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Wary Of Another Shutdown, Retail Landlords Sweeten Pot For Tenants

Some retail landlords are offering additional concessions to tenants in case the government mandates another Covid-related shutdown.

Landlords are including language in new leases that allows retail tenants to defer part of their rent if the government requires store closures, according to the Wall Street Journal. Many insurance policies did not cover pandemic-related losses, leading landlords to find new ways to keep struggling tenants in place.

In one case, EastBanc, which owns and operates 25 retail properties in Washington, D.C.’s Georgetown neighborhood, has offered to cut tenants’ base rent to 50 percent if the city forces a shutdown, the Journal reported.

In Detroit, development company Bedrock — created by billionaire Dan Gilbert — is allowing tenants to forgo their base rents if they provide the company with 7 percent of gross sales.

Throughout the pandemic, retail landlords have largely offered deferrals to tenants whose businesses have been decimated who were unable to pay rent. But other landlords have sued and sought to evict some chain retailers over millions of dollars in unpaid rent. Meanwhile, landlords are seeking to exclude pandemics as being labeled force majeure events — act of God — which they argue would make it more difficult to get financing if that language is included.

 

Source:  The Real Deal

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Prices Rise For Apartments With This Must-Have Feature

There is always a list of must-have priorities for buyers and renters — and they’re willing to pay more for it.

Even in a market partially paralyzed by the pandemic, places with this amenity are getting more looks than those without. Searches for New York City rentals with it are up 270% since before the pandemic started, according to real estate website StreetEasy.

“The number one thing that people are asking for is private outdoor space,” said Cindy Scholz, a real estate adviser at Compass Inc. in New York. “Particularly in rentals, where we have a huge inventory supply right now, the stuff that’s actually moving at a reasonable pace has private outdoor space.”

In New York City, where early coronavirus lockdowns kept residents inside cramped apartments for months, apartments with terraces in Manhattan are selling for 5.4% more per square foot than those sold this year before the pandemic lockdown, according to data from appraiser Miller Samuel Inc. That’s compared with a 1.1% drop in price per square foot for co-ops and condos without terraces.

While rents for apartments without outdoor space in New York have fallen 6%, they’ve only fallen 3% for those listed as having some outdoor space, according to Shane Lee, data scientist at RentHop, an apartment rental website.

In Brooklyn and Manhattan, renters are paying 33% more for two-bedroom apartments with outdoor space, compared with apartments without, according to RentHop. For example, the median two-bed with outdoor space rents for $4,728 in Manhattan, compared with $3,550 for similar apartments without the outdoor space.

Meanwhile, in Chicago, landlords are able to get up to $300 more per month for apartments with outdoor space compared with last year, while prices in the rest of the market haven’t changed significantly since the pandemic started, Lee said.

Ashish Thakkar, a pulmonologist and critical care specialist, has spent months treating Covid-19 patients as he splits his time between Manhattan and Kentucky. In July, he put down a deposit on an alcove studio with a private balcony in New York’s Financial District, knowing that the virus and lockdowns weren’t going away.

With all the uncertainty in the economy, he figured he’d be able to negotiate the price down, but the seller wouldn’t budge as much as he hoped. Still, he went ahead, knowing that he’ll have a place to enjoy, even if he needs to quarantine.

“It’s this novelty of being able to go out at the end of a long day and be on your own balcony, and still be socially distant but still be able to be outside and partake in a little bit of the magic that makes up New York,” Thakkar, 35, said. “It’s the best of both worlds. It makes quarantine that much more bearable.”

Renter interest in New York City has shifted from Manhattan to neighborhoods in outer boroughs including Ocean Hill in Brooklyn and Ditmars in Queens, partially due to the fact that outdoor space is more common outside of Manhattan, Lee said.

Prospective renters and buyers have been especially nit-picky about the types of outdoor space being listed. While landlords might classify a tiny balcony or fire escape as outdoor space, people are really looking for areas that can double as living spaces and are accessible from the same level as the rest of the apartment, Scholz said.

“People are very sensitive now to their environments because it’s going to double as their office,” Scholz said.

 

Source:  NREI

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Restaurants Can Reopen Dining Rooms In Miami-Dade Starting Next Week

Restaurant dining rooms in Miami-Dade County can reopen beginning on Monday, more than a month after restaurants were ordered to close indoor seating due to spiking coronavirus cases.

