), which focused on generating support for the team with Miami-Dade’s Hispanic population. Through this event, the Dolphins contributed to the greater Miami-Dade community through a school beautification project and a football clinic. The team also presented a local CEO with the Hispanic Heritage Leadership Award, joining the NFL in recognizing Hispanic leaders in each team’s market.

In addition to Dolphins and University of Miami (UM) Hurricanes games, Sun Life Stadium hosts other sporting events that generate significant economic impact on Miami-Dade County. The venue recently hosted the Orange Bowl—an annual college football game native to South Florida—between the Clemson Tigers and Oklahoma Sooners, an event that generated close to $300 million in economic impact. Other events the venue hosts include community service events, concerts and soccer matches. Orange Bowl CEO Eric L. Poms tells Invest: Miami that the event shows visiting sports fans what Miami-Dade offers. “There is also the media impact that comes in—the showcasing of the activities taking shape during the week and then the game itself,” he said. “You are getting a four-hour win-

In 2015, the Miami Marlins saw its attendance, revenue and per capita spending grow—even our television and radio ratings were up. While we had a setback last year when it came to on-the-field performance, we are back on the hope train for 2016 and looking forward to what it will bring as our plan is to bring another World Series Championship to Miami. Part of the success of the team hinges on having and maintaining an effective presence on social media. This is why we have an entire department devoted to marketing initiatives and the digital promotion of our team and baseball as a sport. The goal is very simple: to go viral. This is a challenge as it means having to make ourselves different from others in the digital marketplace, where our users’ desire for information about the Marlins can be fulfilled in myriad ways.

A further challenge is that the average baseball consumer is aging, while the number one growth demographic for sports and media in the world is the 18-to-34 age group. To capture this segment’s attention, we connect with fans on social media during and between games. We are looking for ways we can provide access to our players, our staff and our organization as a way to give users a unique online experience. These efforts seemed to have paid off and we turned the corner this year: our average fan age stayed the same and didn’t get older by even a year, so we have stemmed a 20year tide.

You cannot have a great city without great sports teams, along with museums, public space, public parks and public transportation. Miami has always been a gateway city in terms of transportation and population, but we are becoming a gateway from an intellectual standpoint, as well.

I am confident that, in my lifetime, Miami will become the greatest city in the Americas. But we can’t underestimate the importance of public transportation, public infrastructure and public park space—all of those things are required in order to achieve great city status and maintain it in the long term. www.capitalanalyticsassociates.com

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dow where people from around the country watch— some because it is tradition, others because it is a highstakes game—and they see how beautiful it is down here and say, ‘That’s a great place to go visit.’”

College sports College football adds another dynamic to the Miami sports scene, but South Florida also benefits from one of the fastest-growing sports leagues in the country. The NCAA has earned record revenue the last two seasons, and its 2014 television deal with ESPN will continue to increase its profits in the near future.

The University of Miami’s Hurricanes football program is worth about $188.61 million, 39th in the country. The Hurricanes will look to increase revenue in the coming years by becoming more successful on the field and will rely on new Head Coach Mark Richt to lead this transition. The Hurricanes hired Richt in December 2015 after firing Al Golden in October. Richt played quarterback for the

Hurricanes in the early 1980s and brings an overall coaching record of 145-51. Following Richt’s hire, the university announced that it had sold over 1,000 new season tickets, indicating that college football has a prosperous future in South Florida.

Things also look good for the Miami Hurricanes basketball team.

The team started the 2015-2016 season with a 13-1 record, including its second victory at the Puerto Rico Tip-Off. The hot start has prompted Hurricanes basketball fans to show their support: the team has set a record for most season tickets sold.

If they keep up this level of play, the Hurricanes should earn a spot in the NCAA Tournament in March.

Miami’s stadiums host a variety of nonsporting events that generate significant economic impact for the county.

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Fair-weather fans Miami’s outdoor sports and events complement its professional teams, rounding out the region’s sports scene. These sports include golf, tennis, auto racing, running and sailing.

On March 3, 2016, Miami-Dade welcomed the best

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golfers in the world to the Trump National Doral for the annual World Golf Championships-Cadillac Championship Tournament. Adam Scott won this year’s tournament, which that included a Dolce & Gabbana fashion show and live music. In addition to making a substantial economic impact for local businesses, the PGA raises over $10 million for local Miami charities during the event.

Like golf, auto racing also secures Miami-Dade’s presence in outdoor sports. The Homestead-Miami Speedway hosts the NASCAR Sprint Cup event, the Ford Ecoboost 400, every year in November. Yearround operations at the track generate more than $300 million in economic activity for the area, most of which is accumulated during the weekend of the NASCAR Sprint Cup event. The 2016 event will be held November 20, 2016, when Kyle Busch will defend his 2015 title. In addition to NASCAR events, the county also hosted one of the races in Formula E’s first racing series. Though thousands of fans attended the race on Biscayne Boulevard, Miami won’t be on Formula E’s circuit in 2016, but could return in later years due to its success in the city.

Miami-Dade’s climate and location offer runners, boaters and sailors the ideal conditions to practice their hobbies year-round. Sailing and boating are popular in the county, benefiting local nautical local vendors. The area is host to numerous boating events and competitions, including the 75-year-old Miami International Boat Show, Strictly Sail Miami, the Columbus Day Regatta, the Bacardi Sailing Week and the Miami Riverday Festival. Each year, over 20,000 people race in the Miami Marathon and Half Marathon. The event attracts runners from all over the world; 2016’s winners and record breakers hailed from Kenya, Peru and Italy. An official qualifier for the Boston Marathon, the race saw the number of registrants go from about 20,000 in 2015 to nearly 24,000 in 2016.

