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Retail Space Is Hard To Find In South Florida Thanks To Migrating Restaurants

The lack of Covid-19 restrictions in the Sunshine State is attracting an “unrelenting migration” of restaurants to South Florida, according to the latest retail market reports from Collier International (CIGI).

That migration, in turn, has jacked up retail rates in Miami-Dade, Broward, and Palm Beach counties. It’s also made it extremely difficult for new restaurants and stores to open in high-trafficked areas, said Jonathan Rosen, Colliers’ director of retail services in South Florida.

“I think the over-arching message is [South Florida] over the past 12 months has been a safe haven for a lot of these out-of-market retail and restaurant operators,” Rosen said. “…They don’t have to worry about being closed down by the government or Covid-19 restrictions.”

And when the retail and restaurant operators do move from, say, New York, that attracts other New York operators to move to South Florida.

“They feel comfortable seeing their peers…coming down to this market,” Rosen explained.

Restaurateurs and retailers aren’t just coming from New York. Vacant “second generation restaurant space” is being taken over by restaurateurs from the northeast United States and South America, according to Colliers’ latest restaurant and retail reports.

“True Class A retail space is in the highest demand, as well as stores at grocery-anchored and mixed-use centers,” Colliers noted.

The scarcity of space has had an effect in Miami-Dade, where the asking leasing rates increased 12.5% to $38.98 per square foot this third quarter, from $35.54 a square foot year-over-year. Miami-Dade’s overall vacancy is 3.9% this third quarter, whereas in last year’s third quarter the vacancy rate was 4.5%.

In Broward, the asking rental rates increased 3.5% to $22.96 a square foot, from $22.18 a square foot year-over-year. The vacancy rate also fell to 5.1% compared to 5.4% in last year’s third quarter.

In Palm Beach County, third quarter rental rates climbed 9.8% to $24.98 per square foot, from $22.76 a square foot year-over-year. Overall vacancy also plummeted to 4.8%, compared to 5.2% at last year’s third quarter.

Rosen said the market is particularly strong in Miami’s Brickell, downtown, and the Wynwood Arts District, where retail and restaurants are in close proximity to offices. Not only are people starting to return to the office, Rosen said, but there are also new exciting tenants coming into the Greater Downtown Miami market such as Microsoft (Nasdaq: MSFT) opening an office at 830 Brickell and venture capitalists like OpenStore and Founders Fund moving into Wynwood. Retail is also doing well in other densely packed places such as Aventura, Fort Lauderdale’s Las Olas Boulevard, Miami’s Coconut Grove, and Miami Beach, Rosen added.

Although the Downtown Miami submarket does have an unusually high direct vacancy rate of 19.9%, according to Colliers’ Miami-Dade County Retail Market Report. Rosen explained that the retail in Miami’s Central Business District has been “left vacant strategically” due to an ongoing streetscape plan funded by the City of Miami and developer Moishe Mana, who owns 60-plus properties on or near the Flagler Street corridor.

“There are long-term plans to transform it into more of a retail and restaurant hub,” Rosen said.

There are also plans to construct even more retail. The Colliers reports note that 3.7 million square feet of new retail is under construction in Miami-Dade, 363,000 square feet in Broward, and 389,000 square feet in Palm Beach County.

Headquartered in Toronto, Colliers is a diversified investment management company and brokerage that specializes in commercial real estate. The company has offices in 67 nations. Its South Florida operations include Fort Lauderdale, Boca Raton, and West Palm Beach.

 

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Deco Capital Breaks Ground On Mixed-Use Project In Miami Beach

Deco Capital broke ground on the Eighteen Sunset mixed-use project in the Sunset Harbour neighborhood of Miami Beach.

Sunset Land Associates LLC and SH Owner LLC, affiliates of Miami Beach-based Deco Capital Group, are building 40,000 square feet of offices, 17,000 square feet of commercial space and a massive 15,000-square-foot penthouse in five stories. The penthouse will also have 15,000 square feet of outdoor space.