Miami-Dade Mayor Carlos Gimenez said restaurants will be able to operate at 50 percent capacity indoors, as long as tables are spaced at least six feet apart with a maximum of six people per table. He said the decision came after consulting with medical experts and the White House.

The countywide 10 p.m. curfew will remain in effect. Gimenez said that the county will revisit pushing the curfew to 11 p.m. after Labor Day weekend. He also added that he plans to keep the beaches open, though that can change.

Individual cities may be stricter with the reopening guidelines, but cannot be less restrictive than the county.

Gimenez called it the “first step” and said “we must keep our guard up.”

The announcement comes as the uptick in coronavirus cases begins to slow in Miami-Dade. The 14‐day average positivity rate in Miami-Dade is 10.29 percent as of Tuesday, according to the county’s New Normal dashboard.

To date, Miami-Dade has had 153,385 cases and 2,277 deaths. Statewide, 605,502 positive cases of Covid-19 have been reported, and nearly 11,000 deaths, according to the Florida Department of Health.

Gimenez said restaurants will be required to keep doors and windows open if possible, and keep the air conditioning running. Diners can only remove their masks once food and drinks are present on their tables, and must wear masks when they leave their tables.

Countywide, a number of restaurants have either closed permanently, been unable to offer outdoor dining, or have decided to close temporarily due to the effects of the pandemic on their businesses. Shortly after the mayor announced restrictions in July, restaurant owners protested that decision.

Casinos and bars will remain closed, though Gimenez hinted that casinos may be able to open sooner than bars.

 

Source:  The Real Deal

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Miami Beach Approves Co-Working, Co-Living Project

Miami Beach officials approved URBIN, a coworking, co-living project that includes wellness and a hotel.

URBIN Miami Beach Partners‘ project was approved for 62,000 square feet of development, including four floors of coworking with 139 desks, 49 co-living units, 56 hotel rooms, and a 4,000-square-foot wellness center at 1234 and 1260 Washington Ave. There would be a garden and lounge on the roof. The project would include a small retail space.

The developer, Rishi Kapoor, would demolish a retail building on the property and renovate an office building. The new building would rise six stories.

 

Source:  SFBJ

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August Brings No Sign Of Rent Apocalypse

Tenants across the country are largely still paying rent despite high unemployment and waning government aid, a new report found.

About 87 percent of apartment households made a full or partial rent payment by Aug. 13, according to the National Multifamily Housing Council’s Rent Payment Tracker. That was only a 2-point drop from the same period a year ago, when the economy was humming.

NMHC surveys 11.4 million units of professionally managed apartment units across the country.

Doug Bibby, the organization’s president, said the rent collections could decline, however, as relief through the CARES Act dries up. The federal unemployment benefit of $600 a week expired in the last week of July, and job growth is not likely to make up the difference.

“With that support now having expired more than two weeks ago, households across the country are grappling with even greater financial distress,” Bibby said in a statement.

Unemployment is steadily declining across the U.S. In July, the U.S. unemployment rate was 10.2 percent, down from its peak of 14.7 percent in April. Still, the U.S. has lost about 13 million jobs since the coronavirus gained a foothold in February, according to the Department of Labor.

For the unemployed, the next few weeks, or months, could be tough. Democrats and Republicans have failed to compromise on a new stimulus package, which was expected to extend the unemployment bonus, albeit at a diminished level, and perhaps include another round of $1,200 stimulus checks.

In addition, eviction moratoriums are also set to expire in many states, and some landlords are eager to move out tenants who have not paid rent for months.

 

 

Source:  The Real Deal

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Retail Center In Miami Health District Fetches $349 PSF

Civica Center, a retail complex in the Health District of Miami, sold for $26 million.

RP 1050 NW 14th Street LLC, an affiliate of Dallas-based Rockpoint Group, sold the 74,463-square-foot retail property at 1050 N.W. 14th St. to TCD 212 Civica FL Property, an affiliate of Boston-based Taurus Investment Holdings. A10 Capital provided a $23.71 million mortgage to the buyer.

The price equated to $349 per square foot.

The two-story building was built on the 1.8-acre site in 2015. This is the first time it has sold.

Recent tenants in Civica Center include Quest Diagnostics, 7-Eleven, Montessori School, Gateway Dental, Salsa Fiesta, and Dunkin’.

