Villa Magna goes down!

Development
Hollo takes on partners, swaps hotel rooms for fewer condos
July 20, 2007 By: Oscar Pedro Musibay
Rendering of Villa Magna


Tibor Hollo’s Villa Magna condo project on Miami’s Brickell Avenue waterfront is on the real estate downturn diet.
His plan has been switched from two 56-story condo towers that were to have a total of 780 units to a 66-story tower with 326 condos plus 198 hotel suites, an ice rink and a dinner theater.
Hollo also has new Spanish partners, led by Jose Pedro Iglesias Moure and including Jose Angel Goxencia Roques and Juan Bartolome Segui Gamundi. They have the 2.5-acre Villa Magna site at 1201 Brickell Bay Drive under contract for an undisclosed amount.
A source said the sale is expected to close soon. Sources said Hollo might be bought out, but his name is on new city plans for the site.
The same group bought an acre diagonally across the street at 1390 Brickell Bay Drive for $35 million in January. Both parcels are vacant.
Architect Bernard Zyscovich, who designed the original Villa Magna and is involved in the new plan, said the project is undergoing a “complete redesign” and will drop the Villa Magna name.
Hollo has submitted new designs to the city for the Villa Magna site. He did not return calls seeking comment before deadline.
Zyscovich confirmed the 1201 property is under contract but would not disclose the price.
Plans for the other parcel now call for a 57-story tower with offices and condos.
Hollo’s Florida East Coast Realty and the New York investment company Coalco were behind Magna, which was to break ground last spring with units priced from $800,000 to $3 million. Deposits are being returned.
Zyscovich and the Spanish architectural firm Segui + Partners are listed on new plans filed with the city. Segui Gamundi is one of the partners in the purchasing group and part of the architectural firm.
The rink and theater plans are a response to growing demand by neighborhood residents for after hours entertainment, Zyscovich said.
Hollo, a fixture in Miami real estate for 55 years, is never short of ideas. He claims credit for building the first high-rise on Brickell Avenue, and his company developed the 630-unit Opera Tower north of downtown Miami and is planning the 70-story Bayfront Plaza office tower in downtown Miami.

For video of Villa Magna site, click here
Craig Studnicky, a principal of condo brokerage International Sales Group, said Hollo’s change of plans is consistent with the overall market because every residential or mixed-use developer not already out of the ground is considering a redesign or cancellation because of Miami’s condo glut. He also said lenders today are more likely to back developers building hotels and office than residential.
Stephen Nostrand, executive vice president of Colliers Abood Wood-Fay, said Hollo is wise to bring in a partner to spread the risk.
“If I were Hollo’s organization, it makes so much sense because it’s mitigating the risk,” said Nostrand, who is also treasurer of the Greater Miami & the Beaches Hotel Association.
Although he wasn’t familiar with the deal, he speculated the new partnership could have the new player provide equity as well as develop and run the hotel portion of the project.
But he cautioned hotels, the latest hot vehicle, also could saturate the market if planned projects all come to fruition.
There are hotels planned at Metropolitan Miami, Epic, 700 Biscayne Blvd. and two on Watson Island. Related Group has a hotel planned as part of its Icon Brickell project.
Nostrand said the response to hotels in Miami’s Brickell financial district has been strong so adding rooms should work, but a detailed analysis is necessary to determine demand to avoid the same fate as the low-occupancy condo market.
Niesen Kasdin, former chairman of the Beacon Council and a member of Miami’s Downtown Development Authority board, said hotel demand is growing, but he shares Nostrand’s concerns about market saturation, specifically in the luxury end occupied by the likes of the Mandarin Oriental and Four Seasons. He said the best bet for new hotel product may be to focus on less pricey ideas.
“I question the depths of the luxury hotel market to grow and add more product,” Kasdin said.
Oscar Pedro Musibay can be reached at omusibay@alm.com or at (305) 347-6651.