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CREC Assigned To Lease 3 Institutional Office Properties Totaling More Than 500,000 SF

CREC has been appointed to lead leasing at three office properties in South Florida’s key office markets of Brickell and Coral Gables.

The office buildings become the latest addition to CREC’s portfolio, which includes more than 100 properties totaling 13 million square feet across the state’s major markets. As the commercial real estate industry continues to consolidate amongst national firms, CREC remains Florida’s premier independent full-service commercial real estate firm, with offices in Miami, Fort Lauderdale and Orlando.

“We are thrilled with this new assignment, which comes on the heels of two other significant leasing and management contracts for institutional partners, highlighting CREC’s ability to continue to thrive and differentiate in a market otherwise defined by consolidation within the national brokerage houses,” said Carol Brooks, President of CREC.

Steven Hurwitz, Partner, Doug Okun, Senior Vice President, and Katie Fernandez-Espinosa, Senior Leasing Associate, will lead the office leasing efforts.

“Our institutional clients enjoy our full-service platform, local market expertise and track record to provide a holistic approach to real estate services,” CREC’s Steven Hurwitz said. “We have a uniquely collaborative team approach among disciplines, enabling us to provide institutional quality service in an entrepreneurial setting.”

The newest CREC assignments include:

800 Brickell Avenue: Located in Miami’s Brickell Financial District, CREC will lead the leasing efforts at the 15-story office tower 800 Brickell Avenue that has more than 212,000 square feet of office space and is home to tenants such as TotalBank, StateTrust, Prudential Insurance and Anheuser-Busch Companies.

The Alhambra: Situated in the heart of the Coral Gables Business District, CREC will oversee the leasing of The Alhambra office property located at 2 Alhambra Plaza. The building has 221,000 square feet of rentable office space and a tenant roster that includes Disney, Crystal Lagoons, Campbell Sales and Gresham, Smith and Partners.

The Alhambra West: Just a few blocks east, CREC will also handle the leasing at The Alhambra West, an office building totaling 91,000 square feet at 95 Merrick Way. The office property is home to tenants such as Northwestern University, Starbucks, US Department of State, and Pipeline Workspaces.

This is why your favorite Miami restaurants are closing

BY CARLOS FRÍAS AND NICHOLAS NEHAMAS | MIAMI HERALD
AUGUST 26, 2016 7:00 AM


Mark Scharnitz was sick of doing all the work.

He built a small café, The Corner Muse, that helped breathe new life into Miami’s Edgewater district at a time when drug dealers and street walkers worked openly. But when the neighborhood came up, so did his rent. And at the end of his five-year lease, after he had renovated the space into a thriving restaurant, his landlord tried to nearly triple his rent — and forced him out when he couldn’t pay.

The upscale seafood restaurant Mignonette now stands where Scharnitz’s dream once did.

“You bring people there. You build up the neighborhood. And when your lease is up, they don’t care — you’re out,” Scharnitz said.

Restaurants, like artists, move into depressed neighborhoods where rents are cheap, hoping their fans will follow. And when they do, they are often the first ones priced out.

It’s happening across Miami.

In May, Michelle Bernstein’s signature restaurant in the Mimo neighborhood, CENA by Michy’s, closed after a 10-year run. So did Mimo’s The Federal, even after a drastic, last-ditch makeover.

A key culprit in both cases? Rising rents.

South Florida’s smoking-hot commercial real estate market is pricing restaurants out. Rents have quadrupled in popular areas such as Brickell, Wynwood and the Upper East Side over the last few years, brokers and developers say. (Renters are feeling the same heat on the residential side, too.)

“It’s almost like New York real estate right now,” said Ivo Tsinev, a broker at Colliers International South Florida who represents both national chains and chef-driven restaurants.

The region’s appetite for restaurants is insatiable, research shows. People are eating out more and shopping at grocery stores less.

To wit: In Miami’s greater downtown, restaurant sales hit nearly $735 million in 2014, according to the Downtown Development Authority. That was up 78 percent over 2013.

And South Florida diners are dropping more cash than ever: Consumer restaurant spending in the region is growing at the second-fastest rate in the country, new statistics from brokerage CBRE say.

