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March 25, 2021

Innovating in Commercial Real Estate: How Terranova CEO Stephen Bittel Creates Continuous Value in Planned Urban Development Projects

For most of human history, a valuable natural resource such as a water source or defensible high ground was often the reason for a community to develop. The ancient Egyptians famously settled along the Nile River, utilizing the vast resource to build their kingdom. The Inca Empire made their home high in the Andes Mountains, using terrace farming to allow them to build aqueducts that were so well-built they are still in use today. However, as industrialization and modernization began and took hold in the second half of the 20th century, communities were no longer geographically hindered by access to resources, and as a result a shift toward single-purpose zoning in urban areas occured. Planned urban development emerged as a response to this trend, orienting urban communities around the principles of convenience and efficiency rather than a natural resource or feature. The best of both worlds, these combinations of commercial and residential spaces create the potential for constant innovation, for those who have the creativity to see its potential.

There have been rumblings for a few years now about a “mass exodus” of millennials and Generation Z to the suburbs, a trend that appears to have been exacerbated by the coronavirus pandemic of 2020. The jury remains out though as to whether this will be a lasting trend, as those who leave cities and urban areas for the suburbs must grapple with the fact that they can't find their beloved urban amenities in the vicinity of their new big house with a yard. In particular, many planned urban development projects are constantly reinventing the wheel, moving beyond simply residential and commercial spaces to create value for their communities. One such example of this is Lincoln Road in Miami Beach. In the 1960’s it emerged as one of the nation’s first pedestrian malls when the road was closed to traffic, and has remained among one of the more popular destinations for visitors to the South Beach area, thanks in no small part to the work of Terranova CEO Stephen Bittel.

Today Terranova is one of the top commercial real estate firms in southern Florida, but Bittel spent over 40 years within the industry growing the business from the ground up to make it the success it is today. A native of Miami, Bittel grew up believing he would become a lawyer, taking the same profession as his father and grandfather before him. However, while attending Bowdoin College for his undergraduate degree in economics he found himself increasingly drawn to entrepreneurship. After spending a year traveling abroad and making international connections, Bittel found himself well-positioned to start his own real estate business, and although he had already started law school he jumped on the opportunity. While still attending the University of Miami School of Law and eventually passing the bar exam, Bittel worked out of his home to build Terranova into a viable company that was able to survive the real estate market recession of the late 1980’s and position itself for success.

After the market had rebounded, Bittel began growing his company’s portfolio considerably, capitalizing on the young and growing families of the 1990’s who were moving to the more suburban municipalities of Miami-Dade county by purchasing shopping centers and strip malls in the area. Although they were able to get larger amounts of square footage for less money, they also desired easy access to grocery stores, pharmacies, and other popular chains. Terranova sought to fulfill their needs by partnering with large brands such as Publix, Walgreens, and Starbucks across multiple properties, creating “retail anchors” that would draw in foot traffic for the smaller businesses in the shopping centers. Under this model Bittel grew Terranova to be a powerhouse within the commercial real estate industry, owning and operating office buildings, industrial parks, multi-family, and self-storage assets with a total property base of over 8 million square feet.

In the early 2000’s, the pendulum again began to swing the other direction, as Bittel realized his own young employees were seeking shorter commutes and a closer proximity to the going-ons of the city. Rather than moving out to the suburbs as they once were, they were instead purchasing and renovating older homes in urban centers. As a result Bittel had Terranova pivot, and the company began purchasing property for their portfolio in urban retail centers that were part of a walkable downtown core rather than the suburban shopping centers they had previously focused on. Among these purchases, Bittel made waves within the real estate industry by purchasing $52 million worth of property on Lincoln Road, with a second deal valued at $139 million, which was considered by many to be an exorbitant price at the time. However, his foresight proved correct, and just a few short years later for $342 million, over 44% with the equity multiples exceeding six times the original price paid and one of largest property sales in the history of southern Florida.

In spite of the sale, the company remains active in the properties, which has been the social center for Miami Beach since it was originally learned of mangrove trees for development in 1912. Brands such as Saks Fifth Avenue, Cadillac, and Packard quickly made a home for themselves on the street, which became a retail destination as a result. In the 1950’s, the popularity of the strip saw the city commission the acclaimed architect Morris Lapidus to redesign it in the neo-baroque “Miami Modern” style he had popularized and employed in other iconic Miami buildings such as the Fountainbleau Hotel and Eden Roc Hotel. Using gardens, fountains, and shelters to enliven the area, he transformed the area and paved the way for it to be billed as the “most magnificent mall in all of the Americas.”  The area proved to be so popular it was closed completely to traffic and evolved past retail, becoming home to the architecturally acclaimed 1111 Lincoln Road parking garage, the New World Center concert hall, and the newly restored performing arts venue Colony Theatre.

Areas like Lincoln Road will survive because of their ability to adapt to the swiftly changing needs of those who inhabit and patronize them. In 2019, the city announced a $67 million rejuvenation project that would be helmed by James Corner, a landscape architect who is most known for transforming New York City’s High Line from obsolete infrastructure to a thriving greenway and urban park. The coronavirus devastated much of the retail industry, but Bittel’s Terranova has remained flexible in their leasing structures, making unique arrangements with their tenants for rent such as charging the cost of occupancy plus a percentage of sales instead of the flat rate model. Additionally, during the holiday season their storefronts hosted a number of pop-ups from local retail vendors such as a plant store and a vintage boutique. Pop-ups have become an increasingly useful tool for businesses of all sizes to better get to know their customers, spread brand awareness for their products, and even test a market for a potential long-term setup. In fact, roughly one third of pop-up deals eventually translate into long-term leases.

This strategy proved successful, and Lincoln Road has shown its resiliency as the world slowly begins to open back up again and retailers push for space on the strip. New, unique concepts for the space include new locations for popular local restaurants, an artisan donut shop, and a pizzeria by a James Beard award-winning chef. Additional recent openings also include a fine art gallery, a CBD shop, a popular local optometrist chain, and an electric scooter store. Amazon even announced it would be the location of their flagship 4-Star Store. By keeping their retailers diverse and putting all efforts towards ushering in a recovery both for public health and economically, Bittel has ensured the road is seeing a surge in foot traffic, even as other areas of the brick-and-mortar space are still struggling to bounce back.

Recognizing the value that interactive activities and environmental awareness can bring to a community, most recently the Lincoln Road Business Improvement District has teamed up with the Fairchild Tropical Botanic Garden to create a new exhibition within the space. Utilizing their world-class collection of tropical trees, palms, and flowers, the Fairchild Gardens have created a new way of looking at use of space in an urban environment. Florida is one of the few places in the United States where orchids grow naturally on trees, and the project is also a conservation-based one in which they hope to educate the general public about the unique flora of the region. Staying current with today’s technology, the project is fitted with 120 QR-coded signs which visitors can scan to learn about each and every plant curated by Fairchild’s scientists, allowing them to be virtually guided through the space with pictures and videos. In addition to teaching visitors about the local landscape, the installation also encourages them to utilize green landscaping within their own residences, producing more oxygen in urban centers and fighting global warming as a result.

In order for anything to survive it must be flexible to the tides of change, innovating new ideas to keep it fresh in today’s fast-changing world. Stephen Bittel’s Terranova has seen many iterations during its 40 years operating within the commercial real estate sector, from the suburban shopping centers of the 1990’s to the urban developments within walkable cores that are popular today. Rather than fight the ebbing and flowing trends of real estate, Bittel has ensured that Terranova instead finds creative solutions in commercial real estate that ensure the needs of those living in the communities they serve are met.

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