During his decade living in Hollywood, Florida, Gevorg Shahbazyan always saw great potential in the parcel of land at 2100 North Federal Highway.
“It’s a promising location between Miami and Fort Lauderdale,” Shahbazyan said. “The next logical place [for development] it’s Hollywood town.”
Hollywood is located between Fort Lauderdale and Miami in Florida. Shahbazyan believes both areas are becoming too expensive, which he believes suggests strong demand for a 200-unit, 14-story building in Hollywood.
So it made sense that Shahbazyan, the founder and CEO of Starlife Group, would start his first high-rise project at this location in his own backyard.
“I met with the city before I bought the property, as part of my due diligence,” Shahbazyan said. “They gave me this presentation that listed the investment the city has already made and what they plan to do in the city. And we were talking about billions of dollars.”
With this confidence, he bought the 1.48 acre lot for $6.5 million by 2023, according to Florida YIMBY. It will be home to a 14-story mixed-use project called 21 Hollywood.
While 21 Hollywood represents a step forward for a company that’s been in business since 2018, it’s just one project that requires more coordination, Shahbazyan says. Previously, he has worked on lower density residential projects.
“This is the first high-rise project we’re doing, but that’s no different than just doing a single-family house,” Shahbazyan said. “Coordination and planning are a little different. It takes a lot more coordination, time and investment. But at the end of the day, building a building or a house or building a building with 200 units, they have a lot of similarities.”
Here, Shahbazyan talks to Multifamily Dive about risk management, construction financing and rates.
This interview has been edited for brevity and clarity.
Multifamily Immersion: South Florida has been a place where many developers have struggled over the years. How have you mitigated the risks?
GEVORG SHAHBAZYAN: We have brought in industry experts to join and work with us. So this is a way to mitigate the risks.
We went after one of the best structural engineers in the state. We started working with the best architect. Kobi Karp is one of the best in the world. Having A-plus people like that on your side in a project like this is what you need.
As early-stage developers making high-rise buildings with half a million square feet, you want the best on your side. You don’t want the best team working against you and your competition. You can also pay them a little more and have them by your side.
Are you planning to celebrate 21 Hollywood or sell it?
I would like to stabilize the building first, and then it depends on the market. The market is very uncertain today with rising construction costs and high interest rates. We thought it could be converted into condos and sold as condos. We’re not doing anything about it today, but that might be an option after stabilization, because I think the market will be much friendlier to condo units.
To maintain this flexibility, are you developing it with condo finishes in mind?
We’re putting in a lot of nice amenities and appliances. The overall finishes will be quite nice. So we’re also planning that, maybe in the future, we’ll have a couple of exit options. One option would be to refinance it and keep it. Then the other option would be to convert it to condos later, after stabilization, and sell it.
How did you finance 21 Hollywood?
When interest rates are rising and there is uncertainty in the market, you need to think very flexibly and adapt to the new environment. We tried to find very flexible financing.
Gevorg Shahbazyan
Permission granted by Starlife Group
For a developer, it makes sense to work with EB-5 because we’re paying a much lower interest rate than an average construction loan, which ranges from 8% to 10% or so. We’re at 5% or 6%, and sometimes even lower for EB-5.
It benefits us because it is flexible financing. It benefits investors because they get a green card, and it benefits the community and the government because we’re creating jobs and improving communities. With our 21 Hollywood project, we are creating 1,521 jobs.
How have the tariffs affected the construction of 21 Hollywood?
We were very close to having some problems. We have mitigated all these risks. We paid our vendors before because we knew that many things can change. At the time of the foundation I paid them for the finishes, appliances and everything. So we’ve got that covered.
If we wait a couple of months, we’d probably be stuck. The kitchen cabinets are up 25%, so we actually did our contracts maybe three months early. So it was like perfect timing.
What’s next for you after 21 Hollywood?
We have some large-scale projects that I don’t want to reveal right now, but at the end of the year or early next year, I will announce them. We have quite a few going, and we have many more smaller townhouses and single family homes. These types of projects are usually to cover our operating expenses as we build the bigger ones.
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