Landlords see that success and are asking chefs to pay up — or get out.

The perks of being a landlord

Scharnitz decided it wasn’t going to happen to him again.

Five years ago, he bought a building “for a song” ($280,000 for 3,490 square feet of space) on Northeast 54th Street in the heart of Little Haiti. That was before speculators decided it could be the next Wynwood, when he still had to worry about getting robbed like one of his managers did.

He ran his catering business out of the back. In February, when he thought the neighborhood was ready, he opened Philly Grub, making authentic cheesesteaks with shaved sirloin and housemade cheese “whiz.”

The restaurant is part of Little Haiti’s gentrification, bringing with it adventurous new customers — as well as rapidly rising rents. It’s the same old story — even in neighborhoods that have yet to prove themselves, rising rents push out restaurants that blazed a trail.

“People told me I was crazy,” Scharnitz said. “And the crazier they told me I was, the more I knew I had to do it. If you don’t buy your building, there’s just no way you can do it.”

Bernstein, an international award-winning chef raised in Miami, knows all about the dangers of not owning your own space.

She grew up in Mimo — the Miami Modern district along North Biscayne Boulevard south of 80th Street — and led the neighborhood’s revival by using her name to draw fans to a desolate part of town. She and chef/husband David Martinez even bought a house there. They still live there, but their restaurant is no longer part of the neighborhood it helped build.

“It’s devastating,” Bernstein said at the time. “We totally vested ourselves in that neighborhood.”

The issue? The building was sold before they signed a lease extension and the new owners asked nearly three times the rent, almost $60 a square foot. Bernstein had even renovated the restaurant a year ago, thinking she’d be there long term.

For her fans, it was like Emeril Lagasse being priced out of New Orleans.

“It’s indicative of what’s going on and what is going to continue going on in Miami,” said CENA co-owner Steven Perricone, a former New York restaurateur and developer who bought the property for Italian restaurant and market Perricone’s in 1994, when Brickell was a fine-dining wasteland.

Finding an area like Brickell or, perhaps, Little Haiti or Little River, before it blows up is hard.

If a chef wants to open up in an already established neighborhood, owning just isn’t realistic, said Andreas Schreiner, who owns the Pubbelly restaurant group, with locations in Sunset Harbor and downtown Miami.

“It’s a nice dream to do it, but the way real estate prices are now, it’s a little prohibitive, especially on the Beach,” Schreiner said. “We’re looking to expand on the mainland, but even in places like Wynwood or the Midtown corridor, prices have really gone up. So to be able to purchase … it’s just too much.”

At the mercy of the market

Owning a restaurant is a risky business.

The industry is rife with turnover. Some spots close before people even know they are open, even excellent ones such as Bazi, which folded after less than six months in ultra-competitive South Beach, despite a 3 1/2-star Miami Herald review.

But what’s happening in South Florida’s restaurant scene now is different, experts say.

It took Tsinev, the broker, two years to find the perfect space for one client in downtown Miami. He’s even given up using commercial real estate databases to find locations, because there’s too much competition for not enough space. Instead, he cold-calls landlords, from Miami’s Parks and Recreation Department to the Dominican consulate, to see if they’re interested in leasing to a restaurant. (It’s working, he says.)

“The gap is getting wider and wider between what landlords need to recover and what the chefs and all of these restaurants can afford to pay,” Tsinev said. “I’m not saying we’re in a bubble. But I hope it starts slowing down soon.”

The debacle at CENA wasn’t the first time rents have displaced Martinez and Bernstein. Their Sra. Martinez in the Design District folded after their rents went from $15 a square foot to nearly $50, from one lease to the next.

Martinez is stunned at the rents landlords are asking today. In Little Haiti, prices are nearly $40 a square foot. Even in Allapattah, he is seeing landlords asking $30 a square foot compared to less than $10 a year ago.

“Rents go up before a neighborhood proves itself in Miami,” Martinez said. “Rents are going to have to come down unless landlords don’t mind seeing their buildings empty.” More and more restaurants are opening outside the traditional hotspots of Brickell and South Beach. Some chefs are looking to suburbs, such as Kendall and Doral, said CREC broker Rafael Romero. “It creates a bidding war,” he said.

