Winning in Wynwood
08.19.2017 | Quarterly Report - South Florida Commerical Real Estate

Winning in Wynwood

A few years ago, New York-based East End Capital noticed something unusual about real estate activity in Miami. “Historically we have tracked Miami, but we had never transacted here,” says Marc Gitto, who is a director at East End. “Then, after the recession, we saw a massive, fundamental market shift. Twelve years of condo supply was absorbed in three years.”

East End began analyzing Miami neighborhoods, looking at historical growth, employment data, population changes, crime statistics, median incomes, supply and demand characteristics, rents, and the like, in order to identify potential playing fields.

One area that looked attractive to East End was Wynwood, an area just north of downtown Miami that was in the midst of a dramatic transformation. Once a part of the country’s third-largest garment district, it had been in decline for decades. In 1987, a group of artists driven out of the South Florida Arts Center by escalating rents formed a nonprofit and bought an abandoned bakery to convert into artists’ spaces. Rechristened The Bakehouse, it attracted galleries and developers, and Wynwood began an unlikely conversion to an eclectic arts mecca.

East End wanted to be a part of that. “We saw an area that was in the early stages of an exciting transformation into a live-work-play neighborhood. It was attracting people in their 20s and 30s and who wanted to be around arts and culture,” Gitto says. “We made our first purchase in Wynwood in early 2014.”

A single purchase, however, was not what Gitto and East End had in mind. “When we did decide to focus on Wynwood we didn’t want to buy just one warehouse, but enough to play a meaningful role in shaping the neighborhood. One thing in our favor is that we are surrounded by smart, like-minded owners and developers.”

A couple of years ago, a massive rezoning from light industrial and industrial uses to general commercial and medium-density residential –– as well as a number of restrictions preserving Wywood’s character as an arts district ––“made development in the area more viable and attractive,” Gitto says.

In the few years since its first transaction, East End has become one of Wynwood’s most active players. About a year ago the company opened Wynwood Arcade, an adaptive re-use project on Northwest 24th Street tenanted with retailers and restaurants.

Recently, the company bought three warehouses adjacent to a site where East End’s Wynwood 25, a 289-apartment, 400,000-square-foot mixed-use project on Northwest 25th Street, is about to break ground.

The warehouses, built in 1951, are slated for adaptive re-use, Gitto says. “We plan to make some general infrastructural upgrades for retail reuse –– probably as an art gallery or something that speaks to the Wynwood culture.”

Adaptive reuse, Gitto says, is a common strategy for purchasers of South Florida’s urban industrial product.

Growing up in New York, Gitto says he didn’t initially pursue a career in commercial real estate. “After I realized I wasn’t going to be the starting shortstop for the New York Yankees,” he jokes, “I thought I’d go into management consulting or corporate finance. That being said, my father is in real estate, so it has always been a part of my life.”

After earning a BS from Skidmore College and an MBA from Northeastern University, real estate seemed like a natural fit. In the course of his career, he’s been intimately involved in managing over 10 million square feet of real estate, as well as the acquisition, recapitalization and disposition of billions of dollars of real estate properties. “For me, success is feeling good about my work and being excited about tomorrow,” Gitto says. “My father’s work ethic and values are things I took notice of early on, and this has been a great inspiration for me. “I love to see a project from start to finish. There’s a real feeling of accomplishment when you see a project through from the original underwriting to execution of the business plan.”