Inflation Watch April 2021: 5-Year TIPS Spread Levels Out, Indicating 2.5% Inflation Expectations, as 10-Year Continues Climb

Federal Reserve Bank of St. Louis, 5-Year Breakeven Inflation Rate, commonly referred to as the TIPS Spread, a measure of expected inflation derived from 5-Year Treasury Constant Maturity Securities and 5-Year Treasury Inflation-Indexed Constant Maturity Securities, for the 5 years ending 4/30/21
Federal Reserve Bank of St. Louis, 5-Year Breakeven Inflation Rate, commonly referred to as the TIPS Spread, a measure of expected inflation derived from 5-Year Treasury Constant Maturity Securities and 5-Year Treasury Inflation-Indexed Constant Maturity Securities, for the 510years ending 4/30/21

Above are charts for the 5-Year and 10-Year breakeven inflation rate, commonly referred to as the TIPS spread, for the five years ending April 30, 2021. This is a calculation of the difference in the yields, i.e. the spread, between United States Treasury bonds and Treasury Inflation-Protected Securities (TIPS) of the same maturity. It is a useful and oft-quoted measure of expectations for (CPI) inflation in the financial markets. The spread indicates expected inflation, of interest to investors in commercial real estate – more on that below – and for that matter any asset class.

As one can see in these charts, the 5-year TIPS spread has leveled off at about 2.5% after a fairly rapid and steep ascent since the pandemic related drop in early 2020. The 10-year TIPS spread, however, continues to climb, and now sits at about 2.4%, just under that of the 5-year. Thus, investors are putting their money on about 2.5% inflation for both the next five and ten years. Given some of the stimulus driven choices by the USA of late, it is worth watching these measures carefully.

Real money is at stake with these spreads. TIPS pay interest every six months, based on a fixed rate that is calculated by multiplying the adjusted principal by one-half the calculated interest rate (i.e. half a year’s worth of inflation at that rate). Thus, a “bet” that an investor makes in with these bonds has real financial implications. If actual inflation is higher than priced in the markets, a TIPS buyer will make more that a straight treasury buyer. If it is lower, that TIPS buyer will make less. How much money is at stake? In 2017 Morningstar pegged the market at $1.2 trillion. Thus, every 1/10% difference is a $1.2 billion swing. Real money.

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”

~ Sam Ewing

What is the impact of inflation on commercial real estate? In the near term, higher inflation tends to bring higher interest rates. Higher interest rates are a negative for commercial real estate. Higher rates means larger debt service payments, reducing the buying power of purchasers, and negatively impacting deal economics. It also means makes fixed income investments a more competitive investment, likely pulling capitalization rates (cap rates) up, and thus prices down. Over a longer period, however, the prospect of inflation leads to a principal benefit of commercial property investment, that of its potential as a hedge against inflation. After all, more inflation should lead to higher rent, at least in time.

MIT published an excellent whitepaper on real estate’s ability to keep pace with inflation with data to 2016. They looked at then tendency of retail, multifamily, industrial, and office income and values to keep pace with inflation. The best at keeping pace income-wise was retail, with rent growth of 102% of inflation. Office was the worst performing at a quite dismal 18%. Values across the property types were more consistently kept pace, with retail again doing the best appreciating at 107% of inflation, office again the worst at 74% of inflation. I’ll speculate that the fairly drastic difference between income and value keeping pace with inflation is driven by vacancy. If you’re interested in the topic, read the paper.

Expectations for inflation also come into play with lease structure and due diligence. A lease structure with a fixed rent increase becomes less attractive for a landlord with higher inflation expectations. Similarly, a commercial property being acquired with existing leasing in place that have fixed or capped rent increases looks less attractive as inflation expectations increase. Also, a property being purchased with fixed rate financing will look increasingly attractive if a buyer anticipates inflation fueled increases in income. Inflation, in short, is very important to commercial property investors.

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Economy
May 10, 2021

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Top Stories
May 5, 2021

Millage Rates in Miami-Dade County by Municipality, Sorted from High to Low

Millage Rates, Which are Used to Calculate Property Tax, for Municipalities in Miami-Dade Sorted from High to Low

Millage Rates in Miami-Dade County by Municipality

Below here millage rates, which are used to calculate property tax, are listed in alphabetical order by municipality for the various municipalities within Miami-Dade County. These are also show in graph form above, sorted from high to low, with Biscayne Park having the highest millage rate. This highest rate, like golf, is the worst, that is unless you like paying more tax (there’s always one). The lowest is North Miami Beach.

For commercial real estate investors, a higher millage rate translates to higher expenses and thus lower net operating income. The difference between the highest and lowest rates, if one assumes assessed value as 2/3 of market value, is $6,462 per year of extra expenses per million of market value. The variance is not insubstantial.

Miami-Dade Millage Rates Listed Alphabetically

Aventura Millage Code 2800 2020 Millage Rate: 17.5032
Bal Harbour Millage Code 1200 2020 Millage Rate: 17.4585
Bay Harbor Island Millage Code 1300 2020 Millage Rate: 19.4016
Biscayne Park Millage Code 1700 2020 Millage Rate: 25.4771
Coral Gables Millage Code 0300 2020 Millage Rate: 18.9154
Cutler Bay Millage Code 3600 2020 Millage Rate: 18.2094
Doral Millage Code 3500 2020 Millage Rate: 17.8643
El Portal Millage Code 1800 2020 Millage Rate: 24.0771
Florida City Millage Code 1600 2020 Millage Rate: 22.9629
Golden Beach Millage Code 1900 2020 Millage Rate: 24.1771
Hialeah Gardens Millage Code 2700 2020 Millage Rate: 20.9384
Hialeah Millage Code 0400 2020 Millage Rate: 19.3742
Homestead Millage Code 1000 2020 Millage Rate: 22.4626
Indian Creek Millage Code 2100 2020 Millage Rate: 22.0771
Key Biscayne Millage Code 2400 2020 Millage Rate: 16.5514
Medley Millage Code 2200 2020 Millage Rate: 20.8271
Miami (DDA) Millage Code 0101 2020 Millage Rate: 21.8145
Miami Beach Millage Code 0200 2020 Millage Rate: 19.3785
Miami Beach Millage Code 0201 2020 Millage Rate: 20.1946
Miami Gardens Millage Code 3400 2020 Millage Rate: 23.6096
Miami Lakes Millage Code 3200 2020 Millage Rate: 18.0898
Miami Millage Code 0100 2020 Millage Rate: 21.3464
Miami Shores Millage Code 1100 2020 Millage Rate: 23.794
Miami Springs Millage Code 0500 2020 Millage Rate: 23.1071
North Bay Village Millage Code 2300 2020 Millage Rate: 21.895
North Miami Beach Millage Code 0700 2020 Millage Rate: 22.3125
North Miami Beach Millage Code 0701 2020 Millage Rate: 16.1125
North Miami Millage Code 0600 2020 Millage Rate: 22.9931
Opa-Locka Millage Code 0800 2020 Millage Rate: 25.5771
Palmetto Bay Millage Code 3300 2020 Millage Rate: 17.9771
Pinecrest Millage Code 2000 2020 Millage Rate: 18.1761
South Miami Millage Code 0900 2020 Millage Rate: 20.0771
Sunny Isles Millage Code 3100 2020 Millage Rate: 17.9771
Surfside Millage Code 1400 2020 Millage Rate: 19.8931
Sweetwater Millage Code 2500 2020 Millage Rate: 19.7719
Unincorporated Miami-Dade Millage Code 3000 2020 Millage Rate: 17.7054
Virginia Gardens Millage Code 2600 2020 Millage Rate: 20.8771
West Miami Millage Code 1500 2020 Millage Rate: 22.6629

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Uncategorized
May 2, 2021

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After many starts and stops and years of inaction and delay, the City of Miami is days away from mobilizing its latest plan for improving Flagler Street downtown. “We are mobilizing the first week of May. The first section is expected to take nine months and the entire project is about 30 months long,” Hector L. Badia, with the City of Miami’s Office of Capital…

Miami Beach Convention Center lineup grows

The Miami Beach Convention Center is arising from pandemic shutdowns with 20 events and counting lined up for the rest of 2021, including the annual meeting of The Aesthetic Society (American Society for Aesthetic Plastic Surgery), which kicks off Friday. Last summer the center’s nearly 500,000 square feet of exhibit space was a state-sponsored covid…

Interest, Not Deals, Fuel Miami’s Office Market

Headlines portray Miami’s office market as a pandemic boomtown. While cities like San Francisco and New York suffer, Florida’s Magic City is wielding low taxes and a pro-business mayor to attract high-profile signings, including private-equity behemoth Blackstone, sandwich franchise Subway, and venture capital heavyweights Founders Fund…

Coral Gables may extend outdoor dining breaks into 2022

Under Coral Gables’ incoming mayor Vince Lago’s administration, restaurants will be able to use outdoor vacant lots and parking lots beyond the June 15 extended expiration date. Coming in May, Mr. Lago said, he’s presenting three ordinances that would expand on the outdoor dining experience through January 2022.  “It’s been very successful allowing…

WATCH: How the eviction ban is affecting landlords, renters

New York’s eviction moratorium has saved some from ruin, but threatens to cause it for others. The moratorium, which has stretched on for 13 months, isn’t the only of its kind: The Centers for Disease Control and Prevention announced its own national eviction moratorium last September which, like New York’s, has been repeatedly extended. And the state…

The Fed: Did the Pandemic Spur Urban Flight? A Look at the Eighth District

Recent research by economist Stephan Whitaker at the Cleveland Fed found little evidence of an “urban exodus” during the pandemic. Populations of urban neighborhoods declined across the U.S. in 2020. However, this decline was primarily due to a drop in the flow of people moving into urban areas—not a mass urban exodus. Whitaker found evidence of…

Seller of industrial property near MIA to Blackstone sues ex-partners for $5M

Blackstone’s $56 million purchase of an industrial property near Miami International Airport closed nearly two years ago, but the legal fight among the sellers is still brewing. Samuel Friedman alleges that he was shortchanged more than $5.1 million by the other three sellers of Airport Trade Center – Haim Yehezkel, Roy Mussaffi and Joseph Cohen. The…

Earnings up, stores down: Why successful retailers close locations

By the look of things, Best Buy had a great winter. Domestic revenue surged 11 percent in November, December and January to $15.4 billion. But in announcing the good news, the electronics retailer said it would lay off 5,000 full-time workers and ramp up store closings. In the crosshairs are 450 locations with leases expiring in the next three years. “There will be…”

The Innovators: Codina Partners

By 1979, Armando Codina had already pioneered the field of data processing for doctors’ offices when he founded Codina Group, which he grew into Florida’s largest privately held commercial real estate company. He later merged it with another to eventually be sold off to Fortress Investment Group. In 2009, he teamed up with his daughter…

American Landmark CEO Joe Lubeck Provides Updates On Florida Strategy, $2B Shopping Spree

When Bisnow checked in with American Landmark CEO Joe Lubeck last March, the coronavirus pandemic had just broken out and the stock market crashed 26%, but he was still calmly intent on deploying $2B in capital to buy up apartment complexes. “We had hoped to acquire a billion last year,” Lubeck said. “We ended up with about $700M. So we didn’t quite hit our…

Expanding his empire: David Grutman to take over The Forge in Miami Beach

In a deal that marks the end of a dynasty’s control, hospitality mogul David Grutman plans to take over The Forge in Miami Beach, The Real Deal has learned. Alvin Malnik opened The Forge in the 1950s, and the glitzy restaurant was known as a hangout for celebrities like the late Frank Sinatra and Elizabeth Taylor. The restaurant at 432 West 41st Street…

Rent hikes are back

Stimulus payments, the vaccine rollout, low inventory of homes for sale and the recovering economy likely contributed to landlords accelerating the pace of rent increases last month. (iStock) The pandemic did not stop rents from increasing, but it steadily slowed that increase to almost nothing. However, the trend ended last month, according to a new report. In…

Telecommunications and power delivery contractor Concurrent Group leases in Opa-Locka & more leasing news

Concurrent Group LLC, a telecommunications and power delivery contractor, leased 8.4 acres in the Gratigny Industrial Park at 3705 Northwest 123rd Street in Opa-locka. The yard can fit nearly 200 trailers. Edward Easton of The Easton Group represented Concurrent Group. Brian Smith at JLL and Bob Comunale of Industrial Group…

For Data Centers, Opportunity Lies In Florida

The number of people who move into Florida each year is about equal to the population of Orlando, said Landmark Dividend Senior Vice President and Chief Technology Officer John Regan, speaking on a Bisnow webinar about South Florida data centers on April 22. Most of those roughly 500,000 new residents use computers and smartphones. “If every one of them…”

Dev site with retail-office building in Wynwood Norte hits market for $25M

A development site with a fully leased retail-office building in Miami’s newly anointed Wynwood Norte district hit the market for $24.5 million. An investment partnership led by Cymbal Development is selling the 1.4 acres at 3452 and 3466 North Miami Avenue, 20 and 34 Northwest 35th Street, and 28 and 29 Northwest 34th Terrace, according to a release. Property…

Commissioners give green light to 36-story tower in the Miami Design District

Despite protests from a competing developer, Dacra and its partners are a step closer to finalizing zoning changes that would allow them to build a 36-story tower in the Miami Design District. The Miami City Commission voted 5-0 on Thursday to preliminarily approve a slate of changes in the Miami Design District special area plan, or SAP. They include increasing the…

Building owners crucial to Biden’s climate goals

If President Joe Biden is to slash the country’s greenhouse gas emissions in half by 2030, he will need a lot of help from residential and commercial buildings owners. The president announced the goal, which is based on 2005 emission rates, Thursday during a global climate summit. The new target greatly accelerates the Obama administration’s reduction target of…

Northbridge sells Aldi-anchored shopping center in West Kendall for $22M

Northbridge Investment Management sold the Aldi-anchored Kendall Pointe shopping center in West Kendall for $22.4 million. A deed shows the Toronto-based investment firm sold the property at 16508 and 16514 Southwest 88th Street to Arlington Mass, which is tied to Miami-based self-storage provider A+ Storage. The buyer took out an $11.4 million loan…

Optimizing the office: How flex workspaces will bring tenants back

Companies have accepted that work-from-home is here to stay. Commercial landlords need to stay relevant. Enter the flexible office. TRD Brand Studio will host its first virtual event, Optimizing the office: How flexible workspaces will bring back office tenants, on Tuesday, May 4 at 2 p.m. EST. This live event will feature executives from Essensys, IWG, Industrious…