Drew Schaul of leasing firm RKF agreed. “The market is as tight as it’s ever been,” he said. “There’s a limited supply of great restaurant space, especially for the higher-end, chef-driven restaurant concept.”

Not all the new competition is up to snuff.

Many wealthy foreigners see opening a restaurant in Miami as a better investment than leaving their cash in struggling Latin American and European economies, said Emran Ally, a broker at CBRE. Some of the investors don’t know how to run a restaurant or play the real estate market.

“A lot of those tenants overpay [for space] and then landlords start charging more and the menu prices rise and it’s a slippery slope,” Ally said.

And there’s another way Miami’s hot real estate market hurts restaurants.

Most retail leases require tenants to pay property taxes, maintenance and insurance, on top of monthly rent.

If a buyer comes in and scoops up a building for a big price, Miami-Dade County will likely assess the property at a higher value — raising the taxes and leaving the restaurant tenant on the hook for the higher bill. That’s in addition to the new owner asking more rent once the original lease expires.

There are signs South Florida’s commercial real estate market could slow down — but they’re still far off.

For one, Miami’s residential building boom is cooling as sales plummet, meaning retail developers will face less competition from condo projects. The threat of Zika could also hinder tourism in the region, depressing restaurant sales.

‘Feed the neighborhood and it will feed you’

Restaurants can only run so far. Eventually, rents catch up.

Fiorito Argentine restaurant was a pioneer when it moved into Little Haiti, a block north of the famous Churchill’s music venue, four years ago. Most of its customers are from outside the area. The restaurant is drawing people from Miami Shores and El Portal and helping build interest in Little Haiti.

But Fiorito has seen its rent triple since it moved in. The owners, brothers Maximiliano and Cristian Álvarez, hope to grow with the neighborhood, but they already suspect one day they might have to relocate.

“Rents have gone way up,” Maximiliano Álvarez said. “People are running from higher rents, but eventually they all go up.”

When rents go up, chefs can’t just charge more for mac ‘n’ cheese, the way a boutique might mark up yoga pants.

“People feel we’re trying to take advantage of them,” Álvarez said.

Several chefs said the best-run restaurants make about a quarter on every dollar. An average one gets eight to 10 cents.

“Our bread is expensive enough,” jokes Zak Stern, who has developed a cult following in Wynwood as Zak the Baker. “High-quality food shouldn’t just be for the very wealthy.”

But good neighborhoods need good restaurants. A restaurant like Zak the Baker can build a community in ways an Old Navy or Banana Republic can’t.

“You feed the neighborhood and it will feed you,” says Goldman Properties managing partner Joe Furst, quoting his former boss, the late real estate developer Tony Goldman.

When Zak the Baker was looking to open in Wynwood, Furst made it happen. Goldman — which owns more than 30 properties in the neighborhood — designed and built a space for him and financed the deal.

When it came time to open a full production bakery in the heart of Wynwood (set to open in September), Goldman offered Stern a 10-year lease and favorable terms to keep him from moving to Doral or Medley.

“It’s in their interest not to kill the goose that laid the golden egg,” Stern said.

Some landlords see the logic in cutting restaurants a bit of slack.

“The restaurants, they bring people every day,” said Craig Robins, the developer who owns roughly three-quarters of properties in the Design District.

Robins said he generally charges restaurants about 25 percent of what his retailers pay.

Although he makes more money renting to Louis Vuitton, Hermès and Gucci, he says restaurants are crucial to the success of the luxury shopping mecca.

“People go out to eat much more than they shop,” said Robins, who is planning to open 10 restaurants by fall 2017.

Major property owners like Goldman and Robins are the exception. Because they own so many properties, they can afford to rent to restaurants at a lower rate. Smaller landlords can’t always do that, if they’re thinking about the bottom line.

But focusing only on the bottom line can kill a neighborhood.

Just ask Coconut Grove. Landlords brought in retailers and national chains with no connection to the community in the 1990s and the crowds lost interest. Only now that more independent eateries are opening — 33 Kitchen, Ariete, Glass and Vine, Lokal, Panther Coffee and Strada, just to name a few — is Coconut Grove experiencing a revival.

