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Starwood Cancels Purchase Of Miami Beach Office Building

Days before it was slated to close on the purchase of an office building in Miami Beach, Starwood Capital Group has pulled out of the deal, according to a source directly involved in the matter.

Miami Beach-based Starwood, one of the largest real estate investors in the world, was under contract to purchase The Lincoln, at 1691 Michigan Ave., for $92.5 million from CLPF Lincoln LLC, in care of Washington, D.C.-based Clarion Partners. The Miami Beach City Commission approved the assignment of the ground lease for the property July 20, clearing the way for the purchase. The price of the pending deal was disclosed in city records.

However, Starwood terminated the contract July 26, according to a source close to the deal. That means Starwood will likely lose the $2.5 million deposit it made when the property went under contract. If Starwood had pulled out of the deal only a week earlier, it could have recovered that money, according to the source.

The Lincoln consists of 118,658 square feet of office space, 43,166 square feet of retail and a 709-space parking garage.

Source:  SFBJ

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Billionaire Stephen Ross’ Deauville Resort Redevelopment Plan Could Soon Be Up For A Vote

Miami Beach voters will likely decide Nov. 8 whether billionaire Miami Dolphins owner Stephen M. Ross can redevelop the site of the shuttered Deauville Beach Resort with the height increase he wants.

The City Commission on Wednesday approved putting the item on the ballot on first reading. It would take a second vote by the same body to officially put it on the ballot. Ross’ plan would create a “North Beach Oceanside FAR Overlay” district to raise the maximum height on the Deauville site to 375 feet, and permit more building density.

The resolution doesn’t mention the exact size of the project the developer would build.

Ross, the chairman of New York-based Related Cos., and New York-based architect Frank Gehry presented the Commission with preliminary plans for a 175-room hotel tower and a 150-unit condo tower.

Built at 6701 Collins Ave. in 1957, the 540-room Deauville closed in 2017 following an electrical fire and never reopened.

It’s usually difficult to demolish properties with a rich history in Miami Beach, but this hotel fell into disrepair following the fire and a judge ordered its demolition.

The hotel is currently in the process of being torn down after Miami Beach officials cited it for numerous code violations related to the deteriorating condition of the building.


Source:  SFBJ

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8-Story Building Proposed In Allapattah

A developer has proposed an 8-story self-storage facility in the Allapattah neighborhood of Miami.

The city’s Urban Development Review Board on Wednesday will consider plans for the 16,706-square-foot site at 760 N.W. 21st St. Mlab International LLC, managed by Ricardo Ordonez and Luis Farjardo in Miami, purchased the property for $875,000 in 2020. It previously had an automotive business.

Farardo said he is the developer and will handle construction, while Ordonez is his partner. He said Public Storage will manage the facility.

The building would total 103,819 square feet, with 2,138 square feet of ground-floor retail and the rest of the space for self-storage. There would be 12 parking spaces.

Blitstein Design Architects in Coral Gables designed the project. Marin Mitrasinovic of Canada was hired to create a mural on two sides of the building.

The occupancy of self-storage facilities in the area is 98% and rental rates continue increasing, Farardo said.

“As more and more multifamily projects are delivered in Wynwood and Allapattah, demand grows,” he said. “Additionally, many residential units delivered are smaller in size, including several micro units.”

Many experts say Florida is among the top markets in the nation for self-storage.

According to RentCafe, there was 4 million square feet of self-storage space set to come online in South Florida in 2022, a 30% increase over deliveries in 2021. That compares to 40 million square feet of existing self-storage space. Rents have surged 17% over the past 12 months with an average cost of $168 for a 10-by-10-foot unit.

South Florida has the fifth-most self-storage construction in the nation.


Source:  SFBJ

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Miami’s CBD Is Getting Mind-Boggling Office Rent Increases

For the first time in history, the average asking rent for office space in Miami skyrocketed to more than $50 per SF in Q2.

Brickell is dominating the market — its 42% year-over-year rent increase surpassed Manhattan and Los Angeles, according to a JLL report.

Migration of America’s top talent to Miami is the main factor driving high rents and making Miami’s office market the hottest it has ever been, Blanca Commercial Real Estate founder and owner Tere Blanca told Bisnow.

“[Miami] is a place where you can attract talent, and the talent has migrated in big numbers during the pandemic and today,” Blanca said. “With a very diverse, educated workforce and population, companies are excited to be in a city that is growing in many ways [and experiencing] a business expansion.” 

Florida added 10,522 new tech jobs last year, the second most in the country, according to the Computing Technology Industry Association. CompTIA ranked the Miami metro fourth in the U.S. for net tech jobs added, and LinkedIn reported a 30% year-over-year increase in IT and software jobs in Miami in 2021.

