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.