It’s a lesson for Mimo, Little River, Little Haiti — and the chefs taking a chance on the next up-and-coming neighborhood. Your success could be your undoing, unless you buy in on the ground floor.

“Nobody’s going to tell me I have to leave,” said Philly Grub’s owner, Scharnitz. “I’m here for the long haul.”

Nicholas Nehamas: 305-376-3745, @NickNehamas

Carlos Frías: 305-376-4624, @Carlos_Frias

CPAC & Lubert Adler Complete Repositioning of Royal University Plaza Shopping Center in Coral Springs

Alan Esquenazi and Warren Weiser

37,000-square-foot Orchard Supply store set to open in November

Eighteen months after acquiring Royal University Plaza in Coral Springs, Florida, owner CPAC Royal University, LLC, a joint venture between principals of CREC and Lubert Adler, has finalized a dramatic repositioning that more than doubled occupancy, added 15,000 square feet of rentable retail space, and lured high-profile anchors including Orchard Supply and Total Wine & More to the neighborhood shopping center.

Located at 2556 North University Drive, Royal University Plaza was an underperforming asset when CPAC and Lubert Adler purchased the property for $26 million in February 2015. At the time, the center was 45 percent occupied and in need of significant capital improvements that would help attract major national brands to the center situated at the high-volume intersection of University Drive and Royal Palm Boulevard.

Central to the JV ownership group’s turnaround was enlisting CREC to undertake an aggressive retail leasing and marketing campaign and oversee a series of capital improvements, including a 15,000-square-foot expansion that opened the door to a new 37,000-square-foot Orchard Supply store set to open in November – one of the brand’s first locations in South Florida.

“As we began evaluating the neighborhood following last year’s acquisition, we quickly identified a lack of available boxes capable of attracting junior anchors,” says Alan Esquenazi, a partner at CREC. “By reconfiguring storefronts and adding additional space, we transformed Royal University Plaza into a top-performing asset in the Coral Springs neighborhood within a year-and-a-half.”

Today, the 115,000-square-foot Royal University Plaza is 94 percent leased and home to a tenant roster that includes Total Wine & More, Pet Supermarket, Jimmy John’s, Third Federal Bank, Hertz Rental Cars, Brooklyn Water Bagel Co., and AAA Auto Club.

“Royal University Plaza is a classic example of a retail asset that benefitted from a creative approach to leasing, marketing and construction management,” explains CPAC Principal Warren Weiser. “We identified an underperforming property in a submarket that was home to strong demographics and CREC executed a strategy that maximized asset value and elevated the center’s appeal among some of the country’s hottest retail brands.”

With high connectivity, Doral offices 98% full, values reported holding

Office values continue to hold strong in Doral, says Douglas Okun, senior vice president of CREC, which manages the Lennar Corporate Center, where occupancy sits at 98%…

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Kopelowitz Ostrow Opens Gables Office

A Fort Lauderdale law firm has chosen Coral Gables for its first permanent Miami-Dade office.

Kopelowitz Ostrow Ferguson Weiselberg Gilbert signed a 5,000-square-foot lease at 2800 Ponce de Leon Blvd., a Class A office building anchored by Regions Bank. The firm will join others operating in the 28-story Regions Bank Tower, including Wicker Smith O’Hara McCoy & Ford and Breier Seif Silverman & Schermer.

The new location will be managed by veteran Miami lawyer Robert “Bobby” Gilbert, who became a name partner after joining the firm last fall. Gilbert left Grossman Roth to oversee and expand Kopelowitz Ostrow’s complex litigation and class action practice.

“By opening our office in Coral Gables, we’ll be able to continue building our team and providing the full range of services to our clients and co-counsel across South Florida,” he said in a statement.

The office will be home to eight of the firm’s 45 or so attorneys come August.

Carol Brooks, president of Coral Gables-based CREC, represented the firm in the lease transaction. No other details were released.

