No Comments

Miami Beach Now Leads South Florida Office Rent Growth

Miami has emerged as one of the largest fintech hubs in the country, a rise that’s accelerated as the COVID-19 pandemic drove companies to the metro area en masse. That’s driving up office rents across the board in Miami-Dade County–and among the region’s competitive submarkets, Miami Beach has shown the fastest growth post-pandemic.

Asking rents for Class A office space in Miami Beach have rebounded to $56.66 per square foot, up 10.2% year-over-year, according to a new report from Colliers. The submarket is also highly constrained in terms of supply, especially when it comes to viable office space. Most investors, wary of high land prices, have gravitated instead toward luxury hotels or boutique condo projects, but those same factors have also kept demand booming.

In nearby Brickell–which Colliers calls “the Manhattan of the South”–the Class A market continued to recover during Q1, thanks largely to corporate relocations from the Northeast and Midwest. Average rents clocked in  at $66.70 per square foot in Q1, an increase of 4.9% over Q1 2020 numbers. The area is a major hub for South Florida’s fintech industry and other professional service providers: Thoma Bravo recently signed a 36,500 square foot lease at 830 Brickell, and existing tenants like Banco Sabadell and HIG Capital also renewed their leases during the quarter, signaling optimism for “a very strong 2021,” according to Colliers.

And in downtown Miami, home to a significant roster of law firms, banks, and public sector employers, rates are lowest among the metro’s submarkets at $50.35 per square foot. That’s an 8.2% increase over the first quarter of 2020.

Meanwhile, further afield, the suburb of Coconut Grove also benefited from COVID’s disruption to migration pattern with tenants like Mercy Hospital, the John S. and James L. Knight Foundation, and Weinberg Wheeler Hudgins Gunn & Dial all renewing existing office leases. Gross rental rates for Class A space in the market increased by 7.9% year-over-year to $60.34 per square foot last quarter.

Miami’s Wynwood neighborhood is also luring office-using tenants from both within Miami and out of state. Recent transplants include Spotify, Live Nation Entertainment Co., Bank OZK, venture capital and startup building firm Atomic, led by Jack Abraham, and Founders Fund, the multibillion dollar venture capital firm led by PayPal co-founder Peter Thiel.


Source:  GlobeSt.

No Comments

Micro-Mobility Infrastructure Plan Targets Downtown Miami, Including Coconut Grove, Brickell, Midtown, Morningside, Edgewater And Part of Wynwood

A micro-mobility infrastructure project half funded by electric scooter fees could be coming to downtown Miami, adding about three miles of protected bicycle and scooter lanes and laying the groundwork for more lanes in the future.

The green-patterned pavement lanes, which would come with concrete barriers separating them from traffic, would run from South First Street to Northeast 11th Terrace along North Miami Avenue and Northeast First Avenue, and from Northeast Second Avenue to I-95 on North Fifth and Sixth streets.

Key locales along the routes would include Government Center, Brightline Station, Miami Dade College’s Wolfson Campus and several Metromover stations.

The project would also add missing pedestrian ramps to adjacent sidewalks and upgrade all pedestrian crossings and signage to “high emphasis” for greater visibility.

Miami-Dade commissioners were to decide Wednesday whether to OK an agreement with the city to fund and undertake the project, which would cost $2,064,661.

Miami would contribute $1 million to the project with fees the city has charged electric scooter companies to operate through a pilot program in downtown, Coconut Grove, Brickell, Midtown, Morningside, Edgewater and part of Wynwood.

Miami-Dade would cover the remainder with revenue from road impact fees. Julian Guevara of the county’s Department of Transportation and Public Works (DTPW) would monitor the project.

DTPW plans to test other types of protective barriers in the area. Depending on the results, the county could build similar bicycle, scooter and pedestrian provisions in other urban areas, a memo from Miami-Dade Chief Operations Officer Jimmy Morales said.

“It is the goal of the county to improve the safety of the most vulnerable modes of mobility, walking and cycling,” the memo said. “It is also the goal of the county to ensure that bicyclists have an intuitive and connected route through Miami-Dade.”

The project is in keeping with the county’s Complete Streets and Vision Zero programs, which aim to make streets safer for all users through smart, inclusive engineering and design and to ultimately eliminate all traffic fatalities and severe injuries.

It also squares with the county Transportation Planning Organization’s protected bicycle lane demonstration plan and the city’s bicycle master plan, the memo said.

City commissioners argued last July over whether to use the funds set aside for the bike paths to plug budgetary holes they expected due to the pandemic. Joe Carollo and Alex Díaz de la Portilla, who advocated for keeping the $1 million for other city issues, clashed over the issue with Keon Hardemon, Manolo Reyes and Ken Russell, who represents the district from which the electric scooter pilot revenue is drawn.

Mr. Russell noted then that the city’s bicycle master plan was “10 years delinquent.” Over that time, he said, bicycle riders had been injured and died in Miami because they lacked proper accommodations.