Looking ahead Thanks to new leadership and strong players, Miami-Dade’s three major-league teams are poised to continue their on-field successes and continue to increase their revenue and attendance. These teams may soon be joined by an MLS team. As for college sports, the Miami Hurricanes will continue to impact the economy and rise in popularity due to the success of its football and basketball programs. Moreover, outdoor sports such as golf, tennis, auto racing and running will continue to be popular due to MiamiDade’s status as a sunny tourism destination.

Each March, South Florida hosts the Miami Open in Crandon Park. Formerly the Sony Ericsson Open, the Association of Tennis Professionals (ATP) named the 31-year-old competition “Tournament of the Year” nine out of the last 13 years.

The 2015 tournament featured stars Novak Djokavic, Rafael Nadal, Andy Murray and Venus and Serena Williams. Over 300,000 people attend, and ticket prices rose 20 percent from 2014.

Visitors enjoyed a beach volleyball tournament, a fashion show and “The Taste of the Open,” serving dishes from the world’s leading chefs. “The Miami Open emphasizes a range of high-quality food experience,” says Miami Open Director and IMG Executive Vice President Adam Barrett. “Whether you are getting a pretzel from a cart or enjoying a meal from one of three sit-down restaurants— of different styles and different levels—or having a drink from a champagne bar or a beer cart, there is something for everybody.” The 2016 tournament will continue its success from March 21 to April 3 with a “Kids’ Day” and a Duran Duran concert.

Lasting two weeks, the tournament generates over $380 million in economic impact, including 14,000 hotel rooms booked—equivalent to hosting the Super Bowl in Miami. Miami receives global exposure through 7,000 television hours broadcast to over 190 countries.

The tournament’s future may be in jeopardy as it lost an early 2016 court dispute regarding a $50-million expansion of Crandon Park. Though International Players’ Championship Inc. has an eight-year contract with the county, the tournament insists the agreement is invalid as it was contingent on upgraded facilities. Resolving the dispute depends on whether the National Parks Conservation Association approves the expansion.

If unresolved, the tournament has proposed Orlando, Beijing and Dubai as alternate locations.

Adam Barrett Director & IMG Executive Vice President, Miami Open www.capitalanalyticsassociates.com

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Unique flavor How the internationalization of basketball and Miami mutually reinforce one another

Chris Bosh Player – The HEAT Group Basketball has become an increasingly international sport. How have you experienced this as a player?

The evolution of technology has made the world smaller. The ability for the NBA to promote and broadcast games all around the world has definitely made a difference in making the sport more popular. I have been to Italy, Germany and many different parts of Europe, and nearly everywhere I go I get recognized. Not only that, but I hear people telling me, “Go HEAT!” They also tell me that they love Miami, or that they have always wanted to come here.

Why do you think that people around the world have this reaction to Miami?

Miami has its own unique flavor. When I think of Miami, I think glamour. I think electricity—the neon signs everywhere, the electric pink and blue of the skies and also the energy of the place. There is the touristy side to Miami, but people are not just relaxing here all the time. They come here to play but also to work hard. There is that East Coast drive here. It’s not just a beach town. It’s a town full of ambitious people. It’s the best of both worlds.

How has living in Miami shaped you professionally, particularly in your development as an entrepreneur?

I’ve learned the most from meeting so many different types of people. Every businessperson, it seems, has been to Miami. Miami is also the Gateway to South America, and anyone who wants to do business there, or who is from there and wants to do business in the U.S., comes to Miami. One factor that is important to succeed in this area is being able to speak Spanish, which I have started to learn. This has helped me to connect with our Spanish-speaking fans, which are a very important group. The fact that so many international businesspeople working in different industries—whether it’s real estate or technology—pass through here provides a really amazing op-

portunity. Just that factor alone allows you to really build relationships and talk to people from all around the world you wouldn’t normally be able to talk to.

What role do you think that sports, and in particular the Miami HEAT, play in promoting economic growth and business development in this market?

Miami is becoming a true global city. It has always been known as this, but I think the infrastructure now is catching on. More opportunities are opening up and people from all over the world are hearing about them and starting to come. Having arts, culture and a worldclass team like the HEAT based here attracts more of those people. They can take their employees or clients to a HEAT game, enjoy some entertainment, have a good time—but also do business. www.capitalanalyticsassociates.com

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Moving to Miami: David Beckham’s journey to bring MLS to South Florida Looking to join the MLB, NFL and NBA is Major League Soccer (MLS), with David Beckham leading the effort.

The former professional soccer superstar had a contract with Los Angeles Galaxy in 2007 that allowed him to purchase an MLS team at a discounted price of $25 million upon his retirement from the sport. Taking advantage of this contract, Beckham, along with his partners—television producer Simon Fuller, Sprint CEO Marcelo Claure and former AEG CEO Tim Leiweke— formed Miami Beckham United and announced in 2014 that they intended Miami to be the location of this new team. After much negotiation, Beckham’s quest to bring MLS to Miami took a major leap forward when he announced in December 2015 that his group had reached an agreement with Miami-Dade County and the City of Miami to build a stadium in Overtown.

Both the city and county agreed to Beckham’s latest proposal after rejecting three of his group’s previous offers. Beckham initially sought a waterfront stadium near PortMiami but was turned down in May 2014 due to heavy opposition from local residents as well as the Miami Seaport Alliance. Beckham’s second proposal was for a similarly styled stadium on Biscayne Bay. That plan was rejected in June 2014 due to traffic concerns. Beckham thought that his group had finally struck gold when the city and county agreed to a stadium site next to Marlins Park in July of 2015. However, that proposal also fell through, though this time because Beckham’s group was unable to secure the land it needed in time to get final approval for the stadium.

The county was also skeptical of this proposal because Beckham’s group planned on transferring the land to the Miami-Dade School Board. Though this move made financial sense for Beckham’s group, it was not good for the county. Beckham’s tumultuous journey for a stadium site finally ended when he settled on the Overtown location.