CREC Completes Office Leases Totaling 13,000 SF in Coral Gables, FL

Carol Brooks

Hemisphere Media Group expands its Coral Gables headquarters; Law firm Kopelowitz Ostrow Ferguson Weiselberg Gilbert opens its first permanent Miami-Dade County office.

The Coral Gables office market is getting an added boost thanks to the expansion of the only publicly-traded, pure-play US Hispanic tv/cable networks and content platform and a Broward law firm opening its first permanent office in Miami-Dade. Hemisphere Media Group, Inc. will relocate and expand its headquarters to 4000 Ponce de Leon Blvd., while new arrival Kopelowitz Ostrow Ferguson Weiselberg Gilbert will open its newest office at 2800 Ponce de Leon Boulevard. The two leases total a combined 13,000 square feet of Class A office space.

Carol Brooks, President of Coral Gables-based CREC, one of Florida’s largest commercial real estate services firms, represented Hemisphere and Kopelowitz Ostrow Ferguson Weiselberg Gilbert in the two transactions. William Holly of Patton Real Estate represented the owner of 4000 Ponce de Leon Blvd., CMC Group.

The leases come as new investment pours into the Coral Gables business district. A $21 million makeover of the neighborhood’s main retail thoroughfares, Miracle Mile and Giralda Avenue, is underway; more than 85 new restaurants have opened in the last five years; and over 1,500 residential units are expected to come online by 2020.

“The Gables is surging as new companies enter what has always been one of Miami’s most desirable submarkets and existing firms expand,” explains CREC President Carol Brooks, who advised both firms in their leases. “Our tenant representation team took the time to learn the needs of Hemisphere and Kopelowitz Ostrow Ferguson Weiselberg Gilbert, and then created a leasing strategy that will meet both firms’ current and future real estate requirements. The result will be new absorption for the Coral Gables office market.”

Hemisphere owns and operates five leading U.S. Hispanic cable networks, two Latin American cable networks, and the leading broadcast television network in Puerto Rico. The firm was located at 2000 Ponce de Leon Blvd., but recently decided to relocate to an 8,000-square-foot space with the goal of modernizing its space and establishing a defined headquarters that could accommodate its entire staff.

“As we have grown, we took on additional non-contiguous space and this move will put us all under one roof, so we can work more efficiently,” says Hemisphere President and CEO Alan J. Sokol. “After surveying the market with CREC, we concluded that 4000 Ponce was the right choice due to the building’s location and modern finishes. We couldn’t be happier with our new headquarters, and we’re thrilled that we’re remaining in Coral Gables.”

Kopelowitz Ostrow Ferguson Weiselberg Gilbert is a full-service South Florida law firm with approximately 45 lawyers that represent clients of all sizes, from entrepreneurs to large public companies. The firm’s main office is in Fort Lauderdale. The new Coral Gables location, which totals nearly 5,000 square feet, opens following the arrival last year of veteran Miami lawyer Bobby Gilbert, who is overseeing and expanding the firm’s complex litigation and class action practice.

“By opening our office in Coral Gables, we’ll be able to continue building our team and providing the full range of services to our clients and co-counsel across South Florida,” says Gilbert, who will manage the Coral Gables office.

About CREC

Founded in 1989 by Chairman Warren Weiser and President Carol Brooks, CREC (Continental Real Estate Companies) is one of Florida’s largest commercial real estate services firms, managing a portfolio of more than 100 office, retail and multifamily properties totaling 11.4 million square-feet. With offices throughout Florida, CREC specializes in asset and property management, leasing, tenant representation, construction management, development dispositions and finance, and creative workout solutions. For more information, visit  www.crec.com.

About Hemisphere Media Group, Inc.

