No Comments

Developers Envision Pedestrian Paradise From Wynwood To The Design District

Developers are working to build up Midtown as a natural connection between Wynwood and the Design District_Photo Credit Bisnow 1170x435

As the warehouses of Wynwood give way to high-end apartments, developers are spreading their tendrils beyond the dense retail core and into neighborhoods that were all but ignored less than a decade ago.

“It’s almost like there was a memo that went out to all developers across the country: Spend a lot of money in Wynwood and Midtown,” said Ryan Shear, managing partner at Property Markets Group.  “And it’s happening, you’re watching it happen before your eyes.” 

The rapid growth of Wynwood in the last five years is spilling northward into Midtown as developers look to connect the city’s creative core with its luxury retail center of the Design District, tying together distinct neighborhoods into a unified hub of activity.

Developers from outside of Florida are especially interested in starting projects in Wynwood, Amanda Hertzler, executive managing director at the architecture firm MKDA, said at a Bisnow event Tuesday held at the Hyatt Regency Miami on the future of Wynwood, Midtown and the Design District.

The out-of-state firms are “looking at Wynwood specifically, not just South Florida but Wynwood specifically, as where they want to put shovels in the ground not just for one, not just for two but for multiple projects,” she said.

The interest extends beyond the confines of Wynwood, where developers in recent years have worked to transform what had been a neighborhood of low-rise industrial buildings into a creative hub and hospitality destination.

Midtown, north of Wynwood, is also drawing significant attention from developers who are looking to create a natural connection between the nightlife and hospitality that dominates Wynwood and the high-end shopping that defines the Design District.

“Wynwood has really pushed a walkable area,” Hertzler said. “What’s challenging is the walkable area does kind of stop at some point. The idea is to really connect the Design District to Midtown to Wynwood in a really pedestrian-friendly way and get cars off the street.” 

The push into the 18 blocks that make up Midtown has been decades in the making and is being shepherded along by a master plan that encourages the development of walkable streets, speakers at the event said.

Two decades ago, the neighborhood was a largely undeveloped industrial expanse known as the Buena Vista railyards. Florida East Coast Railway sold the property to Miami developer Michael Samuel and Joe Cayre, the chairman of New York-based Midtown Equities, who in turn sold half the land to Cleveland-based Developers Diversified Realty, The New York Times reported in 2009.

The real estate investment trust built the 470K SF Shops at Midtown, creating a nominal link between Wynwood and the Design District that is now being supercharged by a wave of recent development.

“In 2005, I was with a different group and we financed the Cayre family to buy the land in Midtown Miami,” said Greg Newman, senior managing director at Bank OZK, one of the most active lenders on developments in Miami. “Everybody in Miami, most of my developer clients, thought we were nuts. But sometimes it takes somebody outside the town to see the vision.” 

Miami-based Rosso Development is building The Standard Residences, Midtown Miami in the neighborhood. The 120-story condo building had 80% of its 228 units pre-sold as of October, when Bank OZK provided a $45M construction loan for the project.

Carlos Rosso, the firm’s founder and a former minority partner at Related  Group, said the neighborhood was beginning to realize its full potential under its master plan.

Midtown has a “design intent in the whole neighborhood that I don’t think we have anywhere else in Miami,” he said.

Generous sidewalk requirements that extend up to 20 feet wide, a focus on substantial tree cover to shade pedestrians from the South Florida sun and requirements that the ground floors of new developments must be at least 80% glass all help to promote foot traffic and street-level activations, he said.

“Northeast First Avenue, where The Standard is, has been designed from day one as a natural connection between the Design District and Wynwood,” Rosso said. “The whole street doesn’t have one loading dock, one garage entrance, you don’t smell trash, you’re always walking on a sidewalk that is always the same material.” 

He pointed to the June purchase by Terra Group, led by David Martin, and Lion Development Group of a 1.7-acre site at 3501 NE First Ave. for a planned condo project as further proof that the neighborhood was rising to meet the moment.

“When the Cayres bought Midtown, I think they paid something like $30M for the whole neighborhood,” he said. “David Martin just paid $40M for 1 acre.”

The neighborhood is being boosted by the success of the Design District, which itself is reaching the culmination of a decade-long redevelopment.

Dacra, led by billionaire Craig Robins, had been repositioning the district since 1998 before partnering with L Catterton, the private equity arm of LVMH and its CEO, Bernard Arnault, in 2010 to bring the firm’s luxury brands to the district.

The pandemic boosted Florida’s profile among the wealthy elite, propelling the Design District into Miami’s premiere luxury retail destination.

“We are getting tenants from the Design District inquiring about our retail spaces at The Standard,” Rosso said. “They say the people that are in the Design District, guess where they live? They live in Midtown.”

The master planning that developers credit with Midtown’s success is also playing out in Wynwood, which passed its own regulations in 2020 to promote pedestrian traffic.

“The common thread between Midtown and the Design District is that they both have streetscape master plans that were very intentional,” said Raymond Fort, vice president at Arquitectonica. “Wynwood also has a streetscape master plan, but it’s not controlled by a single entity. It’s up to the responsibility of each individual developer to build out their frontage.” 

