Hot Properties

The condo kings at Crescent Heights say they're changing the face of Miami Beach. They certainly are.

Of Albee's children, Hyman acquired the highest profile in the City of Miami Beach, founding a law firm and serving for a time as city commissioner. His four children, all sons, inherited his ambitiousness and, after attending universities in the northeast, all returned to their hometown: two are now doctors at Miami Heart Institute, a third heads the law offices.

Russell Galbut earned an undergraduate degree in hotel management from Cornell University and a law degree from the University of Miami. While still in law school, he got involved in the construction industry and contracted his first building in 1976; the single-story brick structure at the corner of Washington Avenue and Tenth Street houses the family's law firm. He also began developing shopping centers, office buildings, and new condominiums. When interest rates soared in the early Eighties, Galbut switched to the construction of nursing homes and adult congregate facilities, ventures that weren't as dependent on low interest rates. During the late Eighties, the Galbuts owned hundreds of rental apartments in Houston and New Orleans, units which they have since sold.

In 1989 Galbut met Sonny Kahn, who was converting condominiums in Southern California. Kahn had emigrated from Israel to Los Angeles in 1972. There, he says, his first jobs included driving a cab and repairing cars. In the early Eighties he founded Crescent Heights and developed a few residential projects, including the refurbished Granville Hotel in West Hollywood.

The Carriage rental properties (Carriage Club North, Carriage Club South, and Carriage House) between 50th and 55th streets on Collins Avenue brought Galbut and Kahn together. Since then their projects have included the conversion of apartment buildings and hotels into condominiums and condominium-hotels. In some cases, such as the Decoplage, the conversions have required near-total renovations, from the replacement of roofs, plumbing, and electrical wiring all the way down to details such as elevator buttons. "I sometimes say ours has been a bigger challenge because we're given the worst stuff to work with in a way," comments Menin, who describes the Decoplage and the Hampton (on Washington Avenue on South Beach) as "ugly" buildings. In other cases, such as the Ocean Pavilion and the nearby Alexander, Crescent Heights has acquired structures in good enough shape to sell without much renovation. Regardless of a building's quality, Menin says, the company always sells units "as is"; buyers are encouraged to hire the developer's subcontractors to renovate their units, at an additional cost.

In all Crescent Heights has converted fifteen properties, fourteen in Dade and one in Hollywood. Total units sold since 1989: approximately 4000. Increase in the number of Crescent Heights employees: 70 (1989) to 700 (today). Gross revenue since 1989: $260,477,300.

Russell Galbut emphasizes that his company's "buy low, sell low" strategy is a major success factor. Several Crescent Heights buildings A the Alexander at 5225 Collins Avenue, for instance, and the Decoplage A were in foreclosure when the partners purchased them. The Alexander was purchased for $30 million, about $50 million below what it was worth, says Galbut.

These bargains are reflected in the condominiums' asking prices, among the lowest available for seaside property in Miami. According to marketing director Brian Duchman, Crescent Heights prices average between $125 and $150 per square foot. "This is reasonable, but not a killer deal," comments David Dabby, senior vice president of AREEA. The range, Dabby says, is comparable to other older buildings along Collins and significantly lower than the cost of new beachfront luxury construction, which goes for $175 per square foot and up.

In addition to their prices, Crescent Heights executives highlight their "one-stop shopping" concept: not only will the company sell the condominium, but it will arrange financing and renovation of individual units. The company also offers to manage units for owners who want to be absentee landlords. The full-service mentality, the developers point out, is particularly convenient for the out-of-town or foreign buyer. Menin estimates that this contingent accounts for about twenty percent of the company's sales. Most buyers, he adds, are looking for an investment and use the condominiums as weekend or vacation homes. A majority enroll in the rental program.

"It's very hard for anybody to compete with us," says Russell Galbut. "Just our telemarketing team consists of 50 employees." The company also has enlisted (for free) the help of several South Florida personalities, such as Capital Bank chairman Abel Holtz and modeling executive Irene Marie, to give videotaped testimonies about the joys of doing business and living in Miami. Sonny Kahn says Crescent Heights has spent hundreds of thousands of dollars doing direct marketing in Latin America -- television commercials mostly -- but has found local marketing more effective. ("We've found the best way to hook them is when they're here," offers marketing director Brian Duchman.)

Financing has been provided by several banks, including Home Savings Bank and Holtz's Capital Bank, on whose board of directors Russell Galbut sits. (According to Kahn, Crescent Heights's relationship with Capital Bank goes back to the Eighties and California, where Capital helped finance several of Kahn's projects.) AREEA's David Dabby points out that not only has this arrangement benefitted the developer, but it has also been a "good deal," as he puts it, for the banks, which can finance the property acquisitions in bulk and potentially participate in individual mortgages.

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