💰Miami Mega-Loan Mania!

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Happy Friday Highest & Best! A pretty rainbow has emerged after four days of relentless Florida rain. I like it:

Today we’re talking “Big”:

💰 Biggest construction loan in Florida history

📦 A whopping warehouse wager

📈 Big pile of unsold Florida homes

🌆 A bigger Miami office lease for Citadel

Let’s get to it!

Waldorf Nabs Biggest Construction Loan in Florida History

The planned Waldorf Astoria Hotel & Residences in Miami just secured a $668 million construction loan — the biggest in Florida history for a single building.

Bank OZK ( a prolific lender to South Florida condo projects) and Related Fund Management provided the financing, which will cover the costs of completing the 1,049-foot waterfront tower, the Financial Times reported this morning.

The project, by developer PMG, will be Miami’s tallest condo building, and is expected to be done in 2028. It’s already sold 90% of its 387 condo units, the developer said. (See our previous coverage of its 13,000-square-foot penthouse for $50 million here).

Bank OZK is wagering that Florida’s in-migration of wealth and business will continue in the post-pandemic era, bringing with it ever more buyers who can afford Miami’s new crop of multi-million dollar condos.

The Arkansas-based bank  lent over $1 billion to South Florida-based developments within the last 6 months and was the largest construction lender in the U.S. last year by far, with over $3 billion worth of loans, according to MSCI.

“Miami continues to be an attractive market given its strong economic fundamentals,” Brannon Hamblen, president of of Bank OZK, told the Financial Times. The city is now the most significant part of the Arkansas lender’s loan portfolio.

⏪ Catch up on recent Highest & Best issues:

• Foreclosure, Fines and Forklifts, June 7, 2024

• Happy Home Insurance Vibes, May 31, 2024

• Zeal of Fortune, May 24, 2024

From “30 Rock” to “Rock Lake” Industrial Park

Remember we said that Florida warehouses are a must-have item for wealthy investors?

Well this week brings another example:

Tishman Speyer, the real estate firm that owns New York’s Rockefeller Center, has purchased an industrial park in Pompano Beach.

Tishman paid $100.2 million to acquire Rock Lake Business Center, a 35-acre site with a pair of newly built warehouses and the potential to build two more, according to Vizzda, a real estate intel firm.

It’s the first-ever industrial property that Tishman, a global real estate investor, has owned in Florida, the company said in a statement. And it loves where it’s at: the warehouse complex, along the Florida Turnpike, is squarely between Miami and West Palm Beach, and is a 60-minute drive to 80 percent of South Florida’s population, Tishman said.

That makes it a compelling storage location for any retailer or vendor looking to stash inventory within a day’s delivery of the region’s growing and wealthy population. In fact, the U.S. Postal Service is a tenant in one of the warehouses that Tishman just bought.

📈 South Florida’s population boom has pumped up demand for warehouse space. And the world’s largest real estate investors are jumping at the opportunity to own some:

📦 Blackstone, the world’s largest owner of commercial property, bought a Pompano Beach storage center for $20.7 million in April, and another warehouse, used by Whole Foods, for $29 million last year. It also wants to build a 128,000-square-foot warehouse outside of Miami.

📦 In December, the founder of clothing retail chain Zara paid $113 million for a cold storage warehouse in Hialeah.

📦 Boston-based private equity firm Rockpoint paid $183.8 million for a development site in Pompano Beach, with plans to build a 1.5 million square foot warehouse.

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🚨 Florida is Tops for “Stale” Home Listings

Like week-old bread, Florida’s home listings are getting “stale.”

The state’s metro areas are seeing the highest-in-the-U.S. share of for-sale homes sitting on the market for 30 days or more without takers, according to a report this week by brokerage Redfin.

🫣 In Miami and West Palm Beach, 76% of home listings in May lingered on the market for at least a month, Redfin reported.

😮 In Fort Lauderdale, the share of of lingering homes was also 76%. (That reflects a 7.3% increase of such listings from a year earlier—the second- biggest jump of any city in the in the U.S.).

🫣 Florida cities account for six of the top ten U.S. metros with the biggest annual jump in languishing listings. (Dallas, TX was number one though).

😮 Nationally, the share of 30-day-plus listings stood at 62%

Florida’s lethargic sales market reflects a national stagnation in home buying. Record-high prices, paired with persistently high mortgage rates, have priced out many buyers and made relocation financially unfeasible for people who own their homes outright or with a lower mortgage rate.

🚨 And here’s some fresh data:

U.S. home sales in May fell to among the lowest levels in the past decade, Redfin said today in a separate report.

There have been only two months in the past ten years with fewer home sales.

Chart: Unsold Inventory in Biggest U.S Metros, May 2024

Six Floors Are Not Enough for This Hedge Fund

Six floors of a Miami office building were apparently not enough for the hedge fund Citadel.

Citadel said it will lease two more floors in the under-construction tower at 830 Brickell, in Miami’s pricey financial district, Bloomberg News reported. That will make the hedge fund the largest tenant in the building with 130,000 square feet of office space.

The firm, which relocated from Chicago to Miami in 2022, said it expects to have about 450 employees in Miami by the end of the summer, due to local hiring and "another wave of relocations” ahead of the school year.

Citadel, which leased 90,000 square feet in the building in August 2022, is now subleasing the extra space from Kirkland & Ellis, the Chicago-based law firm that’s trading its offices on the 14th and 15th floors for a spot on higher floors that another Chicago law firm gave up. (So basically: out-of-town firms are swapping offices they have not yet occupied in a building that’s not yet done).

Rent for subleased offices at 830 Brickell — which will open to tenants later this year — is close to $200-per-square-foot and is among the most expensive office space in the city, Bisnow reported.

And this is all temporary digs for Citadel. The firm, founded by billionaire Ken Griffin, is planing to build its very own headquarters along the waterfront in Miami’s financial district on a lot that Griffin purchased in 2022 for a record $363 million.

That’s it for today!

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