Developers have been diligent in the implementation of the new design standards, Fort said, adding that the neighborhood has plans to create pedestrian-only streets as more projects get built.

“It’s not just the building that’s going to create the neighborhood, but the streetscape and the landscape as well,” he said.  

Hertzler said the regulations went into effect just as developers began amassing larger assemblages to build denser projects in the neighborhood, helping to promote designs that will make the neighborhood more navigable to pedestrians.

Her firm designed PMG’s Society Wynwood, a 318-unit apartment building at 176 NW 25th St. that is expected to open next month. A primary feature of the development is its paseo, a pedestrian walkway that cuts through the property and helps connect the neighborhood’s long blocks.

PMG’s project was one of the first large assemblages to begin construction when it broke ground in 2021, she said, but other developers have followed suit to design projects that will add paths crisscrossing the neighborhood.

“It creates this shaded, really interesting, meandering path through Wynwood,” she said. 

As Wynwood sees a burst of residential development, neighborhood officials also moved in 2020 to tackle Miami’s housing affordability issue. The Wynwood Business Improvement District created the Wynwood Public Benefit Trust Fund, which is financed by developers who pay into it in exchange for additional square footage at their sites.

Those funds can then be disbursed to developers who include workforce housing inside their projects, a scheme that Miami-based developers Black Salmon and LD&D embraced at their Wynwood Haus project at 23 NE 17th Terrace.

The 224-unit luxury apartment building, also financed with a construction loan from Bank OZK, has units set aside for tenants making between 100% and 140% of the area median income. Part of the lost income from what the units could be leased for at market rates are rebated back to the developer by Miami’s Omni Community Redevelopment Agency, said Diego Bonet, managing partner at LD&D.

Wynwood Haus opened its doors less than a month ago and is now 17% leased by around 45 tenants, most of whom are occupying the workforce-priced apartments, he said.

“Those units have been flying off the shelves, as you’d expect them to,” Bonet said. “Just knowing that we’ll have a base of the building that’s always rented de-risks the project to a certain extent. To us, it was really a win-win solution.” 

As more large-scale projects fill into Wynwood, the quiet Wynwood Norte neighborhood just north of the core and west of Midtown is also attracting developers eyeing smaller-scale projects.

PMG and Lndmrk Development spent $20M on a 1.1-acre assemblage in the neighborhood in October. Plans haven’t been announced for the site, but Shear said Tuesday that PMG was preparing to launch a condo project in the neighborhood during the second quarter.

Wynwood Norte has separate zoning from the rest of Wynwood that encourages the development of lower-density projects. These will become attractive relocation options for the boutique retailers that are being pushed out of Wynwood’s core or tenants looking for a smaller scale than Midtown.

“Wynwood Norte is smack in the middle of both these neighborhoods,” Shear said. “It’s already becoming one of the anchor neighborhoods that will connect both of these places.” 

 

Source:  Bisnow

No Comments

Sleepy No Longer, Downtown Miami Evolves Into Urban Hub

Once a place that emptied at 5 p.m., Downtown Miami is in the midst of a dramatic transformation. Overlooked no longer, the city’s central business district is getting denser, growing taller and attracting new attention.

The area has been poised for a breakout since the Great Recession, and its moment finally seemed to arrive during the pandemic. Out-of-state companies, most notably Blackstone Group, are opening offices downtown. And a widely noted study said Miami’s urban core has experienced the largest downtown population surge in the nation over the past two decades.

As Miami gains momentum, developers are making big bets on the city’s appeal to both employers and their employees.

“It’s like a snowball effect,” said Nitin Motwani, a developer of Miami Worldcenter. “Downtown Miami, over the past 10 years, has completely evolved into one of the great, 24-hour metropolises in the world.”

Motwani is part of a particularly ambitious project: Miami Worldcenter, a $4 billion mixed-use development, includes apartments, retail space, condos, hotels and offices spread across 10 blocks of downtown parcels.

Just south of downtown, OKO Group and Cain International are building 830 Brickell, a 640,000-square-foot tower that will test office tenants’ appetite for Manhattan-style rental rates. And the 13-story Nikola Tesla Innovation Hub, with 136,000 square feet of office space, is set to begin welcoming tenants next year.

“It feels like we’re on the precipice of something big,” said developer Ryan Shear, managing partner of Property Markets Group (PMG). “Downtown has so much potential, an untapped amount of it.”

PMG is developing the Waldorf Astoria condo and hotel project, which will be the highest tower south of New York, Shear said. PMG also expects to break ground this year on E11EVEN Hotel & Residences, a 400-unit condo project. The units are priced at $250,000 to $12 million.

The E11EVEN project quickly sold more than 70 percent of its units, reflecting what Shear sees as Downtown Miami’s move into the top tier of urban cores.

“Miami, for a long time, has been an undervalued city,” he said. “Miami has a lot of catching up to do.”

The flurry of investment offers a sharp contrast to downtown’s former vibe. For years, downtown boosters touted a vision of a thriving, round-the-clock urban core. And, for years, the city’s central business district remained a place that filled up at 9 a.m. but couldn’t sustain a nightlife.