In addition to the deal for Civica Center, Taurus paid $4.53 million to RCR Management for the neighboring building of 4,768 square feet at 1000 N.W. 14th St. It formerly had a bank.

There haven’t been many retail property sales in South Florida since the Covid-19 pandemic started. The drops in tourism and office occupancy have especially hurt sales in entertainment districts and downtowns. The Health District, however, remains busy as it’s home to major health care employers such as Jackson Health System and the University of Miami Health System.

However, the future of this property is likely to look very different.

Taurus said it plans to redevelop the site into a 62,500-square-foot facility with medical office and ground-floor retail and then construct a 460,000-square-foot medical office building on the parking lot behind the building.

“We feel that this acquisition is uniquely located in the heart of the Health District, and will provide much needed supply of medical office and research space to the area, resulting from new allocations made to medical research and development, due to the Covid-19 pandemic,” Taurus CEO Peter A. Merrigan said.

 

Source:  SFBJ

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Medical Office Building Sales Fell Nearly 50 Percent In Q2, But The Sector’s Outlook Is Strong

The volume of MOB investment sales transactions in the second quarter of 2020 totaled around $2.2 billion, a 43 percent decrease compared to a year ago. In the first quarter of 2020, MOB investment sales volume reached $3.7 billion, according to data firm Real Capital Analytics (RCA).

The CoStar Group, another provider of commercial real estate data, pegs MOB investment sales volume at around $2.1 billion in the second quarter, a drop of 54 percent from $4.7 billion from a year ago.

“The volume of sales has absolutely hit pause, it hit the brakes really hard in the second quarter. You saw a significant drop in sales volume,” says Keith Pierce, research manager for Southeastern region with real estate services firm Transwestern. “The price per square foot did not really shift that much for those sales that did close. But by and large, just everybody froze in late March and largely stayed frozen until sometime in June.”

Average cap rates on transactions involving MOB assets remained at 6.6 percent at the end of the second quarter, flat with the figure from a year ago and the first quarter of 2020, according to RCA. CoStar pegs average MOB cap rates at 6.7 percent, also registering no change from the previous quarter.

“I anticipate seeing somewhat of a flattening,” says Russell Brenner, president of the medical office and life sciences division with real estate investment firm CA. “Once the market truly opens up again and lenders, which have been very selective in where they lend, come back into the market in droves and in a more significant way, I think you may well see cap rates continue to fall. But for probably the next two three quarters, I think it will be a largely flattening of cap rates.”

Earlier during the pandemic, many Americans largely postponed elective procedures, which put a dent on revenues for medical office tenants. But in states where those facilities are reopening, industry sources are reporting pent-up demand.

“We saw very few delinquencies, perhaps a handful of rent deferral requests, but by and large, the healthcare medical office tenancy as a whole stood up very well,” says Brenner. “Certainly now that elective procedures are back on in most parts of the country, MOBs are poised to bounce back and will continue to be a stable and reliable asset class.”

“Medical practices are running at 90 to 95 percent of pre-pandemic levels,” says Steve Hall, senior managing director for healthcare advisory services at Transwestern, who expects this level of demand to continue through the end of the year.

“Many of the company’s tenants are back to 80 percent of pre-pandemic levels of procedures and services,” says Jon Boley, senior vice president of acquisitions and development for HSA PrimeCare, a firm that develops, leases and manages medical facilities.

“The reason these businesses are not back to 100 percent is because they are having to do above-standard cleaning in order to disinfect surgery centers throughout the day,” Hall notes. “A factor that will shore up MOB assets in the future is the dearth of new construction happening right now. During a pandemic, a lot of people aren’t pulling the trigger on a brand new construction. The lack of construction going on right now I think is really going to keep the market strong since there is not going to be oversupply.”

 

Source: HREI

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Investors Searching For Hotels In Distress

South Miami-based multifamily developer The Estate Companies has purchased the Ramada Hotel in Hialeah for $15.25 million.

“The distressed hotel sector has created investment opportunities that firms like ours are ready and able to capitalize on,” said Jeffrey Ardizon, a principal of The Estate Companies, in a statement.

The purchase of the five-acre site, at 1950 W. 49th St., closed Friday, according to the release. The Downtown Miami-based LV Lending provided $11.5 million in financing.

The Estate Companies does not have any plans finalized for the site, according to its spokesperson.

Other multifamily developers are expected to buy South Florida hotels, said J.C. de Ona, southeast Florida division president of Centennial Bank, to convert the buildings to apartments or redevelop the land.

