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Miami Beach Leaders Want Office-Housing Towers Off Lincoln Road. Will Locals Approve?

If Miami Beach residents approve, two development projects would convert three parking lots off Lincoln Road into apartments, plus office and retail space. The city-approved plans are part of a larger effort to diversify the community’s economy amid South Florida’s migration of professionals working largely for tech and financial services companies.

Miami Beach voters will decide in either August or November whether the city should enter into public-private partnerships with two development teams, said Miami Beach Commissioner Ricky Arriola, sponsor of the plan to build on the three surface parking lots. The city needs at least 50% of voters to approve it. Developers proposed two buildings with 43 apartments, 187,000 square feet of office space, 33,000 square feet of retail and 715 parking spaces, more than double the number of existing spaces. The buildings would rise up to 80 feet.

Miami Beach officials approved two bids in February after receiving 18 submissions. The move comes two years after the commission first issued a request for proposals in late 2020 and later issued a formal call for bids. Lincoln Road Property Owners — comprised of Integra Investments, Starwood Capital Group and the Comras Company — plan to redevelop the lot between 17th Street and Lenox Avenue and 1040 Lincoln Road into two buildings with office and retail space. The Peebles Corporation, Scott Robins Companies and former Miami Beach Mayor Philip Levine aim to convert the lot at 1664 Meridian Ave. into a building with apartment rental, office and retail space.

“The city is doing everything it can to diversify the local economy,” Arriola said. “We are taking surface parking lots that are not the best use of public land into something that will make it into an economic engine for the city.”

Developers would undergo the site plan and design review approval steps once receiving support from residents, Arriola said. Construction would start in 2023 and the developments would be completed in 2026. The Lincoln Road Property Owners said in a joint statement, “This development will position Miami Beach to attract new businesses, create sought-after jobs, spur additional private sector investment and create new revenue that will enable Miami Beach to continue investing in infrastructure and quality of life initiatives.” The housing piece will benefit the community, Scott Robins Companies President Scott Robins said, because “people want to live close to their office.” Demand in Miami Beach is anticipated to remain high for office space. “The world that we live in is full of risk,” but “we are not talking about a ton of space,” said Bob Orban, principal in the Miami office of commercial real estate market analytics firm Cresa. Businesses will benefit from an increase in the daytime population, said retail expert Beth Azor of Azor Advisory Services in Weston.

Some Lincoln Road business owners are looking at the long-term gain, despite a potential shortage of parking spaces during construction, including V&E Restaurant Group CEO Matias Pesce. His firm owns restaurants Vida & Estilo, Havana 1957, La Cerveceria de Barrio and Cortadito Coffee House. “The shortage of parking may have an impact on guest traffic,” Pesce said, “but we know it will be for the best.” Another challenge would be a lack of affordable and workforce housing, Orban said. Robins said he and his partners are in talks with the Beach officials to possibly include affordable or workforce housing. “For the people that work for these financial services firms that are going to answer phones and type documents,” Orban said, “it would be more attractive in terms of having something affordable close to their place of work.”

 

Source:  Miami Herald

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Miami Beach To Prohibit Hotels In Sunset Harbour?

New proposed zoning regulations for Miami Beach’s Sunset Harbour neighborhood would encourage office development, but shun future hotels, putting a new project by Ronny Finvarb in a perilous position.

The Miami Beach Planning Board on Tuesday recommended the city commission approve the new overlay district for Sunset Harbour, along with an amendment that would allow hotel and residential projects that submitted design review board applications before April 27 to move forward. However, city commissioners could decide to remove the amendment when the proposed regulations come up for first reading on May 12.

The overlay district would only allow primarily office buildings up to 65 feet tall in Sunset Harbour. The legislation provides for retail and restaurant uses in ground-floor spaces and some residential units, as long as a majority of a building is office use.

Directors of the Sunset Harbour Neighborhood Association, which helped craft the language for the new regulations with commissioner Ricky Arriola, spoke against Finvarb’s project, a 36-room boutique hotel that would be built at 1790 Alton Road. His affiliate Sobe 18 LLC recently paid $4 million for the 10,200-square-foot property and has an agreement with Kimpton to also manage the new hotel.

Geoffrey Aronson, an association director, said that even though Finvarb is only proposing 36 rooms, the units are large enough to accommodate up to eight guests, and that it would attract tourists looking to split the cost of hotel stays. He also noted that the association voted 9-1 to oppose the hotel project.

“That is about 230 or so potential guests at any one period of time,” Aronson said. “I would suggest to you that the location of the hotel is not necessarily attractive to Class A tourists. There are going to be five hotels surrounding our area.”

Mike Ruben, another association director, said the group would consider dropping its opposition if Finvarb agreed to reduce room occupancy from eight to six people, which the developer said he would.