Downtown workers who liked an urban vibe commuted from Miami Beach or Coral Gables. The rest of the labor force put up with gridlocked commutes from Kendall or Weston.

“Until 10 or 15 years ago, Miami was a city that existed in spite of its downtown,” said Andrew Trench, a managing director at Cushman & Wakefield. “Downtown had office space, and the Miami Heat played downtown, and that was kind of it.”

However, during a building boom before the Great Recession, developers inundated downtown and the Brickell district with high-rise residences. As new residents filled those units after the crash, Miami’s downtown population ballooned. This was the first signal that downtown couldn’t remain a mere business district forever.

According to research by Brookings, Miami had the fastest-growing population of any major downtown over the past two decades. Miami’s urban core posted population growth of 202.5 percent from 2000 to 2018.

The soaring head counts enticed new grocery stores, restaurants and bars downtown, fulfilling the vision of the district as something more than a place to leave at the end of the workday.

Whole Foods opened a store in Downtown Miami in 2015, and the crowds quickly became legendary. “You can barely move in the store,” a Whole Foods executive reported in a 2016 earnings call.

Trey Davis, an associate director at Cushman & Wakefield, lives on Brickell — downtown and Brickell are distinct neighborhoods, but both are part of the central business district — and walks to work and shopping areas.

“I barely use my car,” he said. “There will be times when I go three to four weeks without using it.”

While new residents have been plentiful, office users have proven more elusive. That’s changing, too.

In one noteworthy recruiting win, Blackstone Group last year signed a deal to open a 215-person office in downtown. The private equity giant leased a 40,000-square-foot office at 2 MiamiCentral, the office building adjacent to the Brightline train station.

Blackstone expects to pay its Miami workers an average salary of $200,000. Microsoft and hedge fund Citadel also are said to be shopping for office space in downtown.

Big-name companies, it seems, finally are taking note of Miami’s oft-repeated selling points: low taxes, a business-friendly climate, and comparatively affordable real estate costs.

Despite that pitch, the tenants from New York and California arrived in a trickle rather than a torrent. Then came the COVID-19 outbreak, and companies took a fresh look at their locations.

“The pandemic was the accelerator. We have a great migration happening right now,” said Alan Kleber, a managing director at JLL. “You have people thinking, ‘If we were ever going to move our headquarters, or move a component of our operation, now is the time to do it.’”

The new interest in Miami follows years of efforts by the city to pitch itself to financial firms in the Northeast and to tech players on the West Coast.

“We felt it was only a matter of time before this happened,” said Cushman & Wakefield’s Trench. “I never thought a pandemic would be the catalyst.”

The emergence of Miami as a corporate location spurred 830 Brickell’s decision to quote rental rates of $75 to $85 per square foot.

“These are the highest rates Miami has ever seen,” said Trench, who’s marketing the space.

Even so, 830 Brickell’s rates are lower than the typical rents for Class A space in San Francisco or Midtown Manhattan. The building is scheduled for completion in 2022.

Features will include a building-wide app that lets users order coffee or reserve a treadmill in the gym, Trench said. While work-from-home trends during the pandemic have reduced demand for office space, Trench expects a return to the office.

“As much as we’ve seen we can all work from home, it’s tough to be at home 24 hours a day,” he said.

Miami boosters are banking on a return to offices after the pandemic. In a bid to raise the city’s national profile, the Miami Downtown Development Authority (DDA) last year launched its Follow the Sun initiative, which pays incentives to businesses that move to the central business district.

To qualify, an employer must create at least 10 new jobs that pay at least $68,000 a year. In return, employers get $500 per employee, up to a maximum of $50,000 a year, and up to $150,000 over three years.

In February, the DDA said eight companies won grants that will bring 684 jobs downtown. In all, the companies will receive $560,000 from the initiative.

One of the recipients is Blackstone. Other grant winners include an unnamed California wellness company and a Connecticut hedge fund, along with a number of employers moving from elsewhere in South Florida.

Downtown developer Motwani is a member of the board of the DDA. He said the incentives aim to make employers feel welcome, especially those from markets, such as New York and California, where business owners often complain about red tape and bureaucratic mazes.

“It’s more of a gesture,” Motwani said. “What can we do?”

The idea for Follow the Sun started in 2013. Miami had embarked on a marketing campaign aimed at hedge funds and other financial firms in Manhattan and Greenwich, Conn. The DDA pitched itself as a sunny and carefree destination, a place with lower taxes and a more welcoming business climate.

The Follow the Sun initiative is funded from property taxes collected by the DDA. Motwani said the outlay will be more than repaid as hundreds of high-earning workers take jobs downtown.

Some also will live in the district. Even those who commute from other areas will still spend money at downtown restaurants and support cultural institutions. What’s more, some of the incentive money will be pumped into building improvements as the new tenants set up shop downtown.

“They’re giving back more than they’re taking,” Motwani said. “We want the jobs. We want the diversity to our job base.”

 

 

Source:  Commercial Observer

© 2023 FIP Commercial. All rights reserved. | Site Designed by CRE-sources, Inc.