Ocean Terrace developers to pay $3M to settle lawsuit with Miami Beach

Miami Beach squeezed a $3 million payment from the developers of Ocean Terrace to end a dispute over floor-to-area ratio calculations for the North Beach mixed-use project. Miami Beach city commissioners on Wednesday approved a settlement agreement with Ocean Terrace Holdings that squashes a lawsuit the developers filed against Miami Beach in…

Fifteen Group sells off last piece of Homestead townhome portfolio for $101M

Fifteen Group sold the last piece of its Homestead townhome portfolio for $101 million. The Miami-based investment firm, led by brothers Mark and Ian Sanders, sold 157 units to an undisclosed bulk buyer, according to a release. Late last year, Fifteen Group sold the 292-unit Seascape Pointe community, within the assemblage, to Mast Capital. Fifteen Group…

Exeter Property Group buys Miami Gardens industrial property for $14M

Exeter Property Group bought a Miami Gardens industrial building occupied by RC Home Showcase for $13.5 million. The Conshohocken, Pennsylvania-based commercial real estate investor, developer and manager purchased the property at 16115 Northwest 52nd Avenue from K2 Aluminum in an off-market deal, according to broker Jonathan Salk…

MMG’s Retail Real Estate Leases – Q1 2021

The South Florida retail market is witnessing quite a bit of activity despite the influence and presence of the pandemic, and it seems it is turning the page. There are several factors for this, but two primary reasons are: 1) Florida is back in business and much more open than other states, and 2) people…

Neology Debuts Allapattah Multifamily, No. 17 Residences

Neology Life Development Group has opened its first ground-up residential project in Miami’s Allapattah neighborhood. The No. 17 Residences Allapattah has also pre-leased 50 percent of its units and will see residents move in this month, according to Neology. The luxury community offers 192 units in studio, one-, two- and three-bedroom floorplans that range…

There’s “lots of runway in real estate”: Blackstone’s Jon Gray

Blackstone Group’s president and COO Jon Gray thinks higher inflation is on the way, and he thinks risky real estate investments could be the anecdote for investors. “What we’re trying to do is position ourselves for things that look and feel [the] least bond-like as much as possible,” Gray said Thursday during the investment giant’s first-quarter earnings call. Gray said safe…

Last call? Miami Beach proposal would ban future standalone and rooftop bars on Ocean Drive

Miami Beach’s strategy for killing the rowdy, at times violent, party atmosphere on Ocean Drive and nearby Collins Avenue involves curtailing development of future standalone and rooftop bars. The Miami Beach City Commission on Wednesday gave preliminary approval to a slate of commercial changes aimed at revamping the Art Deco Historic District…

Biden administration considers Opportunity Zone overhaul

A Trump-era tax incentive was meant to drive investment into parts of the country that were struggling economically. Spoiler alert: It didn’t, and President Joe Biden’s administration is weighing what it wants to do about the program. For a recently released study on the program, researchers at the University of California, Berkeley, looked at 2019 investment figures…

Tricera Capital, LNDMRK Acquire Cube Wynwd Office Building in Miami for $28M

Tricera Capital, a Miami-based real estate investment firm, and LNDMRK Development have acquired Cube Wynwd, a newly constructed office building with ground-floor retail space in Miami’s Wynwood neighborhood. RedSky Capital sold the property to the buyers for $28 million. Scott Wadler and Michael Basinski of Berkadia arranged the $27.5 million loan for…

Prestige scores $21M construction loan for three Hialeah workforce housing complexes

Prestige Companies is continuing its multifamily development spree in Hialeah, as it just scored a $21 million… loan for three workforce housing complexes. The Miami Lakes-based developer will start building Palm Avenue Lofts at 1201 Palm Avenue; Champions Lofts at 40 West 23 Street and 2290 Palm Avenue; and Poe’s Lofts at 7901 West Fourth Avenue…

Downtown Delray Beach retail building sells for $12M

A retail property along Atlantic Avenue in downtown Delray Beach sold for $11.5 million, delivering a windfall for the family that owned it for more than 40 years. The Cook family of Delray Beach, through an affiliate, sold the building at 325 East Atlantic Avenue to an entity managed by Steven Cohen of Delray Beach, records show. The buyer, 325 East Atlantic…

Mindful Capital buys Deerfield Beach industrial complex for $6 million

Mindful Capital Group bought a Deerfield Beach industrial property for $6 million. Delray Beach-based Mindful Capital, through an affiliate, bought the four-building complex at 830 Northeast 41st Court from Lotus Commerce Center, according to a deed. The 43,500-square-foot complex was built in 1991 on 4 acres, records show. The seller, managed by attorney…

Nuveen buys Coconut Creek multifamily complex for $47 million

An affiliate of global investment manager Nuveen bought a Coconut Creek multifamily complex for $46.5 million. CVIII Waterview Apt Holdings bought the 192-unit Waterview at 3621 Hillsboro Boulevard from Coral Gables-based Bar Invest Group, according to a deed. The buyer has the same New York address as Nuveen and lists several…

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April 28, 2021

Commercial Property Borrowing Cost Quarterly 2021 Q1: 5-Year Yield Up from Zero-ish, Approaching 1%

U.S. Treasury 5 Year Nominal Rates for the Five Year Period Ending March 31, 2021

Yields on 5-year U.S. Treasury Notes edged up to 0.92% by the end of March. This is low, to be sure, but up from the barely-keeping-its-head-above-naught 0.36% yield booked at the prior year’s end. This yield is considered to most closely track commercial real estate financing cost, and those are of particular interest to investors in commercial property.

This cheap money environment continues to be a powerful force on commercial real estate prices. There are of course ongoing concerns about what follows from here, but that is unknown. What is known for sure is that lower interest rates means lower debt service. Also, real estate income becomes relatively more attractive to fixed income investments.

The interest rate environment has the ability to affect commercial real estate values in a number of different ways. Borrowing cost, i.e. debt service, is of course affected directly, as higher interest rates increase the cost of borrowing and thus negatively affecting demand. Cap rates tend move over time, but not always in the short term, in line with interest rates, with considered analyses generally concluding that cap rates move on average in the same direction as 10-year rates, but by about a third as much. Interest rates also affect the economy, which in turn affects vacancy and rental rates.

Also see:



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April 23, 2021

Miami Commercial Real Estate News April 21, 2021: Two Multifamily Trades Near $100 Mil; Two Industrial Prop Sales Exceed $25 Mil; Miami Attracting Big Tech, NY; More…

Chart: Miami Commercial Real Estate Sales to List Price Ratio March 2021

The sales to list price ratio as reported by the Miami MLS for improved commercial real estate (MLS classification: commercial/industrial) within Miami-Dade county in Florida priced from $1 million to $10 million in March came up a bit to 93% from 89.5% the month prior. Though off of highs in the past 10 years, this percentage is nonetheless in the upper…

Estate Companies sells Soleste Twenty2 apartments in West Miami for $97M

The Estate Companies sold its fourth West Miami multifamily community, this time for $97 million. The South Miami-based developer said it sold the 338-unit Soleste Twenty2 at 2201 Ludlam Road to Dallas-based Westdale Real Estate Investment Management. The sale equates to $286,982 per unit. The eight-story property on half an acre totals…

Estate Cos. Sells Newly Built, Luxury Apartment Community in West Miami for $97 Million

The Estate Cos. (EIG), a private developer of multifamily properties, has sold Soleste Twenty2 in west Miami for $97 million. The locally based developer completed the eight-story luxury apartment community in February 2020. An entity doing business as Westdale Twenty2 LLC purchased the 338-unit community. The buyer is an affiliate of Westdale Real Estate…

Panel: ‘Astronomical’ Multifamily Investment Demand Drives Up Pricing

The U.S. multifamily sector remains an attractive option for real estate investors looking for a safe haven. Beyond the pool of traditional buyers who are actively acquiring apartment properties, the sector has become a landing spot for companies that aren’t legacy multifamily owners. Steven DeFrancis, CEO of Cortland, cited REITs like Blackstone Real Estate…

Miami Senior Housing Project Lands $42M Loan

Royal Senior Care has received $41.9 million in construction financing for its upcoming, 217,123-square-foot luxury senior community, dubbed The Oasis at Coral Reef, in Miami’s Richmond Heights neighborhood. BHI’s Healthcare Group arranged the debt, which included a $31.9 million loan provided by BHI, along with a $10 million note from Coastal States Bank.

Chart: Miami-Dade Commercial Real Estate Sales March 2021

The chart herein displays the number of closed sales of Miami-Dade commercial properties, including improved commercial property and vacant commercial land, that were recorded in the Miami MLS for the two years ending February 2021. March, as can been seen, was a record for the past two years. Looking back farther than the data in this chart, March…

North Miami Beach approves mixed-use, multifamily Skygarden tower

North Miami Beach gave final approval for a Turkish developer to build a 19-story, mixed-use multifamily tower. Skygarden at 16900 Northeast 19th Avenue will be 224-feet tall and include 341 apartments, 12,635 square feet of retail space, 405 parking spaces, a recreational deck with a pool and garden on the sixth floor, a rooftop terrace, and public art. Developer…

Land Enterprise Service LLC Picks Up Miami Airport/Doral Industrial Land Site For $3.7 Million

State Street Realty recently completed an industrial land sale transaction valued at nearly $3.7 million within Beacon Lakes Business Park. The Class “A” +/-3 acre industrial land site is a prime property situated on NW 17 Street & 127th Avenue adjacent to the Florida Turnpike & Dolphin Expressway (SR 836) within the Miami Airport/Doral submarket.

Tech workers plan to head back to offices by Q3

By September, a slew of workers may be finally returning to their offices. That’s according to a new report by Savills, which surveyed more than 120 tech companies in March about their future office plans. More than 50 percent said they expect to be back in the office by the third quarter of this year. Twenty-four percent said they would be back by the fourth quarter…

Tricera, Alex Karakhanian buy Redsky’s Cube Wynwd for $28M

A joint venture between Tricera Capital and Alex Karakhanian’s Lndmrk Development paid $28 million for Redsky Capital’s new Class A Miami office building, The Real Deal has learned. Redsky and its joint venture partner, JZ Capital Partners, completed the eight-story, roughly 100,000-square-foot Cube Wynwd, at 222 Northwest 24th Street, in 2019. It’s about 30 percent…

Nightlife Mogul David Grutman Rumored to Be Eyeing Miami’s Wynwood Garage

Days after his lavish bash for his newest venture, the king of Miami’s nightlife, David Grutman, is said to be expanding his real estate portfolio into Wynwood, Commercial Observer has learned. Groot Hospitality, Grutman’s company, is in talks to lease a retail location at the Wynwood Garage located at 2660 NW 3rd Avenue, according to two sources…

‘Slammed’ With Showings And Deals: Miami Only Market In U.S. Expected To See Office Rents Grow

According to JLL’s most recent Office Insight Report for Miami, Q1 marked the fourth consecutive quarter of negative absorption, but “recent leasing activity suggests that occupancy gains will resume before the close of the year.” According to CBRE, Miami is the only market in the country that will see office rents grow in the next two years. “I would venture to say that…”

Gold Rush for Miami Restaurant Space as New Yorkers Make Their Move

It’s booked solid for a month in advance — inside at full capacity with no social distancing. Cote, a New York-based, Michelin-starred Korean steakhouse, opened its Miami branch in the swanky Design District on 3900 NE 2nd Avenue, in February. “We struck gold,” said Simon Kim, Cote’s owner.Miami’s restaurant market is thriving, in stark contrast to…

Sentinel buys Miami Beach, Bay Harbor Islands apartment portfolio for $97M

Sentinel Real Estate is betting big on the Miami Beach and Bay Harbor Islands multifamily market, buying a 452-unit portfolio for $96.6 million. The New York-based commercial real estate investment manager bought 25 buildings in Miami Beach and five in Bay Harbor Islands from various affiliates of Boardwalk Properties, according to deeds and a spokesperson…

Sentinel Real Estate Corporation Acquires Miami Beach Multifamily Portfolio for $96.57 Million

Sentinel Real Estate Corporation (“Sentinel”) announced today the $96.57 million acquisition of a 452-unit multifamily portfolio in Miami, Florida. The portfolio comprises a total of 30 individual properties – 25 of which are located in the heart of South Beach, with the other five located in the coveted submarket of Bay Harbor in North Miami Beach.

Retail landlords still suing over skipped rent

While businesses have been suing their insurers, commercial landlords have also been filing claims against tenants that have skipped rent, citing similar coronavirus losses. While no database tracks these cases, several recent rulings have gone against tenants. Movie theaters — one of the sectors the pandemic has pushed to the brink — have found little solace…

Lawsuits, interrupted: Judges nix business pandemic insurance claims

GreenStreet Cafe’s lunchtime rush had just ended on a recent afternoon, but the clamor of dishes in the kitchen hadn’t ceased. Business has finally picked up at the popular eatery in Miami’s Coconut Grove, known for its red velvet outdoor couches, a place where athletes and artists have dined over the past 30 years. Still, owner Sylvano Bignon is heated. A judge in…

Sunbeam Television completes $57M waterfront assemblage in North Bay Village

Sunbeam Television Corp., owned by the billionaire Ansin family, completed a waterfront assemblage of more than 6 acres in North Bay Village. Sunbeam, led by president and CEO Andy Ansin, most recently paid $13.5 million for the former Trio on the Bay restaurant site at 1601 79th Street, according to the brokers involved in the deal, Samuel Heskiel…

Notable Retail Leases Signed in South Florida Q1 2021

South Florida Retail Leases 2021 – 2020 We’ve compiled a comprehensive list of the top retail leases signed by square footage in South Florida during Q1 2021. This quarter was busy overall, especially considering the current pandemic, and saw several big box leases signed and sealed. Despite the sentiment that the traditional retail market is…

E11even condo tower planned for downtown Miami reaches 90% of units under contract in two months

It’s last call for potential buyers of the E11even Hotel & Residences Miami. Developers Property Markets Group and E11even Partners officially launched sales in February for the 375-unit hotel and condo tower planned for downtown Miami’s Park West neighborhood, and now have 90 percent of the units under contract, The Real Deal has learned. Buyers put down…

Billionaire Vlad Doronin, partner score $128M construction loan for Brickell condo tower

OKO Group, the real estate development firm led by billionaire Vlad Doronin, and Jonathan Goldstein’s Cain International secured a $128.3 million construction loan for a waterfront Brickell condo project. Bank OZK provided the financing for Una Residences, a 47-story, 135-unit tower currently under construction, according to a press release…

Centennial Bank Provides $12.5M Construction Loan for Workforce Housing Project in Miami

