Miami Approves $29M Sale of Watson Island Site to BH3 & Merrimac

Key Points:

• Miami Commission votes 4-1 to approve $29M sale of 3.2-acre Watson Island site to BH3-Merrimac JV, following voter referendum.
• Package includes $9M for affordable housing/infrastructure and $4M for deed restrictions, enabling shift to ~100 condo units.
• Controversy stems from high appraisals ($257M-$342M) versus discounted price due to existing lease, raising questions on value extraction.

A Waterfront Vote That Divides City Hall

Miami's City Commission has greenlit a contentious $29 million land sale on Watson Island, handing over a prime 3.2-acre waterfront parcel to developers BH3 and Merrimac Ventures. This move, approved December 11, 2025, despite vocal opposition, signals fresh momentum for mixed-use projects in a high-demand area, offering investors a lens into navigating public-private deals.

Deal Breakdown

The transaction involves the southwest side of Watson Island at 888 MacArthur Causeway, where BH3 and Merrimac—operating as IG Luxury—will purchase the land outright while leasing the city's remaining 7-plus acres. Originally tied to Flagstone Property Group's stalled plans since 2001, the JV took over the lease in 2023. The $29M price tag is supplemented by $9M from developers for affordable housing and infrastructure improvements, plus negotiations for $4M to release deed restrictions—clearing hurdles for condo development over prior timeshare approvals.

Project Highlights

Poised for a mixed-use overhaul, the site could host approximately 100 luxury condo units, capitalizing on its Intracoastal location. This shift from timeshares aligns with Miami's evolving skyline, blending residential with potential commercial elements. Historical delays and litigation with Flagstone underscore the site's untapped value, now primed for execution under new stewardship.

Controversy and Risks

Opposition centered on perceived undervaluation, with appraisals pegging the land at $257M to $342M—far above the sale price, attributed to the existing long-term lease. Commissioner Ralph Rosado's lone dissent called for an independent review by Cushman & Wakefield, citing flip risks and insufficient public benefits. Residents echoed concerns over rushed decisions and past "bad deals," highlighting the political and legal pitfalls in waterfront acquisitions.

Why This Matters for Investors / Landlords

For landlords and investors, this deal exemplifies opportunities in undervalued public assets, where lease structures can slash entry costs for high-yield developments. The condo pivot could yield strong returns in Miami's supply-tight market, but the controversy flags due diligence needs—appraisals, zoning negotiations, and community pushback could impact timelines and profitability. Nearby holdings may see uplift from infrastructure boosts, making Watson Island a bellwether for similar ventures.

The Bigger Bet on Miami’s Waterfront Future

Miami's Watson Island approval, while divisive, opens doors for strategic waterfront plays in a resilient market. Investors should weigh the discounted pricing against execution risks, positioning this as a model for unlocking premium sites through persistent negotiation. As density proposals loom in areas like Edgewater, stay tuned for broader ripple effects on South Florida portfolios.