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After several setbacks, soccer superstar David Beckham is set to bring a soccer stadium to Miami’s Overtown neighborhood.

vately funded, and his team will have to purchase the entirety of the land in their name. Beckham’s group indicated that they intended to spend at least $150 million in construction of the 30,000-seat soccer stadium. Despite these perceived benefits, residents of Overtown are skeptical of the economic benefit the new stadium will have on their community. Members of Beckham’s group tried to dispel some of these concerns during a town hall meeting with residents in December. As Tadd Schwartz, president of Schwartz Media Strategies, currently representing the group, tells Invest: Miami, “Miami Beckham United is engaging nearby residents and community groups to learn about the neighborhood’s priorities as the stadium comes to life.” However, the city must still approve zoning changes to accommodate the stadium, a process that will require a number of public hearings. As of March 2016, Beckham’s group has yet to negotiate with the county to finalize the sale of three acres of public land. In addition, while Beckham United has the owner of the private land it needs under contract, it has not finalized that sale either. The group is hoping to be done with these zoning approvals by June 2016.

SPORTS ANALYSIS

Further, in lieu of building a parking garage, the stadium will rely on 7,000 parking spaces within a 10-minute walk to the site as well as a Metrorail station three blocks away. This is disconcerting to local officials, including City of Miami Mayor Tomas Regalado, who believes the distance from the station to the stadium is too far. However, Beckham United cites Miami’s transition to an urban area as an ideal reason to keep a parking garage off the plans. The site’s proximity to Brightline’s MiamiCentral station and the Miami River District offers entertainment and restaurants for fans and provides transportation options, as Schwartz tells Invest: Miami. “Our team is also exploring new transportation methods, such as parking shuttles on game days and water taxis that will arrive on the Miami River,” he says. “Miami Beckham United is taking a responsible approach to development that prioritizes public transit, access and walkability.”

It remains unclear how strong the economic impact of the new stadium will be. In the short term, the stadium will certainly create construction jobs and jobs for workers involved in the operation and maintenance of the stadium. The influence of Miami-Dade’s high Hispanic population should make the soccer team popular within the area, which will result in high attendance numbers and an economic benefit for the restaurants and shops in close proximity to the stadium. A good comparison for the economic impact that an MLS team will have in Miami is the impact the Orlando City Lions plans may have on Central Florida. A study predicted that Orlando’s new MLS team will have an overall economic impact of $1.2 billion on Central Florida after the opening of their new stadium in 2016. It is important to remember that although Miami-Dade has a larger population than Orlando, Beckham’s new stadium may not reach the same level of economic impact on South Florida because the region already has two outdoor stadiums.

The influence of Miami’s high Hispanic population should make the soccer team popular within the area.

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Proud tradition How a long-standing legacy of victory becomes an asset for growth in a new era

Tom Garfinkel President & CEO – Miami Dolphins to set benchmarks and bring about improvements. Additionally, we are looking at new ways to open the dialogue with fans and make their voices more meaningful.

We could presume to know what they want, but I find it’s a lot easier and more effective to simply ask them.

What are the key components of the Miami Dolphins’ growth strategy for the medium term?

Our goal is to honor the proud winning tradition of the Dolphins and bring the team to a place where it is competing for championships every year. We celebrated our 50th season in 2015. For a part of that time, we were the only professional sports franchise in Florida and we had a lot of success. Because of that history, the team has a deeply emotional and meaningful connection with its fans, who are passionate and loyal. From a business strategy standpoint, we want to respect the passion of those supporters and find new ways to engage with them and enhance their experiences with the Dolphins. We are looking at the end-to-end experience, from concessions, security protocols, even bathroom conditions, and are measuring everything to try 180 | Invest: Miami 2016 | SPORTS

The Sun Life Stadium is a landmark infrastructure in the city. What is the strategic vision to grow its impact?

While the stadium is part of the Dolphins brand, our vision is for the stadium to become a global entertainment destination that will host the biggest events in the world, including football. To reach this goal, we’ve invested more than $450 million in renovations, which included moving seats closer to the field and building new seating products and exclusive clubs that create a unique luxury experience. Over half of the tickets sold for the Jay Z and Beyoncé concert in 2014 were bought with credit cards from outside South Florida, indicating that people were coming from out of the area, so we know we can be a destination for big events that reach far beyond our region.

We have plans to host more international soccer games and festivals and become a competitive venue to host football championships and hopefully even the World Cup. Finally, we are taking advantage of the fact that Miami is a global curator for culture by improving food offerings and curating artists from around the world to display their work at the stadium.

What are some of the challenges of operating a major league sports team in this market?

Miami offers many opportunities for leisure, whether it’s the beach, art events, music or other sports. Because of this, we have a lot of competition relative to other markets where entertainment options are more limited. However, this also means that we have a tremendous opportunity to engage consumers by creating a variety of experiences using the stadium.

Legal: Featuring insights from Greenberg Traurig’s Cesar Alvarez, Senior Chairman, and Jaret Davis, Miami Co-Managing Shareholder, shared exclusively with Invest: Miami

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Connecting markets: Miami-Dade’s steady economic growth and international appeal have resulted in more diverse opportunities for its legal industry Cross-border transactions: Latin America Twenty years ago, the mergers and acquisitions (M&A) market in Latin America largely focused on U.S. and European companies investing in places like Mexico, Venezuela, Chile and Argentina. In recent years the dynamic has dramatically changed due to the region’s strong economic growth and the emergence of Latin American multinational corporations or multilatinas. These companies, like Embraer, AB InBev and Odebrecht, now operate across multiple borders seeking investments both in the region and beyond.