“Our concern is that there has been a degradation of tourism in Miami Beach, and we feel higher occupancy rooms invite that type of tourist,” Ruben said. “We would have to meet as a board and then meet with Mr. Finvarb.”

Finvarb, who has developed four other hotels in South Beach, told the planning board that the new hotel he is proposing is not out of scale for Sunset Harbour and that he is not seeking any height increases or variances.

“I took a risk making an investment during the pandemic,” Finvarb said. “Now there is some discussion about taking away our property rights and penalizing us.”

Finvarb did not respond to a request for comment on Wednesday.

Mickey Marrero, the attorney for Sobe 18, said Finvarb, prior to closing on the development site, met with Miami Beach Planning Director Tom Mooney to confirm a hotel would be permitted on the property.

Marrero said Finvarb executed the purchase agreement with a nonrefundable deposit a week before the Feb. 10 city commission meeting, when commissioner Arriola initially floated his proposal to limit commercial development in Sunset Harbour.

A Miami-Dade County deed shows Finvarb closed on the site on April 6.

Marrero claimed Finvarb was blindsided by the proposed restrictions. “At no point in our discussions [with Mooney] did the possibility of prohibiting hotels come about,” Marrero said. “Our client did everything a property owner should do in good faith.”

When 1790 Alton Road was listed for sale, marketing materials said the property was approved for a five-story commercial/retail building with 30 parking spaces and a roughly 8,000-square-foot ground-floor commercial space.

Finvarb also owns the Kimpton Hotel Palomar South Beach at 1750 Alton Road. His portfolio also includes the Residence Inn by Marriott South Beach, Thompson South Beach, and Courtyard by Marriott South Beach.

 

Source:  The Real Deal

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Miami Beach Gets Strong Response From Developers Looking To Build Office Space

Seventeen developers have expressed interest in building Class A office space on three municipal parking lots in Miami Beach adjacent to Lincoln Road between Alton Road and Meridian Avenue. The City put out a Request for Letters of Interest (RFLI) in November to test the waters as it seeks ways to diversify an economy heavily dependent on tourism and hit hard in recent years by hurricanes, Zika, and now the more prolonged COVID impacts.

In a letter to City Commissioners updating them on the process, Interim City Manager Raul Aguila wrote, “The list of interested parties includes accomplished real estate developers and investors, known both locally in the region and nationally.”

Fifteen respondents submitted their expressions of interest before the 3 pm deadline on February 11. They include:

  • 13th Floor Investments
  • Adler Group
  • Design District Management, Inc., D/B/A Dacra & Adventurous Journeys LLC
  • Andalex Capital
  • The Comras Company of Florida, Inc. & Terra
  • COO Premium Development, Inc.
  • Sterling Bay, Place Projects, and Deco Capital Group
  • David Mancini & Sons, Inc.
  • East End Capital
  • Integra Investments & Starwood Capital Group
  • Mangrove Real Estate Partners, Tricera Capital, Sasaki
  • Northwood Acquisitions and Northwood Investors
  • Oak Capital Group LLC
  • R & B Realty Group, LLC
  • Related Group (PRH Investments, LLC)

Aguila said two additional expressions of interest came in slightly beyond the deadline but before end of day on the 11th to bring the total to 17. They are:

  • RFR Holding LLC
  • Galbut Family Office LLC

The City initially planned to issue the RFLI early last year before the pandemic hit but delayed it while dealing with public health issues first. Then, following a difficult budget process in which the COVID budget gap came into focus and the beginning of the migration to South Florida by tech and finance companies, the City issued the request for expressions of interest which were due Thursday.

“The overwhelming response of [17] highly qualified parties validates my thesis that there is an unmet demand for Class A office space in Miami Beach,” item sponsor Commissioner Ricky Arriola said.

“One thing that the pandemic has made crystal clear, as have hurricanes and Zika, is that the Miami Beach economy is married to the tourist market,” noted Arriola, chairman of the Commission’s Finance and Economic Resiliency Committee. “Our hotels, our restaurants, our shops are heavily dependent on a robust tourist market. Having companies establish headquarters or substantial business operations in Miami Beach that are not tied to the tourist industry will create jobs and diversity and thereby strengthen our local economy.”

Despite the fact that Miami “is one of the few open markets in the United States,” Arriola said resort tax revenues “were still down.”

“That’s not good for our City budget and the operations of our City services,” he said.

The municipal surface lots for which the City sought expressions of interest include the P25, P26, and P27 lots located in a four-block area to the north of Lincoln Road. Any development would require replacement of the parking for paid public use. The City did not want – and would not consider – specific proposals or offers to develop the lots. Rather it sought expressions of interest only to determine if an RFP (Request for Proposals) process would follow.