On 0.77 acres at 1733-1759 Purdy Ave. and 1724-1752 Bay Road, Eighteen Sunset will overlook Maurice Gibb Park, giving tenants an unobstructed view of Biscayne Bay. It will be within walking distance of the popular restaurants and shops and Sunset Harbour.

 

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Real Estate Experts Predict Rent To Keep Rising In South Florida

Real estate experts are predicting rent prices to keep rising in South Florida through the end of the year.

According to real estate information provider CoStar Group, by the end of October, rent had gone up here in Palm Beach County by 28 percent compared to this time last year. That’s compared to only a 17 percent rise in Broward County. And this month and next month, experts project rent to continue to rise by 8.9 percent.

CBS12 News spoke with a renter in Palm Beach Gardens, who started renting a place for $1,800 in 2020 to save up for a house until rent increased by 39 percent, leaving her and her husband wondering what to do next.

“We can pay the $700 increase, but now you’ve got gas going up, you’ve got electric going up, everyday items: food, everything going up. So now I’m going to have to short myself on those things in order to be able to cover for a place to live,” said Terisa Boyce.

Reasons rent is so high? Demand. There was a drastic increase of people who moved here during the pandemic, bringing the vacancy rate of places in Palm Beach County to only 3.7 percent.

 

Source:  CW34

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Madison Realty Capital Originates $310M Loan For Miami River Towers

Madison Realty Capital has provided a $310-million loan to The Chetrit Group for the first two phases of development of a 6.2-acre mixed-use site located along the Miami River connecting Brickell to Jose Marti Park.

The loan is also secured by land for the third, fourth and fifth phases of development, which is zoned and entitled for approximately 1,300 residential units.

The site will be developed in five phases spanning 2.5 city blocks and deliver 1,928 multifamily units with top-of-the-line amenities, including boat slips.

Madison Realty Capital’s loan will be used to finance Phase I of Miami River, which will deliver a 54-story, 632-unit mixed-use tower; and Phase II, which will consist of a two-building three-story development with 24,000 square feet of commercial space and a publicly accessible esplanade and river walk along the Miami River.

Funds from the transaction will be contributed to the Miami Dade Affordable Housing Trust Fund earmarked for the East Little Havana Area.

 

Source:  ConnectCRE

 

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Real Estate Wins in Miami’s Mayoral Elections

Real estate-friendly candidates and initiatives came out victorious across Miami in Tuesday night’s election, particularly in the mayoral races in the high-profile cities of Miami and Miami beach.

In Miami Beach, Mayor Dan Gelber handily won reelection, capturing 62 percent of votes for this third term. The Democrat had tied his campaign to a controversial referendum to curb partying in South Beach. The referendum proposed rolling back the last-call time to serve alcohol at establishments along famed Ocean Drive, to 2 a.m. from 5 a.m.

The majority of voters agreed with Gelber, with 56 percent approving the non-binding measure.

Proponents say the initiative will help curb disorderly conduct and crime at the wee hours of the night.

“They don’t have to have a 24-hour party. Our residents cannot be held captive to a business model that creates disorder,” Gelber said last night.

Real estate is also at play. Endorsers believe the measure will help revive a historic but shabby part of town, and soften its wild-party image incongruent with the expensive condominiums that surround it.

As Miami attracts corporate giants, developers, including Jorge Perez of the Related Group, say Miami Beach has fallen behind, partially because of the perception of mayhem. Related is looking for a marquee name to fill its One Island Park office development in Miami Beach.

Last month, a tape leaked of Gelber talking with unidentified developers about creating a Political Action Committee to fund city commission candidates that support redevelopment, according to the Miami New Times, which first reported about the tape. The mayor also said he could put initiatives on the ballot favored by developers as a way of bypassing the commission approval.

“In politics, money plays a big part …” Gelber is heard saying. “Tell us what you need to reimagine the areas we know need to be reimagined.”

A Political Action Committee supporting the Ocean Drive measure earned donations from Starwood Capital Group’s Barry Sternlicht and developer Alex SapirThe Real Deal reported.

Critics, like the Citizens for All a Safe Miami Beach, say the measure will cost as much as $40 million in lost tax revenue and drive up unemployment, which will only worsen crime in the area.