Blanca CRE has been a player in the industry for over 35 years. According to the firm, office development is being spurred in Brickell and Wynwood by remote work and zoning improvements.

“Brickell and Downtown have experienced a lot of this dynamic … of new people moving and choosing to live in the urban core,” Blanca said, adding that the pandemic accelerated a workforce migration that industry leaders “felt would happen sooner or later.”

The Wynwood Rezoning project, approved in 2015, led to an explosion of interest from developers. As office buildings joined residential, corporate users and investors began flocking in.

Blanca CRE was the agent when Blackstone purchased two office buildings in Miami in 2021, and Blanca said its acquisition spurred more office activity.

“That unleashed an activity that was unprecedented in terms of companies coming here, many in the financial services sector and then later the tech industry and fintech industry,” Blanca said.

Heavy hitters such as Apollo, Babylon and Citadel have come to Brickell in recent years.

Other blue-chip, out-of-town tenants moving in include Microsoft Corp. and Marsh, a subsidiary of Marsh & McLennan Agency, which both moved into 830 Brickell. For coworking firms like WeWork and Industrious, the demand is at an all-time high.

“They have waiting lists, so there are many companies that have entered into licensed agreements with WeWork, IWG, Industrious and so on because they are recruiting talent, they are growing their accounts here and waiting for their permanent spaces to be delivered,” Blanca said. “We expect there is going to be tremendous demand for space on a longer-term basis as each company expands and as the executives choose where they are going to reside.”

As that happens, office demand may spill into other neighborhoods, she said.

For WeWork, this has meant finding new ways to maximize its “inherent flexibility” to accommodate the surplus of out-of-town tenants.

“We continue to see strong demand in Miami where, as shared in our Q1 2022 earnings report, we saw over 90% occupancy and accounted for 9% of commercial office leases despite representing approximately 1% of the market stock,” WeWork Territory Vice President Suzie Russell told Bisnow via email. “As a result, we have waiting lists in most of our Miami locations.” 

Russell said demand is broad-based across company sizes and industries, including tech and finance.

Initial Q2 key findings provided to Bisnow by Blanca Commercial Real Estate show that the flight-to-quality trend is positioned to continue into the foreseeable future, especially in Brickell, Wynwood, Miami Beach and the Miami Design District. That will continue driving pricing up and vacancy down.

Asking rents at 830 Brickell, considered the top-tier building in Brickell, are between $125 and $150 per SF, a $25-per-SF increase over Q1.

“This trend is extremely prominent in Tier 1 Brickell office buildings where rents increased 7.2% from the previous quarter with some landlords increasing rents between $5.00 – $7.50 per SF,” Blanca CRE said in a report. “This growth will be especially prominent in Miami’s CBD where 40% of new to market tenants are looking for space.”

Miami’s office vacancy rate is at its lowest level in eight quarters.


Source:  Bisnow

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300-Unit Apartment Complex Proposed In Miami’s Wynwood

New York-based Fisher Brothers Management has proposed an apartment building with ground-floor retail in Miami’s Wynwood Arts District.

The city’s Urban Development Review Board on July 20 will consider plans for the 1.39-acre site at 2200 and 2250 N.W. First Ave., plus 2201 and 2229 N.W. First Court. It’s the former home of the Miami Rescue Mission.

FBWS Development Senior LLC, an affiliate of Fisher Brothers, purchased the property for $18.6 million in 2021.

The FB Wynwood building would total 359,694 square feet in eight stories, with 308 apartments, 21,724 square feet of retail and 122 parking spaces. The developer would pay $2.2 million to the Wynwood Parking Trust Fund, which promotes parking development in the neighborhood, to reduce the parking requirements at the project.

Source:  SFBJ

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Office Project Could Replace Gas Station In Miami Beach

Arkadia Property Group plans to redevelop a gas station in Miami Beach into an $11 million mixed-use project centered on office space.

The city’s Planning Board will consider the application July 26 for the 0.36-acre site at 1840 Alton Road. The property belonging to Alton Road Supreme Services, owned by Mario Suarez in Hollywood, currently has an Exxon service station and cash wash.

It would be developed by 1840 Alton Road Partners LLC, co-owned by David M. Aaron and Richard Kilstock, the managing principals of Bal Harbour-based Arkadia Property Group.

With an estimated cost of $11 million, the project would total 67,641 square feet in five stories. It would consist of 3,300-square-foot of ground-level retail, 36 parking spaces on the second level, 17,113 square feet of office space on the third and fourth floors, and a fifth floor containing an 8,000-square-foot live/work unit.


Source:  SFBJ

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Recently Built Condo In Miami’s Wynwood Hit With Foreclosure Lawsuit

The recently completed Wynwood Atriums condominium in Miami could be seized in a $4.7 million foreclosure lawsuit.