Centennial Bank has provided a $12.5 million construction loan to Prestige Cos. and Florida Value Partners for Trails, a workforce housing project located on the Ludlam Trail at 1040 SW 70th Avenue in Miami. The project’s first phase will consist of two- to three-story garden-style buildings with 84 residential units ranging from one- to two-bedroom units listed from…

Single-tenant office buildings face higher risk of default

At one point, leasing an office building  to a single tenant rather than collecting from multiple smaller businesses seemed to be a sure thing. But now some office landlords who’ve relied on one tenant are at risk of losing their properties as more companies shed space, the Wall Street Journal reported. Just outside of Houston, oil company Schlumberger occupied…

Prestige Companies nabs $12M construction loan for multifamily project on Ludlam Trail

Prestige Companies scored a $12.4 million construction loan for a workforce housing project to be built on the site of a former mobile home park in central Miami-Dade County. Miami Lakes-based Prestige and Miami-based Florida Value Partners are building the $17 million The Trail garden-style community at 1040 Southwest 70th Avenue, along the…

Miami Marine Stadium champion looks to concerts revenue bonanza

The key to a financially successful restored Miami Marine Stadium will be concerts, says Don Worth, who has devoted much time for more than a dozen years to getting the stadium rebuilt and reopened. Mr. Worth was one of several speakers during a virtual community meeting April 15 about the future of the famous concrete stadium on Virginia Key. Sponsors…

Historic Walgreens site redevelopment clears alcohol hurdle

The success of a plan for major redevelopment of an historic building in Miami hinged in part on the ability to sell alcohol. Developers cleared that hurdle, and another involving parking, at the April meeting of the city’s Historic and Environmental Preservation Board. The developers, 200 E Flagler Development LLC, had requested a zoning exception to permit…

Groot Hospitality, Partners Open Goodtime Hotel on South Beach

The Goodtime Hotel, the first collaborative lifestyle hotel brand from David Grutman of Groot Hospitality and Pharrell Williams, has opened on South Beach’s Washington Avenue and 6th Street in Miami Beach. Grutman and Williams worked alongside the real estate developers Michael Fascitelli and Eric Birnbaum of Imperial Cos. to build the hotel. Morris Adjmi was…

Miami’s mayor a magnet for Big Tech money

Miami Mayor Francis Suarez’s call to make Miami the new Silicon Valley has Big Tech and real estate pouring cash into his coffers. Newly minted venture capital billionaire Chamath Palihapitiya, crypto investors Tyler and Cameron Winklevoss, Shutterstock founder Jon Oringer and others are backing the mayor’s reelection campaign this year to the tune of more…

$414B PE Firm Apollo Considering Opening Miami Office; Employees Prefer

Apollo Global Management, a private equity firm with $414 billion under management, is considering opening a Miami office. The new office in Miami is being considered after the company surveyed employees on where they would like to work from, a spokesperson told Bloomberg. An office in West Palm Beach is also under consideration following the survey.

Techcrunch Founder Says Miami Is Now The World’s Best Place For Entrepreneurs: ‘So Perfect Right Now’

The founder of Techcrunch says there is no better place to be than Miami right now. Michael Arrington, who was once named by Time Magazine as one of the most influential people in the world, wrote in a Twitter thread that Miami is “so perfect right now,” and explained why. Part of the reason is the weather, but Arrington explained that it is much more than that.

TA Realty buys Hialeah Gardens warehouse for $26M

TA Realty bought a Hialeah Gardens warehouse for $25.8 million, amid pent-up market demand in light of e-commerce growth. Records show Boston-based TA Realty, through an affiliate, bought the property at 14001 Northwest 112th Avenue from EWA Hialeah Gardens Owner, which is tied to Denver-based EverWest Real Estate Investors. CBRE’s Jose Lobon…

Ivy Realty buys Miami-Dade warehouse with cold storage for $26M

Ivy Realty snagged a Miami-Dade County warehouse with cold storage for $26 million, as it continues to expand its South Florida industrial portfolio, The Real Deal has learned. The commercial real estate investor bought the property at 6950 Northwest 77th Court from an affiliate of The Apollo Group in a sale-leaseback. The Apollo Group, a logistics provider to cruise…

Lissette Calderon delivers first multifamily project in Allapattah

Developer Lissette Calderon has completed the first of her three apartment projects in Miami’s Allapattah neighborhood. Nearly two and a half years after buying the land, Calderon’s Neology Life Development Group received a temporary certificate of occupancy for the 192-unit No. 17 Residences, a 13-story building at 1569 Northwest 17th Avenue. Calderon said it’s…

Sapir Organization’s Alex Sapir On Miami’s Condo Market

Early last year, Alex Sapir, president and CEO of The Sapir Organization, had received a certificate of occupancy for Arte, the 16-unit luxury condo his team developed in Surfside, just north of Miami Beach. He was working through a punch list when the coronavirus pandemic hit. “February of 2020, we were negotiating with two contracts which were, we thought…”

Publix Aims to Dominate Florida’s Supermarket Food Chain

To understand just how aggressively Publix Super Markets is blanketing South Florida with stores, look no farther than the corner of Commercial Boulevard and Dixie Highway in Oakland Park. At the northwest quadrant is a Publix that has operated for years. And just across Commercial Boulevard is another Publix. The newer location at the corner opened…

The Industrial Park of Doral Continues To Grow

Since March of 2020, more than 700 new companies have started operations in the Industrial Park of Doral, and many of these companies were already operating in our city. Now they are in search of larger spaces in order to expand and improve their operations. Manuel Pila, Economic Developer for the City of Doral, informed us about this, and he has also expressed that…

The Yield Curve as a Predictor of Future Growth and What Its Recent Steepening May Portend for the Economy

In recent weeks, the steepening yield curve has become a topic of conversation among market participants. For starters, the slope of the yield curve can be measured as the difference in nominal interest rates between long- and short-term U.S. Treasury securities. Using the spread or difference between the 10-year and two-year constant maturity Treasury rates…

Cities Look To Coworking To Accelerate Return To Work, Downtown Recovery

For more than a year, city governments encouraged people to stay home to slow the spread of the coronavirus. But that message has shifted, and cities are now pushing to bring people back to offices to help revive their downtown areas, and they see coworking spaces as a way to accelerate that effort. Over the last three months, Miami, New York and D.C. have…

Miami-Dade County wins lawsuit over Coconut Grove Playhouse partial demolition

A plan to partly demolish and renovate the historic Coconut Grove Playhouse is back in play, after a court struck Miami Mayor Francis Suarez’s veto of the project. Miami-Dade County wants to build a 300-seat theater that would incorporate elements of the original 1927 auditorium and restore the facade. The playhouse has a city historic designation and…

Cryptofinance firm buys waterfront commercial condo to move HQ to Miami

Cryptofinance firm XBTO Group is moving its headquarters to Miami. The New York-based firm paid $5.4 million for a waterfront commercial condo at Biscayne Beach in Miami’s Edgewater neighborhood. Two Roads Development, which built the 51-story tower, sold the 5,400-square-foot space, said Arden Karson of Karson & Co., who brokered the deal.

Ironstate pays $16M for Wynwood site, marking first property in Miami

Ironstate Development Group purchased a property in Wynwood for $15.6 million, marking its first South Florida site, The Real Deal has learned. The Hoboken, New Jersey-based development firm, led by brothers David and Michael Barry, acquired the Art by God assemblage at 60 Northeast 27th Street. The buyer is 26-60 NE 27th Street LLC, according to brokers…

American Landmark buys Plantation apartments for $58M

American Landmark CEO Joe Lubeck and The Marin. (American Landmark, Arium) American Landmark Apartments bought The Marin by Arium for $58 million, with plans for renovations that include rebranding the complex as The Pearl. Tampa-based American Landmark, through an affiliate, purchased the 223-unit community at 3880-3960 West Broward Boulevard from CPI/Carroll Grove East Owner, which is an affiliate of Atlanta-based Carroll, according to a deed. The sale equates to $260,090 per unit. The garden-…

Alliance Consolidated sells Hallandale Beach medical office building for $6M

Alliance Consolidated Group of Companies sold a Hallandale Beach medical office building fully leased to a dialysis center for $5.9 million. Records show the Bannockburn, Illinois-based commercial real estate investor, through an affiliate, sold the building at 22 Southwest 11th Street to 30 Sherman Ave. Realty. It was a 1031 exchange, according to a press…

Urso Family Realty sells Fort Lauderdale warehouse for $11M

An entity tied to a West Coast shipping company bought a Fort Lauderdale warehouse for $10.6 million. Records show the buyer, led by Andrew Naumov, an executive of Richmond, California-based West Coast Shipping, bought the property at 6001 North Powerline Road from Urso Family Realty. The buying entity, 6001 Powerline LLC, secured a $5 million mortgage…

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April 21, 2021

Chart: Miami-Dade Commercial Real Estate Sales March 2021

Miami MLS Number of Sales from April 2019 to March 2021 for a) Commercial, Industrial or b) Commercial, Business, Agricultural, or Industrial Vacant Land within Miami-Dade County, Florida

The chart herein displays the number of closed sales of Miami-Dade commercial properties, including improved commercial property and vacant commercial land, that were recorded in the Miami MLS for the two years ending March 2021. March, as can been seen, was a record for the past two years. Looking back farther than the data in this chart, March was a record for the past 10 years. March’s sales were 12% higher than the next highest, which was June 2017. This is only for sales booked in the Miami Multiple Listing Service (MLS), which does not record all commercial property sales, but does many.

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April 20, 2021

Miami Commercial Real Estate News April 14, 2021: Miami-Beach 7-Eleven Sells for $11 Million; Dezer Partnering with Bentley for Sunny Isles Development; More…

Capital Realty affiliate sells South Miami office and retail building for $5M

An affiliate of Capital Realty Services sold a mixed-use office and retail building along South Miami’s Sunset Drive for $5 million. Sunset One Properties sold the property at 5875-5887 Sunset Drive to 5875 Sunset Group, a Hollywood-based investment group led by Stanley and Michael Cohen, according to a deed. The two-story building totals 10,463 square…

Fill ‘er up: Power Petroleum buys Miami Beach 7-Eleven with gas station for $11M

Power Petroleum bought a Miami Beach 7-Eleven with a gas station for $11.25 million, the same amount as the listing price, the brokers said. The Pompano Beach-based, family owned petroleum supplier bought the property at 6348 Collins Avenue from Ivelise Daily, as trustee of the Sarah D. Brito Revocable Living Trust. Alejandro D’Alba and Scott Sandelin…

Gil Dezer partners with Bentley for luxury condo tower in Sunny Isles Beach

Developer Gil Dezer, known for his luxury condo towers and exotic car collection, is partnering with Bentley for his next project. Dezer Development will build a Bentley Motors-branded skyscraper on an oceanfront site in Sunny Isles Beach. Sales are expected to launch later this year, as early as October, Dezer told The Real Deal. It will mark the first…

Echoing Pre-COVID Times, Fed’s Beige Book Returns to Describing Modest Growth

The Beige Book has begun to sound rather ordinary again. After a year of pandemic-induced economic turmoil, that is welcome news indeed. The Atlanta Fed’s portion of the report summarizes southeastern economic conditions in the six weeks preceding each meeting of the Federal Open Market Committee. For years, Beige Book descriptions of “modestly…”

Miami’s Brickell Area Makes List of 50 Priciest Submarkets for Office Space in Q4 2020

As the effects of the pandemic continue to be felt in the commercial real estate (CRE) world, some companies are switching up their future policies regarding work from home and reevaluating their office footprint. So, CommercialSearch conducted a study to find which were the 50 most expensive office space submarkets in Q4 2020. Overall, 42 of the 50…

Medical offices are just what the doctor ordered for landlords

Medical offices have been a bright spot for real estate investors during the pandemic, despite the fact that telehealth saw a boom during the pandemic. Doctors and medical professionals have remained on time with their rent payments in the past year, unlike other office tenants, the Wall Street Journal reported. While some tenants have paid less than 85 percent…

Pharrell’s Goodtime Hotel opens in Miami Beach

After roughly five years and $200 million, the Goodtime Hotel is almost open. The Washington Avenue hotel, developed by Imperial Companies’ Michael D. Fascitelli and Eric Birnbaum, opens Thursday. The developers brought on star talent… Pharrell Williams, hospitality mogul David Grutman and designer Ken Fulk… at 601 Washington Avenue…

$11.3M Sale Arranged of Miami Beach Property Leased to 7-Eleven

Marcus & Millichap has arranged the $11.3 million sale of a 4,370-square-foot retail property leased to 7-Eleven in Miami Beach. Alejandro D’Alba and Scott Sandelin of Marcus & Millichap marketed the property on behalf of the seller, an individual/personal trust known as Armando’s Service Station, Inc. (dba 7/11 Store). The buyer was Power Petroleum Inc…

Top-5 Miami Shopping Centers: Retail Market Trends & Analysis 2021

Miami’s incredible, sunny climate and outdoor, social lifestyle create a foundation for the fundamental presence of retail shopping centers and malls in the region. In fact, it’s a Top-10 Shopping Destination in the USA on a variety of lists, including Travel & Leisure’s latest list. This is just one of the many factors that makes…

Estate Companies scores $30M construction loan to turn Hialeah Ramada into multifamily

A plan to convert a long-closed Hialeah hotel into multifamily is moving forward, as the developer scored $29.5 million in construction financing. The Estate Companies has started construction to turn the Ramada Inn at 1950 West 49 Street into Alture Westland, according to a press release. The project is expected to be finished in the fourth quarter.

Accor to Run Miami Worldcenter Tower Under Morgans Originals Brand

Miami-based real estate developer Royal Palm Companies (RPC) and French hospitality behemoth Accor will team up to operate the luxury skyscraper, Legacy Hotel & Residences at Miami Worldcenter, a 27-acre, mega-development project situated in the city’s downtown, Commercial Observer has learned. Accor will manage and operate the building under the…

Commercial Property Sales Close in Coral Gables Central Business District as City Continues to Evolve

The Coral Gables central business district is quickly taking on a new form. The Plaza, to the east of the Ponce Circle, is coming online, with one office tower recently completed and another expected to be toward the end of 2021. Together, these towers will add nearly half a million square feet of office space to the area. Big tenants have reportedly already signed up…

Public-private deal’s apartments downtown set to take tenants

Grand Station Apartments, the product of a public-private partnership with the Miami Parking Authority (MPA), is ready to begin lining up tenants that will fill its 300 units. ROVR Development has announced it has begun pre-leasing for Grand Station Apartments, a 30-story apartment tower in the heart of Downtown Miami. Expected move-in will take place over the…

Miami-Dade housing rents dip a hair

As the vaccine rollout allows the economy to slowly reopen and replenish jobs, the need for multifamily rental spaces has increased throughout Miami-Dade County. So far in 2021, the average effective rent year-over-year is down 0.2 % in Miami-Dade Metro Area, compared to a 2.7% decrease in 2020, according to Marcus Millichap’s 2021 first-quarter multifamily…

East-West transit corridor might have lost a major funder

With the future of the Miami-Dade Expressway Authority (MDX) in legal limbo, the county is developing alternative plans for building and operating a rapid bus service known as the East-West Corridor. The plan now for the route linking West Miami-Dade to Miami International Airport and downtown Miami along the 836 (one of five toll roads MDX oversaw)…

Ronny Finvarb plans boutique hotel on Alton Road site in Miami Beach

Miami Beach hotelier Ronny Finvarb closed on the site of a planned boutique hotel on Alton Road. Finvarb’s Sobe 18 LLC paid $4 million for the 10,200-square-foot property at 1790 Alton Road in Miami Beach, he said. There, he plans to build a 36-key hotel with a restaurant on the ground floor. Property records show 1790 Alton Holdings LLC sold the lot.

