What’s the Deal? | Eric Benaim & Benaim X Partners’ Acquisition of Three Wynwood Commercial Properties

What drew you to Wynwood?

I've been going to Miami since ‘98 and I would go there for the Miami Winter Music Conference year after year. The first time I was in Wynwood was in 2011 and a friend of mine was exhibiting at one of the art fairs during Art Basel and I went to see her booth and went to a bunch of parties in Wynwood and I really liked it. Over the last ten to twelve years visiting, I've seen a lot of similarities between Williamsburg and Wynwood. A few years ago, before Hermes opened up in Williamsburg, they opened a Hermes gym with Hermes gym equipment and sporting goods to test out that market over there. They did the same thing but with Chanel and opened an old-school diner that was essentially a Chanel makeup diner. I see Wynwood eventually becoming a market for brands to do similar brand testing and create those kinds of experiences.

I’ve also learned that in Miami there's not that many walkable neighborhoods. Wynwood is a very walkable area and I like the grittiness of it. The street art, restaurants, and businesses are very unique there and I see Wynwood as the in-between market for brands that fall between high-end shopping like in the Design District and discounted shopping you can find in Midtown.

How did you secure financing for the properties?

Two years ago, I started an investment company called Benaim X Partners and the recent transaction of the three buildings at 2324-2328 North Miami Avenue, 38 Northwest 24th Street was a Benaim X Partners transaction based off of a 1031 we did in January. With regards to financing, we financed 50% with the seller, which we came to realize is very common in Miami.

How does this deal stand out for Wynwood?

Everywhere you go in Wynwood, people over the years have been buying up sites and tearing them down. Sites you see now, they really only give out three to four-year leases. Right now, our property is fully occupied, but I'd like to be the landlord where a tenant can come and ask for a long-term lease, and that would be my value add. Opening up a business takes a lot of money and a lot of risk and a lot of times, people don't want to. They don't want to risk all that for three or four years. They want to have security, and I'm happy to work with them on that.

I already spoke to the tenants and told everybody that I'm happy to keep them longer. Everybody thought that they were going to be out in a few years, and I told them I'm happy to negotiate leases and give longer-term leases, and everybody was super relieved and happy. I want to have a reputation of being a landlord who works with his tenants, who doesn't try to squeeze every single dollar out of them, tries to be fair with them, and hopefully they succeed in our properties, because if they succeed, we succeed.

What kind of tenants are you currently working with?

We have some really great tenants like Aroma 360, which is the parent company of Hotel Collection and they're an anchor tenant with us. They have about 18 to 20 thousand square feet of office space with us. We also have Perro Negro, which is the number one reggaetón club in Miami and they have another popular location in Colombia. We also have another lounge and a smoke shop.

I'm currently talking to an artist because our property is one of the few in Wynwood that doesn't have an art mural. So, I'm talking to an artist already about covering up the entire property with a mural. We’re planning to do that in the fall and maybe open it up for Art Basel and we’re really excited about that. I do see a lot of other opportunities over there, not just as an investor, but also on the brokerage side with Modern Spaces.

What was the most challenging part of the deal?

The most challenging part of the deal is that I'm a New Yorker. I'm not based in Miami, so learning about a lot of how business is done in Miami was probably one of the biggest challenges. One thing I learned is that lawyers don't really work on Fridays in Miami, whereas in New York, we work all the time. Navigating the business environment or how business is done in Miami was probably a little bit of a learning curve, but we got through it. I've been going to Miami for a while now, but I never went there for business as a broker. I have done deals in Miami. I sold a dozen apartments in the Icon Brickell and a couple of apartments at a building called the Jade, but I never had business relationships over there. Creating those relationships was a little bit of a challenge, but it also was really fun. And ironically, most of the people I met there in the last year were all New Yorkers.

How did your journey into real estate begin?

I got into real estate in 2001. Prior to that, I was a rave party promoter and after 9/11 nobody wanted to party anymore. I didn't know what I was going to do, but my father, who was in the gas station business and owned a couple of properties, pushed me to get into real estate. I hated it at first, but decided I’d give it a year or two and I got my real estate license at 22 years old.

One day, while attending a party at MoMA PS1 in Long Island City, I found myself exploring the neighborhood. I saw a building with condo signage and saw potential in the area. Considering there were no digital tools like StreetEasy or Zillow at the time, I would call myself and leave a voicemail with the information on the sign. When I got home, I could take notes on whatever I saw and I put up an ad on Craigslist and then received numerous inquiries. Recognizing the opportunity, I decided to focus my efforts on Long Island City and when the building opened in April 2006, I sold 18 apartments in just two days. It was a breakthrough moment for me and I ended up selling a total of 44 apartments in that building and 14 more in another nearby.

What is your advice for someone who wants to start in real estate?

Grind it out in the beginning because in the first couple of years it’s really hard. But if you really put in your time into it and hustle, you can be successful and make a really good living and career for yourself. With real estate you can also have lots of opportunity with not a lot of prior experience required.

Looking back before starting my career, I wish I had the foresight to know that yes, real estate is cyclical, the market goes up and down, but even after it goes down, it's still higher than it was before. If I thought like that in my early days, I would have taken a lot more chances.

 

This interview was conducted through Traded’s Ambassador Program in collaboration with Julie Berman.

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