Across Biscayne Bay in Miami, Mayor Francis Suarez also cruised through reelection, winning nearly 79 percent of the vote. The Republican elected official was a shoo-in, having raised millions of dollars.

Suarez’s crowning achievement has been to rebrand Miami into the “Wall Street and Silicon Valley of the South” by courting companies to relocate while embracing cryptocurrency. Many took note. Corporate heavyweights BlackstonePoint72 Management and Microsoft, just to cite a few, signed office leases in Miami this year.

Developers have reaped the benefits of the corporate migration. Office landlords have kept rates high thanks to the new-to-market demands. Residential rents and home prices have skyrocketed over the past year due to the influx of moguls and high-earning workers.

Suarez will undoubtedly continue to lobby companies — now with voters’ blessings. “Today we embark on a new chapter to finish what we started,” Suarez said last night. (Representatives for the mayor did not immediately respond to a request for comment.)

The mayoral race in Sunny Isles Beach, a town littered with new oceanfront high-rises, will go to a runoff since no candidate captured more than 50 percent of the vote. Real estate attorney and town commissioner Dana Goldman will face another commissioner, Larisa “Laura” Svechin. 

Down south, Homestead Mayor Steve Losner squeezed out a victory, winning by 68 votes.

Out west in Hialeah, Esteban “Steve” Bovo, who earned an endorsement from former President Trump, won the mayor’s race.

 

Source:  Commercial Observer

 

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CRE Has Biggest-Ever Sales Quarter

Investors purchased $193 billion in commercial real estate during the third quarter, marking a reported record that surpassed pre-pandemic spending by 19%.

Apartment buildings, life-science labs, and industrial spaces to support the e-commerce boom drove the record period, according to data from Real Capital Analytics reported by the Wall Street Journal. The report notes sales of the properties surged so much, they canceled out shrinking office and retail markets and defied dire predictions of the sector’s crash.

The record period is part of a record year for the sector. The Journal reports sales in the first nine months of the year hit $462 billion, 10 percent more than the same time in 2019 and the highest of the same period from any other year.

Investors in commercial real estate previously outpaced pre-pandemic figures in the second quarter, spending $144.7 billion. This marks almost triple the purchases in 2020, but $50 billion less than the most recent purchases.

Data and analytics firm Green Street’s index for tracking property owned by REITs also showed a surge in activity. According to the Journal, the index is up almost 22 percent from its pandemic nadir and 8 percent from pre-pandemic times.

The boom is largely fueled by investors snagging a large number of single properties in a multitude of deals, rather than previous booms featuring plentiful portfolio sales, or sales of entire companies.

Green Street data show the hot commercial real estate market is being paced by industrial real estate and the multifamily market. The Journal reports that the industrial market has soared 41 percent in value since before the pandemic, while the multifamily market has seen a 19 percent increase in value.

The industrial market hit several records in the last quarter, including an all-time low in vacancy and record highs in net absorption and average asking rents.

In addition to new deals, developers in the space are setting records this year. A record 521.4 million square feet of space was under construction in the third quarter and approximately 340 million square feet is slated for delivery this year.

However, the surges in activity aren’t being felt universally across all parts of the industry. According to Green Street data, the value of shopping malls are down 13 percent during the pandemic, while the values of hotels have dropped 4.2 percent and office buildings have dropped 5.6 percent.

 

Source:  The Real Deal

 

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New Lease On Life: Apartment Projects Popping Up At Distressed South Florida Shopping Centers

Residential redevelopment of South Florida shopping centers is becoming more common, amid solid demand for rental housing and a slack market for retail space.

This month, Houston-based developer Morgan Group won a land use change to build 356 apartments on the site of a former Macy’s store and parking lot at Pompano Citi Centre, a shopping center in Pompano Beach on the southwest corner of Copans Road and Federal Highway.

“We haven’t seen many of these residential transformations at commercial centers, but I think you’ll start to see more of them as the centers unfortunately start losing tenants on a permanent basis,” said attorney Neil Schiller, a founder and shareholder of Boca Raton-based Government Law Group who represents real estate developers.

