South Florida developers are facing a wave of foreclosures and bankruptcies as rising interest rates, high construction costs, and cautious investors put pressure on the region’s real estate market. Thirteen development sites across Miami-Dade, Broward, and Palm Beach counties have either landed in bankruptcy court or are threatened by foreclosure, according to an analysis by The Real Deal.
Brian Tuttle, a developer behind the Mainstreet at Tuttle project in Royal Palm Beach, described his struggle to refinance $38.4 million in loans after banks reduced 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.” He added that potential investors “were all looking for a steal,” making it difficult to secure fair market deals.
In July 2024, Fuse Group filed a foreclosure complaint against entities controlled by Tuttle after he was unable to secure new financing. Despite meeting with over 200 groups in 14 months seeking equity partners, Tuttle’s efforts were unsuccessful. In September, his entities filed for Chapter 11 bankruptcy following a $47.4 million judgment awarded to Fuse Group.
Tuttle is not alone in facing these challenges. Industry professionals warn that this could be just the beginning of broader distress for South Florida’s commercial real estate sector. In 2024 alone, five development sites faced foreclosure.
The region experienced rapid growth during the pandemic as developers launched projects expecting continued increases in rents and property values. However, Federal Reserve rate hikes and roughly 30 percent increases in construction costs have undermined those assumptions. Projects that once promised strong returns now face thin or negative margins when accounting for higher borrowing expenses.
“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.”
Many troubled projects relied on short-term bridge loans—typically lasting one to three years—that were meant to carry them through early development stages until they could secure cheaper construction financing or sell the property. As these loans mature without refinancing options available and interest accrues at double-digit rates, developers find themselves stuck.
“You rerun the math at a higher interest rate and building costs up 30 percent, and the numbers don’t make sense anymore,” said Holly MacDonald‑Korth of KDM Financial.
Legal battles between lenders and borrowers have become common as developers attempt last-ditch bankruptcy filings or appeals to delay foreclosures. For example, Rok Lending acquired title to an Aventura medical office site at auction after winning a $19.9 million judgment; attempts by developer Marlon Gomez to stall proceedings through legal maneuvers failed.
On Miami River Cove—a planned townhome project—Gomez faces allegations from Fiorentino Family Office of defaulting on a $10 million loan using fraudulent documents; Gomez denies wrongdoing but did not comment further.
Lenders are increasingly challenging such delay tactics in court. Fuse Group asked bankruptcy court to dismiss Tuttle’s Chapter 11 petition for allegedly being used solely as a stalling tactic; an evidentiary hearing is scheduled for January 20–22.
Despite these difficulties, some developers continue working toward reorganization plans within bankruptcy proceedings: “We filed a Chapter 11 to protect the unsecured creditors so that [Fuse Group] didn’t wipe them out,” said Tuttle. “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 high-profile developments like Legacy Hotel & Residences at Miami Worldcenter are affected; Monarch Alternative Capital is moving forward with foreclosure after construction halted last year amid loan disputes exceeding $340 million.
Attorney Josh Rubens noted that default interest rates can exceed 20 percent over extended periods: “There may be a large balance that another lender is apprehensive about getting involved in… 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.”