Lease roundup: Iberia Foods takes 78K sf space in Hialeah; more

Centergate at Gratigny Iberia Foods inked a nearly 78,000-square-foot lease at Centergate at Gratigny in Hialeah. The three-building Class A industrial property at 5801 and 6301 East 10th Avenue totals 1.6 million square feet. Easton & Associates’ Michael Waite represented Iberia. Transwestern Real Estate Services’ Thomas Kresse, Walter Byrd, Ben Eisenberg and…

Terreno Realty Buys Miami-Dade Property, Plans Warehouse Development

Terreno Realty Corp. said it plans to build a pair of warehouses in Miami-Dade County after buying a vacant site in the Gladeview area. VF 73rd Street LLC, managed by Rene Vivo Jr. and Augusto J. Fonte in Hialeah, sold the 5.8-acre site at 3000 NW 73rd Street to Bellevue, Washington-based Terreno Realty Corp. for $5.8 million. The property…

Over 340M sf of industrial space set for delivery in 2021

Tesla’s Gigafactory (Tesla) Everything is bigger in Texas so it’s no surprise the Dallas area is leading the way in industrial construction. About 28 million square feet of warehouses and distribution centers across 81 projects in Dallas-Fort Worth are scheduled to be completed by year-end, according to a report from CommercialSearch, a CRE listings company.

Dollar General thrives amid retail apocalypse

Don’t tell Dollar General that brick-and-mortar retail is dead. The retailer plans to open 1,050 new stores this year, Business Insider reported, part of an aggressive expansion plan that goes against the push many retailers have made to increase their online operations. That follows a similar pace of expansion in 2020, when 1,000 new stores opened and 1,670…

Michael Stern’s tower site deemed brownfield, paving way for tax breaks

The site of Michael Stern’s planned 62-story One Southside project in Brickell is officially a brownfield… The designation will allow Stern, founder of New York-based JDS Development, to pursue state tax credits as well as grants from the federal EPA to remove any contamination found on 32,250-square feet at Southwest Second Avenue and 12th Street owned…

McDonald’s to shutter hundreds of Walmart outposts

As fast-food restaurants with drive-throughs have gained popularity, those without have waned. Now, McDonald’s is planning to close hundreds of its eateries in Walmart stores by the end of the summer, the Wall Street Journal reports. That will leave just 150 of the Golden Arches’ Walmart locations across the country — down from 500 at the start of 2020…

Owners of historic Shelborne hotel in South Beach seek approval for renovation

The owners of the historic Shelborne Hotel at 1801 Collins Avenue are planning a renovation of the oceanfront South Beach property. Shelborne Hotel Partners WC LP submitted a proposal to the Miami Beach Historic Preservation Board for the partial demolition, renovation and restoration of portions of the hotel. The ownership group also wants to add a…

Mall vacancy rate hits all-time high

It’s not just office and residential landlords who need to worry about soaring vacancy rates. The vacancy rate for regional and superregional malls hit 11.4 percent in the first quarter of 2021, the highest it’s ever been. That’s up from 10.5 percent in the fourth quarter of 2020 — an increase of 90 basis points in a single quarter, according to a report by Moody’s…

Remote Work Expected to Decrease Office Density and Demand

The era of tightly packed offices could be gone as office spaces are expected to be less dense in the coming years as remote work seems here to stay, CoStar Group predicted. CoStar suspects that a hybrid, part-home, part-office work model might prove the most efficient and productive for employees. Plus, both workers and employers prefer the flexibility.

Astor Companies scores $32M construction loan for Miami apartments

The Astor Companies scored a $32.4 million construction loan for its planned mixed-income, multifamily project near Miami’s Flagler Street. Coral Gables-based Astor, led by founder Henry Torres, is developing the 10-story, 199-unit Douglas Enclave at 61 Northwest 37th Avenue. Ocean Bank issued the loan, according to records. Astor plans to start…

Brickell dev site hits market, broker expects it to fetch more than $25M

A developable assemblage in Miami’s Brickell neighborhood hit the market, with zoning that allows for two 48-story towers. The listing broker said he expects it to sell for more than $25 million. Owner Progesti Corp. listed the 1.3 acres at 180 Southwest Ninth Street, 244 Southwest Ninth Street, and 901 Southwest Third Avenue. Progesti, whose president is Jose Nunez…

Planet Cellular Purchases Doral Office/Warehouse Facility

Planet Cellular paid $4,400,000 for a ±30,000-square-foot office/warehouse facility located at 8788 NW 15 Street in Doral. Based in Los Angeles, California, Planet Cellular Inc. (PCI) is a specialized re-seller of IT and telecommunication hardware equipment and software services, cellphones, peripheral devices, and streaming devices. Daniel P. Cook, Owner…

Landmark Cos. buys Coral Springs apartments for $40M

Landmark Cos. paid $40.2 million for Coral Falls Apartment Homes in Coral Springs, marking the investor’s second multifamily community in Broward County. Keasbey, New Jersey-based Landmark, through an affiliate, bought the 190-unit complex at 2801 Northwest 91 Avenue. The seller is CF Partners Limited, an affiliate of Iron River Management, according to…

Continental Realty buys LA Fitness-anchored shopping center near Wellington

LA Fitness Continental Realty Corp. bought the LA Fitness-anchored Shoppes at Sherbrooke retail center near Wellington for $11.3 million. Baltimore, Maryland-based Continental Realty bought the plaza at 8888-8954 Lantana Road on behalf of its Continental Realty Fund V, according to a press release. The seller is G&I VIII Sherbrooke, an affiliate of New…

Koda Interstate buys Riviera Beach industrial park for $13M

An industrial park in an Opportunity Zone in Riviera Beach sold for $12.8 million, another sign of strength in the market sector. Koda Interstate bought the complex at 6555 and 6557 Garden Road and at 3541 Dr. Martin Luther King. Jr. Boulevard from Interstate Industrial Park Holdings, according to a press release. Hollywood-based Koda is led by Brandon…

Pair Of 300-Foot Towers Will Be Tallest On Fort Lauderdale Beach

Kolter Urban, a developer based in Delray Beach, Florida, announced today that it is launching sales for two tall, slender towers that will rise 300 feet above sea level on Fort Lauderdale Beach. They are slated to be the beach’s tallest structures. Located at 3000 Alhambra St., the beachfront project will be called Selene Oceanfront Residences. Its towers are designed to be…

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April 14, 2021

Chart: Miami Commercial Real Estate Sales to List Price Ratio March 2021

January 2011 to March 2021 Sales to List Price Ratio for Commercial/Industrial Property within Miami-Dade County, Florida and Priced from $1 Million to $10 Million as Recorded in Miami MLS

The sales to list price ratio as reported by the Miami MLS for improved commercial real estate (MLS classification: commercial/industrial) within Miami-Dade county in Florida priced from $1 million to $10 million in March came up a bit to 93% from 89.5% the month prior. Though off of highs in the past 10 years, this percentage is nonetheless in the upper half of where it has been over the past ten years, as is evident in this chart.

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Trends
April 14, 2021

Miami Commercial Real Estate News April 7, 2021: Hialeah Industrial Properties Sell for $50 Mil, Acre at Worldcenter for $20 Million; Inflation Expectations Rising; More…

Codina Partners’ plan for Coral Gables rental tower advances with three-way property swap

Codina Partners’ plan for a high-end rental tower in Coral Gables is a step closer… As part of the three-way trade, Codina Partners bought a 1.3-acre development site… bought Coral Gables’ former police building at 2801 Salzedo Street from the city for $16.7 million… had given the city land for its new police department headquarters at 2151 Salzedo Street.

Terreno Realty pays $50 million for two buildings at FECI’s Hialeah industrial complex

Terreno Realty Corp. paid $50 million for two recently completed industrial buildings at Countyline Corporate Park in Hialeah. San Francisco-based Terreno Realty, a publicly traded industrial real estate investor, bought the properties at 4021 and 4071 West 108 Street from affiliates of Florida East Coast Industries, records show. The buildings total 274,000 square feet…

Miami Worldcenter developer sells 1-acre lot to Abbhi Capital, doubling its site

Miami Worldcenter Associates sold another piece of the mega-project to Coral Gables investment firm Abbhi Capital. Abbhi paid $20 million for the 1-acre development site between Northeast 10th and 11th streets along Northeast First Avenue, according to a press release. It’s zoned for nearly 850 residential units and 1.2 million square feet…

Chart: TIPS Spread Indicating Highest Inflation Expectations in 13 Years

The TIPS spread, United States Treasury bond yields less Treasury Inflation-Protected Securities (TIPS) yields, for the 5 years ending April 2, 2021. The TIPS spread is the difference in the yields between United States Treasury bonds and Treasury Inflation-Protected Securities (TIPS). It is a useful and oft-quoted measure of expectations for (CPI) inflation in the financial…

The Fed: Is Inflation Making a Comeback?

The average price level dropped sharply during the early stages of the COVID-19 pandemic and has gradually recovered since then. As a result, annual inflation has remained low: The 12-month change in the personal consumption expenditure (PCE) price index reached 0.5% in April 2020, its smallest increase that year. Core PCE inflation (which excludes food…

Florida lawmakers look to restrict impact fees

Amid a booming real-estate market in many areas, state lawmakers are moving forward with proposals that would place additional restrictions on impact fees that cities, counties and school boards say are needed to help keep up with growth. House and Senate committees Wednesday approved bills that include putting limits on impact-fee increases and defining…

Bank OZK Provides $64.8 Million Construction Loan for Natura Gardens Apartments in Miami

Bank OZK has provided $64.8 million in construction financing to Terra and New Valley, the development partners of Natura Gardens, a multifamily community in Miami. The loan will fund the ongoing construction of the 23-acre community, which will encompass 460 garden-style apartments across 12 three-story residential buildings. The development broke ground…

TM Real Estate sells Miami Gardens office park for $15 million

TM Real Estate Group sold the Lincoln Square office complex in Miami Gardens for $15.35 million. Coconut Grove-based TM Real Estate sold the office park at 18405 Northwest Second Avenue to Preminger Investments, according to a news release. The buyer assumed an $11.5 million CMBS loan on the property with a fixed interest rate of 4.9 percent and about…

$15.4 Million Sale of Lincoln Square Office Complex in Metro Miami Arranged

Aztec Group Inc., a real estate investment and merchant banking firm, has arranged the $15.4 million sale of Lincoln Square, a 116,560-square-foot suburban office complex located at 18405 NW 2nd Avenue in Miami Gardens. Peter Mekras and Brell Tarich of Aztec Group led the transaction. Miami-based TM Real Estate Group ran a marketing process to sell the…

Opportunity Zone investors pour in ahead of key deadlines

This is a critical year for Opportunity Zone investors. Real estate developers, property owners and funds have until the end of December to take full advantage of the federal tax-break program, but have also benefited from a Covid-related deadline extension. Though the coronavirus briefly paused Opportunity Zone investment nationwide, backers…

These US real estate titans made Forbes’ 2021 billionaires list

The world minted new billionaires at a rate of one every 17 hours in 2020 — and some of those came from the real estate industry. Zillow co-founders Rich Barton and Lloyd Frink, eXp World Holdings founder Glenn Sanford and his wife Penny, and Florida home-builder Patrick Zalupski were among the real estate industry’s newest entrants into the ranks of the uber…

Foreclosures and evictions could be halted for rest of 2021

An onslaught of home foreclosures and evictions could be forestalled for another year. The Consumer Financial Protection Bureau is looking at restrictions on mortgage servicers that would prevent struggling homeowners from going straight into foreclosure. The agency has proposed a measure to stop mortgage servicers from proceeding with…

Office landlords offer discounts to lock in leases

Office landlords in New York, Chicago and San Francisco could be taking a hit in the next few years even if some companies lock in long-term leases. More companies are keeping their offices, but are downsizing those spaces to allow employees to work remotely part-time, according to data from VTS, first reported by the Wall Street Journal. The analysis shows that…

Miami-Dade seeks federal funding for Northeast commuter rail line

Background work for a planned commuter rail linking Miami to Aventura is underway, as Miami-Dade applied last month for federal funding for the project and is in talks with operator Brightline to run the route. If all goes according to schedule, construction of what is known as the Northeast Corridor will be done in 2024, according to Luis Espinoza, spokesman…

State finishes six-year, $260 million Krome Avenue upgrade

After more than six years of non-stop construction to enhance Miami-Dade’s westernmost thoroughfare, the Florida Department of Transportation’s (FDOT) $260 million Krome Avenue improvement program is finished. FDOT on Friday announced completion of the 11th and final project in the program, which began in February 2015. The projects…

David Martin: Leads Terra to develop projects based on community needs

David Martin wants to build better neighborhoods. His firm, Terra, has developed more than 5 million square feet of residential, commercial and mixed-use projects. Another 3 million or so square feet are on the way, adding up to more than $8 billion portfolio of assets. In the 20 years since he co-founded Terra with his father, Pedro Martin, the company’s aim…

Miami Industrial Real Estate Quarterly Market Report Released: 1st Quarter 2021

The Miami industrial market’s Q1 vacancy rate was 4.6% at the close of the quarter with a $13.16 per sq. ft. average (gross) lease rate. Industrial vacancies are for Miami warehouses are back below the National Index rate after climbing higher in 2020 for the first time in 20 years. Deliveries have totaled 4.7 million sq. ft. over the past 12 months. After trending…

Terra scores $65 million loan for Northwest Miami-Dade project

Terra is moving forward with its multifamily project in northwest Miami-Dade County, near the planned American Dream Miami mega-mall. Terra and New Valley secured a $64.8 million construction loan from Little Rock, Arkansas-based Bank OZK for Natura Gardens, a 460-unit development planned for a 23-acre site along Northwest 170 Street between…

Miami’s Real Estate Boom: Too Good To Be True?