Shopping centers in densely populated areas are among the best in-fill sites for multifamily developments because they can meet the residential, occupational, and recreational needs of residents, said Art Falcone, co-founder and chief investment officer of Boca Raton-based Encore Capital Management.

“As South Florida gets basically built out, the opportunity now is combining live, work and play,” Falcone said. “People don’t like to be in cars and stuck in traffic.”

Falcone’s company acquired the 34-acre Fashion Mall in Plantation, demolished it, and is replacing it with Plantation Walk, a mixed-use redevelopment that ultimately will include 730 apartments. Tenants have started moving into two newly opened apartment buildings with 410 units, and Falcone expects construction of a third apartment building with 320 units to start early next year.

Falcone said Encore also has received certificates of occupancy for 130,000 square feet of new retail and restaurant space. Other completed projects at Plantation Walk include a Sheraton Suites hotel and a fully leased, 180,000-square-foot office building where insurance giant Aetna occupies half the space.

Newer mixed-use developments in South Florida commonly combine commercial space and rental apartments. Miami-based Terra developed Pines City Center in Pembroke Pines from the ground up with more than 300,000 square feet of retail and restaurant space and 400 apartments.

A positive market response to the residential options at Pines City Center encouraged Terra to acquire a 38-acre shopping center in Miami called Central Shopping Plaza, renovate the existing stores, including a former Kmart store that Target will occupy, and build apartments around them.

The first phase of that redevelopment, called CentroCity, will include 460 apartments, and will be completed in 12 to 18 months, said David Martin, CEO of Terra. By 2024, he said, Terra plans to build a total of 1,100 apartments and 250,000 square feet of office space at the CentroCity property in Miami’s West Little Havana neighborhood.

At Pines City Center, “what we saw was a very strong symbiotic relationship. Residents loved living around a retail offering, and retailers liked having customers who can walk to the store,” Martin said. “It becomes a lifestyle offering for the residents and obviously increases the number of repeat customers” for the retail tenants.

Another large-scale redevelopment is expected to bring a residential component to the Boynton Beach Mall. Columbus, Ohio-based Washington Prime Group won a rezoning of the 108-acre mall in Boynton Beach for a redevelopment that would combine as many as 1,420 apartments and up to 400 hotel rooms with 629,000 square feet of retail space. Washington Prime Group recently emerged from Chapter 11 bankruptcy with a new CEO.

However, shopping center owners like Beth Azor are unlikely to redevelop their properties in the absence of low occupancy rates. Azor is founder and principal of Azor Advisory Services, a Weston-based company that owns six shopping centers in Broward County.

She has no plans for multifamily development at any of her shopping centers because they aren’t distressed – three are fully leased – and because developers are building hundreds of apartments near her centers in Davie, Plantation and Sunrise.

“There are so many wiser, more experienced, richer folks doing apartments, that I like to watch their success from my vantage point,” she said, citing her career as an investor in shopping centers. “After 35 years in the business, I know how to do those, versus trying to learn how to develop multifamily properties.”

 

Source:  The Real Deal

 

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New York Developers Unveil Plan For South Beach Office Project

Two New York-based development firms are teaming up to build a Class A office project in Miami Beach.

Sumaida + Khurana and Bizzi & Partners are planning a five-story building with 56,177 square feet at 944 5th Street and 411 Michigan Avenue in the city’s South of Fifth neighborhood, according to a press release. An entity managed by principals of both firms bought the two vacant lots for a combined $8.9 million in June, records show.

The joint venture tapped renowned Spanish architect Alberto Campo Baeza to design the building, and hired Miami-based Cube 3 as the project’s executive architect.

The South of Fifth office project would be Baeza’s first building in the Miami area, and his first commercial building in the U.S., according to the release. Over the last decade, developers have enlisted world-renowned architects like Renzo Piano, Bjarke Ingels, Rem Koolhaas and the late Zaha Hadid to design luxury condominiums in South Florida.

