Most real estate developers have hit pause. Why Terra’s David Martin is forging ahead
Most college students use coffee to power through all-night cram sessions.
As a University of Florida undergrad, David Martin used coffee in a different way — to launch his business career.
Starbucks had started sprouting up around the country in 1995, but none had yet reached Gainesville. So Martin signed onto his AOL account and went online to find out why so many were buzzing about the company.
“I had always been very entrepreneurial as a kid, so I took out a $50,000 line of credit from SunTrust Bank and opened a coffee and bakery shop on campus called Java Lounge,” he said. “It was open from 7 a.m. to 1 a.m. and it grew so fast I ended up with 25 employees. I learned a lot about operating a business and having a responsibility to your customers. It also taught me how to deal with city government and getting permits.”
Two years before he graduated in 2001, Martin sold the coffee shop for $450,000 to Einstein’s Notes, a local Gainesville business.
“That coffee shop is a good example of what makes David a successful developer,” said Keith Kurland, Senior Managing Director & Co-Head of New York Capital Markets for the financial firm Walker Dunlop. “He saw a need for a coffee shop and he filled it. That’s akin to what he does as a developer — understanding what his end users want and need, from office to retail to residential.”
In the ensuing 19 years, Martin, 43, has become one of the most prolific and respected developers in Miami’s real estate market. His firm Terra, co-founded in 2001 with his father Pedro Martin, a former partner at the Greenberg Traurig law firm, has completed or is currently developing 8.6 million square feet of residential, commercial and retail spaces throughout Miami-Dade and Broward counties, valued at a total of $7.24 billion.
“Under David’s leadership over the past 10 years, Terra has grown into an internationally respected development firm that is reshaping the face of South Florida’s communities and the broader real estate landscape,” said Pedro Martin, who remains active with the company. “I am incredibly proud that David has stayed true to our founding principles even as the company has grown. He understands that the work we do at Terra can be a part of the solution for the many challenges our city faces, and I know he will be making an impact in this community for decades to come.”
Full speed ahead
At a time when most developers have hit pause on new projects — even before the COVID-19 pandemic — to allow time for the absorption of the surplus of condos, commercial and office spaces already on the market, Martin is defying industry headwinds. He’s developing everything from luxury to workforce housing, industrial to hotel, single-family homes to his current project, a marina.
“I’m convinced there are 12 David Martins,” said Lyle Stern, president of the Miami Beach-based leasing and consulting company Koniver Stern Group. “He’s always available even though he has a lot of projects going on. He’s on every call. He’s ubiquitous. He’s like water in the rain. I believe he’s cloned. He’s everywhere. And he’s super involved. He never starts with ‘How much is this going to cost?’ but ‘How is this going to fit into this neighborhood?’ ”
Terra’s geographical reach extends throughout Miami-Dade and Broward counties, from the booming Coconut Grove and Miami Beach to less buzzy neighborhoods such as Miami Lakes, Pembroke Pines, Hialeah and Weston. And because of his successful track record, Martin is able to attract heavyweight partners and investors, minimizing the risk of funding the developments using his own equity alone.
“He has a strong track record. He’s made a lot of money to invest in the future growth of his business, and the debt and equity capital markets respect him and are excited to invest with him, due to his keen eye for unique projects,” Kurland said. “That’s true of his partners on the development side too, from general contractors to construction.”
Those who work with Martin say one of the things that sets him apart is his keen attention to the smallest details, from doorknobs to color schemes to a $15,000 line item on a budget for a $300 million project.
“One of the things that’s both entertaining and frustrating about hanging out with David is whenever something comes up, he will act immediately,” said Bjarke Ingels, the famed Danish architect who designed the twisting towers of Terra’s Grove at Grand Bay luxury condo. “So if you’re discussing a project with him and you say ‘We should talk to this guy about this thing,’ David will call him on the spot, put him on speaker and instantly deal with the issue.
“Sometimes it’s hard to keep up with his train of thought. But David doesn’t leave anything for tomorrow or even an hour from now. It has to be right now. That’s often how incredible things happen.”
In the works
Terra projects currently under construction include:
▪ The 800-room Grand Hyatt Miami Beach on 17th Street, which will connect to the Miami Beach Convention Center via a sky bridge;
▪ Mr. C Residences, a 20-story, 151-unit luxury condo tower at 2655 S. Bayshore Drive in Coconut Grove that marks the first large-scale residential project by the upscale hospitality brand;
▪ Grove Central, an 883,000-square-foot mixed-use development adjacent to the Coconut Grove Metrorail station that will include a 50,000-square-foot Target, 288 market-rate and workforce rental apartments, and a 23-story office tower;
▪ The Canopy Club, a large mixed-use development at 500-600 Alton Road at the gateway of Miami Beach off the MacArthur Causeway that will include 330 residential units, a 15,000-square-foot retail component and a three-acre public park;
▪ District 79, a 500,000-square-foot warehouse/industrial project at 7777 NW 41 St. in Doral, on the former site of the PepsiCo distribution center and regional headquarters.