While Latin America’s growth and expansion has recently slowed amidst challenging economic and political times, the region’s fundamental strength offers encouraging signs for potential future business opportunities. Some examples: • Brazil: As Latin America’s largest economy and its largest consumer class, Brazil still remains a strong target for foreign investment. M&A activity hit a recent record of $22.59 billion in the fourth quarter of 2015, according to Dealogic. This growth was driven by foreign investors seeking long-term growth opportunities and Brazilian companies selling assets.

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At the same time, many Brazilian firms are seeking investment opportunities in the U.S. • Mexico: Government reforms in the telecommunications and energy sectors have attracted tremendous investor attention. AT&T’s investments in the region have been heralded as an example of how government reforms are driving increased competition and investment. Although interest in the energy sector has slowed because of declining world oil prices, there remain attractive opportunities in the midstream and downstream sectors, particularly as the country opens its electric power sector.

• Argentina: Government initiatives such as easing currency controls and negotiating a $5-billion credit line with foreign banks, have made this country the source of the most investor optimism in Latin America. The ability to adopt measures to generate investment will be essential to returning Argentina to the forefront of inbound investment, a position it has not occupied for more than two decades.

• Cuba: As with the opening of any market, the recent U.S. rapprochement with Cuba creates both opportunities and challenges. Even with President Barack Obama’s 2014 announcement to normalize relations with the

LEGAL OVERVIEW

island nation, there still remain complex implications for conducting business with Cuba.

While much has been made of President Obama’s moves, equally significant are the dramatic changes that have already made Cuba today a vastly different place than it was in 1992, following the collapse of the Soviet Union. There is a growing recognition that Cuba needs to diversify its economy, instead of continuing the pattern of relying on a number of patron states, whether that is the U.S., the Soviet Union or Venezuela. This realization is just one of the motivating factors driving change. Today restaurants and stores dot the landscape—catering not just to tourists, but local Cubans as well, as long as they can afford it. Standards of living, from a consumption standpoint, have improved. The next challenge: to address Cuba’s dual currency system.

Cuba could not have asked for a better time to be reintroduced to the world economic stage. In the rest of Latin America, economies are suffering through currency devaluations and competition for investment has declined.

Multilatinas are increasingly looking to diversify beyond their home countries and expand regionally. At the same time, U.S. agribusinesses are anxiously looking for new markets, and they have not been afraid to deliver that message to members of the U.S. Congress.

Business opportunities do exist at the margins for U.S. companies, particularly in sectors like telecommunications, aviation and tourism. But for the most part, U.S. trade and commerce with Cuba still remains illegal.

The best opportunities in Cuba right now may be for non-U.S. businesses, which are anxious to invest before Americans are allowed to actively start doing business in the country. Interest from international investors has been bolstered since Cuba’s removal from the State Sponsors of Terrorism list. Previously, international companies were typically unwilling to risk the stigma of doing business in Cuba, especially given the small size of the Cuban market.

Companies need to keep in perspective that Cuba remains a relatively small economy. While the combined gross domestic product (GDP) of Central America is roughly $170 billion, the Cuban GDP is estimated at $70 billion. But there are other attractions.

Cuba has a highly skilled workforce, with a 95-pluspercent literacy rate, and a strategically central location. The challenge that remains is whether the Cuban government will take the necessary steps to create a truly competitive Cuban economy.

Cross-border transactions: Israel Miami-Dade’s global business ties extend beyond the Western Hemisphere. Israel, for example, has emerged as an important partner and investor for the South Florida region. Israel is a leading innovator in industries like agriculture, water, telecommunications, renewable energy, health care and technology. All of these industries are critical areas where Miami-Dade—and Florida in general— have a continued need for innovation to help address some of the region’s challenges.

The transformation in Miami-Dade’s economy over the last few years, particularly with respect to its developing tech industry, has sparked interest in the Israeli market. In years past, Israelis looking to invest in South Florida would turn to more traditional industries like real estate. The dynamic has changed due to recognition by the Kauffman Foundation Index of Entrepreneurship, which ranked the Miami Metropolitan Statistical Area second in the U.S. for startup activity. Israeli entrepreneurs who would typically have headed for the established U.S. tech hubs of Boston, California and New York are now looking at South Florida.

The region is viewed not just as a location to test new technologies, but as a potential site for a U.S. headquarters. For Israelis, the Miami area holds a number of attractions, including the pleasant climate, diversity and the affinity to Israeli culture.

As important, there is an abundance of capital available here for fundraising sources, including both high-net-worth individuals and funds. One example of the strengthening ties between Israel and South Florida can be seen in the memorandum of understanding that was signed in 2015 between Miami Dade College and Tel Aviv University to establish programs that connect Israeli tech expertise to the South Florida tech ecosystem.

There is an abundance of capital available in Miami for fundraising sources, including both high-netindividuals and funds.

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Rezoning and neighborhood revitalization initiatives are transforming neighborhoods into mixed-use communities.

Real estate The international community is focused on Miami’s post-recession vertical growth, which is characterized by depth and dimension beyond luxury condominium projects. Miami is no longer viewed as a sleepy retirement community, but instead a fastevolving metropolis. This urban revitalization is creating tremendous growth opportunities.

One indicator has been the proliferation of new urban retail development. Mega projects like Brickell City Centre and Miami Worldcenter are filling market demand and creating urban commercial centers. The interest in alternative land uses has generated new zoning guidelines to ensure that growth proceeds in a balanced and sustainable fashion. In the past, the City of Miami relied on Neighborhood Conservation Districts, which created regulations intended to conserve existing structures, prohibit the demolition of buildings and preserve existing uses in certain lots. Presently new zoning guidelines are emerging, 184 | Invest: Miami 2016 | LEGAL

such as the Neighborhood Revitalization District established in 2015 for Wynwood.