Hemisphere Media Group, Inc. (NASDAQ:HMTV) is the only publicly traded pure-play U.S. media company targeting the high growth Spanish-language television and cable networks business in the U.S. and Latin America. Headquartered in Miami, Florida, Hemisphere owns and operates five leading U.S. Hispanic cable networks, two Latin American cable networks, and the leading broadcast television network in Puerto Rico. Hemisphere’s networks consist of: Cinelatino, the leading Spanish-language movie channel with over 16 million subscribers across the U.S., Latin America and Canada, including 4.5 million subscribers in the U.S. and 12.3 million subscribers in Latin America, featuring the largest selection of contemporary Spanish-language blockbusters and critically-acclaimed titles from Mexico, Latin America, Spain and the Caribbean; WAPA, Puerto Rico’s leading broadcast television network with the highest primetime and full day ratings in Puerto Rico. Founded in 1954, WAPA produces more than 75 hours per week of top-rated news and entertainment programming; WAPA America, the leading cable network targeting Puerto Ricans and other Caribbean Hispanics living in the U.S., featuring the highly-rated news and entertainment programming produced by WAPA. WAPA America is distributed in the U.S. to 5.2 million subscribers; Pasiones, dedicated to showcasing the most popular telenovelas and drama series, distributed in the U.S. and Latin America. Pasiones has 4.4 million subscribers in the U.S. and 10.6 million subscribers in Latin America; Centroamerica TV, the leading network targeting Central Americans living in the U.S., the third-largest U.S. Hispanic group, featuring the most popular news, entertainment and soccer programming from Central America. Centroamerica TV is distributed in the U.S. to 4.0 million subscribers; and Television Dominicana, the leading network targeting Dominicans living in the U.S., featuring the most popular news, entertainment and baseball programming from the Dominican Republic. Television Dominicana is distributed in the U.S. to 3.0 million subscribers. For more information, visit  www.hemispheretv.com.

20 Sports Authority Stores Up for Grabs in South Florida
Carla Vianna | Daily Business Review

About 20 locations from Miami to Jupiter will be up for grabs once the debt-laden sporting goods retailer closes its doors in bankruptcy. Averaging 40,000 square feet, the large stores threaten to inflate the market by nearly 1 million square feet when big-box retailers are physically downsizing.

A dwindling market for department stores makes finding a tenant for extra-large spaces more difficult than releasing boutique-size shops catering to lifestyle brands, said Gunster real estate attorney Brian Belt. The Miami shareholder said big-box stores sit on the market longer, which could hurt smaller tenants nearby that counted on the foot traffic generated by their bigger neighbor.

If landlords fail to attract a sizable retailer, the large spaces may be retooled into gyms or other uses that “don’t generate as much income,” Belt said.

When Sports Authority shuts its doors, hundreds of stores across the U.S. may go dark — and stay dark.

South Florida, however, is somewhat immune to the “retail apocalypse,” said Alan Esquenazi, a principal at CREC who has represented Sports Authority in the past.

Brokers are confident the retailer’s South Florida locations won’t sit vacant for long.

Esquenazi said Sports Authority “traditionally went for high-profile, great locations.”

These include the street-level store at the popular Shops at Midtown Miami and a spot at Dadeland Station in suburban Kendall. The bankrupt retailer also has a presence at Dolphin Mall and Sawgrass Mills.

Steven Henenfeld, CREC’s director of retail leasing, said the closings open prime sites for tenants looking to upgrade their position in the market and give landlords the opportunity to push up rents when a newcomer moves in.

“South Florida in general will fare better with respect to Sports Authority’s vacancies than a lot of other markets because our retail numbers are very, very strong,” Belt said.

Retail vacancies dropped to 3.2 percent in Miami-Dade County and 5.3 percent in Broward County during the first quarter, according to CBRE Inc.

A bankruptcy auction will be held June 29 for 320 of the chain’s 463 store leases, including 18 in South Florida totaling 715,000 square feet. New York-based A&G Realty Partners LLC will accept bids until June 23.

“After the June 29 date, we will have a better idea of what is going to be left available,” said CBRE senior vice president Paco Diaz.

Diaz said the top two contenders could be Dick’s Sporting Goods and Orchard Supply Hardware.

Lowe’s purchased Orchard Supply in 2013 and last year announced plans to add 40 stores, according to a retail report by Orlando-based Crossman & Co.

“Retailers at every end of the spectrum are reevaluating their footprints,” the report said. Healthy retailers are “exploring smaller stores to gain access to urban consumers where real estate costs can be prohibitive.”