Lyle Stern, President of Koniver Stern Group, a retail leasing and consulting company that owns and operates properties on Lincoln Road, serves on the Board of the Lincoln Road Business Improvement District (BID). Stern kicked off the initial thought process about Class A space at the end of 2019, sending a white paper to Mayor Dan Gelber and City Commissioner Ricky Arriola, chair of the Commission’s Finance and Economic Resiliency Committee. Some of the southward migration had already started due to changes in tax policy that limited deductions for state and local taxes.

“I was getting calls from luxury residential brokers about the higher net worth families moving in,” Stern said. “They were looking for great Class A office space and they don’t all necessarily want to be in big buildings and, even if they do, they want to be in Miami Beach.” While there are a couple Class A buildings here, he said the newest had been built almost 20 years ago and they were pretty well leased. “There’s a lack of newer, elevated Class A office space in the City for these folks.” (Earlier this month, Related Group received approval from the Miami Beach Design Review Board for its proposed Class A office development on Terminal Island.)

He pointed to Starwood Capital’s Barry Sternlicht who is building a new headquarters here because there “wasn’t sufficient space for him at the quality level that was new.” When Carl Icahn, a Miami resident, decided to move his office to Sunny Isles, Stern said, he told Gelber and Arriola, “Maybe it makes sense to explore [Class A offices].”

Arriola put the item on a Commission agenda and the RFLI was developed. Once the decision was made to issue it, Stern suggested the Lincoln Road BID partner with the City on outreach. “We have the capacity,” he said. “Let’s partner to make this a great economic development initiative.” The BID’s marketing firm, Schwartz Media, generated media buzz while Stern reached out to developers across the country to make them aware of the RFLI. The City spent $8,000 on an eight-week strategic marketing campaign.

“This is not just about building office space so people have a place to go and the City has additional funds coming in,” Stern said. “For me, it’s how do we get back to where we were.” Class A office users would “infuse our local stores, our restaurants, our cultural facilities on a daily basis.”

The added benefit, Stern said, is additional parking. Not only would the office developers be required to replace the current parking, they would add parking for employees of the office tenants. They could also serve as overflow parking for the Convention Center, he added.

At the same time, he said, you’re taking parking lots that are “not pretty” and giving the City “the ability to take those three lots and continue to knit this quilt that connects the Convention Center, the New World Symphony, the cultural district, the Bass Art Museum, Lincoln Road, Española Way, Washington Avenue.”

It’s an opportunity, he said, to take “islands of concrete” and at the expense of private developers, create “spectacular” architecture with active rooftops and engaging areas at the pedestrian level “both for our tourists and as importantly, candidly, for our residents.”

“I feel great,” Stern said about the response. “In a world where there’s a lot of unknown, what’s known is that there’s a lot of interest in Miami Beach.

“It’s incredible and noteworthy that in the middle of a global pandemic our city received interest from some of the most successful, internationally relevant and community minded developers who have transformed neighborhoods with their vision, including Dacra, Sterling Bay, The Related Companies, Starwood Capital Group, Terra Development and East End Capital, each of them with a track record of spectacular architecture and cultural investment that attract international attention,” Stern said after the names were announced. “Truly a transformative opportunity for our city.”

“A lot of homes have been sold since March,” Stern said, “but that doesn’t continue forever.” The City “constantly needs to be improved and elevated and maintained and I think that’s what the opportunity is here.”

“The intended consequence,” Stern noted, “is more jobs for Miami Beach residents, less commuting time and traffic for Miami Beach residents who otherwise would go to the other side of the Bay to work.” Living and working here would allow them to “spend more time on Ocean Drive, Lincoln Road, Española Way, and Washington Avenue walking, shopping and dining.”

Arriola said, not only does the business community support the effort “because they recognize that having hundreds if not a couple thousand well-paying jobs year-round brings daytime and weekday customers to Lincoln Road,” but “I think residents should embrace it as well because it will strengthen our local economy and make our City budget less reliant on tourist dollars.” He sees the opportunity for an “influx of good paying local jobs” and less traffic so people “don’t have to leave the Beach to go to Brickell or the mainland to work. They can stay local.”

Until there’s an RFP, Stern said, “There’s nothing to talk about” but the RFP process “will cause folks to spend quite a bit of money to come up with some spectacular plans.”

“I just hope that my colleagues have the fortitude to move forward with this once-in-a-generation opportunity,” Arriola said. “We can expect there will be some resistance from some folks in the community, but we need to look ahead to future generations and what this can mean for the betterment of our city over the long term.”

Aguila noted in his letter, “the City Charter would likely require voter referendum approval of any development on these lots.”