Rather than prohibit the introduction of new uses from a zoning perspective, the intent is to incentivize people to redevelop an area and transform it into a truly mixed-use community. New rezoning incentives include reduced parking requirements and greater flexibility in physical design. For instance, developers are permitted to have 90-percent lot coverage, as opposed to 80 percent, provided the additional 10 percent is located on the roof. These types of development guidelines are facilitating the transformation of Wynwood, once zoned exclusively for industrial purposes, into a community filled with storefronts, art galleries and restaurants.

These changes in the urban landscape speak to the broader transformation of Miami. Today, it is a place no longer just catering to the wealthy foreigner or visitor, but to a wider population. An important element to meeting the needs of a diverse population is having adequate housing options, and in particular

LEGAL OVERVIEW

rental properties, which have experienced a recent surge. Because of the traditional popularity of condominium and home ownership, Miami historically had a serious deficiency in high-quality rental units.

This situation is correcting itself. Over the last few years, several institutional apartment developers have entered the market and many are pursuing opportunities to build high-quality, market-rate apartments in areas like Edgewater, the U.S. 1 corridor, or the Miami River. Rental development is further distinguished by the profile of its developers and investors. Unlike condominiums, which are heavily supported by high-net-worth individuals, rental development is funded by real estate investment trusts (REITs) and institutional capital— AIG, Prudential, Invesco, JPMorgan Chase, Morgan Stanley, Alliance Residential and the like.

These investor groups have lower risk appetites when compared to others who invest in condominium projects; in other words they deploy so-called “patient money,” which forecasts profits far into the future.

This recent investment activity in Miami speaks to the confidence in the long-term intrinsic value of real estate in the market. The presence of carefully deployed institutional capital also will help add stability to a market long known for booms and busts.

Construction litigation The surge of new residential development brings with it an increase in construction-related lawsuits.

Jaret Davis Miami Co-Managing Shareholder – Greenberg Traurig, LLP

Miami’s continued growth as a technology and entrepreneurial ecosystem has evolved to the point where major national groups are electing to call Miami home. Investments in our community are increasing with commitments from nationally and internationally ranked incubators, accelerators and co-working center operators, including WeWork, Startupbootcamp, Cambridge Innovation Center and PowerMoves. At the same time, we are benefiting from the maturation of local initiatives like the eMerge Americas technology conference that has successfully put the region on the map. That success has had a catalytic effect sparking similar events such as Black Tech Week, AngelSummit Americas and the International ITTECH Law Conference. The future is bright for the tech community in Miami.

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In particular, defect litigation is on the rise. While this uptick is not atypical for a hot real estate market like Miami-Dade, a number of distinct trends mark this spate of suits.

For one, cases have become more complex. Today’s disputes do not just pertain to physical defects, but also project delays. The latter is more difficult to litigate, thus requiring more sophisticated legal expertise, because they essentially require that the project be reconstructed in order to identify why the delay occurred and who is responsible. While defect litigation is usually initiated by a condo association and directed at developers, today more developers are filing suits against general contractors over project delays.

Meanwhile, more cases are being filed that do not involve immediately discernable defects, like cracks in the plumbing system. Instead, those disputes concern future defects and who ought to be held accountable for them. For instance, a lawsuit may be brought over pipes that display corrosion but have not yet been compromised, with an allegation that the pipes, while still functioning at the time of filing, will fail at some point.

One factor that has informed the recent swell of construction litigation is the changes made to Chapter 558, the Florida Construction Defect Statute of the Florida Building Code. The most recent modifications were put into effect in October 2015, and alter the definition of “completion of a building or improvement,” along with the statutory warranty provision. Ironically, the purpose of Chapter 558, which was originally passed in 2005, was to reduce the need for litigation by implementing a mandatory pre-litigation alternative dispute resolution process that a plaintiff must satisfy before filing suit.

However, this process has caused claimants to invest in detailed engineering reports after project delivery for the purpose of substantiating claims. More often than not, the reports identify claims the claimants themselves were unaware of, compounding the number of claims and the complexity of the subsequent defect litigation.

As these trends continue to shape the landscape of construction litigation, area courts have become more sophisticated in their knowledge and handling of construction litigation. As a result, cases are being adjudicated more quickly and efficaciously.

This also paves the way for more class-action suits to be filed in South Florida courts, a growing trend in litigation broadly speaking, and one that is not sparing the construction industry.

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Environment In recent years, South Florida has emerged as the “epicenter” for the impacts of climate change, garnering a significant amount of national media coverage and serving as a critical case study for key national reports. At the local level, authorities have moved beyond conceptual debates and focused their efforts on finding practical solutions. In doing so they are taking a multipronged approach, addressing both the questions of resiliency and adaptation.

While resiliency refers to the ability for a city to withstand significant natural catastrophes, adaptation, or mitigation, is a more proactive and preventative approach to countering climate change. Miami-Dade County is requiring the use of more resilient construction materials and adjusting building elevations to avoid damage from storm surges and rising tides.

Mitigation initiatives underway include the identification of flood-prone

LEGAL OVERVIEW

The number of construction-related lawsuits has risen with increased residential development, partially driven by changes in state construction law.

areas and prohibition of construction of certain types of infrastructure in those areas, such as a wastewater treatment facility in a flood zone.

Both adaptation and resiliency play vital roles in readying cities for the inevitable impacts of climate change. In Miami-Dade County, these efforts have advanced beyond mere planning to the implementation and funding stages. In 2015, the county appointed a chief resiliency officer, both a symbolic and practical sign of its commitment to seriously address climate change. The City of Miami Beach in particular has been quite proactive in taking measures to tackle the effects of sea-level rise because of this barrier island’s extreme vulnerability. In 2015, Miami Beach residents voted to raise taxes in order to fund climate mitigation initiatives. The city is in the process of investing $500 million in storm water surge prevention measures, such as installing pump systems and elevating roads in areas that experience

repeated flooding. Meanwhile, efforts are being expended to address the future impacts of rising tides, such as refining seawall-related regulatory criteria.

