South Florida was spared Hurricane Matthew’s wrath, but Zika season never seemed to end. Meanwhile, another year in South Florida business brought other sea changes, including international cooperation (Cuba) and corruption (Panama Papers), booms, busts and a few surprises.
The Miami Herald business staff rounded up our picks for the best business stories of 2016 in real estate, tourism, international business, media and tech for this week’s Business Monday. Rather than stories that dominated the headlines of the day, we looked for stories that told the bigger picture of trends that could continue into 2017.
Here they are, presented in reverse order. We’ve also highlighted some stories to watch for next year.
11. NBCUNIVERSAL Telemundo Enterprises steps up its game
The Spanish-language TV/cable/production company started the year by breaking ground on a massive build-to-suit 450,000-square-foot facility at 12200 NW 25th St., slated to open in early 2018. When completed, Telemundo Network, Telemundo Studios, Telemundo International, the cable network NBC Universo and all of the company’s digital-media operations will relocate there from their current locales in Hialeah, Medley, Miami Springs and Coral Gables. Telemundo ended the year by besting rival Univision season-to-date in Monday-through-Friday prime time among adults 18-49 and adults 18-34, according to Nielsen. The network credits its slate of innovative programming that departs from traditional telenovela formulas for its success. Look for the winning streak to continue, and possibly grow, once its new production facility is up and running.
10. A booming year for new Miami hotels
Hotel room supply ballooned in 2016 as a slew of new hotels entered the Miami market. Six of them — Atton, EAST, Fasano, Meliá, Pullman and Roam — were from international brands choosing Miami as their first U.S. outpost. The city’s maturation into a global destination is attracting more hotels than ever. In downtown Miami, the city’s urban development has reinvigorated the area north of Brickell and south of the Adrienne Arsht Center, morphing the 9-to-5 sleepy town into the kind of urban core that is luring hoteliers nationwide. Already open: the 126-room Langford hotel and 129-room ME Miami, of Spain’s ME by Meliá brand. Next year, a 250-room futuristic Yotel hotel is set to open near the Langford, and Miami Worldcenter’s massive two-tower hotel, with 1,700 rooms total, will break ground for the first phase of its construction just a block from ME Miami.
9. Uber and Lyft are legally yours
Miami-Dade commissioners finally made ride-hailing companies Uber and Lyft legal in May, after a nearly three-year fight that pitted the tech-enabled services against the county’s taxi drivers. Uber and Lyft followed an approach that brought it success in other markets: launch in defiance of local regulations, then build a following of drivers and passengers so large that political pressure builds on elected officials to sanction the operation. It worked. Broward and Palm Beach counties have approved the services, too. Both Uber and Lyft have introduced carpool-like services this year for multiple riders going the same way. And while ride-sharing was speeding along, an on-demand war heated up for restaurant delivery. Once UberEATS and Amazon Restaurants entered the fray, bye-bye services Caviar and Favor.
8. Manny Medina’s (nearly) instant tech company
South Florida leaders have been trying to develop a tech hub here, but one of the missing elements has been a critical mass of large tech employers. What will likely help the cause: Tech pioneer Manny Medina will lead a new multinational data center and cybersecurity company based in Miami. Medina Capital, his Miami-based private equity firm, and global private equity firm BC Partners formed the new venture in a $2.8 billion transaction announced in November. The new company, not yet named, will combine a worldwide network of 57 CenturyLink data centers with cybersecurity and data analytics companies, including Doral-based Easy Solutions, a cyber-fraud fighting company. Calling it “Terremark on steroids,” Medina said the new company will have more than 1,000 employees. While it hasn’t been determined how many of them will be in South Florida, it will be a strong presence, said Medina, who founded and led Terremark until its $2 billion sale to Verizon in 2011 and more recently founded eMerge Americas, a homegrown technology conference that returns June 12-13. As for his new venture, “I’m back and I can’t wait,” Medina said. “I feel like I have been rehearsing for this my entire life.”
7. The home-sharing battle gets ugly
The battle over short-term rentals came to a head in South Florida in 2016. Reports from the hotel industry claimed that sites like Airbnb are skirting the taxation requirements and regulations that hotels have to abide by, while operating essentially as hotels. Hoteliers also argued that renters on short-term rental platforms were not doing it for extra cash, but instead were increasingly running full-time businesses as renters. No place was that battle more hard-fought than in Miami Beach. The city ramped up its fines against short-term rental violators in March to $20,000, the highest penalties in the country. By late November, the city had fined residents a combined $4 million. Meanwhile, Airbnb’s reach in Florida continues to grow, with most of its renters in Miami and Fort Lauderdale. According to ZIP code data the site provided to the Miami Herald, Airbnb rentals have found a home in 72 ZIP codes from Homestead to Hialeah. Since 2014, the number of tourists coming to Miami to stay at an Airbnb rental has tripled.
