Published: Jul 14, 2015
BY NICHOLAS NEHAMAS
Starting in 1986, Massirman worked as a commercial broker at CBRE. Then, in 2008, when he saw a market ripe with opportunity, he became an investor and developer. His first focus was on fractured condo and single-family projects that went belly-up during the financial crisis.
His development firm, Rivergate Companies, today focuses on multifamily projects and building urban infill self-storage facilities. With partners Stephen Garchik and Steve McBride, Massirman runs Miami City Self Storage. The company has snapped up six plots of land across Miami-Dade County in the last two years for about $12 million.
Massirman has also formed a partnership with KW Property Management and Consulting to manage multifamily and commercial properties in Florida and North Carolina.
A big believer in the promise of technology to enhance real-estate development, Massirman has experimented with crowdfunding a rental project in Orlando. He answered questions from the Miami Herald on the future of his companies and South Florida’s real-estate market via email.
Q: What trends led you to believe that self-storage would be a good investment in Miami? What are your future plans for that area?
A: Having developed storage in the previous cycle, the timing felt right. My partners Steve Garchik and Steve McBride, veteran storage developers from D.C. and NYC, got together in early 2013 to form a joint venture to build urban infill, high-end self-storage facilities. We found that little self-storage building had taken place in the last 10 years. With the continued growth and expansion of South Florida, it was the opportune time to ramp up our self-storage effort. Currently, we have five deals under construction and 13 deals in process. Our plans are to build out the South Florida market with the best sites we can acquire. Our leading-edge designs have been favorably accepted by most municipalities we have targeted. We are in active discussions to scale our footprint beyond South Florida.
Q: You’ve expressed interest in crowdfunding real-estate developments. How successful has that innovation been?
A: We crowdfunded an apartment community in Orlando with EarlyShares and got a very strong reception from investors. I believe crowdfunding will continue to gain market acceptance for raising capital from both accredited and non-accredited investors. We will continue to explore this emerging marketplace.
Q: Genting has been extremely quiet about its plans for the old Miami Herald site. What do you think is the best use for that land?
A: The Genting land is located in the epicenter of Miami at the confluence of downtown, Edgewater and Miami Beach. The original plan was oriented toward gambling, but its timeline regarding legalization is unknown. I am sure they are working on the strategic plan for their holdings, which could encompass a resort, office, hospitality, condos, retail and beyond. The challenge will be how to integrate this into the competitive landscape with Worldcenter, Midtown, Design District, Brickell City Centre, to name a few.
Q: Where do you think we are in the current real-estate cycle?
A: The South Florida market has been at full tilt since the market reignited in 2010. First, it was the distress wave, which lasted a couple of years morphing into a robust development market for condominiums and luxury rental communities, which is reaching peak levels. Acquisitions are getting pretty tight due to cap rate compression. Current trends in development include mixed-use, urban infill development and high-street retail. It feels like we are in mid-cycle, and the fear of a rise in interest rates is looming. That said, we are truly a unique economy driven by international focus, the emerging tech industry, port expansion, convention center expansion and airport expansion, to name a few major infrastructure projects. Include the arts, professional sports, gentrifying urban markets, and it all spells a very exciting time to be a part of the globalization of Miami.
Q: What under-exposed neighborhoods should developers be targeting next? What kind of developments does Miami need more of?
A: We have seen frantic activity in Wynwood, Little River, downtown Miami, Miami River and Edgewater. I think sticking to these markets and looking for second-generation and backfill opportunities will be a viable strategy. We are in the process of rolling out a platform to explore these opportunities.
Q: Miami is one of the most expensive cities in the country for renters. Why are rents so high compared to incomes? And what can be done to help address this problem?
A: The main factors involved here are high land values, availability of prime sites for rental and construction costs. Couple that with the fact the condo developers have paid a premium on a per-unit basis for land and that we have seen a “land rush” in the last few years — it complicates matters. This makes building affordable rentals virtually out of reach. The affordable housing developers in town just can’t get enough tax credits allocated to meet the rising demand. Affordability is a significant issue in Miami-Dade County. There is a growing need for affordable, clean, safe housing for the people that make our economy function, including teachers, firefighters, police, restaurant, clerical, government, hospitality, retail and domestic workers as an example. These individuals make up the fabric of our economy, and it is a struggle for them to build savings when over half of their earnings goes to rent. Solutions include creating more workforce housing just outside the urban core on less expensive land. These projects will need subsidies to get the numbers to work inclusive of: tax-exempt bond financing, increased allocation of tax credits to urban Miami-Dade County, streamlining of the HUD 221-d4 program, and tax-increment financing, for instance.
Q: Why did you see an opportunity in property management, and where have you directed your resources? How pleased are you with the new venture?
A: Rivergate Management started as a multifamily acquisition platform for its own assets, as well as third-party industry relationships in 2008. In early 2013, I was introduced to Robert White and Paul Kaplan, both CPAs and the founders of KW Property Management & Consulting. In just 10 years, they have built their condo-management business to 60,000 + units and are one of the leading service providers in that industry. They laid out their vision to duplicate their success on the rental side of the business, and Rivergate | KW Management was conceived as a separate entity. Currently, Rivergate | KW Management has close to 10,000 units in the management pipeline, including 2 million square feet of commercial. Our resources are focused on hiring the best people in the business to grow this company into an industry leader. I am very fortunate to have great partners in all of my entities.
Job title: President, Rivergate Companies.
Time in current post: Eight years.
Past jobs: CBRE, global commercial real estate, vice chairman for 20 years (1986-2007).
Education: BBA Finance, University of Miami.
Personal: Married to Lisa for 24 years; two children named Jordan and Drew.
Hobbies: Family, real estate, everything tech. Outdoor sports.
Favorite charity: Nicklaus Children’s Hospital (formerly Miami Children’s Hospital). Served on board of directors since 2010, chair of the Buildings & Grounds Committee.