Until now, South Florida’s focus has been on the consequences of sea-level rise, but as awareness of the complexity of climate change grows, more sophisticated solutions will be sought. These will take the form of sustainable planning, such as a growing emphasis on transit-oriented development and green building initiatives.

Technology South Florida’s expanding tech industry continues to build critical mass—especially in verticals like digital health technology—generating opportunities for the local economy and the legal industry.

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LEGAL OVERVIEW

Legal work in the technology sector includes addressing regulations adapting to the emerging issues of privacy and intellectual property.

that struggles to keep up with emerging issues that concern privacy or intellectual property (IP).

Within the realm of IP, one notable trend has been the invalidation of patents for software-implemented business systems and methods after the 2014 Supreme Court decision in Alice Corporation Pty. Ltd. v. CLS Bank International. The Court addressed the increasing prevalence of software patents claiming protection for inventions that simply utilize computer systems to implement business processes and methods that can be performed manually. The Court ruled that to be patentable the claims must address significantly more than just a computerized implementation of a method that can be done without a computer.

This has a strong impact on crafting IP protection strategies due to the risk that a software patent could be declared invalid by the United States Patent and Trademark Office. Companies today must coordinate carefully with patent counsel to assess the patentability of their innovations and derive effective strategies for protecting their IP. Where the availability of patent protection is tenuous, trade secret protection under 188 | Invest: Miami 2016 | LEGAL

state trade secret laws may be available for algorithms and other proprietary aspects of software. Under these laws, states will provide surprisingly strong protections to the proprietary nature of a company’s trade secrets if a company can demonstrate it has exerted reasonable efforts to maintain the secrecy of this information. Reasonable efforts would include limiting the universe of employees with knowledge about the innovation, ensuring all employees with such knowledge are subject to confidentiality and proprietary invention assignment agreements and taking practical steps to ensure information is not at risk of being publicly leaked.

Another vulnerable area concerns allocation of IP rights within joint development agreements between software developers. This issue particularly arises in cases where a small software startup partners with a very large technology company to leverage the startup’s solution within the large tech company’s platform. The large company may have concerns about maintaining ownership of the IP it brings to the project. However, in the process of crafting provisions

LEGAL OVERVIEW

to ensure, this protection many large tech players may become overzealous and include language that could effectively transfer the IP rights to the startup’s software. Actual exits have been impacted where nervous prospective buyers rejected an otherwise attractive startup due to concerns that they may no longer own the IP inherent in the innovations.

Experienced counsel should be consulted when crafting important commercial agreements where joint development or interfacing of software is contemplated.

Private equity Investment funds in South Florida continue to grow and mature. Low interest rates and plentiful financing have been catalysts for robust activity.

Spin-off funds continue to grow in sophistication and gain market share in South Florida transactions.

Meanwhile, representations and warranties insurance has become more prevalent and even required in certain types of transactions for a prospective buyer to win the deal.

One risk that has emerged as a focal point for

acquirers is data privacy. Concerns over catastrophic liability from data breaches have resulted in heightened due diligence to address privacy matters.

With increased competition among funds for quality deal flow, majority investments—where funds can acquire a controlling stake of a business—have become increasingly scarce. In response, funds have developed a number of strategies to continue putting capital to work. One growing trend is the increase in funds making minority investments, where they acquire less than a controlling stake of a business.

Another trend is increased fund specialization, where funds are formed to invest only in a limited niche area, such as green energy or philanthropic causes that generate substantial societal impact, in addition to turning a profit. Similarly, in order to develop specialized expertise, funds have been aggressively recruiting specialist operating partners. For instance, a fund that is focused on investing in beauty product companies might hire a cosmetics company executive.

Competition among funds to recruit expert operating partners has intensified to the point where it is common to see multiple funds claiming to have a proprietary relationship with operating partners who are wellregarded in a particular industry.

Competition among funds has also affected the manner in which their professionals, such as investment bankers, attorneys and accountants, conduct themselves throughout the deal process. A decade ago, the focus of these advisors was solely on performing their respective work in connection with the deal. Now, as funds look for every possible advantage, they seek professionals who in addition to performing top-level work also have the personality to help the fund foster the relationship with the seller or sellers. No fund wants to risk a professional offending a seller and compromising the deal.

The articles herein are presented for informational purposes only and are not intended to be construed or used as general legal advice. Please contact Greenberg Traurig if you have questions regarding this information. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2016 Greenberg Traurig, LLP. All rights reserved.

Capital Analytics would like to thank Greenberg Traurig for its contribution to the Legal chapter of Invest: Miami 2016. For help with your legal needs, contact Greenberg Traurig at www.gtlaw.com or investmiami@gtlaw.com.

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Growing dimension How the legal industry is evolving in a dynamic, post-recession economy

Cesar Alvarez Senior Chairman – Greenberg Traurig, LLP concerns about cybersecurity, white collar defense and related regulatory investigations.

These new challenges are touching everyone, including government, financial institutions, retailers, internet merchants, major corporations and consumers. Looking forward, we will be deploying our efforts to engage clients in these areas, where we have tremendous expertise.

How has the notion of “legal expertise” evolved since the Great Recession?

The legal industry is quickly changing and the value an attorney provides is more than about knowledge of legal statutes. The focus has to be on understanding a client’s business and how to solve problems—not just legal ones. The problems a client may encounter will have many facets, and a good attorney should always seek to serve as the quarterback. You want to become the first person the client consults to strategize on finding a solution. This flexible and dynamic approach is what attorneys today need in order to be competitive.

Given these trends, how do you see the legal industry changing in the medium term?