Triumph Capital Partners LLC filed a foreclosure complaint June 28 against 136 NW 26 St Project LLC, along with loan guarantors Hernando Anthony Carrillo and Sherry Johnson Carrillo. It targets the 32 residential condos and the two ground-level commercial condos at 136 N.W. 26th St.

The five-story building was completed a few weeks ago. None of its units have sold, according to county records.

All of the residential and commercial units in the building had been presold, and none of the buyers have sought to back out of their contracts, said Coral Gables-based attorney Bruce M. Bounds, who represents the condo developer.

Construction was delayed by the Covid-19 pandemic. A shortage of construction workers and supply chain challenges delayed the arrival of crucial building materials for months, but the condo is now functionally complete, he said.

The developer secured a $5.5 million mortgage in 2019. According to the lawsuit, the borrower defaulted on the loan by failing to make payments from Feb. 28 onward, and owes $4.7 million in principal, plus interest and fees.

Source:  SFBJ

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Continuing Interest In Miami Beach Leads To New Wave Of Luxury Hotels

If there’s one U.S. destination that’s remained remarkably hot throughout much of the pandemic, it’s Miami Beach.

And luxury hotel developers have taken note: The market is awash with major hotel upgrades and new development.

One of the marquee projects is a revamp of the Raleigh Hotel at 1775 Collins Ave., which will join the Rosewood Hotels & Resorts brand by 2025.

Up the road, preliminary plans from Miami Dolphins owner Stephen Ross call to acquire and redevelop the site of the former Deauville Beach Resort at 6701 Collins Ave.

A major rebuild and restoration of the storied Shore Club at 1901 Collins Ave. into a boutique hotel and residences is also in the works, with new owners planning to tear down the newer structures on the site and restore the original, circa-1950s art deco buildings.

Similarly on track for a refresh is the Delano South Beach at 1685 Collins Ave., part of Accor’s Ennismore arm, which like the Shore Club has been shuttered since the early days of the pandemic. Acquired by Cain International in late 2020, the real estate investment firm announced plans for a “strategic repositioning” of the property.

Whether it will remain flagged under the Delano name remains unknown, however, with Ennismore telling Travel Weekly that it has no information “as to what ownership intends to do with the asset.”

Meanwhile, Developer OKO Group revealed plans for an Aman property at the site of the former Versailles Hotel at 3425 Collins Ave. Also planting a flag is luxury player Bulgari Hotels & Resorts, whose planned Miami Beach outpost, set to open at 100 21st St. in 2024, will also be the brand’s first in the U.S.

Miami Beach’s continued upscaling has helped spur a flurry of additional renovation projects, said Steve Adkins, chairman of the Miami Beach Visitor and Convention Authority.

“I think you’re going to see more remodeling and scaling up taking place across the beach, because if you’re not the best in your class, it’s going to be tough for you to retain that traveler when they have other options,” he said.

The Confidante Miami Beach, a midbeach resort located at 4041 Collins Ave., for example, is currently undergoing a roughly $60 million refresh and is on track to relaunch under Hyatt’s luxury Andaz flag by 2024.

“These types of hotels are going to help propel Miami and [cater to] clients that typically travel overseas to find that ultraluxury product,” said Albert Andrew Valera, founder of Miami-based agency Everything Travel Guy. “If someone tells you that it’s $2,000 a night for a junior suite, people won’t bat an eye anymore, because the level of product that’s coming in is going to warrant $3,000 a night.”


Source:  Travel Weekly

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“It’s On Fire.”: Miami Mayor Touts South Florida Economy

Miami Mayor Francis Suarez made an appearance on Fox Business where he discussed Miami’s booming economy, referring to it as “on fire,” as the city posts repeated increases in real estate sales, an influx of new jobs, and the welcoming of tech businesses from states like California and North Carolina.

Miami in recent years has made its mark as a burgeoning tech city, being named one of the top cities in America for eCommerce business. The city has managed to carve out a niche in the cryptocurrency space, with the creation of a cryptocurrency specific to the area: MiamiCoin.

“It’s on fire,” said Suarez. “Our tax base grew by 12 percent year over year. We’ve transferred over $2 trillion in assets under-managed companies in the last two years. Our venture capital pipeline grew by 400 percent year over year. It’s amazing what following some basic principles will do for a city like keeping taxes low, keeping people safe, keeping homeless low. We are at a 2013-year low in homelessness where our tax rate is at a 1960s low and our homicide rate is at a 1950s low.”

South Florida has seen an influx of new residents from both domestic and international origins, as well as businesses moving headquarters seeking more favorable tax structures. The surge in people inhabiting the city has led to higher demand for real estate, driving prices higher while keeping the market red-hot. Miami-Dade County’s real estate market continues to skyrocket, as the Miami Association of Realtors in MArch registered the county’s third-highest month ever in terms of sales.

