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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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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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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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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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Webinar: South Florida Retail Outlook: What is the Impact of COVID-19 on South Florida’s Retail Sector?

Last week, Shopping Center Business and Southeast Real Estate Business hosted “South Florida Retail Outlook: What is the Impact of COVID-19 on South Florida’s Retail Sector?

Listen as a panel of retail experts discusses their gameplans: how they are working with tenants and their employees as the industry seeks to adapt. Hear about attitudes towards loans, rent reductions, property value, next steps and more.

See a list of some topics covered and their timestamps below:

(07:00): How are restaurants and experiential tenants faring?

(09:29) Adapting for the challenges of COVID-19

(17:28) Retail rent trends over the next 180 days?

(24:32) What can owners do today to position themselves to succeed?

(36:00) When might we start to see real loan defaults and real distressed assets?

(42:55) Lessons learned from 2007-2008 financial crisis

(53:56) Decisions made in the pre-COVID-19 world that have carried over well into our current environment

Click here to access the complimentary webinar recording. Hear how South Florida retail professionals are approaching industry challenges and evolving to meet the needs of retailers.

 

Source:  Shopping Center Business

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Pair Of Mixed-Use Towers Planned For Wynwood

On the eastern side of growing Wynwood a developer plans a large mixed-use residential project that will also bring in new commercial tenants.

PRH CHO Dragon Wynwood LLC plans to build the pair of neighboring buildings at 2804, 2810, 2819, 2828, 2838 and 2804 NW First Ave.

The city’s Urban Development Review Board considered the project at a virtual meeting and recommended it for approval with a couple of thoughts.

With a current working title of Wynwood 29, the vast development tops out at 375,383 square feet.

The project includes a 12-story building that connects to an 8-story portion, and a separate 8-story building across the street, with 248 multifamily residential units, 28,071 square feet of ground floor commercial uses, a garage for 372 vehicles and room to park 22 bicycles.

Wynwood 29 will include a pool and amenity deck. The garage is intended for both residential and commercial tenants, as well as patrons.

The project is to have 6,360 square feet of open space.

The collection of parcels is between Northwest 28th and 29th streets, split by Northwest First Avenue.

The 12-story portion is planned for the southwest corner of Northwest 29th Street and First Avenue. The southern end of that block has the connected 8 stories. The ground floor is set for retail uses.

What’s referred to in the plans as Parcel 2 is on the northeast corner of Northwest 28th Street and First Avenue. Planned there is the 8-story building, which has eight levels of parking, seven levels of residential and ground floor retail.

The property is currently vacant and is within both the T5-O and T6-8-O Zoning Transects and the Wynwood Neighborhood Revitalization District (NRD-1) Overlay.

Multifamily structures sit to the east and west of the property.

Attorney Brian Dombrowski, representing the developer, told the review board the project was previously approved in September 2016 and this is a slightly modified design, updated after the company gained an additional parcel.

In a letter to the city, Mr. Dombrowski detailed requests for one warrant and several waivers in order to construct Wynwood 29.

The developer is requesting a warrant to allow on-street maneuverability to access two loading berths. Turning movements associated with more than one loading berth per development may be permitted on-street by warrant, except along Wynwood Corridors, under Miami 21 zoning.

The project proposes on-street maneuverability to access two loading berths from Northwest 28th Street, on the western portion of the project, according to the letter.

The waivers being sought include:

  • Up to a 30% reduction in required parking within the quarter-mile radius of a Transit Corridor. The property is within a quarter mile of multiple bus and trolley stops.
  • Up to a 10% increase in lot size from 40,000 square feet to 44,000.
  • Up to 90% lot coverage through the Flexible Lot Coverage Program, of the NRD-1 Regulations. This additional lot coverage allows both the activation of the roof terrace as well enhancing the pedestrian realm.
  • Up to a 10% increase in lot coverage for the T6-8-O portion of the property, allowing 84.3% of coverage when 80% is allowed.
  • To allow vehicular entry, loading docks, and service entries from the primary frontage, Northwest 28th Street.
  • Up to a 10% reduction in the minimum square footage for a one-bedroom residential unit. Miami 21 typically requires a minimum square footage for a one-bedroom residential unit of 550 square feet. The project proposes one-bedroom units at 531 square feet, 3.5% below the minimum.