Every Monday, Mirielle Enlow, executive vice president of operations for Keller Williams in Miami Beach, gathers her top real estate agents for a meeting that she calls the Millionaire Mega-Agent Mastermind. With South Florida now experiencing a well-publicized real estate boom characterized by top-dollar prices and fierce competition for homes, you might expect…

Amol Sarva trashes Newmark after ouster from Knotel

Knotel co-founder Amol Sarva took some shots at its new owner, Newmark, on his way out the door of the flex office company he ran into the ground. In a blistering email Friday evening, Sarva accused the brokerage of using the bankruptcy process to take over the once high-flying Knotel and damaging the company’s relationships. In months leading up to…

Peebles accuses former associate of “anonymous and malicious” smear campaign

Don Peebles is accusing one of his rivals of running a covert smear campaign against him. The Peebles Corporation head claims that former business associate Daniel Hoeg used untraceable Russian servers to send anonymous, defamatory emails to public officials who were reviewing Peebles’ real estate projects, according to a lawsuit filed Friday in…

Big Tech firms led office leasing in 2020

Big Tech keeps getting bigger, and the office footprint of the companies in the sector is keeping pace. Tech firms leased more office space than any other industry last year, according to CBRE’s latest TechInsights report. In total, the tech sector took about 26 million square feet in 2020, which accounted for 17 percent of total office leases. Tech has dominated…

Construction, leisure & hospitality jobs rebounded in March

The leisure and hospitality industry bounced back in March, adding 280,000 jobs to the economy as hotels, restaurants and bars continued to reopen across the country. Bars and restaurants saw the majority of job gains last month, as 175,000 individuals were brought back to work, according to the latest data from the U.S. Bureau of Labor Statistics. Hotels added…

Visualizing the CRE Market Timer’s Thought Process

These probability distribution charts are the topic of this article. The first is a normal distribution of returns using a combination of a cap rate of 5% and rent growth of 2% (and assuming an unchanged cap rate a year later) further assuming an annualized standard deviation of returns of 6.5%. The second is how some market participants feel this is in reality now…

Openings From Carbone to Moxy Hotel Enliven the Miami Scene

Things were looking grim last year, when Miami’s hospitality industry took an estimated $3.4 billion hit from March to August 2020, according to a recent study. Fast forward to March 2021, when the city’s hotel occupancy rate hit 80.7 percent, according to data from STR, with many Miami Beach hotels reporting sold-out weekends — and Miami was back as one of…

Video: GSU’s Jon Wiley, PhD and Lynn Mckee on Opportunity Zones and the Office Market

Jon Wiley, PhD, Professor at J. Mack Robinson School of Business at Georgia State University, and Lynn Mckee, Lecturing Professor at the J. Mack Robinson School or Business at Georgia State University and Senior Vice President and Commercial Real Estate Banker at SunTrust Bank, appear on America’s Commercial Real Estate Show to discuss opportunity zones…

New York Taqueria Tacombi Comes to Miami

Yet another Big Apple institution is coming to South Florida. Tacombi, the popular New York-based taqueria chain, will open two branches in Miami this year. One location is slated to open in October by Lincoln Road, the popular shopping street in South Beach, according to information from the Lincoln Road Business Improvement District. Tacombi has signed up…

Q&A With Yair Levy, Developer Of Miami’s Time Century Jewelry Center

Yair Levy, founder of Time Century Holdings, is the developer behind the Time Century Jewelry Center, a planned epicenter for Miami’s jewelry and diamond trade that will command an entire square block when it opens in mid-2022. Levy is sinking $50 million into the renovation of a lackluster shopping mall in downtown Miami to create his 225,000-square-foot…

Cold Storage’s Explosive Growth Hasn’t Removed Its Risk

The growth in the cold storage sector of industrial real estate over the past 12 months has been simply staggering. Average rent for U.S. cold storage space increased about 15% from the first quarter through the end of last year, CoStar Group reports. Since 2017, rent in the sector has grown by 29%, easily outpacing the still-impressive 21% growth in industrial…

Construction spending fell slightly in February

Thanks to bad weather and pricier materials, construction spending fell slightly last month — though it’s still higher than it was last year. National construction spending dropped 0.8 percent to a seasonally adjusted estimated rate of $1.516 trillion in February, according to the Census Bureau’s monthly report. In January, spending hit a record rate of…

Wynwood Norte plan aims to spur new affordable housing development

A city of Miami zoning overhaul of a traditionally single-family neighborhood just north of Wynwood is largely aimed at enticing affordable housing development in the area. The Miami City Commission last week unanimously approved the Wynwood Norte Neighborhood Revitalization District, a zoning overlay that proponents claim will…

Canadian investor scoops up Hallandale Beach office building for $17M

A Canadian real estate investor expanding its holdings into South Florida bought a Hallandale Beach office building for $16.5 million. Soliman Corporation, based in Montreal, purchased the 1250 Building from Murray Family Associates, an affiliate of Hallandale Beach-based real estate firm KEI Properties, the buyer said. It’s roughly 80 percent occupied.

CubeSmart buys Weston self-storage for nearly $12M

CubeSmart scooped up a Weston self-storage facility for $11.5 million. The Malvern, Pennsylvania-based company bought the building at 1500 North Park Drive from an affiliate of South Florida real estate investor Leo Ghitis, according to a deed. The 93,182-square-foot storage facility was built in 1991 on 6 acres, property records show. Ghitis, through 1500…

Publix pays $10 million for site of new Fort Lauderdale supermarket

Publix is advancing its plan for a new store in Fort Lauderdale’s Lauderdale Beach neighborhood, buying the development site for $10 million. Deed records show Publix bought 1.4 acres of mostly parking lots and an existing retail building at 2985 North Ocean Boulevard in two separate purchases. In one deal, Publix bought 0.9 acres consisting of two adjacent parking…

Intalex Capital buys Plantation office park for $15M

Intalex Capital bought a Plantation office complex, Executive Court at Jacaranda, for $15 million. Fort Lauderdale-based Intalex Capital, through an affiliate, bought the offices at 7800-8040 Peters Road from Executive Properties, according to a deed. Intalex took out an $11.2 million loan from Pacific National Bank to finance the purchase. Property records show…

Kushner’s Proposed 1M SF Industrial Project in Palm Beach County Could Impact Florida Agricultural Reserve

Palm Beach County, Florida, commissioners in 1980 set aside 21,000 acres in the western part of the county as an agricultural preserve for farmland, wetlands, water resources and open space. Now, New York-based Kushner Cos. intends to build a massive, 1M SF industrial warehouse on 51 acres that had long been the site of a plant nursery. To proceed, Kushner would…

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April 7, 2021

Chart: TIPS Spread Indicating Highest Inflation Expectations in 13 Years

The TIPS spread, United States Treasury bond yields less Treasury Inflation-Protected Securities (TIPS) yields, for the 5 years ending April 2, 2021.

The TIPS spread is the difference in the yields between United States Treasury bonds and Treasury Inflation-Protected Securities (TIPS). It is a useful and oft-quoted measure of expectations for (CPI) inflation in the financial markets. The spread indicates expected inflation.

Real money is buying these bonds. TIPS pay interest every six months, based on a fixed rate that is calculated by multiplying the adjusted principal by one-half the calculated interest rate (i.e. half a year’s worth of inflation at that rate). Thus, a “bet” that an investor makes in with these bonds has real financial implications.

As one can see in this chart, this spread has been on a somewhat rapid and steep ascent since its pandemic related plummet in early 2020. It has not reached its highest level in the 5 year period on this chart. In fact, if one looks back farther, it is at the highest level it has been since July 2008, nearly 13 years prior. That is a concern, but even more of a concern is whether the end of this ascent might be a ways up from here.

Alert level? Yellow.

Watch this.

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Economy, Financing
April 6, 2021

Visualizing the CRE Market Timer’s Thought Process

These probability distribution charts are the topic of this article. The first is a normal distribution of returns using a combination of a cap rate of 5% and rent growth of 2% (and assuming an unchanged cap rate a year later) further assuming an annualized standard deviation of returns of 6.5%. The second is how some market participants feel this is in reality now, capped by an environment that doesn’t leave much room for improvement. I’ll return to these further down the post.

First, allow me to do a bit of groundwork.

The returns for commercial real estate are affected by multiple factors. First is the earnings of the property in the form of net operating income (NOI). That is money in the bank (well, assuming rent is paid). Rent growth adds to this in the form on additional money-in-the-bank rental income, but also in terms of increased value. Over time, a property can generally be expected to move in line with its rent growth, plus or minus what follows. If a cap rate is unchanged, value moves up exactly in line with NOI growth.

Changes in vacancy rates, or perhaps more accurately changes in assumed vacancy rates, affect NOI disproportionately as not only is rent lost but expense coverage is also lost. For example, if one assumes a building has expenses equal to 35% of gross potential rent, a 5% increase in assumed vacancy from 3% to 8% will decrease that property’s NOI 1.6X as much as the increase in vacancy, like this:

This tends to come into play for all properties. Even a fully leased building with a long-term tenant or tenants should have a vacancy assumption as tenants eventually leave and (sorry to say it aloud) some tenants fail. What assumption is used is a function of what is going on in the markets, thus higher market vacancies will tend to result in higher assumptions for any property.

Then there is the market capitalization rate, commonly referred to as the cap rate. This is the percentage of return buyers demand from earnings (NOI), i.e. NOI / price. Overall market cap rates are affected by a number of things, but the most notable are interest rates and rent growth.

Interest rates affect cap rates as a competing asset class and also by driving demand for property. Commercial real estate does not have only bond like characteristics, however, thus the cap rate does not move exactly in lockstep with interest rates. Over time, cap rates tend to move in line with real interest rates (interest rate less inflation), as cap rates are essentially the real interest rate plus a spread, that of commercial property to some real rate benchmark, generally that of the 10-year US Treasury. on a 1 to 1 basis. In practical terms, over time, this results in cap rates tracking interest rates by about a third. The cap rate to real rate spread moves up and down, but over time is lost in its general trend of tracking real rates.

Rent growth also affects the market cap rate as the more you expect earnings to grow over time the less you are willing to accept now. Miami has experienced and is commonly expected to continue to experience higher rent growth than many markets, and thus has a lower cap rate (i.e. a higher ratio of price to income) than other markets. This growth rate to cap rate relationship tends to be vaguely generalized, but I’d suggest the ratio is about -50%, that for every 1% increase in rent grwoth assumed the cap rate is roughly 0.5% less. If you want to dig deeper into that, I took some time to back that up with some mathematical rationale in a prior post; Quantifying the Effect of Rent Growth Assumptions on Commercial Real Estate Cap Rates. Be warned, there is an Ambien effect.

All this leads to the Goldilocks scenario some believe commercial real estate is in. In order for returns in excess of NOI and rent growth, there needs to be a decline in interest rates either from a decline in rates, an increase in rent growth assumptions, or a decrease in the spread of cap rates to interest rates, or a decline in vacancy rates. Interest rates seem unlikely to go much lower, rent growth seems unlikely to be even stronger, and buildings can’t be more full than full, thus it seems like the return boost possibilities are fairly well all tapped out. The spread of cap rates to interest rates can move, but it does when it does, and there seems no reason to anticipate a move either way, thus I’ll set that one aside. I would also note that buildings can’t get more full than full, but when they want to, rents go up, thus there may be room for rent growth increases. Regardless, on balance, many suggest that the variables that can really push returns are fairly well tapped out. Given this, there is an exchange of ownership underway from those with an inclination toward market timing to carry traders, investors that buy to capture the spread between NOI and interest rates.

Now, to return to the chart at the top, the probability distribution charts. The top one uses 7%, the sum of an assumed market cap rate of 5% and assumed market rent growth of 2%, as a mean return, then plots a normal distribution of possible annual returns using a standard deviation of 6.5%. That SD is more addressed in a paper by S&P Down Indices and another by a trio of University of North Carolina and Indiana University professors. From these, I settled on 6.5%, but I could have chosen a bit higher or lower.

The second chart is this same distribution with some capping math applied as one exceeds the mean return. This is not to show some set of true probabilities, but to graphically note what some investors perceive as the range of possibilities in the current environment. This is how a trading type commonly views trades, that probabilities can be skewed in certain situations putting the odds of taking some position in the trader’s favor. But for that, traders would not trade. I can tell you from conversations with some commercial real estate buyers that some see the current environment as much more left/negative leaning than this. However, not a small number have been saying this for years, if not decades. It may be that they’re eventually right, but it also might only be that eventually reality steps two sigma in the direction of their prediction.

Back in my Wall Street days, a fellow Financial Advisor in my office once commented how much money he had seen lost by people trying to avoid the next bear market. Somewhat contrary that comment is the reply by Bernard Baruch when asked what was the key to his trading success; “I buy my straw hats in the winter time.” What’s the answer? What will actually happen? To “answer” that, I’ll tap into the superseding wisdom of baseball legend and and everyman philosopher Yogi Berra; “It’s tough to make predictions, especially about the future.”

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Analysis
April 1, 2021

Video: GSU’s Jon Wiley, PhD and Lynn Mckee on Opportunity Zones and the Office Market

The Conversation: Understanding the Current Landscape of Commercial Real Estate & Opportunity Zones; Insights from Experts

In the ever-evolving world of commercial real estate, navigating the complexities of market trends, investment opportunities, and shifting dynamics requires a keen understanding of various factors at play. Recently, on America’s Commercial Real Estate Show, experts Jon Wiley, PhD, Professor at J. Mack Robinson School of Business at Georgia State University, and Lynn Mckee, Lecturing Professor at the J. Mack Robinson School or Business at Georgia State University and Senior Vice President and Commercial Real Estate Banker at SunTrust Bank, provided valuable insights into the current state of commercial real estate and shed light on topics ranging from Opportunity Zones to the future of office space. The discussion is about property throughout the United States, thus some observations may not apply or may apply less to Miami commercial real estate. Investors interested in Miami area Opportunity zones may be interested in our post with an interactive map of Miami-Dade’s 67 Opportunity Zones. Discussed are effects on opportunity zone values; they note buyers seem best served to concentrate on areas that already have an upward trajectory. They also go on to discuss office properties and what the post-COVID future may be for them, declaring their belief that reality will turn out not to be the best case or worst case scenario, but somewhere in between. These are analytic types that are clearly looking for answers in the data but also are trying to get ahead of the data given that the situation is currently so fluid.

