A version of this article first appeared in the CNBC Property Play newsletter with Diana Orrick. Property Play covers new and evolving opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large publicly traded companies. Sign up to receive future editions directly to your inbox. More than a decade ago, Carlos Rodriguez Sr., executive chairman of Miami-based real estate and hospitality investment firm Driftwood Capital, began acquiring real estate in Brevard County, Florida. Since the Space Shuttle program was canceled in 2011, there has been little demand, and supply has been extremely limited due to strict environmental regulations. However, Rodriguez had his own theories about the space race. “I saw a lot of bright futures, even though the bankers were telling me no, and even though a lot of people thought I was crazy, I said, ‘Guys, this could be something big,'” Rodriguez said. He oversaw the rise of the private space industry, including SpaceX and Blue Origin. He also saw an influx of defense industry companies that are part of the space economy. First, he purchased the Hilton Hotel from Blackstone and completely renovated it. The area’s potential was quickly proven and led him to the struggling International Palms Resort. “It was rock bottom, but we had the density. We had the number of rooms we needed if we were to redevelop it. So we bought it as a piece of land with a roof and were going to take the money out of that hotel until we were ready to build,” he said. And that’s exactly what he did. Construction on the new $420 million Westin Cocoa Beach Resort & Spa is scheduled to begin in September 2024 and open next year. Driftwood also invested in the Element Hotel and Crowne Plaza in Melbourne, Florida. Once the Westin opens, Driftwood will control about 11% of the region’s hotel inventory and 62% of the waterfront hotel inventory, Rodriguez said. “If you’re going to have so many top-level executives coming to see the presentation, and frankly, so many scientists, it makes sense to build a luxury hotel,” he said. Adding a conference center to the Westin, he said, “makes a lot of sense when you consider that companies like Amazon have satellite processing facilities at Kennedy Space Center, and we also have SpaceX, Blue Origin, L3Harris, Northrop Grumman, Lockheed Martin. I could go on and on.” Rodriguez sees in hospitality what David Steinbach, chief investment officer at global real estate investment, development and management firm Hines, saw in industrials just a few years ago. In an interview with CNBC’s Property Play last summer, Steinbach explained his strategy for investing in warehouses to support the infrastructure needed to set up data centers in space. A year later, he said he’s still bullish on the play. “Our investment in Space Coast is going well and we’re happy with it. Since this article was published, we’ve heard a lot of information about different companies doing different things,” Steinbach said in an interview on Friday, the same day SpaceX went public on the Nasdaq. “It feels like a lot of hype, but it will definitely go away once the IPO is over. I try to have an investor’s mindset. I still strongly believe in what that future holds,” he said. “In Florida, these things are going to take time to materialize and play out.” Meanwhile, Rodriguez said Driftwood continues to look for more land for development and more investment opportunities in the space real estate economy. He said he was encouraged by the creation of the U.S. Space Force in 2019 and casual conversations between new friends in the space industry. “I thought you were listening to Star Trek, which had fantasies about mining asteroids and collecting solar power in fields in space and building data centers in space,” Rodriguez said. “When you hear all this, you start to wonder what these people are smoking. But frankly, it’s becoming a reality faster than anyone imagined.”