While large department-store brands like Macy’s have struggled with underperforming assets — over the past five years the retailer closed 52 locations — discount retailers like Ross Stores Inc. boast healthy performances and could be viable contenders for Sports Authority’s defunct locations.

 

Does Sumitomo’s $220M Grab Point To More Big Office Buys?

Does Sumitomo’s $220M Grab Point To More Big Office Buys?

JUNE 9, 2016 | BY JENNIFER LECLAIRE

MIAMI—“The fact that the Miami Tower’s price doubled in less than decade is proof that the investor appetite for existing office space is driving property values to record levels.”

The sale price on the 631,672-square-foot office asset: $220 million.

MIAMI—The Japanese corporation Sumitomo recently paid $220 million for the iconic, light-changing Miami Tower in Downtown Miami. Call it the latest sign that the investor appetite for Miami’s commercial real estate market is still intensifying.

Domestic and international investor interest continues to drive property values to record levels. For example, the Miami Tower was last sold for $105 million five years ago. The sale price doubled in about five years.

“The fact that the Miami Tower’s price doubled in less than decade is proof that the investor appetite for existing office space is driving property values to record levels,” Ezra Katz, CEO of Aztec Group, tells GlobeSt.com. “As Miami’s booming condo market outbids office developers for available land, the amount of inventory is not keeping up with the rising demand for office space. We expect that office rents and sale prices will continue to rise as supply becomes more constrained and investor demand increases.”

The past year has seen a series of similar office deals, including the $140 million sale of 777 Brickell, the $112 million sale of 800 Brickell, and the $142 million sale of Espirito Santo Plaza, all trophy assets in Miami’s financial district.

Miami’s booming condo market has also impacted the ability of institutional investors and office developers to compete for land, since condo developers will outbid them every time. As a result, Miami’s office market is seeing steady rising rental rates and increased demand, but little new office inventory to meet the rising demand.

These market fundamentals point to the reasons why Sumitomo would pay top dollar for an office asset like Miami Tower, and all signs point to other office properties trading hands as deep-pocketed investors seek top-performing assets to add to their portfolios as market conditions continue to strengthen favoring landlords.

“Sumitomo’s pickup of Miami Tower is another example of an institutional buyer targeting a performing asset amidst high barriers to new office development across South Florida,” Warren Weiser, chairman of CREC, tells GlobeSt.com. “Building a stand-alone office tower from the ground-up in today’s market has become cost prohibitive just as demand for Miami real estatesoars. This is putting existing buildings benefitting from quality locations and strong income in-place at a premium.”

Coral Gables Sees Mega Deal; Largest of 2016

Coral Gables Sees Mega Deal; Largest Of 2016

MIAMI—The seller more than doubled its money in 11 years.

2121 Ponce includes a five-story, 586-space parking garage and street-level retail space.

MIAMI—It’s the largest commercial real estate transaction in Coral Gables, FL so far this year. A joint venture between Greenstreet Partners just sold the 2121 Ponce office building to a member company of Zurich North America for $57.5 million. Greenstreet acquired the building for 27.1 million in 2005.

Zurich Alternative Asset Management, Zurich’s alternative investment adviser, worked with the buyer on the deal. The sale of the 164,848 square-foot office building marks the latest sign of mounting demand for high-performing South Florida office properties among institutional investors around the world. CREC and CBRE brokered the deal.

“Coral Gables has long been one of South Florida’s most desirable submarkets, and that position will only grow as office users prioritize locations that are walkable and in close proximity to public transit options,” CREC principal Steven Hurwitz, who manages leasing at the building in tandem with CREC’s Doug Okun, tells GlobeSt.com. “2121 Ponce has emerged as one of the neighborhood’s best addresses over the past decade, particularly among companies in the market for space priced slightly below the rates at newer buildings nearby.”

CREC and Greenstreet acquired 2121 Ponce in 2015. Since then, the office asset has seen significant renovations of all common areas. A leasing and marketing program repositioned the building as a boutique, service-oriented option for Coral Gables office users. CREC has worked as the exclusive leasing agent and will continue managing the office asset for the new owner. The property is 95% occupied.