Opportunity Zones: Debunking Myths and Unveiling Realities

Jon Wiley, a financial economist, delved into the often-misunderstood realm of Opportunity Zones. Contrary to popular belief, the data suggests a more nuanced picture than a mere influx of capital into designated areas. Through rigorous analysis of industrial property transactions, Wiley uncovered that properties within Opportunity Zones experienced a 25% increase in value compared to non-Opportunity Zone properties. However, this increase is not uniform across all properties. Those with larger land sizes and lower coverage ratios witnessed the most significant premiums. Moreover, the success of Opportunity Zones hinges on underlying market trajectories, with areas experiencing positive employment and population growth reaping the most benefits.

The Office Space Conundrum: Balancing Remote Work with In-Person Collaboration

Transitioning to the topic of office space, Lynn McKee provided insights into the ongoing debate surrounding the future of office demand. As the pandemic reshaped work dynamics, businesses grappled with the optimal balance between remote work and in-person collaboration. McKee highlighted a fundamental shift in office space utilization, where the demand for flexibility and safety emerges as paramount considerations. While remote work offers convenience, it also poses challenges in fostering company culture, collaboration, and onboarding new employees. Additionally, the office space paradigm is evolving, with the emergence of hub-and-spoke models and a greater emphasis on healthy building standards.

Embracing Education and Adaptability in Commercial Real Estate

Both McKee and Wiley underscored the importance of education in navigating the nuances of commercial real estate. They emphasized the need for professionals to continuously enhance their knowledge and adaptability to thrive in an ever-changing landscape. McKee highlighted Georgia State University’s program, which caters to a diverse range of students, including mid-career professionals seeking to deepen their understanding of the industry. Wiley echoed this sentiment, advocating for a more sophisticated approach to real estate investment and management.

Looking Ahead: Navigating Uncertainty with Strategic Insights

As commercial real estate continues to evolve, strategic insights and informed decision-making are essential for investors, developers, and industry professionals alike. The conversation on America’s Commercial Real Estate Show provided a glimpse into the multifaceted nature of the industry, offering valuable perspectives on Opportunity Zones, office space dynamics, and the importance of education. By staying abreast of market trends and embracing adaptability, stakeholders can position themselves for success in an ever-changing landscape.

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Analysis, Office Property, Opportunity Zones
April 1, 2021

Miami Commercial Real Estate News March 31, 2021: Miami Beach’s Tallest to Break Ground; City Furniture Leases 287k sf Industrial; More…

City Furniture leases Miami Gardens distribution center

City Furniture leased a nearly 287,000-square-foot building at Bridge Point Commerce Center in Miami Gardens, another deal marking the strength of South Florida’s industrial market. The Fort Lauderdale-based furniture retailer led by founder Keith Koenig will open a distribution center at Bridge Development Partners’ under…

Bridge Development Lands New Tenant at Miami Industrial Park

CITY Furniture has committed to a 286,991-square-foot, full-building lease at Bridge Point Commerce Center in Miami Gardens, Fla. The agreement brings Bridge Development Partners’ 1.1 million-square-foot, three-building Phase I to 80 percent occupancy. Delivered in two separate phases, with final completion set for early 2023, Bridge Point Commerce Center…

Two Large-Scale Residential Developments Underway in Metro Miami for Combined $695M

Just outside Miami, two large-scale residential developments are underway totaling $695 million. The projects include the Five Park high-rise in Miami Beach and Plantation Walk in Plantation. Five Park. A joint venture between Terra, GFO Investments and New Valley is preparing to break ground on Five Park, a $345 million residential tower located at 500…

4 Industrial Tenants Ink More Than 293K SF of Deals in Miami-Dade

A quartet of industrial leases totaling 293,278 square feet have been inked in Miami-Dade County, with tenants ranging from Crane Worldwide Logistics to PGT Industries, according to information from Cushman & Wakefield. Crane Worldwide signed a six-year lease for 121,656 square feet at Crossroads West, located at 10901 NW 146th Street along the Florida…

SoLé Mia in North Miami scores $32M multifamily construction loan

The multifamily and retail SoLé Mia project in North Miami has secured a $32 million construction loan for its second rental community. Development duo Turnberry Associates, led by Jackie Soffer, and the LeFrak Organization, led by Richard LeFrak, secured the financing through affiliate SM Parcel A, a mortgage…

SALT shakeup: Democrats pressure Biden to repeal tax cap

As President Joe Biden unveils a multi-trillion-dollar infrastructure proposal this week, House Democrats are calling on him to repeal the Trump-era limit on state and local tax deductions, or SALT. Rep. Tom Suozzi, who represents parts of Queens and Long Island, along with Reps. Mikie Sherrill, Josh Gottheimer and Bill Pascrell of New Jersey, have publicly…

Cofe Properties sells Pinecrest office-retail plaza for $32M

Cofe Properties sold an office-retail plaza in Pinecrest for $32 million, the same price the investment firm paid for the property six years ago. Property records show an affiliate of Miami-based Orion Real Estate Group bought Pinecrest Town Center at 12651 South Dixie Highway from Cofe’s Cofe Town Center. Coral Gables-based Cofe Properties bought Pinecrest…

Watch: Gil Dezer on guerrilla marketing and working with Donald Trump

For this month’s The Closing, The Real Deal sat down with Gil Dezer, the head of Dezer Development and one of the most active real estate players in South Florida. The family-run firm, which was started in 1970 by Dezer’s father, Michael, is behind flashy projects such as the Porsche Design Tower and Residences by Armani/Casa. The elder Dezer influenced his son’s…

What distress? Dry powder piles up with few discounts in sight

After raising billions of dollars to spend on commercial real estate, distress investors are having a difficult time spending it. Despite projections of massive discounts in real estate prices, few have arisen. Banks have yet to write down loans and commercial property owners have had little incentive to sell. These factors, along with generous stimulus packages…

Miami-Dade regains 21,600 jobs in one-month recovery climb

Miami-Dade gained 21,600 workers on payrolls from January to February, unemployment ticked down and every sector but one added jobs as Covid-19 vaccination broadened. Nonetheless, every sector continued to show a decline from February 2020, the last normal month in the state before the pandemic hit in March. Figures from the US Bureau of Labor Statistics…

Work to begin on Miami Beach’s tallest building

Terra, GFO Investments and New Valley plan to break ground this month on Five Park, a 48-story, roughly 280-unit tower at 500 Alton Road that will become the tallest building in Miami Beach at 519 feet upon completion in 2023. Construction will be made possible by the largest residential construction loan in South Florida to be funded since the pandemic struck…

Bidding nears for private developers of taller Government Center

Miami-Dade is seeking one more round of public input before requesting a first round of bids from private builders to redevelop downtown Miami’s Government Center area into a taller, denser and more pedestrian-friendly metropolitan neighborhood. The goal, said Eileen Higgins, the county commissioner leading the effort, is to begin preliminary processes this…

Limited-capacity movie theaters fill, add programming

With social distanced automatic seating and ticketing protocols for each showing, several local theaters are reporting uptake of audiences, filling up showings at limited capacity. Still under strict safety regulations, movie theaters throughout Miami-Dade are seeing an increase of moviegoers, who are feeling safer and more confident as the Covid-19 vaccinations…

What Can We Expect From Retail in 2021?

Retail had a turbulent and uneven ride during the COVID-19 pandemic, but a broad recovery should follow once most Americans receive a vaccination. It goes without saying that 2020 was an incredibly challenging year for many brick-and-mortar retailers as pandemic-related restrictions made turning a profit an uphill battle. Although recovery likely won’t be…

Subleases up 40% across US as companies ditch space

JPMorgan Chase, Salesforce and PricewaterhouseCoopers are among a growing number of firms looking to sublease space as the demand for traditional offices diminishes. About 137 million square feet of office space was up for sublease across the U.S. at the end of last year, according to CBRE Group, the Wall Street Journal reported. That represents a 40 percent…

“There will be blood:” VTS’ Nick Romito on why landlords must embrace data

In this installment of the REInterview, TRD’s Hiten Samtani sat down with founder and CEO of VTS Nick Romito. He noted the office sector’s reputation as a steady, stable, unsexy source of income, and explained how all that could change. VTS began as a video-tour company (literally “View the Space”) and is now a cloud-based leasing and portfolio management…

Founders Fund, Atomic and OpenStore ink long-term leases in Wynwood

Is Big Tech here to stay? Venture capital firms Founders Fund and Atomic and e-commerce company OpenStore signed leases for more than 22,000 square feet in Wynwood, while SoftBank and Microsoft are reportedly looking to expand their presence in Miami. Silicon Valley’s Founders Fund, which took a temporary space in Brickell earlier this year, is leasing…

RedSky, JZ sell Wynwood Block at a loss for $24M

RedSky Capital and JZ Capital Partners sold the Wynwood Block retail building at a loss, as they have been offloading their Miami portfolio in recent months. The joint venture sold the one-story retail building at 2621 Northwest Second Avenue to Wynwood Block Realty, led by Joseph Cohen, for $24.2 million. The buyer took out a $12.2 million mortgage on the…

SoftBank Seeks More Miami Space as City’s Tech Industry Expands

SoftBank Group Corp. is looking for a big block of expansion space in Miami in the latest sign that this city’s tech sector is flexing its muscles. The Tokyo-based company, one of the world’s largest tech investors, is searching for as much as 100,000 square feet of space, according to executives in the real-estate and technology industries. A SoftBank spokeswoman confirmed…

Melo Group Breaks Ground on 57-Story Downtown 1st Apartment Tower in Miami

Melo Group has started construction of Downtown 1st, a transit-oriented multifamily development at 22 SW 1st Street in Miami’s central business district (CBD). The 57-story tower will include 560 market-rate apartments, 10,000 square feet of office space and 3,000 square feet of ground-floor retail space. Completion is slated for 2022. Downtown 1st will include…

Melo Group Breaking Ground On 57-Story Downtown Miami Tower

One of Miami’s busiest developers, Melo Group, has launched construction of Downtown 1st, a transit-oriented development at 22 SW 1st Street in downtown Miami’s central business district. The development comes as Miami’s once-dead downtown is going through a boom. A Brookings report from last year found that Miami’s downtown population decreased…

AquaBlue sells Miami Beach apartment complex for $10M

An apartment complex in Miami Beach sold for $10.4 million, slightly less than its asking price of $13.9 million…. AquaBlue Group, led by Philippe Harari, sold the 30-unit property, called Greenview Courtyard, to an entity led by the Dasilva family. The deal equates to $346,667 a unit. The three buildings span just over a half- acre at 2021, 2025 and 2031 Meridian Ave…

Natixis Lends $177M on Blackstone’s MiamiCentral Office Towers Buy

Blackstone Real Estate tapped the commercial mortgage-backed securities (CMBS) market for its recent acquisition of two office towers in Downtown Miami, Commercial Observer has learned. Natixis was the lender in the deal, providing a $177 million loan. Shorenstein Properties sold the two recently built, Class A office buildings, 2 & 3 MiamiCentral, to funds…

Miami Heat’s Arena Will Be Renamed After Cryptocurrency Exchange In $135M Deal

The FTX cryptocurrency exchange intends to buy the naming rights for the NBA’s Miami Heat’s arena for $135M, the Miami Herald reported Friday. The downtown Miami venue is called the American Airlines Arena, often referred to as the Triple A. An agreement with Miami-Dade County would last 19 years. In a complex deal, the county would take in $8.2M…

CDC extends national eviction ban through June

A few days before its expiration, the national eviction ban was extended for another three months. The Center for Disease Control and Prevention announced Monday it will continue the moratorium through June. “Keeping people in their homes and out of crowded or congregate settings — like homeless shelters — by preventing evictions is a key step in helping to…

South Florida by the numbers: Here comes the money

“South Florida by the numbers” is a web feature that catalogs the most notable, quirky and surprising real estate statistics. While Miami continues to reshape itself as the new global hub for technology and finance, it appears the latter industry has taken the lead in terms of decision makers choosing to live here — perhaps for the long term. In the past two…

Q&A With Akerman’s Neisen Kasdin, former Miami Beach Mayor, on Miami’s Rising Star

Scan the Miami skyline and it’s hard not to lay eyes on a development bearing Neisen Kasdin’s imprint. The commercial real estate pro led the South Beach revitalization that began taking shape in the late 1980s, and has also put his unique stamp on everything from urban revitalization to the development of complex, large-scale, multi-use projects and smaller…

Quantifying the Effect of Rent Growth Assumptions on Commercial Real Estate Cap Rates

When considering changes or potential changes in commercial real estate capitalization rates (cap rates), market participants tend to most commonly think of interest rates. However, rent growth assumptions also affect cap rates as the more one expect earnings to grow over time the less return an investor is willing to accept now. This is just like growth stocks in the…

More than 1 in 5 company execs plan to slash office space

Even as Covid vaccinations bring a return-to-office closer to fruition, more companies are expecting to reduce their real estate footprints. A recent survey conducted by the American Institute of CPA found that 21 percent of company executives said they expect to reduce their office space in the next 12 months, Bloomberg News reported. That’s up by 3 percentage points…

Harbor Landings mixed-use multifamily, hotel and retail project near Seminole Hard Rock advances

Developers Eric Metz and Louis Birdman advanced their plan to build Harbor Landings, with apartments, hotel rooms, and retail space on a site that touches both Hollywood and Dania Beach near the Seminole Hard Rock Hotel & Casino. The Dania Beach commission on Tuesday approved the multifamily portion of Harbor Landings. The eight-story, 275-unit…

Miami commission deals Edgewater jai alai site a winning hand

West Flagler Associates scored a four-of-a-kind win when Miami commissioners Joe Carrollo, Alex Diaz de la Portilla, Manolo Reyes and Jeffrey Watson voted to approve a new settlement agreement, allowing the company to develop a jai alai fronton and card room in Miami’s Edgewater neighborhood. The pari-mutuel and casino company also procured…

Royal Senior Care scores $42M construction loan for south Miami-Dade project

A senior living facility in south Miami-Dade County got a big boost, as the developer scored a $41.9 million construction loan. Aventura-based Royal Senior Care, led by CEO Avi Bittan and managing director Sean Kanov, plans a three-building, 200-unit independent living, assisted living and memory care facility near the Jackson South Medical Center. Tel-Aviv-based…

The REInterview: Real estate’s climate reckoning, with Fifth Wall’s Brendan Wallace and Greg Smithies

Real estate is the quiet sinner in the climate crisis. The industry might not be the Disney villain of greenhouse gases, cackling as it wreaks havoc on the world, but some estimates show it accounts for up to 40 percent of global carbon emissions. In major real estate markets such as New York, that number is over 70 percent. Why has the industry been unwilling…

Krispy Kreme sells Miami Gardens store — sans doughnuts — for $9M

Doughnut shop Krispy Kreme sold its store just outside Miami Gardens for $9 million. A deed shows the Winston-Salem, North Carolina-based chain and Florida Family Realty sold the 4,345-square-foot, one-story building at 530 Northeast 167th Street to New York-based Bremen House. The building was constructed in 2019 on 1.8 acres, according to property records.

