Billionaire Florida transplant says elite school shortfall in Miami hampers expansion
Billionaire Barry Sternlicht said Miami’s growth story is far from over even as a shortage of schools in the area, a key spillover effect from its recent boom, is hindering its ability to lure more residents.
“There are a lot of companies that would move down if they could get their employees’ kids into schools, which is impossible,” Sternlicht, the chairman and chief executive officer of Starwood Capital Group, said in an interview with Bloomberg Television’s David Westin. “I don’t think Miami has peaked. I think Miami and Florida have cycles because they get overbuilt, but they’re ever-higher cycles. You just have to have stamina to stay with it.”
Sternlicht, a real estate investing titan who moved Starwood from Greenwich, Connecticut, to Miami Beach, has emerged as a booster for South Florida. The pro-business environment has been a welcome surprise, making it an appealing alternative to high-tax states in the Northeast, he said in the interview.
But the area’s growing pains are evident in a housing shortage that’s creating affordability challenges, Sternlicht said. Schools have become a major pain point for the thousands that moved to Miami in recent years. Competition over spots in the handful of elite private institutions has been fierce, and efforts to lure in new schools have collapsed.
There are other broader, deep-seated education issues capping the city’s growth. SAT scores have been falling, and soaring house prices and lower pay have made it difficult to lure in highly qualified educators. Miami-Dade County also ranks last out of 23 cities in STEM graduates.
Sternlicht, speaking on the sidelines of the Milken Institute Global Conference in Beverly Hills, touched on topics from college campus unrest to commercial real estate distress. He said that property owners have been victimized by the Federal Reserve’s efforts to tame inflation, which created a balance sheet crisis that is stressing properties even as they command strong rents.
While the industry will eventually adapt to higher rates, property owners are facing a “rolling wall of thunder” as more loans mature and need to be refinanced or paid back, he said.
He still sees opportunities to invest in real estate, including data centers, and even ways to creatively seize on the Florida interest from companies such as Ken Griffin’s Citadel, which moved its headquarters to the region.
“They alone have decided they’re going to make Miami into the financial capital of the United States and they have the power to do that,” Sternlicht said in the interview. “If I was really smart, I would just buy all the houses in Coral Gables and sell them to the Citadel employees as they move down.”