6. A Magic Leap for venture capital — and negative press
Venture capital in Florida is on track for its best year since the frothy days of 2000, but don’t break out the champagne. While Florida companies have pulled in more than $1 billion so far, without Q4 tallied, the mysterious Magic Leap alone pulled in nearly $800,000 from Alibaba and other investors in Q1, bringing its total funding to $1.4 billion. Pull out that one mega-round, and the total would likely trail most of the years since 2001, according to PwC’s Moneytree Report. Still, one big success story can lift a region, drawing more investors and startups, as well as creating jobs. Will it be Magic Leap, said to be developing a “mixed-reality” technology that brings the virtual and real world together? Magic Leap, now in its new 260,000-square-foot campus in Plantation, hasn’t released product details or timelines but hit major media turbulence this month when tech publication The Information reported that some former employees say its development is behind schedule and that some technology the company invented couldn’t be applied to a consumer product, apparently spectacles. The exclusive article also said that a demo of an earlier prototype (it was hands-off for the current prototype) was less than awesome and that at least one of its promotional videos was created by a studio but presented as real. “Magic Leap may have oversold what it can do,” wrote Information reporter Reed Albergotti.
Tech publications piled on with negative press. Management changes swiftly followed, and new CMO Brenda Freeman recently responded in Recode that Magic Leap “is absolutely on track” and “racing toward launch,” without giving specifics. Still, we really don’t know much more than a year ago. Founder and CEO Rony Abovitz has said that Magic Leap’s technology will be worth the wait. Stay tuned.
5. Uh-oh, a condo cool-down
Up, up, up went South Florida’s condo market. Now it’s coming down, down, down. A strong dollar and weak economies in Latin America have locked out the foreign investors who drove Miami’s latest condo craze. The consequences have been drastic. In the third quarter of 2016, the number of existing condo sales fell 19.1 percent year-over-year. Luxury prices slipped, too, falling 22 percent in Miami and 4.5 percent in Miami Beach, according to brokerage Douglas Elliman. Developers across South Florida have delayed, suspended or canceled new construction projects. Miami’s biggest builder, the Related Group, announced a plan to launch new developments in Mexico while South Florida slows down. But doomsday predictions aren’t coming true. This boom was built on hard cash, not illusory credit like the pre-2008 bubble. Developers asked buyers for hefty deposits up front. That means that projects that launched sales when times were good will still get built. This is a cool-down, people. Not a crash.
4. Univision goes on a digital shopping spree
After acquiring a majority stake in The Onion (which includes popular sites such as The AV Club and Clickhole), Univision Communications launched a new online multimedia platform, the Fusion Media Group, intended to attract English-speaking millennials with a mixture of news, commentary, political reportage, humor and entertainment. In August, Univision expanded its digital realm by paying $135 million to acquire the assets of Gawker Media just hours after Gawker.com announced it would cease publication after losing a $140 million invasion-of-privacy lawsuit filed by wrestler Hulk Hogan. The acquisitions came at a cost: In November, Univision laid off 250 editorial and business-side employees, or 6 percent of its work force, following a third-quarter loss of $30.5 million. But the network is now poised to begin integrating its new brand-name digital properties across its TV and online offerings, which should help Fusion further grow its audience.
3. The Cuba cruise frenzy
The race to sail to Cuba started off with some controversy when Carnival Corp. announced that its social-impact brand Fathom would be the first American line to venture into Cuba in more than 50 years.
But no Cuban Americans would be allowed on board. Carnival Corp. was following an arcane Cuban law that barred people who were born on the island but fled to return by sea. Protests and several lawsuits followed, and the line said that it would not launch its itineraries until the prohibition was lifted. Less than two weeks before the ship was scheduled to leave PortMiami for a seven-day Havana-Cienfuegos-Santiago de Cuba voyage, the Cuban government reversed its decades-old policy, allowing Cubans to join in on the inaugural voyage in May. By November, Carnival announced that it was dissolving Fathom in exchange for sending another cruise line — with bigger ships — to Cuba by June 2017. It won’t be alone: In December, six more cruise lines were approved by the Cuban government within one day of each other. Among them, Miami-based cruise companies Norwegian Cruise Line Holdings and Royal Caribbean Cruises and their lines — Norwegian’s Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas and Royal Caribbean’s Royal Caribbean International and Azamara Club Cruises. Connecticut-based Pearl Seas Cruises was also approved. All will crowd Havana Harbor during the first half of 2017.
2. Panama Papers reveal web of criminal activity
When an anonymous leaker named John Doe released 11.5 million secret files from one of the world’s biggest offshore law firms, he (or she) also shone a light on the darkest corners of Miami real estate. The Panama Papers, as they came to be known, showed how people accused of corruption abroad secretly moved money into luxury Miami homes. They revealed a web of criminal activity cloaked by opaque offshore companies and largely ignored by regulators, attorneys and business people. And so much of it traced back to Miami. The Miami Herald worked with nearly 400 journalists around the world to uncover the scandal. At the same time the stories broke, a federal crackdown began on money laundering in luxury homes. The first two markets targeted by the feds? Manhattan and Miami-Dade County. Worst of all, fueled by secret overseas money, local home prices keep rising well beyond what most residents can afford. This was one series of stories that put South Florida in global headlines for all the wrong reasons.