Technology has been the most disruptive factor shaping the legal industry. It starts with setting the expectations that clients have of our ability to provide immediate answers and also serves as an invaluable source of information. As technology evolves, it also presents new business opportunities as our clients face 190 | Invest: Miami 2016 | LEGAL

How can you utilize technology to help drive change in the legal industry?

With more than 1,950 lawyers around the world, every attorney at Greenberg Traurig has a unique knowledge base. We need to better access that knowledge base in real time to meet the demands of clients looking for instant answers to solve their problems. We can learn from the Uber model how to utilize technology to instantly match a client with the right attorneys and expertise. Exactly what that is going to look like, I don’t know yet. But we can’t simply tweak the old model. We have to adapt our linear way of thinking to create a new non-linear approach that will work well into the future.

In crafting a growth strategy for a “big law” firm like Greenberg Traurig, what must be considered?

In 2015, Greenberg Traurig saw significant expansion, adding about 150 attorneys to our rosters and boosting our international capabilities. We opened a new office in Berlin, and grew our Warsaw and Mexico City offices, along with additional and important expansion throughout our existing U.S. offices. But it’s not just about growth for growth’s sake. We only look to add lawyers if it’s strategic growth that adds additional quality expertise and resources that align with our existing platform. For instance, hiring a specialist in a niche area, like complex real estate tax law would be leveraging and allow us to more comprehensively service our clients. For a firm our size, two and two must always add up to more than four.

Directory: A reference guide to accommodations and consulates compiled

by Invest: Miami

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Hotels:

DoubleTree Hotel 1717 North Bayshore Drive Miami, FL 33132 T: (305) 372-0313 www.doubletree3.hilton.com

The Four Seasons 1435 Brickell Avenue Miami, FL 33131 T: (305) 358-3535 www.fourseasons.com/Miami

InterContinental Miami 100 Chopin Plaza Miami, FL 33131 T: (305) 577-1000 www.icmiamihotel.com

St. Regis Hotel 9703 Collins Ave Bal Harbour, FL 33154 T: (305) 993-3300 www.stregisbalharbour.com

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Sonesta Hotel 2889 McFarlane Road Miami, FL 33133 T: (305) 529-2828 www.sonesta.com/coconutgrove

Trump National Doral Miami 4400 NW 87th Avenue Doral, FL 33178 T: (305) 592-2000 www.trumphotelcollection.com/miami/

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Consulates: Antigua and Barbuda: 25 SE 2nd Avenue, Suite 300 Miami, FL 33131 T: (305) 381-6762

Costa Rica: 2730 SW 3rd Avenue, Suite 401 Miami, FL 33129 T: (305) 871-7485

Argentina: 1101 Brickell Avenue, Suite 900 Miami, FL 33131 T: (305) 373-1889 www.consuladoargentinoenmiami.org

Dominican Republic: 1038 Brickell Avenue Miami, FL 33131 T: (305) 358-3220 www.consuladodominicanomiami.com

Bahamas: 25 SE 2nd Avenue, Suite 600 Miami, FL 33131 T: (305) 373-6295 www.consulateofthebahamasmiami.com

Ecuador: 117 NW 42nd Avenue, Suites C-U4 and C-U5 Miami, FL 33126 T: (305) 373-8520 miami.consulado.gob.ec

Barbados: 2121 Ponce de Leon Boulevard, Suite 1300 Coral Gables, FL 33134 T: (786) 515-1201 Bolivia: 3750 NW 87th Avenue, Suite 240 Doral, FL 33178 T: (305) 358-6303 www.boliviamiami.com Brazil: 3150 SW 38th Avenue Miami, FL 33146 T: (305) 285-6200 miami.itamaraty.gov.br/pt-br Canada: 200 South Biscayne Boulevard, Suite 1600 Miami, FL 33131 T: (305) 579-1600 www.can-am.gc.ca Chile: 800 Brickell Avenue, Suite 1200 Miami, FL 33131 T: (305) 373-8623 chile.gob.cl/miami/en Colombia: 280 Aragon Avenue Coral Gables, FL 33134 T: (888) 764-3326 miami.consulado.gov.co

El Salvador: 8550 NW 33rd Street, Suite 100 Doral, FL 33122 T: (305) 592-6978 Germany: 100 North Biscayne Boulevard, Suite 2200 Miami, FL 33132 T: (305) 358-0290 miami.diplo.de Finland: 1280 NE 101st Street Miami Shores, FL 33138 T: (305) 984-5310 France: 1395 Brickell Avenue, Suite 1050 Miami, FL 33131 T: (305) 403-4150 www.consulfrance-miami.org Guatemala: 1101 Brickell Avenue, Suite 603-S Miami, FL 33131 T: (305) 679-9946 www.consuladoguatemalamiami.org

Israel: 100 N. Biscayne Boulevard, Suite 1800 Miami, FL 33132 T: (305) 925-9400 www.consulateisrael.com Italy: 4000 Ponce de Leon Boulevard, Suite 590 Coral Gables, FL 33146 T: (305) 374-6322 www.consmiami.esteri.it Jamaica: 25 SE 2nd Avenue, Suite 609 Miami, FL 33131 T: (305) 374-8431 www.jamaicacgmiami.org Japan: 80 SW 8th Street, Suite 3200 Miami, FL 33130 T: (305) 530-9090 www.miami.us.emb-japan.go.jp Korea (Republic of Korea): 1 SE 3rd Avenue, 27th Floor Miami, FL 33131 T: (305) 982-5573 Mexico: 1399 SW 1st Avenue Miami, FL 33130 T: (786) 268-4900 consulmex.sre.gob.mx/miami Netherlands: 701 Brickell Avenue, Suite 500 Miami, FL 33130 T: (786) 866-0482