The proposed office building will be made of white concrete, glass, and marble, featuring high ceilings, open and flexible floorplans, private outdoor terraces and floor-to-ceiling windows. The building is planned to also have a fitness center, multiple food and beverage venues, a large atrium and a private rooftop with water views.

The two development firms are collaborating on a wide range of commercial buildings across the U.S., focusing on office projects, the release states.

Founded in 2000, Bizzi & Partners focuses on developing high-end commercial and residential properties in Europe, the U.S. and Brazil, according to the company’s websites. Bizzi developed Manhattan’s 565 Broome SoHo and co-developed Eighty Seven Park in Miami Beach.

Sumaida + Khurana, which developed condos at 152 Elizabeth Street and 611 West 56th Street in New York, and its affiliates are currently developing more than 300,000 square feet of ground-up residential projects in Manhattan, with a total projected sellout of about $700 million, according to the firm’s website.

Demand for office space is rising in Miami Beach. The city’s vacancy rate was 8.2 percent in the third quarter, compared to 10.7 percent for the overall Miami-Dade office market during the same period, according to Colliers. The average asking rent hit $51.57 a square foot compared to $44.59 for the overall Miami-Dade market in the third quarter.

Last month, Pebb Capital and Maxwelle Real Estate Group formed a joint venture with Miami Beach developer Russell Galbut to convert the shuttered Bancroft Hotel at 1501 Collins Avenue into a high-end office property. The partnership bought the site for $47 million from a Galbut-related entity. Galbut submitted plans for the conversion to the city of Miami Beach in April.

In August, an entity tied to Scarsdale, New York-based Greenacres Management bought a renovated office building at 1688 Meridian Avenue near Lincoln Road in Miami Beach for $49.5 million.

 

Source:  The Real Deal

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Miami Board Rejects Design For Massive Wynwood Mixed-Use Project

It looks like it is back to the drawing board for the developers of a massive, nearly 1 million-square-foot, mixed-use project in Miami’s Wynwood.

L&L Holding Company and Carpe Real Estate Partners were dealt a setback on Wednesday, when the Miami Urban Development Review Board voted 4 to 0 to reject its proposed design for N29, an office, retail, and apartment complex.

The ruling is technically advice for Miami Planning Director Cesar Garcia-Pons, who has the ultimate say on approving the project’s design. However, UDRB member Dean Lewis told The Real Deal that the board’s recommendations are taken very seriously by planning staff.

The New York-based developers want to construct N29 on an assemblage of land at 31-95 Northwest 29th Street, 2925 Northwest First Avenue and 40-94 Northwest 30th Street in Miami.

L&L Holding Company and Carpe Real Estate are under contract to buy all of the properties, most of which are owned by the Rubell Family Collection.

The development site also abuts the 220,000-square-foot Gateway at Wynwood project.

N29 is planned to total 960,870 square feet, and range between eight and 12 stories tall. The project is proposed to include 200,000 square feet of office space, 523 residential units, 26,372 square feet of retail, 668 parking spaces, and 670 bicycle parking slots. It will also have a 22,000-square-foot, ground-floor public plaza and about 30,000 square feet of programmable space.

David Weitz, co-founder of Carpe Real Estate Partners, said the design of N29 drew “a lot of inspiration” from Oasis Wynwood, an office and retail project Carpe developed at 2335 North Miami Avenue. Weitz said that what makes Oasis unique is its large 30,000-square-foot courtyard.

While N29 already received the backing of the Wynwood Business Improvement District’s Design Review Committee in July, the project review at the UDRB was delayed in August after board members objected to the proposed building’s massing along 30th Street.

The Gensler architecture firm, which is designing the project, attempted to solve this problem by adding a 40-foot-wide paseo entrance on 30th Street and other artistic design elements.

But in the meeting on Wednesday, Ignacio Permuy, chairman of the UDRB, said the project still resembles a wall along Northwest 30th Street. “This is a huge massing that is 100 feet high and 400 feet long, and it is not being broken up,” Permuy said.

This isn’t the case along Northwest 29th Street, Permuy said. “You did a terrific job articulating and breaking up the massing and inviting the pedestrians,” he added.