1. Zika: Need we say more?
Sometimes life really throws you a curve ball. For Miami-Dade County in 2016, it was Zika. The tropical mosquito-borne virus was discovered in Miami’s Wynwood arts district — popular with tourists and locals alike — in July. Businesses in the area immediately felt the bite — and it was no mosquito-sized nibble.
Many reported sales falling by as much as 60 percent. The Wynwood Zika zone was soon joined by others in South Beach, then Mid Beach, then Little River. The outbreak in Miami Beach, the heart of South Florida’s tourism industry, particularly concerned local leaders after Puerto Rico’s tourism industry swooned when the virus emerged there. As national news outlets covered the South Florida outbreak, demand for Miami Beach hotels suffered, then suffered more, potentially threatening Art Basel (which emerged relatively unscathed, although crowds seemed smaller.) County, city and state leaders responded with prolonged spraying of insecticide and other anti-skeeter measures. That, plus a cold spell, seems to have done the trick — for now. In December, Gov. Rick Scott lifted the Zika warning for South Beach, the last of the zones to fall.
Chabeli Herrera, Nicholas Nehamas and Nancy Dahlberg
Stories to watch for in 2017
▪ Zika will be back: Health officials and politicians warn that the virus could return when the weather warms up. In other words, Zika, like hurricanes, could be a recurring seasonal problem that Miami better get used to until a vaccine is on the market, which could be years away. One silver lining is that the officials will have a playbook based on lessons learned in 2016.
▪ Brickell in bloom: Miami’s Brickell Avenue is bursting with new and under-construction condos, restaurants, offices and shops. Boosters say the fancy neighborhood is blossoming into a true urban downtown. But will the growth overwhelm limited infrastructure and worsen already hideous traffic? That’s a question to watch in 2017 as many new projects are slated to open. Here’s an evergreen tip: Take public transit and ride-sharing services to navigate the area whenever you can.
▪ Innovation districts: If you build them …: Art Week brought to light the vision for an innovation district called Magic City. Developer Tony Cho and investor Bob Zangrillo, who have amassed 15 acres in Little Haiti, want the district to include an innovation center, music and events spaces (already opened), an amphitheatre, sculpture garden and green space, much of it renovated from industrial buildings and spaces already there, as well as micro-unit housing and a much larger innovation center in later phases. This follows announced plans by Moishe Mana for a 25-acre development in Wynwood catering to tech companies, creatives and millennials, and a Miami Innovation District on 10 acres in downtown Miami, announced by Michael Simkins. Will these visions begin taking shape in 2017 as they work through the planning and development phases?
▪ The proliferation of pot-preneurs: Amendment 2’s passage on Nov. 8 means that the state’s medical marijuana law will become effective Jan. 3, and health regulators have six months from that date to put regulations into effect. The law requires that the state begin licensing dispensaries and issuing IDs by early October. There are still a lot of unknowns, although lawyers have seen increased interest from real-estate investors seeking plots suitable for growing or storefronts for dispensaries. And while all that rule-making goes on, South Florida startups have already been ramping up for the new industry.
▪ How Cuba will handle cruise capacity: The small Havana Harbor will be full with cruises nearly every day of the week in early 2017, including large ships like Royal Caribbean International’s 1,602-passenger Empress of the Seas and Norwegian Cruise Line’s 2,004-passenger Norwegian Sky. Previously, the only ship sailing from the U.S. to Cuba was Fathom’s 704-passenger Adonia. Cuban infrastructure and its ability to sustain a massive influx of new business will likely be top of mind in 2017. Also on the horizon: whether President-elect Donald Trump’s new administration will reverse relations with Cuba, potentially stopping the cruises altogether.
▪ The outcome of Miami’s Airbnb battle: A tiny fraction of Miami Beach’s hefty fines against short-term rentals have been paid, while the city continues to issue fines, as well as second, third and fourth fines for repeat offenses that add an additional $20,000 each time. Popular opinion continues to support short-term renting, while officials say there is no place for it in Miami Beach. At the county level, the story is completely different. Airbnb said it has been in discussions with Miami-Dade County to reach a tax agreement and possibly other regulatory agreements. The outcome of these discussions will likely be announced in 2017, which might change how Miami Beach approaches short-term renting.
▪ Big bump in cruise ship innovation: In September, Carnival Corp. announced that it was producing three original-content shows airing on major networks, a cruise industry first. Carnival Corp.’s Carnival Cruise Line and competitor Royal Caribbean International, as well as several other lines, have also announced that they’re building ships powered with liquified natural gas, the cleanest-burning fossil fuel, which once was a distant dream for the industry. With a slew of new ships in the pipeline, and new investments in areas such as China, expect the innovation trend to really take off in 2017.