Haiti: 259 SW 13th Street, Suite 3 Miami, FL 33130 T: (305) 859-2003

Nicaragua: 1332 West Flagler Street Miami, FL 33135 T: (305) 265-1415 www.consuladonicamiami.com/cms

Honduras: 8600 NW 36th Street, Suite 510 Miami, FL 33166 T: (305) 269-3131

Norway: 806 South Douglas Road, Suite 580 Coral Gables, FL 33134 T: (305) 358-4386

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Panama: 5775 Blue Lagoon Drive, Suite 200 Miami, FL 33126 T: (305) 447-3700

St. Kitts & Nevis: 6855 Red Road, Suite 600 Coral Gables, FL 33143 T: (786) 662-7401

Paraguay: 25 SE 2nd Avenue, Suite 720 Miami, FL 33131 T: (305) 374-9090 www.consulparmiami.org

St. Lucia: 2 Alhambra Plaza, Suite 850 Coral Gables, FL 33134 T: (786) 502-3351

Peru: 444 Brickell Avenue, Suite M-135 Miami, FL 33131 T: (786) 347-2420 www.consulado.pe/es/Miami/Paginas/Inicio.aspx

Trinidad and Tobago: 1000 Brickell Avenue, Suite 800 Miami, FL 33131 T: (305) 374-2199 www.ttcgmiami.com

Poland: 1440 79th Street Causeway, Suite 117 Miami Beach, FL 33141 T: (305) 866-0077

Turkey: 80 SW 8th Street Miami, FL 33130 T: (786) 310-7583

Spain: 2655 Le Jeune Road, Suite 203 Coral Gables, FL 33134 T: (305) 446-5511 www.exteriores.gob.es/Consulados/ Miami/en/Pages/inicio.aspx

Uruguay: 2103 Coral Way, Suite 600 Miami, FL 33145 T: (305) 443-7453 www.uruguaymiami.org/contenido

Singapore: 2601 South Bayshore Drive, Suite 900 Miami, FL 33133 T: (305) 858-4225 www.mfa.gov.sg/content/mfa/ overseasmission/miami.html

United Kingdom: 1001 Brickell Bay Drive, Suite 2800 Miami, FL 33131 T: (305) 400-6400 www.gov.uk/government/world/organisations/ british-consulate-general-miami

Photo Credits: Economy: pg 20 – Luis Arturo Mora / LAMphotos pg 24 – Frost Science Museum pg 32 – Camillus House Real Estate: pg 43 – Suffolk Construction pg 44 – Terra pg 53, 54 – Pinnacle Housing Group Construction: pg 57 – Inset: Frost Science Museum pg 61 – Plaza Construction pg 65 – Pipeline pg 66 – Luis Arturo Mora / LAMphotos pg 70 – K Group Holdings Environment & Infrastructure: pg 73 – Inset: MasTec pg 74 – Luis Arturo Mora / LAMphotos pg 77 – MasTec Transportation: pg 83 – Large photo: Greater Miami Convention & Visitors Bureau Inset: Luis Arturo Mora / LAMphotos pg 84 – PortMiami pg 85 – Brightline pg 88 – Embraer Aircraft Holding, Inc. pg 92 – Uber pg 93 – Greater Miami Convention & Visitors Bureau Trade & Logistics: pg 95 – Large photo: PortMiami Inset: PortMiami pg 98, 102 – Florida East Coast Industries pg 100 – PortMiami pg 104 – Miami International Airport Banking: pg 107 – Inset: Banesco USA pg 108 – Banco do Brasil Americas Technology & Innovation: pg 123 – Large photo: eMerge Americas Inset: Florida International University College of Business

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pg 124 – Wyncode Academy pg 128 – eMerge Americas Health: pg 131 – Large photo: Miami Jewish Health Systems Inset: Mount Sinai Medical Center Miami Beach pg 132, 135, 136, 138 – Sylvester Comprehensive Cancer Center Education: pg 141 – Large photo: Florida International University College of Business Inset: University of Miami School of Business pg 142 – Florida International University College of Business pg 145 – Wyncode Academy pg 147 – Miami-Dade County Public Schools pg 148 – University of Miami School of Business Retail: pg 151 – Large photo: RCC Associates Inset: Whitman Family Development pg 152 – Whitman Family Development Tourism: pg 157 – Large photo: Greater Miami Convention & Visitors Bureau pg 158 – Greater Miami Convention & Visitors Bureau pg 162 – InterContinental Hotel Miami pg 164 – Luis Arturo Mora / LAMphotos

Thank you,

Miami: For six months, our dedicated staff has had the pleasure of meeting with over 200 senior-level executives in Miami-Dade County, who graciously shared with us their time and their insights of what it is like to do business in the Magic City. These onthe-ground discussions allow us to analyze what it is really like to operate day in and day out in such a dynamic and quick-growing market in order to tell our readers Miami’s true tale of economic diversity, international poise and domestic importance.

Miami is widely misunderstood and changing rapidly, and that is why Invest: Miami takes a dive deep into the real Miami business climate and investment scene. We do so by combining expert analysis and in-person discussions with its local leaders, determining where the city is headed and influencing its global reputation.

However, our work would not be possible without the Miami business community. We would like to thank our esteemed partners for their support and encouragement as well as all the individuals, companies, government officials, associations and chambers who we have met with for their unique perspectives, time and enthusiasm.

Together, we will continue to attract more business and investment to our great city.

– Capital Analytics

Sports: pg 167 – Large photo: Miami Open Inset: Miami Dolphins pg 168 – The HEAT Group pg 170 – Miami Marlins pg 173 – Miami Open pg 176 – Miami Beckham United Legal: pg 179 – Large photo: Greenberg Traurig, LLP Inset: Greenberg Traurig, LLP pg 180, 186 – Greenberg Traurig, LLP Directory: pg 189 – Large photo: Greater Miami Convention & Visitors Bureau

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