“The pandemic has spurred distress with the hotels. Even if an owner is able to carry it, the owner may have to make the decision whether they are going to carry the hotel long term. The longer the pandemic goes the more distress you’re going to see.”

Hotels, especially older ones, that catered primarily to the airports or ports are more likely be bought for redevelopment, de Ona said. Those in areas with a growing renters population, including Hialeah, may have particular appeal.

The developer acquired the 258-key hotel, which opened in 1970, because of its location.

“The site is situated on arguably the City of Hialeah’s busiest corridor and main artery. The City of Hialeah is a market with very high barriers to entry, strong demographic support and close in proximity to some of the largest employment hubs in South Florida,” Ardizon said in a statement.

Homeowners in the area saw values rise in 2020. Hialeah experienced one of the biggest gains on its existing property values from 2018. Values increased by 6.7 percent. Rental rates are among the least affordable in the country, according to a 2020 report by WalletHub.

The Estate Companies opened in 2012 and has built a handful of apartment buildings across Miami-Dade and Broward. Five projects in the works including locations in Downtown Miami, the Health District and Dania Beach.

 

Source:  Miami Herald

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Miami Beach’s Lincoln Road Finds 3 New Uses For Vacant Space Due To Pandemic

Refusing to sit idle, the Lincoln Road Business Improvement District (BID) and the brokerage community in Miami Beach have created alternate uses for vacant retail space, empty parking garages, and the open-air pedestrian promenade – through arts, culture, and fitness activations – to safely attract consumers and drive traffic to stores and restaurants in the open-air dining and shopping district.

 

  • From Boutique to Ballet: the Lincoln Road BID and The Comras Company, one of South Florida’s leading retail leasing/development companies, have transformed a 5,344 square foot former BCBG boutique into a popup residence for the Miami City Ballet to practice their pirouettes and plies before the public. Mannequins have since been replaced by the ballet’s principal dancers, attracting a new type of “window-shopper” interested in safely enjoying the ballet amid the pandemic, while cultural institutions remain closed.

 

  • From Garage to Gym: With many parking lots sitting empty, the Lincoln Road BID has converted the iconic Herzog & de Meuron-designed garage at the 1111 building into an expansive 25,000 square foot fitness studio. Although the iconic building can accommodate 550 people in its open-air space, the complimentary bootcamp and yoga classes are limited to 70 participants to ensure social distancing practices are maintained – the floors are also pre-marked with squares spaced 10 feet apart.

 

  • From Street to Symphony: Home to the world-renowned New World Symphony, which remains closed due to COVID-19, the Lincoln Road District has tapped into its talented tenant, employing musicians from the symphony to entertain pedestrians, diners, and shoppers from golf carts, driven up and down the Road. The roving musicians are in constant motion to ensure crowds don’t gather, and provide consumers with the arts and cultural experiences they’ve come to love from Lincoln Road at a time when the symphony can’t perform for large audiences and social distancing remains critical.

 

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South Florida Medical Office Buildings Trade For $313 Per Square Foot

Berger Commercial Realty/Corfac International Senior Vice President Stephen Hyatt represented the seller, TDH 2866, LLC and TDH 2870, LLC, in the sale of two freestanding medical office buildings located at 2866-2870 East Oakland Park Blvd. in Fort Lauderdale.

Sun Medical Center consists of two newly renovated buildings located adjacent to one another. The 2866 building comprises approximately 12,113 square feet on 3 floors. Broward Health, one of the 10 largest health systems in the U.S., is the main tenant in the building. The 2870 building comprises 1,940 square feet. Extensive renovations featuring Class A medical finishes were completed in 2018. The subject also features ample surface parking to accommodate medical use.

Sun Medical 2866 LLC, a New York-based investor, purchased the 1967-built, building for $4.4 million. The deal closed July 24. The buyer intends to occupy a portion of the building for its own medical practice.

The property is located on well-traveled East Oakland Park Boulevard, just east of Bayview Drive and west of the Intracoastal Waterway.

“There is tremendous demand for medical office buildings due to the stability of the sector and historically long-term tenants,” commented Hyatt. “The medical office building sector continues to be at the forefront of leading real estate sectors, even in this challenging market, and continues to show encouraging signs for acquisition as well as development.”

The buyer was represented by Lyman Phillips with Karlington Commercial.

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