“By reducing the minimum one-bedroom unit size, the Project can provide more affordable units. The Project’s proximity to mass transit makes it a great candidate for smaller, more affordable units,” wrote Mr. Dombrowski.

 

“Urban Land Institute studies indicate that smaller units have stronger occupancy rates than typical apartments and individuals choosing to live in smaller units are attracted to them because of a desire to sacrifice space for lower per unit cost and proximity to transit, employment, and vibrant mixed-use neighborhoods,” he said.

The project is designed by the architectural firm of Arquitectonica. Ray Fort, of the firm, described details of the Wynwood 29 project during the virtual meeting.

Mr. Fort told the board: “This quadrant of Wynwood is becoming the residential sector of Wynwood … it is a little bit quieter – there aren’t as many bars – and surrounding projects are planned to be residential,”

Board Chair Willy Bermello said, “I think the project is beautifully designed.”

And while he complimented the bright colors proposed for the project, Mr. Bermello mentioned a concern with the longevity of painted stucco.

“The issue of our Florida sun is that it’s not forgiving when it comes to bright colored paints. [How do you] maintain the crispness of those colors over time?” he asked.

Mr. Bermello asked if they had considered brick for the project.

Mr. Fort said they did not and referred to the size of the development.

Board member Anthony Tzamtzis also voiced concern about the painted surfaces.

“Did you consider glazed tiles? I think the painted stucco is degrading the concept you are trying to promote, which is the industrial [look],” said Mr. Tzamtzis. But he went on to congratulate Mr. Fort for “an extremely elegant presentation and thoughtful design.”

 

Board member Dean Lewis said the project is “well thought out, well detailed.”

He suggested a pedestrian bridge over Northwest First Avenue to connect the buildings.

Attorney Iris Escarra, also representing the developer, said they have discussed a pedestrian bridge but said it would require a separate approval from the city commission. She said such a bridge may be an option.

Board member Ignacio Permuy said: “I commend you on an exceptional job, starting from the massing to the architecture of the buildings … I truly appreciate the screening on the parking garage.”

Mr. Permuy said he understood the others’ comments about the bright painted stucco but added, “I don’t mind the color scheme that much. I understand comments … but this shows levels of playfulness, it shows you enjoyed designing this project.”

 

Board member Robert Behar said: “I like the whole project. You’ve done a great job.”

A motion to recommend approval of the project passed unanimously, with recommendations including the developer considering connecting the buildings, perhaps with a bridge, and to consider materials other than stucco.

 

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How Retail Leases Will Change In A Post-COVID World

In the post-COVID world, retail leases will need to change and adapt. Several provisions will need to be changed and added to account for the possibility of a pandemic and the mandated shuttering of businesses. This includes adjustments to force majeure and insurance provisions as well as use of common areas, common area caps, alterations, and rules and regulations, all of which should be adjusted to reflect the new market.

“These modifications will likely put landlords in a better position to respond and react to the new normal that will exist until a vaccine is developed and widely distributed,” Dan Villalpando, a partner at Cox, Castle & Nicholson, tells GlobeSt.com.

In regards to the common areas, most leases are currently too broad to account for usage and social distancing. This is one of the first areas that will need to be addressed in leases.

“Landlords should make sure that the language in the Control of Common Area provision found in most leases is broad enough for landlords to respond and adapt to pandemics and similar emergencies, such as by installing items to improve health and safety conditions and making other, perhaps currently unforeseeable, changes to the common area to comply with recommendations or requirements of the Center for Disease Control and Prevention, World Health Organization, or state or local authorities,” says Villalpando.

In some instances, common areas may need to be converted into dining and retail spaces to accommodate social distancing guidelines, and landlords will need to comply.

“As a result of physical distancing and store-capacity requirements, tenants may need the right to use portions of the common area (like sidewalks) for customers to form lines outside the stores,” says Villalpando. “A landlord should not decline a request by a tenant to use the common area for queuing. Nevertheless, a landlord can condition such use upon tenant fulfilling certain prerequisites, such as giving the landlord prior written notice of such intent and the expected duration, peak times, and specific area the tenant wants to use. Additionally, landlords may want to specifically require that the tenant cleans up the area used for queuing on a daily basis.”