“If you keep people safe, you focus on quality of life, it’s an incredible difference from what people are seeing in other major cities across America. And we now live in a decentralized world where you don’t have to physically be somewhere to be able to be successful. And people like Ken Griffin are proving that.” continued Suarez. “When Citadel moved to Palm Beach initially during the pandemic, they prove that they could be a massive market maker and not have to be in New York or Chicago. And now he’s made the move. So we’re excited to have Ken Griffin and his family in Miami.”

Ken Griffin, Illinois’ richest person and founder of industry-leading investment firm Citadel, announced in June that he is relocating his company from Chicago to Miami, citing a more business-friendly atmosphere and a comparative reduction in crime.

In a memo sent to employees, Griffin noted that Florida harbors a better corporate environment due to its favorable tax structure and lack of an income tax. The move is expected to be a multi-year process and will necessitate the construction of a new office building in the downtown Miami neighborhood of Brickell.

In prior years, Griffin threatened to pull Citadel out of Illinois, referring to Chicago in 2013 as a city of “broken schools, bankrupt pensions, rising crime, a declining tax base, and public corruption.”

“Chicago will continue to be important to the future of Citadel, as many of our colleagues have deep ties to Illinois,” Griffin said in his memo to employees. “Over the past year, however, many of our Chicago teams have asked to relocate to Miami, New York, and our other offices around the world.”

Citadel is one of the most successful hedge-fund firms, overseeing $51 billion in assets and regularly outpacing competitors and the market, making a swift recovery following the 2008 recession.


Source:  The Capitolist

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New Office Tenants And New Development Balance Out Vacancy In Miami

While the economy has had a turbulent few years — with a global pandemic, record inflation and political drama — the vacancy rate in Miami’s office market has remained fairly static, as the horde of new-to-market tenants was balanced by new development, according to second-quarter research from Colliers.

In the second quarter of 2022, Miami-Dade’s vacancy rate stood at 11 percent across its 1,693 buildings totaling 94.3 million square feet, per the report. That marks the highest rate since the first and second quarters of 2021 when it reached 11.3 percent.

That’s above the pre-pandemic baseline in the second quarter of 2019, when the vacancy rate registered at 9.2 percent — on 91.7 million square feet of office space citywide.

Andrew Hellinger, co-principal of Urban-X Group, has been the beneficiary of national and local businesses coming to set up shop in Miami. For example, his investment in the mixed-use River Landing, along the Miami River, has paid off.

“The Health District, where River Landing is located, historically had a 0 percent vacancy rate. With the opening of the offices at River Landing, we introduced much-needed space to a tight market, which has leased much faster than we expected,” Hellinger said in a statement to Commercial Observer

The vacancy rate has remained more or less the same in Miami-Dade County despite the lingering concern that COVID-19 could stifle the return to office just as more office space was being added, Jonathan Kingsley, executive managing director at Colliers, pointed out.

“There is significant growth into South Florida combined with organic growth of existing companies who are expanding their footprints and upgrading the quality of the buildings and spaces in which they operate their businesses,” Kingsley said in a statement. “This has kept a healthy balance to offset companies and firms who are downsizing due to remote and/or hybrid work models.”

Developers have been building more in the last three months than they were in 2019 with 3.2 million square feet of office space under construction currently, compared to the 2.8 million being built in the second quarter of 2019.

Within Miami-Dade, the highest office vacancies were in the Wynwood District at around 27.7 percent and Downtown Miami with 22.4 percent — both popular areas that have seen recent deliveries. Class A suffered the highest vacancies as well, with Wynwood’s top spaces sitting empty at about 54.1 percent and 25.7 percent in Downtown.

Meanwhile, Hialeah Gardens saw the lowest vacancies in Miami-Dade, with the up-and-coming district having only 2.4 percent of its 792,137 square feet of office space — all Class B and C — available in the second quarter. Medley came in a close second with 2.9 percent of its 2.4 million square feet vacant.

In South Florida’s two other counties, vacancy rates weren’t too far off. Palm Beach County, with its 1,268 buildings and 52 million square feet of office space, had a vacancy rate of 9.1 percent, according to Colliers, while Broward County had an 11.7 percent vacancy rate within its 62 million square feet of 1,488 office buildings.

But recent hiccups in the economy are beginning to ripple through the market, particularly on the investment sales side.

“There are growing challenges on the capital markets/investment sales transactions for office buildings in recent weeks. Many buyers are forced to re-price (i.e. reduce) their offers based on increasing interest rates and cost of equity and debt,” Kingsley said in a statement. “Likewise, many owners who were considering sales of their office assets, are pausing until the debt markets settle and buyers return to more aggressive offers to purchase.”


Source:  Commercial Observer

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