“David is in a class of his own,” said Peter Zalewski, a principal at the real estate analysis firm Condo Vultures. “He casts a long shadow over some other developers in Miami because he has diversified instead of concentrating on one area, like cratered downtown Miami.
“He’s a Florida unicorn, in that he was born and raised in the state and continues to build here. He might be a little optimistic about where he thinks the market is heading, but I give him kudos for going forward with projects that are going to be difficult, like the Miami Beach Marina.”
The Marina project currently is Martin’s main focus. The ambitious plan calls for a $40 million renovation for the aging Miami Beach Marina, with infrastructure upgrades including sea level rise protection and storm resiliency. Martin is also offering to pay the City $77.5 million for air rights and upland improvements on land adjacent to the marina, including the creation of a one-acre park and a completed stretch of the Miami Beach baywalk. Martin also plans to build a 23-story condo tower and 45,000 square feet of revamped commercial space.
The 30-plus year-old marina south of Fifth Street is owned by the City of Miami Beach and leased to an affiliate of national operator Suntex Marinas until 2022. The project, which would require the demolition of the current marina building that houses the popular Monty’s restaurant, will go to public referendum in November.
Explained Martin, “I was close friends with [developer] Tony Goldman and he always told me, instead of thinking every deal you have is a five-year hold, think 20 years. That way you’re not chasing certain deals because they may not meet that threshold.
“It dawned on me that I wanted to focus on neighborhoods instead of individual projects and figure out what can make them better. Is it parks? Is it flooding pumps? Green spaces? Is there a divide between communities and the business?” he said. “We can use capitalism to solve some of the societal issues that government or the private sectors can’t figure out. We can build that neighborhood and make it better, whether it’s schools or mixed-income housing.”
Case in point: Terra’s development of Pines City Center, the 47-acre, master-planned mixed-use village at 10200 Pines Blvd. in Pembroke Pines, generated enough revenue for the city to build a 175,000-square-foot Charles F. Dodge City Center and Convention Center in 2018.
“You go there today and there’s a sense of pride,” said Martin. “They have amazing graduations for their schools.”
Honorary Miami homeboy
Although Martin was born in Gainesville, he was raised in Miami and identifies as a native. He attended St. Theresa School while living with his Cuban-born parents and two siblings in a multiplex off Ponce de Leon Boulevard. The family later moved to West Dade, where he attended Christopher Columbus High School.
His grandfather is Bernardo Garcia, who operated three funeral homes around Miami-Dade County. As a teenager, he worked there part-time, arranging for flower deliveries and running errands. (His brother now runs that business.)
“The funeral home had a big impact on me, seeing so much death so young,” he said. “It helped me appreciate that life is short, all that carpe diem stuff, and it was a big influence on me. You do a lot of introspection on who you are and why you are this way. My mother was diagnosed with Multiple Sclerosis, and I saw her struggle with her sickness and always push the envelope by testing new medicines, always with a positive attitude. I carry those influences with me in my work — the idea that time is finite and that you need to take risks to succeed.”
Martin has two kids — David, 10, and Collette, 7 — with his wife Christina. The couple started dating in high school. Despite his busy work schedule, Martin tries to drop off his children at school every day himself. His philanthropic work includes academic institutions such as St. Stephen’s, Gulliver, LaSalle and Doral High School, along with charities such as Camillus House and United Way and arts institutions such as the Wolfsonian and Vizcaya museums.
Although he graduated from law school, Martin decided to enter the real estate industry when he returned to Miami in 2001, co-launching his development firm Terra with his father Pedro.
“When I built the coffee shop at the university, I negotiated my lease, negotiated the building permits and went through that whole experience,” Martin said. “Whenever I drove by that coffee shop, it felt good to know I was able to create something that was being used and enjoyed by people. That has become my mission — to create environments that enrich people’s lives — and real estate is an amazing way to do that. Since my father had a real estate background and Miami had such a strong economy, I felt it was a right fit.”
Martin’s first project, completed in 2004, was Nautica Condo, a six-story, 33-unit building at 5970 Indian Creek Drive in Miami Beach. The project grossed $20 million. Prices there today range from $550,000-$699,000.
“It was a great learning experience raising the capital at 23 years old, creating a brand and a product and transacting with people,” Martin said. “I learned how important all the intricate details and execution are. But I also learned the importance of building and preserving relationships and delivering to your investors and buyers.”
But after the Great Recession, Martin began thinking of real estate development in a different way. Terra, like other developers, had to scramble to pay off debt and return capital to its partners after the real estate market collapsed.
A new approach
“That’s where my new approach was born,” Martin said. “Prior to the crisis, everything was about cost control and the strategy was specific to the project rather than the neighborhood. The crisis helped us to always have contingency plans and underwrite deals less aggressively so we can withstand economic and pandemic shocks.
“A lot of developers were getting consolidated, because they were examples of borrowers who didn’t have the financial backing,” he said. “We were able to pay off all our loans in a quick timeline and look at investments from a fresh perspective. The crisis created a kind of cleansing. We were paying distressed prices in 2010-2011, not market prices. We bought a property priced at $60 million for $17 million.”