In addition, these changes to common areas do not apply to increase caps, according to Villalpando.

“In leases where a landlord provides a tenant with a cap on increases in common area costs, such cap does not typically apply to uncontrollable costs,” he says. “Following COVID-19, landlords should consider expanding the list of “uncontrollable” costs. For example, costs associated with a pandemic and the related health or safety measures the landlord takes, for example the installation of hand sanitizing stations, upgrades to automatic doors, use of more personnel to administer cleaning and to make sure guests comply with social distancing requirements, should be deemed uncontrollable and not be subject to any cap.”

In addition, landlords should also take the into account the cost structure, particularly during a pandemic.

“If it turns out that the “base year” for setting the “floor” for common area costs occurs during a year when the common areas are used less because of a pandemic or related outbreak, the landlord should consider including a “gross up” concept to bring the “floor” up to a number that is more reflective of what common area costs would have been but for the pandemic,” says Villalpando.

Villalpando also suggests that landlords can modify the cap during the lowest period.

“Another alternative would be to modify the cumulative versus non-cumulative nature of the cap for any period during which common area costs are artificially low,” he says. “Basically, with a cumulative cap, when the common area costs for a particular year exceed the cap, the landlord can apply any unused portions of the cap from previous years to make up the difference.”

 

Source:  GlobeSt.

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Miami-Dade Property Appraiser Getting Sued Over Tax Bills

Affiliates of megamall developer Triple Five, along with Terra and Starwood Capital Group are crying foul over property tax bills from Miami-Dade County.

A number of developers and investment groups have recently filed lawsuits against Miami-Dade Property Appraiser Pedro J. Garcia for their tax appraisals for the 2019 tax year. Others include the owners of Aventura ParkSquare, the SunTrust office building on Brickell and the Delano South Beach.

The latest suits come as Miami-Dade issued preliminary taxable values for 2020 earlier this month, based on assessments and market conditions on Jan. 1. More such suits could arise, as businesses continue to lose money and commercial real estate values fall due to impacts of the coronavirus pandemic.

“A litigation showdown is looming between property owners and the government over property taxes,” said attorney Josh Migdal, a partner at the Miami law firm Mark Migdal & Hayden, who handles real estate cases.

“Property owners are faced with budget shortfalls due to decreased revenue,” Migdal added. “However, a decrease in tax revenue collection due to the virus will require the government to maximize its property tax collection to prevent its own budget shortfall.”

Florida is heavily reliant on property taxes since the state does not have a state income tax.

Overall, preliminary property tax values across Miami-Dade County rose in 2020 compared to the previous year. The estimated taxable value for Miami-Dade County properties totaled $324.36 million, up 5.1 percent from 2019, according to the property appraiser’s office.

The biggest increases were in West Miami (14.6 percent); Florida City (13.8 percent); Homestead (10.8 percent); Hialeah and North Miami (each up 10.4 percent). Much of the boost in appraised value is due to new construction, the property appraiser’s report shows.

Yet, the property appraiser’s office said falling prices for condos properties in Bal Harbour, North Bay Village, Key Biscayne and Aventura will have a negative impact on property taxes in 2020. It also says that coronavirus is starting to impact commercial real estate values.

“I will do everything within my authority to assist property owners who are struggling during these unprecedented times,” Garcia said in a statement. “As the real estate market changes during 2020, my office will consider these factors and make the necessary corrections permitted by law.”

The property appraiser’s office declined to comment on the recently filed suits. Among them, Triple Five, the Canadian developer, sued over the assessed value of its property in west Miami-Dade, where the group plans to build American Dream Miami mall.

The developer alleges the property appraiser gave an agricultural designation for 46.5 acres of its property, but denied the agriculture designation for two parcels totaling 38.32 acres. The properties were valued at $5.13 million and at $1.5 million, respectively, which the Triple Five alleges are “amounts in excess of their agricultural values.” The developer alleges the entire property should be classified as agricultural for the 2019 tax year, according to the complaint.