ROVR Development Begins Pre-Leasing 300-Unit Miami TOD Community

ROVR Development has started pre-leasing its residential project that’s being built atop the Miami Parking Authority’s headquarters and garage. The developer began construction on Grand Station Apartments in August 2019 and is expecting to complete the luxury community and welcome its first residents in the summer. The $70 million project was the result…

WeWork to go public in $9B SPAC deal

If at first you don’t succeed, try, try again: Two years after its failed IPO, WeWork has struck a deal to go public with a special-purpose acquisition company. The merger with BowX Acquisition Corp. would value the embattled flexible-office company at $9 billion including debt — a fraction of its $47 billion valuation in 2019. WeWork will get $1.3 billion in…

‘People believed it’: the rise and fall of WeWork, a $47bn unicorn

It’s almost by requirement that Hulu’s WeWork: Or The Making and Breaking of a $47 Billion Unicorn, a documentary on the spectacular over-inflation of the company that coated shared offices in a soft-lit shell of capitalistic spirituality, starts with Adam Neumann (in business terms, a unicorn is a private company valued at over $1bn). WeWork’s charismatic…

Closed El Portal church to be born again with office and retail

The sight of a boarded up church with fading yellow paint and white columns along Northeast Second Avenue in El Portal has become customary for drivers and joggers. But that won’t be for long. The former Rader Memorial United Methodist church and school at 205 Northeast 87th Street, closed for 10 years, will be born again as an office and retail site with…

Subway inks lease at Miami’s Waterford Business District, plans to bring 100 employees

Subway made good on its announcement earlier this month that it’s moving to Miami, inking a major lease at the Waterford Business District, with plans to bring 100 employees. The fast food giant leased 64,256 square feet at 1000 Waterford in the massive office park across Miami International Airport. The office park is owned by a joint venture of Chicago…

The money’s moving to South Florida. Will the office leases follow?

Law firm Levine Kellogg Lehman Schneider + Grossman, now at downtown Miami’s Citigroup Center, plans to cut its space in half at its future office as many attorneys opt to work from home permanently. Across the street, at Southeast Financial Center, law firm Meland Budwick plans to expand by 18 percent. These contrasting approaches show the dichotomy of the…

Bridge Development scores $78M construction loan for Opa-locka industrial park

A three-building industrial complex west of Miami-Opa Locka Executive Airport is on its way to completion in the third quarter, after scoring a $78.3 million construction loan. The Class A… will total 589,887 square feet. Bridge Point AVE spans 47 acres, as part of the 178-acre master-planned AVE, Aviation and Commerce Centre at 14350 Northwest 56th Court.

Bridge Development Secures $78.2M Construction Financing for Bridge Point AVE Industrial Park in Opa-Locka

Bridge Development Partners has secured $78.2 million in financing to develop Bridge Point AVE at Miami-Opa Locka Executive Airport. The three-building, 589,887-square-foot industrial business park is more than 72 percent preleased and is scheduled to be delivered in the third quarter. Steve Roth of CBRE’s Debt & Structured Finance team arranged the loan…

Post-COVID Miami: The Changing Landscape of Commercial and Residential Development

Earlier this month, Bilzin Sumberg’s South Florida Redevelopment Conference engaged hundreds of real estate developers, government staff and officials, architects, engineers, and construction professionals from 12 different states and three different countries in thoughtful discussions about the current real estate market and the future of land development…

Last piece of the pie: Franco & Vinny’s Pizza Shack owners sell Fort Lauderdale Beach assemblage for $7M

All the pieces of the pie came together for the owners of Franco & Vinny’s Pizza Shack. The pizzeria owners, Vinny and Caterina Esposito, sold their assemblage for $7.2 million and plan to close the Fort Lauderdale Beach restaurant next month. It’s a deal that has been in the works for close to three years, according to the brokers involved. Marcus & Millichap’s…

Stiles sells Sunrise office building to IP Capital for $25M

Investors remain bullish on South Florida’s office market, despite the massive remote work shift, with IP Capital Partners as the latest to join the onslaught of buyers. The Boca Raton-based investment firm bought Sunrise Corporate Plaza from a company tied to Stiles Corp., a deed shows. IP Capital took out a $16.3 million…

Harbor Group International buys Boca Raton apartments for $81M

300 West Palmetto Park Road in Boca Raton with PGIM Real Estate executive Eric Adler, Harbor Group International CEO Jordan Slone and president T. Richard Litton Jr. (Google Maps) PGIM Real Estate sold a 248-unit apartment community in Boca Raton for $81 million. Norfolk, Virginia-based Harbor Group International bought the Heritage complex at 300…

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Top Stories
March 31, 2021

Quantifying the Effect of Rent Growth Assumptions on Commercial Real Estate Cap Rates

When considering changes or potential changes in commercial real estate capitalization rates (cap rates), market participants tend to most commonly think of interest rates. However, rent growth assumptions also affect cap rates as the more one expect earnings to grow over time the less return an investor is willing to accept now. This is just like growth stocks in the financial markets, the higher a growth ratio the higher the PE (and thus the lower the earnings yield, a calculation for companies essentially equivalent to a cap rate). I know this intuitively, and commonly mention it to commercial real estate investors coming from other markets with lower assumed and historical rent growth; “cap rates are lower here as rent growth assumptions are higher.” I find it is generally not discussed – almost never, actually – by most market participants, but one can nonetheless see such effects in pricing. In writing this article I’m taking my first stab at quantifying the math of it. Here goes.

 

In the above I’m attempting to quantify a ratio is between rent growth and cap rates. I’ve done this by calculating how much lower a price would need to be assuming 0% rent growth (scenario C) to have the same IRR as if the rent growth rate was 2% for a purchase made at a 5% cap rate. Then, the implied cap rate for the lowered price (scenario C priced lowered to match IRR of scenario A) at purchase is calculated, then the difference in these two cap rates, then the ratio between the difference in rent growth (2%) and this cap rate differential (1.35%). This arrives at a ratio of -68.51%. In other words, according to this calculation, for every 1% change in rent growth assumption, the cap rate should decrease by .69%.

Let me say this ratio is bogus, then add that it is not. First, I’ve never seen this calculation done in practice, thus it seemingly isn’t actively considered, though the effects surely come into play for more sophisticated buyers doing long-term projections. Second, there are numbers of variables that could affect this. Taxes and their effects on investor decisions are ignored in the above, as are transaction costs. Plus, there is nothing magic about the twenty years I’ve chosen above. Change this to a shorter or longer period and everything moves. Finally, improved real estate over a long period of time tends to depreciate to land value, which is evidenced incrementally as cap rates steadily increase as a property ages (and drops in class). That effect is ignored in this. Thus, this is somewhat bogus. However, it isn’t in that it is a calculated measure of the effect on IRR of rent growth, and the adjustments necessary to make returns in the form of IRR equivalent and the resultant affect on cap rates as a ratio of rent growth. What I want to illustrate is not an exact effect, but that there is an effect and that it is not inconsequential. It is not the exact ratio that is valid, it is the general effect.

In practice, I would mark this ratio down to “something approaching half.” This not only serves to pull away some of the effects on IRR of rent growth that are noted in the prior paragraph, it also matches my personal observations as an active market participant. This exercise has provided me me with one calculated mathematical ratio, using a method, likely not nearly the most elegant, of surely many others. In the past, I’ve generally noted that rent growth rates in Miami tends to be assumed to be higher than many markets, and that drives down our cap rates. That is more than what most of my competitors would say, but still just a general approximation that, not adequately substantiated, likely tends to go ear to ear nonstop and out of a listener’s mind without registering. Now, having gone through this exercise, I’m comfortable tightening this general statement to something like: the longer term IRR calculations indicate that cap rates should drop by about half a point for every percent higher rent growth assumed. Much better. Love it.

Note: Do me a favor and check my math. This spreadsheet was put together quickly, thus there could be a formula error within. This wasn’t super complicated and the result was not out of line with what I would expect, thus I didn’t fine-tooth-comb review it. If you find an error in these calculations or with my logic in general, let me have it.

Any and all facts, statistics, financial information, specifications, and analysis provided are on a best efforts basis only, and should not be relied upon for making real estate or investment related decisions. Nothing in this post should not be relied on for, tax, legal or accounting advice.

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Analysis
March 25, 2021

Miami Commercial Real Estate News March 24, 2021: Blackstone Snags MiamiCentral Buildings for $230 Million; Galbut’s NMB MXU Project Scores Approval; More…

Blackstone buys MiamiCentral office buildings for $230 million

Blackstone Group paid about $230 million for the office buildings at Brightline’s MiamiCentral station, marking one of the largest investment sales to close in South Florida this year. Funds managed by New York-based Blackstone Real Estate bought 2MiamiCentral and 3MiamiCentral from San Francisco-based Shorenstein Properties, according to a news release….

Shorenstein Properties Sells Miami Office Complex for $230 million

Shorenstein Properties, a privately owned investment firm with offices in New York City and San Francisco, has sold 2 & 3 MiamiCentral, a 320,000-square-foot office complex in the city’s downtown area. A fund backed by Blackstone purchased the property for $230 million. Constructed in 2018, the two-building complex is located within MiamiCentral, a transit…

Blackstone Expands in Miami With $230 million Office Buy

On the heels of Blackstone signing a 41,000-square-foot lease for its tech team at the recently constructed 2 MiamiCentral in Miami, funds managed by Blackstone Real Estate have purchased the entire asset along with the neighboring 3 MiamiCentral. Shorenstein Properties sold the pair of downtown office buildings for $230 million. According to…

Blackstone Drops $230 million On 2 Miami Buildings

San Francisco-based Shorenstein Properties announced Friday that it sold two high-profile Class-AA office buildings in downtown Miami to funds managed by Blackstone Real Estate for $230M. MiamiCentral is a mixed-use, transit-oriented development project that spans six city blocks. The train station was designed to accommodate Brightline private trains and…

Shorenstein Properties Sells 2 & 3 MiamiCentral to Funds Managed by Blackstone Real Estate

Shorenstein Properties, LLC (“Shorenstein”), an owner and operator of high-quality office, residential and mixed-use properties across the U.S., today announced the sale of 2 & 3 MiamiCentral to funds managed by Blackstone Real Estate (“Blackstone”) for approximately $230 million. Located in Downtown Miami, this approximately 330,000 square-foot property…

Related wins approval for another Wynwood mixed-use multifamily project

Nearly 10 months after acquiring a 2.27 acre assemblage in Wynwood’s south end, the Related Group is forging ahead with a new mixed-use project on the site. The Miami Design Review Board on Wednesday approved the developer’s proposal for a pair of 12-story buildings at 2130 North Miami Avenue and 38 Northwest 22nd Street. The project, currently known as…

Galbut development group scores approval for mixed-use North Beach resi project

The developers of one of the first projects planned for the North Beach Town Center district secured approval from the Miami Beach Design Review Board late last week. NoBe Creek LLC, an entity led by Jefferson Brackin, Russell Galbut and his daughter Marisa Galbut, wants to develop a mixed-use multifamily building at 666 71st Street. The board unanimously…

Chetrit scores $15 million for Miami River $1 billion mixed-use project

The Chetrit Group is pushing forward with its long-planned mixed-use Miami River mega-project, as it just scored a $15 million construction loan, bringing its total financing to $70 million. Chetrit Group, through affiliate MC Miami River, secured the loan from MSD PCOF Partners XXXIV, an affiliate of Michael Dell’s MSD Capital private investment firm….

Downtown Miami apartment tower Grand Station — A-Rod an investor — launches leasing

Grand Station Apartments in downtown Miami is launching preleasing of the tower, which counts retired Yankees shortstop Alex Rodriguez as an investor. Rovr Development, led by principals Oscar Rodriguez and Ricardo Vadia, is beginning to lease the 30-story, 300-unit building at 40 Northwest Third Street, near the federal courthouse, according…

Waldorf Astoria Miami, planned as the tallest resi tower south of Manhattan, launches sales

The developers of Waldorf Astoria Residences Miami, planned as the city’s tallest residential tower at 100 stories, are launching sales, The Real Deal has learned. The luxury project, at 300 Biscayne Boulevard, will be the highest skyscraper south of Manhattan at 1,049 feet tall, the developers said. Property Markets Group…

Miami’s upcoming Waldorf Astoria property will soon be the Tallest Residential building south of Manhattan

Step aside, New York; there will soon be a new big building city on the East Coast. Florida isn’t necessarily known for tall, glamorous residential or commercial buildings. As it stands, the tallest building in Florida is the Panorama Tower in the Brickell area of downtown Miami. The 85-story skyscraper is a commercial and residential building that soars 849-feet…

Venezuelan food mogul Mauro Libi nabs Miami warehouse for $8 million

A company tied to Venezuelan Mauro Libi, who owns a food empire, bought a warehouse in Miami International Park for $7.8 million. Records show Eleo Group, managed by Libi, bought a 47,668-square-foot warehouse at 7300 Northwest 35th Terrace from Medley-based window blinds and shades manufacturer Vertilux. Built in 1983, the two-story facility is on 1.8 acres…

Harbor Group International Finances Miami Hotel-to-Multifamily Conversion

Harbor Group International, LLC (“HGI”), a privately-owned international real estate investment and management firm, today announced the $27.5 million financing of a hotel-to-multifamily conversion project in the Coconut Grove neighborhood of Miami. The loan was provided to AB Asset Management (“AB AM”) to acquire and rebrand the property as a Class…

Developers see green in turning golf courses into warehouses

It’s a hole-in-one for warehouse developers. Builders have been turning golf courses into warehouse locations as the industrial space boom continues, according to Bloomberg Businessweek. In May, for example, Onondaga County in New York announced that Amazon would build a $350 million distribution center over 111 acres of land formerly occupied by the…

South Beach Businesses Feel the Pain of Spring Break Chaos and Curfew

Upon entering Miami Beach from the MacArthur Causeway, an electronic sign on Fifth Street warns visitors: “Loud Music Arrestable.” Just a few blocks to the east, vacationers walk along Ocean Drive with stereos and Bluetooth speakers, blaring music and dancing in the street outside the fenced-in dining areas of local bars and restaurants. Miami Beach is…