“We should want the most amazing quality,” Stern said. “If we have to add some height, give some benefit, the long-term benefit to the city is spectacular and I think that’s what we should focus on.”

“It’s not about bringing developers from New York to build offices for wealthy bankers,” he emphasized. “It’s about activating amazing public spaces for people that are living and working here.”

“Look who’s moving here,” he said, citing one example – tech investor Keith Rabois who, according to The Real Deal, “paid a record $28.9 million for a waterfront mansion in Miami Beach.” Stern said Rabois is “taking office space on Brickell Avenue because Mayor Suarez has done an amazing job marketing the City. [Rabois] should be here and his friends should be here.”

“How is that possibly bad?” Stern asked.

“At the end of the day,” Arriola said, “we’re talking about converting surface parking lots… and hopefully turning them into beautifully designed buildings that will have ground floor retail [and] parking as well as jobs. So, we’re taking something ugly and turning it into something beautiful.”

Next steps: The results of the RFLI will be discussed at the February 19 Finance and Economic Resiliency Committee meeting. Should the Commission decide to issue an RFP, Aguila wrote, “Firms invited to participate in the RFP would include but not be limited to respondents to the RFLI.”

“The RFLI stipulates that the Administration may hold industry review meetings, following the receipt of expressions of interest, in order to discuss questions or concerns including any impediments to development with interested parties,” Aguila noted. “The objective of industry review meetings would be to obtain information to ensure preparation of an RFP that best promotes the City’s interests while maximizing benefits the City may receive from any development.”

 

Source:  RE Miami Beach

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Miami Beach Seeks To End Tourism Economic Dependence

Miami Beach is a world-renowned tourist destination, but commissioners are hoping to shift the city’s economy away from dependence on this singular industry.

Covid, Hurricane Irma and the Zika virus are just some events within the past 15 years that have put a damper on visitation dollars, Commissioner Mark Samuelian said at a meeting Friday, and the city needs to find a way to diversify revenue streams.

In October’s Finance and Economic Resiliency Committee meeting, city staff presented an outline detailing multiple channels Miami Beach could explore as a means of generating economic stability outside of the tourism industry. In addition to strengthening new revenue streams, commissioners said, the city should also look to diversify its pull within the tourism industry by promoting arts, culture and daytime activation in addition to the famous nightlife.

John Woodruff, Miami Beach’s chief financial officer, explained to commissioners Friday that staff had sorted the possible revenue streams into multiple “buckets” to make discussion easier. Ideas explored, a commission memo said, included identifying new revenue streams, recruiting new businesses, transforming one-time funds into recurring revenue, increasing reserves and reducing costs.

In July, Mr. Woodruff told commissioners, the city approved a deal with Spectra Partnerships that would allow the company to manage sponsorship and naming rights for the city, including finding a sponsor for the Miami Beach Convention Center, hopefully generating another source of income. 

Business recruitment, he said, would also be vital and will be bolstered by Miami Beach’s efforts to incentivize Class A office space. A proposed amendment still being reviewed by the commission and planning board, Miami Today previously reported, would allow the development of buildings up to 75 feet high in areas of Sunset Harbor, Alton Road and Terminal Island, which would give developers enough floor-to-ceiling space to achieve the high ceilings that are in demand for Class A space.

Increasing reserves and insuring tourism revenue, Mr. Woodruff said, were also options staff considered. The city ultimately decided on a form of self-insurance for tourism revenue, he said, but a 2019 policy led to the generation of more reserve funds that ultimately helped the city through the Covid crisis.

“The Resort Tax Fund reserve policy,” the memo explained, “was increased from a goal of 3 months (2 month requirement) to a goal of 6 months (required amount would begin with 2 months and increase over time as a moving floor until it reaches 6 months). The Resort Tax Fund reserve at the beginning of FY 2020 was $15.2 million or 3 months.”

Commissioners asked Mr. Woodruff and staff to provide a more detailed memo in time for the committee’s next meeting Nov. 13, with the intent of continuing the discussion on reducing the city’s dependency on tourism.

Commissioner Ricky Arriola said Miami Beach should look at diversifying revenue within the tourism industry as well as outside of it. 

“How do we attract a different type of tourist?” he asked. Throughout the year, he continued, a goal should be to attract business people and families in addition to visitors looking for nightlife.

Mr. Samuelian added that in a new work-from-home world, Miami Beach could leverage its appeal as the ultimate destination to telecommute and work with hotels to promote this image. 

However, he said, the focus on driving business in Miami Beach couldn’t just be about tourism. 

“We’re always going to have the conversation around tourism and hospitality because that’s who we are,” he said. But city officials, he added, have to be intentional about focusing on and creating quantitative goals around other areas of the economy as well.

 

Source:  Miami Today

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