Justin Oates of Cain International – Commercial Observer

Justin Oates, Senior Vice President for Cain International, was featured at Commercial Observer’s South Florida Development & Capital Leadership Forum on October 11th, 2023. 

Cain International (‘Cain’) is a privately held investment firm focused on real estate and business opportunities that shape the fabric of global gateway cities. The firm currently manages over $16 billion in assets through its real estate equity, real estate debt and private equity platforms. Cain is a partnership between its CEO, Jonathan Goldstein, and Eldridge. Cain International Advisers Limited, the firm’s asset management and investment advisory division, is an SEC-registered investment adviser.

Commercial Observer: South Florida, and Miami in particular, has benefited from a robust volume of real estate transactions over the past three years. Is this recent real estate boom sustainable?

Justin Oates: The momentum that South Florida witnessed from late 2020 through to 2022 was remarkable, it effectively experienced five years of growth in 18 months. That level of growth anywhere isn’t sustainable, but I believe that Miami will stay on trajectory to become a leading global city if it continues to invest in its talent, as well as in its physical and social infrastructure.

You announced a partnership with Ennismore to grow the Delano brand. How have Miami Beach and Miami retained a competitive edge for attracting hospitality investors? Do you see an opportunity for hospitality to spill into neighboring cities, or Miami neighborhoods that aren’t as well known as tourism destinations?

Miami Beach remains a marquee, global leisure destination, and Delano is one of its most acclaimed, trophy hotel properties. Over the past decade, premier food and beverage and hospitality offerings have emerged in other areas of mainland Miami as areas such as Brickell, Wynwood and Design District have developed or evolved. Other wealthy oceanfront communities in South Florida, such as Palm Beach, Boca Raton, Clearwater Beach, Naples and many others, also remain major markets for tourism, and home/condo prices have risen considerably in recent years.

Cain International has a stake in some large South Florida projects across asset classes, including office, hospitality and residential. Which asset class are you keen on in the market when looking at long-term ROI?

The combination of prime locations as well as high-touch service and design across assets classes to deliver trophy developments is a consistent theme in our South Florida and broader U.S. portfolio. In general, it is our view that the best-in-class / Class A assets across each sector should be well positioned to outperform, and this view generally extends across our equity and debt investments.

In Miami, we are building the region’s premier office tower in 830 Brickell while we are also involved in two luxury condo projects: Missoni Baia, which recently delivered, and Una Residences. We also have a premier oceanfront investment in Palm Beach. In addition, we are redeveloping the Delano Hotel, which we believe will remain one of the premier oceanfront hotels in South Florida once our renovation is complete.

South Florida has managed to evade some of the real estate and economic challenges that other U.S. and global cities have endured. Heading into 2024, are you optimistic or skeptical on the market, and do you think Miami offers a lesson that can be replicated in other markets?

Miami’s significant growth and demand in the past few years offers it a level of resiliency against some of the broader macroeconomic challenges facing commercial real estate in the U.S. and global markets. We are fortunate that South Florida has a healthy office market, especially for Class A space. Miami also has a leading hotel market. We are also fortunate the high interest rate environment has less of an impact on condo development in South Florida than other development projects, given that developers can utilize buyer deposits to finance construction. That said, high interest rates coupled with construction cost increases and an extremely challenging insurance market threaten to slow dealmaking and development.

Looking beyond deal-level challenges, Miami also needs to address a number of critical items — infrastructure, housing affordability, quality of schools — that threaten to limit the amount of continued growth in the region, especially for new-to-market businesses. Miami and South Florida certainly has a pro-growth business environment, but it’s incumbent on the state, county and city officials and private sector to collaborate on solutions to these fundamental issues.

For additional information about Cain please visit www.cainint.com