Spring Break Chaos On Miami Beach: Just A Blip For CRE

After big crowds converged on Miami Beach this weekend, the city imposed an 8 p.m. curfew and shut down bridges connecting the beach and the mainland — giving people just hours’ notice and backing up traffic late into the night. The restrictions are in place Thursdays, Fridays, Saturdays and Sundays through April 11. Officials, residents and business owners have…

Federal bill would give $1.5B to pro-housing localities

To combat the affordable housing crisis, three U.S. senators are set to introduce the Housing Supply and Affordability Act. The bipartisan bill would provide $1.5 billion for federal grants to local governments that commit to increase their supply of local housing, to be distributed over the next five years, according to Bloomberg CityLab. “All Americans deserve…”

Miami Beach developers nab $345M construction loan for 500 Alton

Beach developers Russell Galbut and David Martin scored a $345 construction loan for their planned residential tower at the entrance to South Beach, marking one of the largest loans to close in South Florida during the pandemic, The Real Deal has learned. Galbut’s GFO Investments and Martin’s Terra are partnering on the project at 500 Alton Road…

Miami Beach investor Greg Mirmelli to convert former Banana Republic store into mansion hotel

Miami Beach investor Greg Mirmelli bought the former Banana Republic building at 800 Collins Avenue, with plans to convert the property into a mansion hotel, The Real Deal has learned. Mirmelli paid $4.5 million for the 10,026-square-foot building, he said. Property records show the seller is 800 Collins Ave LLC, led by Sam Herzberg. Herzberg’s entity paid $9.7 million…

 $5.4M Sale Arranged for Former Methodist Church and School in Miami

Gridline Properties has arranged the sale of a former Methodist church and school in Miami for $5.4 million. The 28, 947-square-foot property is located at 205 NE 87th St. in Miami’s Upper East Side and within El Portal Village. Built in 1952, the former Rader Memorial United Methodist Church has been vacant for more than 10 years. Gridline’s Alfredo Riascos…

Rock-bottom prices: 11 malls whose valuations have tanked

The pandemic has wreaked havoc across the retail industry, but few have been hit harder than second-tier malls. And it’s no surprise the largest mall operators have taken the biggest hits. Simon Property Group and Brookfield Property Partners controlled 5 of the 11 malls whose values have fallen the most, according to Trepp, which tracks commercial mortgage-backed…

Limestone Asset Management Closes on Pinecrest Town Center Mixed-Use Retail and Office Property for $32 Million

Miami-based Limestone Asset Management, via a joint venture with Orion Real Estate Group, closed on Pinecrest Town Center, the mixed-use retail and office property located at 12651 South Dixie Highway, Pinecrest, FL 33156, for $32 million. Limestone Asset Management invests in and acquires real estate properties over all asset classes throughout North…

Pop-Up Hotel Concept WhyHotel Launches In Miami

A pop-up hotel concept that originated in Washington, D.C., will launch in Miami on May 1. WhyHotel takes over units in new luxury apartment buildings, bringing in revenue and adding vitality to properties during the lease-up period. In Miami, WhyHotel will operate over 100 units at AMLI Midtown Miami, a 719-unit complex at 3000 NE Second Ave. that…

Sterling Bay Signs Retail Lease with Love Life Café at 545WYN in Miami

Sterling Bay, a Chicago-based real estate development firm, has signed a retail lease with eatery Love Life Café in Miami’s Wynwood district. Love Life Café will take 3,767 square feet of storefront space at 545wyn, Wynwood’s first Class A creative office building. Sterling Bay broke ground on 545wyn in January 2019 and completed the building in late 2020.

Office sector to keep sinking until 2024, Moody’s predicts

The office market is looking at three more years of pain until it turns the corner, according to a new report. Moody’s Analytics and CWCapital note that long-term leases saved landlords from a mass exodus but downsizing will continue to erode their tenant base. As a result, the rise in subleasing and vacancy and the fall in rents will continue before starting to ease…

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…

Developers look to seize the moment as Miami condo craze returns

A rendering of Baccarat Miami With half the business elite seemingly moving to Miami, South Florida’s residential developers are betting that migration momentum will overcome even the market’s significant supply glut.    They’re launching major condo towers set to bring thousands of new luxury units to the area, citing the spillover from booming single-family…

Israeli bond market rule changes could hinder U.S. developers

Around 30 U.S. real estate firms have raised over $5.5 billion in the Israeli bond market in the past decade (iStock) Over the past decade, U.S. developers have flocked to the Israeli bond market to obtain cheap financing for real estate projects — but that could change if new rules governing bonds are enacted. The Israel Securities Authority has…

Multifamily complex in Overtown Opportunity Zone hits market for nearly $12M

An apartment complex in an Opportunity Zone in Miami’s Overtown neighborhood hit the market with an asking price of $11.5 million. The owner of Citywalk Apartments, tied to Miami-based Armos Investments, listed the property at 415 Southwest Ninth Street after renovating some of the 92 units. The apartments were built in 1950, records show. Arthur Porosoff, David Cohen and Joseph Phelps of The Porosoff Group,…

WeWork lost $3B in 2020: report

Investors betting on WeWork’s second act just got a wake-up call. The co-working company lost $3.2 billion last year as the Covid-19 health crisis slashed the demand for flexible office spaces, the Financial Times reported, citing documents shown to possible investors. The pandemic caused WeWork’s occupancy rates to fall 47 percent in 2020, down from 72…

What’s Driving Record Industrial Real Estate Demand

The global pandemic accelerated the growth of e-commerce as lockdowns and safety concerns prompted an increasing number of consumers worldwide to shop online. As a result, several years of online sales growth were condensed into 2020 alone, causing industrial leasing to surge globally as logistics became essential for retailers. Changes in population…

Industrial Properties by U.S. Airports Command Premium Rents

According to CBRE, distribution firms want to be close to major air hubs to expedite speedy deliveries, but there is often a price to pay: Industrial rent premiums average 13 percent in the top U.S. airport submarkets and reach as high as 47% in the Chicago O’Hare submarket. In the era of next-day delivery, third-party logistics firms, ecommerce companies and retailers…

Weird flex but OK: How CRE giants hope to cash in on the future of the office

As a vision of the post-vaccine future of the workplace began to emerge late last year, Industrious co-founder Jamie Hodari was nearing a new funding round with a private equity firm in October. Then, CBRE came calling. The entrepreneur sat down for a socially distanced dinner with CEO Bob Sulentic and Andrew Kupiec, head of CBRE’s in-house co-working…

After $345 million buildout, Brightline to run new Miami-to-Aventura intercity rail

As heralded by a 2019 decision by Miami-Dade commissioners to pay $76 million for a Brightline station near Aventura Mall, county transportation decision-makers last week endorsed the for-profit inter-city rail company’s trains as the preferred mode for a Miami-to-Aventura commuter rail corridor. It will cost an estimated $345 million to build the necessary…

Mixed-use Wynwood buildings on Miami Avenue win OK

A sprawling mixed-use project designed to bring apartments, office space and more in two new buildings in Wynwood won a positive review from the city’s Urban Development Review Board. The board unanimously recommended approval of the project, known as PRH N. MIAMI, after the developer made several changes to the plan in response to issues…

Miami Today Editor suggests we need unity to bar casino perils

Whenever our economy slides, would-be casino owners look to Miami for a free lunch. All that keeps them from the lunch table is state law that bans casinos here and the integrity of enough lawmakers to keep the important barrier intact. As post-pandemic business swings back to normal, casino interests have their knives and forks out with hope of swaying Florida…

A downturn in travel of pandemic proportions : The latest data on miles traveled by air, rail, and road

It’s not news to say that people in modern economies travel. For work, school, or pleasure. For a few hours, days, weeks, months, or even longer. Going places has been an integral and obvious part of work and life for most American households and those of any wealthy economy. It’s also not news to say that travel and work commutes came to a halt last year…

One Thousand Museum developers score $90M refi to stave off foreclosure

The developers of the Zaha Hadid-designed One Thousand Museum condo tower in Miami secured a lifeline, The Real Deal has learned. Louis Birdman, Gilberto Bomeny, Kevin Venger and partners Gregg Covin and Todd Glaser, closed on a $90 million condo inventory loan from Cirrus Real Estate Partners, according to the lender. The refinancing comes less…

Knotel to tap former top WeWork exec as CEO

Knotel is bringing on a WeWork veteran to help straighten out the bankrupt flex-operator. Former WeWork vice chairman Michael Gross will join Knotel as its chief executive, the Wall Street Journal reported. Gross’ first order of business will be to reduce Knotel’s significant losses. The company already plans to close a number of its locations as part of its bankruptcy…

Here’s where Trumpworld has put down roots in South Florida

When Donald Trump left the White House on Inauguration Day, skipping his successor’s ceremony, he flew to South Florida, which has become a base of sorts for his inner circle since election results became widely accepted. Facing a hostile reception in the ex-president’s previous home state of New York, the former president and his wife, Melania…

Changing Zoning From Residential to Commercial

Converting commercial property into residential space—like turning a parking garage into condos—has been popular recently. But what about changing zoning from residential to commercial? Commercial real estate is lucrative. Nearly $90 billion is spent building it each year. If you have a residential property, it could be well worth your time to convert it to…

Cerberus Capital, Stonemont Financial form $1 billion domestic industrial property venture

Stonemont Financial Group and an affiliate of Cerberus Capital Management LP have formed a joint venture to invest in the white-hot logistics sector. The partners want to buy as much as $1 billion worth of industrial real estate, according to Commercial Property Executive. So far, the two firms have purchased properties in Illinois, Florida, Mississippi…

Landlords shun federal rent relief over program requirements

The federal government wants to give landlords and tenants $50 billion to help keep renters in their homes — but some of those property owners are turning down the funding that they’re eligible for. Some landlords have taken issue with the requirements to receive federal rent relief, including disclosing financial information, as well as limits on evicting tenants if…

Flamboyant Miami developer Gil Dezer talks branding, car racing, partnering with Trump

Any screenwriter who pitched the character of Gil Dezer to a Hollywood studio would be laughed out of the room. A chain-smoking, gold chain-wearing, foul-mouthed developer who owns the Aston Martin DB5 James Bond drove in “Goldfinger” and was married at Donald Trump’s Mar-a-Lago? The 46-year-old president of the development firm started by his…

Newmark’s acquisition of Knotel is approved

A bankruptcy court has approved the sale of flex-office provider Knotel to brokerage Newmark. Newmark officials said they expected the deal to close quickly, Commercial Observer reported. The brokerage provided $20 million in debtor-in-possession financing after Knotel filed for bankruptcy in January, and its stalking-horse bid of $70 million brought it closer…

Chart: Miami-Dade Commercial Real Estate Sales February 2021

Miami MLS Number of Sales from March 2019 to February 2021 for a) Commercial, Industrial or b) Commercial, Business, Agricultural, or Industrial Vacant Land within Miami-Dade County, Florida. The chart in this post shows the number of closed sales of Miami-Dade commercial properties, including improved commercial property and vacant commercial land, that were recorded in the Miami MLS for the two…

Midtown Miami Triptych dev site owner files for Chapter 11 amid foreclosure

The owner of a development site, planned for the mixed-use project Triptych, near Midtown Miami, filed for Chapter 11 bankruptcy amid foreclosure. The companies that own the property at 3601 North Miami Avenue are controlled by HES Group CEO and managing partner Francisco Arocha, and managing partner Alberto Abilahoud. Those companies filed…

Data center demand — and rent — surge in secondary markets

As new technologies, streaming and remote work drive demand for data centers across the country, smaller markets with relatively limited supply are attracting more attention. Data center space in secondary markets rented at a rate of $134 per kilowatt per month in the second half of 2020, a significant premium from the average primary market rent of $121…

Chart: Miami Commercial Real Estate Sales to List Price Ratio February 2021

January 2011 to February 2021 Sales to List Price Ratio for Commercial/Industrial Property within Miami-Dade County, Florida and Priced from $1 Million to $10 Million as Recorded in Miami MLS The sales to list price ratio as reported by the Miami MLS for improved commercial real estate (MLS classification: commercial/industrial) within…

Woerners buy historic Paramount Theatre in Palm Beach for $14M

The historic Paramount Theatre building in Palm Beach, which opened in 1927 as a silent film cinema and later morphed into a mixed-use retail and office landmark, sold for $14 million. The family investment firm, Woerner Holdings, through its affiliate WEG Paramount, bought the property at 139 North County Road from Paramount Church, a deed shows. Paramount…

JB’s on the Beach site in Deerfield sells at a discount for $11M

JB’s on the Beach oceanfront restaurant site in Deerfield Beach sold for $11 million, more than a year after it hit the market for $18 million. Ark Restaurants, which already owns and runs the restaurant, bought the 1.5-acre property from Boyle Beach House, led by John Boyle, according to a news release. JB’s on the Beach includes a 9,777-square-foot building…

PrivCap sells assisted living facility in Hollywood for $10M

PrivCap Companies sold the Midtown Manor assisted living facility in Hollywood for $9.7 million. Boca Raton-based PrivCap, through affiliate Midtown Manor Holdings, sold the property at 2001 Polk Street to Midtown Al Propco, led by Moshe Soskin and Joseph Hirsch, according to a deed. The buyer took out a $7.5 million loan from Israel Discount Bank of New York.

Related wins approval to develop high-rise condo project in Hollywood

Hollywood commissioners approved the Related Group’s proposal to develop a high-rise condominium and community center on city-owned beachfront land. Miami-based Related would rebuild the outdated Hollywood Beach Culture and Community Center at 1301 South Ocean Drive, and develop a 30-story, 300-unit condo project on adjacent…

Fort Lauderdale shoots down $1B Bahia Mar condo project on public land

Fort Lauderdale shot down developer Jimmy Tate’s $1 billion Bahia Mar condominium project proposal, but left the door open for Tate to renegotiate his lease for the publicly owned waterfront property. Following Tate’s pitch for 651 condo units during a public meeting on Tuesday, it was clear he didn’t have the needed commission support…

Hollywood approves funding for apartment project with workforce units

Affiliated Development won city approval of its subsidized plan to develop The Tropic, an 18-story apartment building with rent-controlled “workforce” units in downtown Hollywood. The 208-unit, mixed-income apartment building at 1744 and 1753 Federal Highway will have 50 percent of its units reserved for such middle-income tenants as police officers…

Triarch buys Dania Beach industrial property for $10M

Triarch Capital Group bought a Dania Beach warehouse distribution property for $10.4 million, in a deal a broker says set a record price per square foot. Aventura-based Triarch Capital bought the two buildings at 950-952 and 940 Eller Drive as well as a next-door half-acre lot in an off-market deal, according to a press release. Records show the buildings…

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