South Florida developers are facing a growing number of foreclosures and bankruptcies as high interest rates, rising construction costs, and hesitant investors challenge the region’s once-booming real estate market.
Brian Tuttle, a developer in Royal Palm Beach, has struggled to refinance loans for his Mainstreet at Tuttle project after banks lowered appraisals due to higher interest rates. “Banks were saying that due to interest rates, the appraisals had to be reduced significantly,” Tuttle told The Real Deal. “And with the appraisals being reduced significantly, you had to put more equity into the deals.” When he approached potential investors, Tuttle said, “they were all looking for a steal. So when everyone is looking for a below-market deal, the fair market deals just get overlooked. It was very frustrating.”
After failing to secure new funding despite meeting with over 200 groups in 14 months, Tuttle’s lender Fuse Group filed a foreclosure complaint in July 2024. By September, his entities filed for Chapter 11 bankruptcy following a $47.4 million judgment against them.
Tuttle’s situation is not unique. Across Miami-Dade, Broward, and Palm Beach counties, at least 13 development sites have entered bankruptcy court or are facing foreclosure proceedings. An analysis by The Real Deal found that five development sites faced foreclosure in 2024 alone.
The difficulties stem from short-term bridge loans—typically lasting one to three years—that were meant to carry projects through initial stages before securing longer-term financing or selling the site. However, rising borrowing costs and construction expenses have made it harder for developers to transition out of these loans.
“There’s more in the pipeline,” said Josh Rubens of law firm Kluger Kaplan. “I think there have been some extensions over the last 12 to 24 months that you will be seeing headlines about in the next six to 12 months, as those maturities hit.”
During the pandemic-driven migration surge, many developers acquired land and launched new projects expecting rents and prices would continue rising and that they could refinance floating-rate debt before rates increased further. But Federal Reserve rate hikes and roughly 30 percent jumps in construction costs changed those calculations.
“Florida, and South Florida for sure, still has demand,” said Brett Forman of Forman Capital. “But you had explosive growth brought on by Covid… and there are developers that may have gotten over their skis, perhaps [got] too aggressive.” He noted that much debt remains outstanding through this year and into 2026 on early-stage deals.
Holly MacDonald-Korth of KDM Financial explained: “You rerun the math at a higher interest rate and building costs up 30 percent, and the numbers don’t make sense anymore… [Developers] have a hard time getting a new loan for a deal that, on paper, doesn’t look like it’s going to turn the profit they thought.”
Recent legal battles highlight these challenges. In Aventura, Rok Lending took title to a medical office development site after winning a $19.9 million foreclosure judgment; repeated appeals by developer Marlon Gomez delayed but did not prevent the sale. On Miami River Cove—a planned townhome project also tied to Gomez—a receiver is trying to sell amid allegations of loan default; Gomez denies wrongdoing.
Lenders are increasingly challenging bankruptcy filings used as stalling tactics by borrowers hoping market conditions will improve. For example, Fuse Group asked bankruptcy court to dismiss Tuttle’s Chapter 11 petition for allegedly using it solely as a delay tactic; an evidentiary hearing is set for January.
“We filed a Chapter 11 to protect the unsecured creditors so that [Fuse Group] didn’t wipe them out,” Tuttle said. “And right now we’re working with the bank and the bankruptcy court to come up with the best plan to try and make it a win as much as possible.”
Even prominent developments such as Legacy Hotel & Residences at Miami Worldcenter are affected: Monarch Alternative Capital is seeking foreclosure on its site after construction stalled last year on what was originally financed with a $340 million loan from Silverstein Capital Partners.
According to Rubens: “There may be a large balance that another lender is apprehensive about getting involved in… These things just take time, and unfortunately time sometimes really works against the developers when you have a high interest bridge loan that’s ticking away with interest.”
MacDonald-Korth concluded: “Everybody thought South Florida is exempt from all of these commercial real estate issues… But it turns out, a year or two later, it’s not.”
