A nine-story retail showroom is planned as the first opportunity zone project in Miami’s upscale Design District.
BH3, an Aventura-based real estate investment and development company, will develop the 86,000-square-foot building with floor-to-ceiling glass walls on Miami Avenue north of Interstate 195.
BH3 bought the properties at 3801 and 3819 N. Miami Ave. for $15 million in 2017 and has site plan approval for the building.
The 2017 federal tax overhaul law created opportunity zones to encourage investors to put their funds into new projects and businesses to breathe life into economically struggling areas. In return, investors get tax breaks.
Critics have charged many of the projects are going into less-than-struggling areas. State-designated opportunity zones have been criticized for not living up to their original intent to help low-income and blighted areas.
The Design District was blighted but experienced tremendous redevelopment in recent years led by Craig Robins, becoming home to ultra-luxury brands and plazas with public art. The district has achieved record per-square-foot sale prices previously reserved for destinations like Miami Beach’s Lincoln Road.
BH3 said it didn’t initially plan an OZ project, buying the property two years before the tax bill passed. The company established the 3801 NMA OZF LLC opportunity zone fund this year to help finance the new building. Investors can put their capital gains into the fund by year-end.
The 3801 NMA fund will allow investors to defer paying taxes on their capital gains until 2026 and get tax-free appreciation from the project if they keep their investment for 10 years.
“The fund will provide qualified investors with the full tax benefits afforded to them under the legislation,” Gregory Freedman, BH3 principal and founder, said in an emailed media release.
The new building will have 14-foot ceilings except on the ground floor, which will have a 25-foot ceiling. Targeted tenant are fashion brands and retailers that need showroom space.
Preleasing starts next month with rents from $45 to $55 triple net per square foot, which BH3 says is less than market rates for the areas. Construction is set to start next year, and completion is planned in the third quarter of 2021.