CREC’s Warren Weiser, Harry Blyden, and Andrew Remick co-brokered the sale of 2121 Ponce alongside CBRE’s Christian Lee, Jose Lobon, and Andrew Chilgren. Roy Rosenbaum, director of acquisitions, and Sean Bannon, managing director and head of US real estate, led the way for Zurich.

“Our experience at 2121 Ponce is an example of how a building’s value can be maximized by bringing a clear vision to life through creative leasing, construction, marketing and property management strategies,” says CREC chairman Weiser. “The investments we’ve made over the past decade have transformed the building into a core institutional-grade asset, leading to this sale. We expect similar acquisition activity in the coming months given high barriers to new development across South Florida.”

Located in the Coral Gables business district one block north of the “main and main” intersection of Ponce de Leon Boulevard and Alhambra Circle, 2121 Ponce includes a five-story, 586-space parking garage and street-level retail space. Goldstein Schechter, Fox Latin America, Valley National Bank, the Consulate of Barbados and CREC call the office building home. POC restaurant is located on the building’s ground floor.

The office property’s setting in Coral Gables’ walkable downtown is also appealing to tenants as the $21 million makeover of two of the neighborhood’s main retail thoroughfares, Miracle Mile and Giralda Avenue, gets underway. The submarket is home to more than 150 multinational corporations, more than a dozen luxury hotels, a free public trolley system, and boutiques and restaurants. Eighty-five new eateries opening in the last five years. Meanwhile, more than 1,500 residential units are expected to come online over the next three years.

Swiss insurer makes landfall in Coral Gables with $58M investment pay

Swiss insurer makes landfall in Coral Gables with $58M investment play

Sellers more than doubled their money after 10 years of holding the property

June 06, 2016 03:45PM
By Sean Stewart-Muniz

2121 Ponce De Leon Boulevard

It looks like there’s still plenty of foreign investment to go around for Miami’s office market.

Zurich North America, an affiliate of a major Swiss insurance company, just closed on its $57.5 million purchase of the 2121 Ponce office tower in Coral Gables.

The deal was announced Monday by real estate companies Greenstreet Partners and CREC, which formed a joint-venture back in 2005 to buy the 13-story office building for $27.1 million.

Through the years, Greenstreet and CREC started renovating the common areas for 2121 Ponce, which was built in 1970. The companies brought the building up to 95 percent occupancy with an eclectic mix of tenants like the Consulate General of Barbados, Fox Latin America and Valley National Bank. CREC itself even took space in the building, and plans to stay even under the new ownership.

After roughly a decade of holding the property, Warren Weiser, chairman of CREC, told The Real Deal that the partners decided it was a good time to sell amidst a tightening office market.

“The asset performed pretty darn well even through the recession,” Weiser said. “It’s a very good market for both buyers and sellers right now.”

Weiser said the partners had an established relationship with Zurich, which keeps a U.S. office in New York. After touching base in February, the two parties “shook hands” in March and closed the deal last week.

“[Zurich] knows this market,” Weiser told TRD. “They made a very smart purchase because you can’t reproduce this building for the price they paid.”

The most recent sale of 2121 Ponce, which measures 164,848 square feet, breaks down to nearly $349 per foot. That’s more than double the $164 per foot that CRED and Greenstreet paid in 2005.

One explanation for that price explosion can be found in the latest market numbers from brokerage JLL. Although net absorption in Coral Gables was down by a fraction of a percentage point during the first quarter, there was no new office space under construction in the city at that time. Giralda Place has since broken ground with 58,000 square feet of offices. Meanwhile, office vacancies stood at 10.6 percent and rents were asking an average of $38.18 per square foot annually, according to JLL.

The deal was brokered by CREC’s Weiser, Harry Blyden and Andrew Remick, along with CBRE’s Christian Lee, Jose Lobon and Andrew Chilgren. On Zurich’s side, the firm was advised by its “alternative investment management” division. The Swiss insurance carrier has roughly 55,000 employees worldwide, and its North America division specializes in property-casualty coverage, according to its website.

It’s not unusual for insurance giants like Zurich to diversify into real estate: among U.S. firms, Prudential Financial boasts a thriving real estate arm that’s also bought into the Coral Gables office market.