Developer Terra is also suing over a 11,865-square-foot parcel it owns at 2765 South Bayshore Drive in Coconut Grove. The company alleges the property is based on appraisal practices that are not “professionally accepted appraisal practices nor acceptable mass appraisal standards” in Miami-Dade County.

A company tied to Starwood Capital Group sued the property appraiser over a hotel it owns at 6700 Northwest 7th Street near Miami International Airport. The complaint alleges the $20 million assessment does not represent the value of Springhill Suites Miami Downtown/Medical Center because it exceeds the market value.

An affiliate of Integra Investments is suing the appraiser over Aventura ParkSquare, its mixed-use project in Aventura. The development group claims the property appraiser misappraised its property and it should not owe $106,629 in property taxes. The 1.2-million-square-foot project, at 2920 Northeast 207th Street, was completed in 2018. It includes a 131-unit luxury condo building, a 100,000-square-foot Class A office component, 55,000 square feet of ground-floor retail and restaurant space, and a hotel.

Alliance Re Holdings, the investment group that owns the SunTrust building at 777 Brickell Avenue is suing the property appraiser over its appraised value at the office tower. The group, led by Adolfo Geo Filho, who is tied to Brazilian construction company Construtora ARG, alleges it should not owe $2.2 million in property taxes. Alliance Re Holdings alleges the “Property Appraiser’s assessment of the property is arbitrarily based on appraisal practices.” The Filho-led group purchased the SunTrust building for $140 million in February 2015. Tenants include SunTrust, Truluck’s and Quest Workspaces.

The owner of the Delano South Beach is suing the property appraiser’s office over the hotel’s $172,905 tax bill. A company tied to SBE Entertainment Group, led by Sam Nazarian, also alleges the property assessment is arbitrarily based on appraisal practices that are not professionally accepted nor acceptable in Miami-Dade County.

 

Source:  The Real Deal

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These Miami Neighborhoods Saw More Retailers Open Than Leave Amid Pandemic

While many retail shops in Miami-Dade and Broward sat empty during the first months of the pandemic, a few neighborhoods actually experienced a bump in leasing.

Downtown Miami, Coral Gables and Medley/Hialeah defied the nationwide retail spiral, increasing total retail inventory by more than 10,000 square feet each, according to Colliers International’s second-quarter retail report.

“The positive net absorption in these neighborhoods were hangover deals done during the fourth and first quarters,” said industry watcher Beth Azor, investor and broker at the Weston-based Azor Advisory Services.

Dave Preston, executive managing director for retail services for Colliers International, agreed, noting that retail transactions take six to eight months to process.

Another factor, said Azor: Paycheck Protection Program funds, which allowed many tenants to hold on during the second quarter.

But those positives will likely be offset in the third and fourth quarters. Azor said she expects those market reports will show double-digit vacancy rates, at least of 10%, and a minimum of 10% drop in asking rents. Average asking rates have already inched downward, according to the Colliers report.

South Florida also will feel the impact of the national bankruptcies and store closings announced in the second quarters — J. Crew, CMX Cinemas and Neiman Marcus, just to name a few. Miami-Dade Mayor Carlos Gimenez’s order on Monday to end dine-in services and close some other businesses in the county “will be the nail in the coffin for many businesses; this will increase the vacancy numbers,” Azor said.

MIAMI-DADE

Total second-quarter vacancy grew from 4.3% to 4.5%. The completion of new construction injected 10,195 square feet into the market, bringing the total to 101.3 million square feet — 230,698 square feet more than the market absorbed.

But some neighborhoods were spared. Downtown Miami increased leased space by 28,651 square feet; Coral Gables grew by 17,428 square feet, and Medley/Hialeah grew by 24,397 square feet.

“The positive absorption in Downtown Miami stands out. The new development, including Miami Worldcenter and Moishe Mana’s Flagler Village, shows growth in the market,” Preston said.

Newcomers to Downtown Miami leased 2,000 square feet, including ArTi Entertainment, which took 2,200 square feet. “That shows entrepreneurship is alive during the pandemic,” Azor said.

The average direct asking rate decreased from $37.95 to $35.98 per square foot.

 

Source:  Miami Herald

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