Board member Robert Behar pushed for a vote to reject the current design.

“I cannot believe that there was an attempt to do what was requested,” Behar said. “That is the bottom line.”

 

Source:  The Real Deal

 

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‘Enough Buildings’: Brickell Residents Oppose Church Plan For Development

Samantha Castellano sits in Mary Brickell Park watching her 5-year-old son scale the rope ladder and slip down the slide. As a Brickell resident for 15 years, she’s seen residential and office towers clog the skyline. At nine months pregnant, Castellano, 38, said she has a big problem with First Miami Presbyterian Church looking to sell some of its land to a developer.

“I think there should be more green spaces and not more buildings,” said Castellano, who would prefer a museum or community space for her growing family. “There’s enough buildings already.”

Owning what is one of the last waterfront properties in Brickell, the church is looking to sell the parking lot and the Key Point Christian Academy building at 609 Brickell Ave. to a real estate firm for the development of a soaring residential high-rise.

Many area employees and residents told the Miami Herald they are concerned about increased traffic, limited outdoor eating options, job loss and the diminution of one of the last green spaces in the city’s financial center. Valeria Gomez, a Brickell receptionist, calls the area a hidden gem. During tours with people she works with, she advertises the many food options in the food truck plaza, located in the church’s parking lot, and the Brickell Key, Biscayne Bay and ocean views.

“You can take a walk and you don’t have to go all the time to Shake Shack or Mary Brickell Village,” she said. “It’s nice. This area is a favorite, at least for my clients.”

The 26-year-old said most days from 11 a.m. to 2 p.m. the plaza is crowded with residents who want to grab a quick bite or account managers who’d like a relaxing lunch outside the office. She recalled the crowds as she got off work after 6 p.m. earlier this week.

“All the tables were filled up, there were people waiting to get help from the food trucks and everything,” Gomez said.

Several of her clients have children enrolled in the K-8 religious school and she said she cannot imagine how the parent would feel with the school closing if the land is sold.

“You’re taking away an educational environment to make room for people outside of the area,” she said. “With that being said, I feel like it’s a terrible idea.”

Traffic jams are unbearable, she added, and a driver could be sitting in gridlock for 30 minutes when the Brickell Avenue bridge raises. With the introduction of another large condo building, she imagines matters getting worse.

“It’s still a beautiful city, I think we have to do a better job at taking care of it and remembering the people instead of the business,” Gomez said.

Church members plan to vote after services Sunday on the land sale. The Brickell-based firm, 13th Floor Investments, has proposed constructing a high-rise condo with retail and restaurants on the ground floor, as well as worship space inside the tower. If the congregation votes in favor of the proposal, the church could receive about $240 million.

Isaac Rondon, World Wide Bistro food truck owner, said he sells his gourmet burgers and Philly cheese steaks from 12 p.m. to 9 p.m. every day in the plaza. The 23-year-old relies on the Brickell customer base for sales and without the plaza he could lose his job. As a historic site in Miami, the church cannot be demolished or relocated.

The church was hit with a $7.1 million tax bill in 2018 by the Miami-Dade Property Appraiser, for permitting a portion of church grounds to a for-profit school and the food trucks, violating its religious exemption status.

John Wayland, who works in banking in Brickell, said the land is an underutilized asset and by selling a portion of the property, the church can finance additional resources and services.

“I’m not sure how many more condominium buildings Brickell needs to have going up, but I would also say that I understand the desire to be able to convert an asset into a monetary asset,” Wayland, 53, said.

Chip Hoebeke, a consulting director for a business firm, said the plaza is one of the few spaces in Brickell where visitors and locals can enjoy the comfort of street food in comparison to the influx of high-end, sit-down restaurants in the area. As a fan of the vanilla milkshakes from the World Wide Bistro, he described the food truck plaza as a space for dog owners and parents to decompress.

“This is kind of a release valve for that congestion, and at some point, when you have too much congestion it’s got a negative influence on everybody,” Hoebeke, 47, said.

 

Source:  Miami Herald

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