But by November, when the Miami City Commission voted on the issue, the city’s budgetary shortfall was estimated to be $2.7 million – about a tenth of what was expected four months before.

City commissioners unanimously approved the program, the construction for which was expected to begin early this year.


Source:  Miami Today

No Comments

Don’t Count Out Commercial Real Estate, Especially Near The Urban Core

Commercial real estate investors should look no further than the urban cores of Little Havana, The Roads, Little River and Coconut Grove. It’s the right time to invest, says Bill Kerdyk Jr., despite the pandemic causing some retailers and restaurants to close.

Kerdyk leads the Coral Gables-based, family-owned Kerdyk Real Estate, which first opened in 1926. Kerdyk bought the real estate investment and property management firm in 1991 from his uncle. The company leases and manages commercial real estate and sells residential real estate across Miami. While managing the family business, Kerdyk. served as a commissioner for the City of Coral Gables for 20 years, following in the footsteps of his father and uncle.

RE|source Miami checked in to get his view of the current commercial market.

Q: How is the pandemic changing how commercial real estate investors reevaluate their portfolio?

Kerdyk: Rent collection is the new metric for real estate during the pandemic and real estate investors are keenly aware of the impact on their net operating income. Declining collections and leasing spreads, characterized by lower leasing rates and additional landlord concessions, are forcing investors to re-evaluate their options and make tough decisions moving forward. Much of the retail, shopping centers, hospitality and entertainment venues are under pressure — forcing investors to make decisions whether to re-purpose and re-lease their properties, refinance, sell, or in some cases, return the properties to lenders.

Q: You sold your property 147 Alhambra Circle for $5.275 million in late September after acquiring it for $1.2 million in 2002. Where are you reinvesting that capital?

Kerdyk: The Alhambra building was sold based primarily on the premium offered for the property and because of reinvestment opportunities that will arise in the South Florida market to better deploy the capital. As an investor, I am in the process of identifying suitable properties that meet my investment criteria. I seek value-added properties that have upside income generation potential, upon releasing or repositioning of the asset. I look for assets in a stable and improving market that will provide for long- term appreciation that meet or exceed my minimum Return on Investment criteria.

Many other investors are certainly seeking to sell and reinvest the proceeds in more stable sectors but demand for real estate in the South Florida commercial market remains strong, and there are challenges to reinvesting the proceeds in this competitive environment.

Q: What type of real estate do you expect to go under foreclosure? Retail? Office? Hospitality spaces? Which of these assets are expected to get scooped up by investors and why?

Kerdyk: The pandemic has expedited the existing division already underway between essential and non-essential real estate sectors in our economy. While single-family housing remains a leader of the economic recovery here in South Florida, the best- performing commercial sectors include industrial, multifamily and healthcare, which remain very attractive in the current environment — and more so in this low interest rate environment which is expected to continue for some time.

Struggling sectors include retail, hospitality and entertainment venues, and to a lesser extent office product. These are some sectors where opportunities may exist for savvy investors with a plan to purchase and re-purpose the property. Demand for South Florida real estate remains high, despite the uncertainty related to the pandemic.

Q: What South Florida neighborhoods offer the best opportunity for commercial real estate?

Kerdyk: There are opportunities throughout South Florida in the commercial and housing segments. For commercial investing, in general, those submarkets in close proximity to the urban cores of Little Havana, The Roads, Little River and Coconut Grove remain in high demand. This demand is expected to continue post pandemic, despite the recent trend to flee these dense residential areas for more open space during the pandemic.

It is no coincidence that some of the best commercial corridors for investment are located close in to an affluent residential base or in close proximity to areas experiencing rapid growth of multifamily units. For example, mixed-use, walkable and sustainable urban developments, with significant growth in multifamily units, are currently transforming the Coral Gables Merrick Park area. The same thing is happening in Coconut Grove, along the U.S. 1 corridor and throughout Miami.

The best deals in real estate are those that meet the investor’s investment parameters for risk, investment timeline, capital available to invest, and a variety of other considerations. That’s really how you define what’s appropriate for each investor. Some investors seek income, others capital appreciation or a combination thereof, while another investor may seek capital preservation.

Q: What type of real estate in South Florida will likely have the best return for investors in the next 10 years and why?

Kerdyk: I expect trends related to sector bifurcation to continue after the pandemic and believe that housing, industrial, multifamily and healthcare will continue to provide some of the best opportunities, in part due to continuing product demand for these types of assets. I see high-end prime retail and entertainment venues stabilizing and making a comeback as early as next year. I expect lesser retail venues to continue to be under pressure until the retail space is repurposed to a variety of service retail uses.

Overall, I believe impressive demographics, especially net inflows to the South Florida region, to have a continuing favorable impact on valuations. The fact that Florida has no state income tax, and a scarcity of available land for building, also provide a solid base for real estate investment growth in South Florida.


Source:  Miami Herald

© 2024 FIP Commercial. All rights reserved. | Site Designed by CRE-sources, Inc.