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🙃 Flip the Script!
Oshrat Carmiel
September 20, 2024
In partnership with
Happy Friday Highest & Best! Today we’re talking second thoughts and second lives.
Here’s the rundown:
🤔 A third firm is having second thoughts on Miami
💰 Aging condos for a premium price?
📦 The corner office will be a warehouse
Let’s get to it!
Another Miami Back-Out?
A third firm is having second thoughts about opening a Miami office.
Financial services giant Rothschild & Co abandoned its plans for an office at 830 Brickell, the swanky new tower where it committed to leasing 5,000 square feet, the Real Deal reported this week. The office would have been Rothschild’s first South Florida location.
Rothschild is now the third company to change its mind about setting up shop in Miami, after clamoring for a slice of prime office during the pandemic-era’s inbound rush.
In May, California venture capital firm Andreessen Horowitz vacated its 8,300-square-foot office in Miami Beach, just two years into its five-year lease. And Chicago law firm Winston & Strawn, which in 2022 committed to 35,000 square feet at 830 Brickell, scrapped its office plans there.
Rothschild had snagged its spit of space at 830 Brickell early last year, a peak point of Miami’s office boom. The then-under-construction tower — Miami’s first new office building in over a decade — was drawing ever-higher and record-setting rents, as legal and financial firms fought for a foothold in the glimmering skyscraper with waterfront views.
These days, 2.9 million square feet of new office are under construction in Miami — much of it in the Brickell neighborhood, the city’s financial district, according to Colliers.
While office rents in the city are still climbing — they were up 6.1% in the second quarter from a year earlier! — the vacancy rate for office space is ticking up a notch, Colliers said in its quarterly report. Miami’s office vacancy rate in the second quarter was 9.2%, as compared with the U.S -wide vacancy rate of 17.5%.
⏪ Catch up on recent Highest & Best issues:
Rental Roller Coaster Ride, Sept. 14 2024
Office Ditch, Mansion Switch, Sept. 7, 2024
We Gilt This City, August 30, 2024
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When a Billionaire Buys Your Old $100K Condo
Treasure Island Cove Condominiums. (Google Maps)
Condo owners in Miami’s North Bay Village scored a windfall this month when a local billionaire bought their battered old units for three times their value.
The individual owners of all 24 apartments at the Treasure Island Cove Condominium sold their condos to Sunbeam Properties, the real estate arm of the billionaire Ansin family, which owns local news station WSVN Channel 7.
Sunbeam paid $333,333 for each condo unit, roughly three times their assessed values, the South Florida Business Journal reported. The total outlay for the units at 1639 N. Treasure Dr., came to about $8 million.
The condo complex, built in 1952, sits on a landlocked site of less than an acre. But the deal is valuable to both Sunbeam and the former condo owners.
Unit owners were facing hefty special assessment fees — and the prospect of having to vacate temporarily — in order to complete a long list of required repairs in compliance with state condo law. (Owners of old condos elsewhere in the state aren’t as lucky, as they are currently trying to offload their units on the open sales market and having little success).
Sunbeam plans to tear down the condos and add the land to the development site its amassing on the island, which now totals 14 acres. (Its holdings include the shopping center just north of the condos).
North Bay Village officials gave Sunbeam approval for about 7.1 million square feet of development in 2022, including over 1,900 residential units, offices and a hotel. The site of the Treasure Island Cove condos would likely be used as a parking lot, since it’s not on the waterfront, Sunbeam CEO Andy Ansin told the Business Journal.
From Corner Office to Cargo Space
A new warehouse is planned on Ryder’s former office headquarters (Photo: Bridge Industrial)
When Ryder System, Inc— the logistics firm and truck rental company — put it its Miami-area headquarters up for sale last year, few buyers wanted to use the place as an office.
Much to the surprise of brokers marketing the site in Medley, Florida — far from Miami’s central core — the top bidders all wanted to build warehouses there instead.
“It was a perfectly viable office building,” said Brian Smith, executive managing director at JLL, who oversees the leasing of industrial properties in South Florida for the brokerage. “It caught me by surprise.”
🦺 The buyer of Ryder’s office, for $42.1 million, was Bridge Industrial, which demolished the 250,000-square-foot building and will soon begin construction of two warehouses with over 326,000 square feet in its place. The new warehouse complex, Bridge Point Flagler Station, will be complete in mid-2025, according to a leasing brochure.
😎 Warehouses are Florida’s new “It” property class. Demand for them has soared in recent years as retailers, food suppliers and builders scour for more places to stash things near the region’s growing and affluent population.
“Population growth is one big factor for us and also tourism,” Smith said. “Companies supplying food to airlines, uniform companies, they all require warehousing.”
🏃So there’s a race on to acquire and build well-located warehouses. And those looking for storage in South Florida are still paying up to lease it, despite a flood of new choices in the market:
Rents for warehouse space in Miami set a record at the end of 2023 , at $17 per square foot, according to JLL. They remained at that rate (actually a tad higher— at $17.10) in the second quarter of this year.
Miami warehouse vacancies are pretty low, at 3.2% — despite 4.1 million square feet of new industrial space being built and added to the market.
🔄 Unlike elsewhere in the country where developers are attempting to convert obsolete offices into warehouses, Bridge Point Flagler Station marks one of the few sites in Florida where a former office site became industrial, Smith said. It likely won’t be the last, particularly for sprawling suburban office complexes that no longer make sense in an era where many employees work part-time from home.
“The highest and best use was proven to be industrial,” Smith said of Ryder’s site. “The market does not lie.”
“Any office building that is looking at selling and is in these industrial zones, is certainly going to go through this exercise,” he added.
Ryder itself went looking for much smaller office space in a hipper and more central location. After selling its site in Medley, it took two floors in a Coral Gables office building, on a tree-lined street within a walkable shopping and restaurant district.
😎 And it got to re-name the office building the Ryder Colonnade.
That’s it for today!
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