Martin said the crash also changed the way he thought about real estate. Before the recession, he was more focused on maximizing the square footage and density of each project, the way most developers think. After the crisis, he began thinking more about city-building, an approach to development less vulnerable to economic cycles and prone to succeed as long-term investments, and looking for voids that needed to be filled, such as the revitalization of sleepy Coconut Grove.
That approach is serving him well in the COVID crisis, as retail contracts and condo popularity ebbs. Both will thrive again, he believes — though perhaps with twists.
Jonathan Miller, president and CEO of the New York-based appraisal and consulting firm Miller Samuel Inc., said Martin is distinguished by his deeply thoughtful approach.
“When I met him as a consultant, I felt like he earnestly wanted to know what I thought as opposed to what he needed me to think,” said Miller. “For many in the development industry, it’s all about a short window — build and get out. David is very thoughtful about the long-term view of the project. A lot of people pay lip service to community, but that’s part of his brand, which is somewhat contrarian.”
One example of Terra’s community-minded approach: During the development phase of Eighty Seven Park in 2015, Martin gave the City of Miami Beach $10.5 million to renovate the adjacent 30-acre North Shore public park and improve the infrastructure in the North Beach neighborhood.
Martin and partner developer Russell Galbut of Crescent Heights will also build a three-acre public park and part of a pedestrian bridge above Fifth Street as part of their 45-story Canopy Club residential tower and retail pavilion project at 500-700 Alton, located on the northwest corner of the intersection of Alton Road and the MacArthur Causeway.
The $8 million park was part of a compromise between the developers and city officials to accommodate the tower’s height. Construction on the park, which will incorporate water management systems to help the flood-prone area, began in July.
Terra’s attention to resiliency has become another of the developer’s trademarks. Walter Meyer, executive director of the Coastal Marine Resource Center and a founding principal of the New York-based Local Office Landscape & Urban Design resiliency firm, said his company works with developers in the Pacific, Atlantic and Gulf coasts and is choosy about who they work with.
“Our firm doesn’t take on clients unless they’re similar to David,” Meyer said. “There’s usually someone in every coastal city like David, who takes incremental risks for either cultural or resiliency reasons after the bottom line is met on projects. Some developers are interested in raising profits by incorporating resiliency and their buildings turn out to actually not be resilient. David does these things from within. Some of the best resilient buildings in this country are David’s, and the ramifications are significant, because what he’s doing is important for the nation.”
Some industry observers say Martin’s emphasis on sustainability and community-building will continue to grow his reputation within Miami’s real estate market, no matter the ups and downs of each cycle.
“David has been product-specific for different locations and needs, and that has made him very successful,” said Jack McCabe, CEO of the advisory firm McCabe Research and Consulting. “He’s a very savvy developer who will continue to be successful even in a severe downturn, and the next one could be even worse than the last one. But there’s always opportunity in good times and bad times. He’s somebody to watch, because he could potentially become the biggest fish in this pond. He seems to have the Midas touch.”
Q&A WITH DAVID MARTIN
We asked Terra CEO and president David Martin to weigh in on affordability, COVID and other pressing topics. Here’s what he had to say:
On COVID-19: The biggest issue I see right now is how do we build trust and confidence from the public? The way you restore it is by community-based testing. Medicare and Medicaid stopped reimbursing community-based testing, so we have centralized testing sites now that take too long to get your results back. I’m the chair of St. Stephen’s Episcopal Day School and we have to get teachers tested every week.
On the housing affordability crisis: The existing subsidies and tax credits limit affordable housing to only certain neighborhoods. We need to have affordable housing spread throughout our neighborhoods in various types of housing typology that include townhomes, garden apartments, mid-rises and high-rises.
The affordable housing solution using subsidies is not enough to meet the demand. There are a lot of new ideas in zoning that would allow capitalism to deliver affordable housing without subsidies and would be sustainable with higher density in pockets throughout our neighborhoods. That would be sustainable with density in pockets throughout our neighborhoods.
On the future of retail: Amazon’s purchase of Whole Foods was a significant message. Target and Wal-Mart are opening new stores and recruiting the best and brightest talent for their digital operations. As innovation in technology happens, the retailers are starting to innovate as well. Target used to do 140,000-square-foot stores. Now they’re doing 50,000 square feet. You’re seeing other tenants that would have once wanted more space now looking for less space. We’re seeing how shopping centers and retailers can use their physical footprint for the last mile of distribution for their customers. That reduces the fulfillment costs of those digital purchases.
COVID has accelerated the process of which retailers will survive and which won’t. But South Florida has always been under-retailed when you compare our retail square footage to our per capita. In the next 5-10 years, I see a lot of redevelopment happening within our existing B and C class shopping centers to smaller A class shopping centers with a multifamily component. But the physical footprint is still necessary.
On gentrification: There are a lot of ideas on how to create jobs and revitalize neighborhoods. As our access to information and data improves, capital market investments are accelerating the increase of property values in neighborhoods before the fundamentals of those neighborhoods are steady. The vulnerable neighborhoods don’t have job employment anchors or basic opportunities that the residents need. We need things like that from property tax raises for families that have lived there for a number of years, historic preservation and the restoring of existing stock so the neighborhoods don’t lose their soul and social fabric.