Former WeWork CEO Adam Neumann is bullish on South Florida and Saudi Arabia for the expansion of his latest venture, Flow, a community-focused residential property provider.
Prior to officially launching Flow in 2022 with $350 million from Silicon Valley venture capital firm a16z, led by Marc Andreessen and Ben Horowitz, the Miami-based company bought a handful of apartments across the southeastern United States, including two in the Miami area. About six months ago, the company officially opened its first two apartment buildings: Flow Miami and Flow Fort Lauderdale.
They are almost entirely leased, Neumann said at The Real Deal's South Florida Real Estate Forum this week at the Mana Wynwood Convention Center in Miami’s Wynwood arts district. Potential plans for expansion include "doubling down" on South Florida and Saudi Arabia, after opening the 238-unit Flow Narjis in the kingdom's capital city of Riyadh last month as it considers locations in Jeddah on the Red Sea and West Palm Beach.
In South Florida, net operating income "is growing in the buildings substantially compared to the neighbors," Neumann said. And even though rents in the overall Miami area have been flat or going down, "our rents keep going up.”
Rents at Flow Miami range from $2,223 for a 450-square-foot studio to upward of $5,000 for a 1,272-square-foot, three-bedroom residence. That is pretty much in line with similar high-end luxury apartments across Miami, where market asking rents range from $2,295 for a studio to $3,782 for a three-bedroom unit, according to CoStar data.
Flow can charge a premium because it focuses on developing a tightly knit residential community, generating returns on both Flow’s properties and for its tenants, Neumann said.
The difference between Flow and its competitors that offer many of the same amenities like wellness studios and yoga rooms? “It’s a feeling,” said Neumann at the conference. And it doesn't matter if a visitor is at Flow Miami or a future Flow property in Riyadh, “you will feel the exact same thing."
Representatives for Neumann declined multiple requests for a separate interview with CoStar News.
Flow owns and manages its properties outright — a key distinction from WeWork that mainly leased and subleased its spaces. Flow also develops its technology in-house.
The company’s tech allows residents to lead their own classes and events, letting them connect with their neighbors more easily. It also launched a new sales tool, helping curate content for brokers selling Flow's first condominium property called Flow House in Miami.
Flow House at 697 N. Miami Ave. is next door to Flow’s Miami apartment complex in Miami Worldcenter. The 466-unit condo offers studios starting at $450,000. One-bedroom residences begin at $600,000.
“Think of it as the Four Seasons for the young generation. It gives all these services, but it’s not that expensive. I’m not saying it’s cheap, but it’s not that expensive,” Neumann said.
Expansion plans
Neumann decided to jump across continents from Florida to the Middle East for Flow's expansion after talking with his partners at a16z and touring the region.
"We actually started traveling the Middle East because we were talking to a lot of their investors who come from that region. And we were telling them what Flow is going to do in Miami. And ... every single investor we met there was like: 'Oh, forget about doing this in the U.S. You got to come do this in the Middle East. Specifically, you should start in Riyadh,'" Neumann said.
But not every conversation with the team is so straightforward. Andreessen and Horowitz are "real partners" because they tell him the truth, even if it may not be what he hopes to hear, Neumann added.
"The reason they're such great partners is because they don't say in the board meeting what I want to hear, they say what I need to hear. Whenever they hear something that might not make sense, they fight with their foot down with really good discussions," Neumann said.
Neumann settled in the Miami area after being ousted in 2019 from WeWork, the coworking company he helped propel into a multibillion-dollar real estate empire before its first attempt at an initial public offering was scrapped amid corporate governance concerns. WeWork filed for Chapter 11 bankruptcy protection last year.
Neumann said he "couldn't be more proud of what we built" at WeWork, adding he has learned and grown a lot as a leader over the past few years.
"I hope that I'm a different CEO today than I was before," Neumann said.