2008 Firm Overview presentation - Miami Downtown Development

Transcription

Office Outlook
Miami . Q2 2013
Set in motion: Investment sales
activity continues
Midyear signaled ongoing confidence in the market with heightened
office dispositions and redevelopment announcements, buoyed by some
of the highest levels of activity being generated from the retail, housing
and hotel sectors
Jones Lang LaSalle • Office Outlook • Miami • Q2 2013
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Miami overview
The year began well for Southeastern U.S. markets where above-
Look to a continuation of concessions dropping and rents increasing.
average employment advances were registered and where an
For prime spaces, landlords are generally achieving bigger rents and
impressive slice of the nation’s absorption gains were tallied.
offering moderate tenant improvement allowances. This is not
Capturing over 13.0 percent of country’s new occupancy gains was
prevalent, however, for “commodity space” i.e., lower floors with limited
noteworthy considering the geographic area’s disproportionate share
to no views and where the better concessions are being generated.
of inventory (comprising only 6.1 percent of total office space
nationally). The leaders were Atlanta (7.2 percent of national
Within the Suburbs, the number of large contiguous blocks (20,000
absorption) and much of Florida with Miami accounting for 3.0 percent
square feet+) of prime space availabilities is down from this same time
national absorption.
last year. On the Class A sublet front, only two assets can
accommodate a large user, both of which are located in the Airport. The
Midyear upheld the previous three years of positive absorption in
Suburbs also contains the largest volume of Class A sublease space.
Miami, led almost entirely by the Class A segment of the market. With
Although comprising only 1.0 percent of vacancies, the volume of
sublease still under 1.0 percent of vacancy, new occupancy gains
current square feet vacant has increased substantially over the last
have reduced direct vacancy by 3.0 percentage points since third
12 months.
quarter 2011’s record high of 20.8 percent. This was also the lowest
posted since late 2009.
Although the CBD and the Suburbs each posted double digit
vacancies, the CBD accounted for 75.0 percent of absorption market
wide. The CBD’s Brickell sector recorded the highest absorption yearto-date among all Miami submarkets. Only two segments of the local
office market have single digit direct vacancies: the Class A sectors of
Coconut Grove and Miami Beach – both of which are Suburban and
both of which contain relatively small inventories.
3
Miami overview
Investment sales activity continues for those assets of
CBD Densification and Parking Woes
institutional interest
Existing office users continue to consolidate into new buildings, gaining
By midyear, two office assets garnered headlines. In the CBD, the
efficiency by having more employees work in less space. Miami’s CBD
recently renovated 444 Brickell project announced the marketing of its
(and the Brickell sector in particular), stands out as one of the only
200,000 square foot Class B office building. The 4.13-acre property
urban cores with insufficient municipal parking facilities. This has been
occupies prime Brickell Avenue and Miami River frontage. The sale
somewhat hidden and oversold for some years due to high office
also includes a second 72,000 square foot, fully leased Class B office
vacancy rates. The combination of office assets gradually filling up
asset (Daily Business Review).
along with Miami’s urban housing boom has driven up land prices that
make it financially unattractive for development of parking garages.
Among Suburban markets, one of Miami Beach’s few Class A office
Further adding pressure is the waiver of any parking requirement for
assets is set to be acquired for nearly $472.00 per square foot. Known
residential uses within 1,000 feet of a Metromover or Metrorail station.
as Lincoln Place, the 139,887 square foot building also occupies a key
position in the heart of one of the top retail and tourist destinations,
Market Distinctions
South Beach. It has close proximity to the famed Lincoln Road
Vigorous global trade continues to position the state and Miami among
retail/entertainment corridor and is within a block of the beach.
the nation’s top international business markets. Florida’s 2012
Headquartered by LNR (now Starwood), the new buyer is Orlando
international trade reached a record $162 billion last year, growing by
based, Parkway Properties. Closing is expected by third quarter 2013
more than double the national average at 8.7 percent. This ranked the
(South Florida Business Journal).
state top in the nation for the highest trade surplus (World Trade Center
Miami, Miami Herald).
Suburban Coral Gables recorded its first Class A institutional sale
since 2008 with the disposition of the 218,170 square foot BACColonnade asset, one of the competitive Trophy office buildings.
Miami overview
Two of Miami’s stalwart drivers, international commerce and banking,
collaborated this quarter with the announced intention of Chile’s thirdlargest bank, Banco de Credito e Inversiones (BCI), to purchase localbased City National Bank of Florida for nearly $883 million or 1.5 times
its “book value”. The sale should close by year-end with the bank
remaining under the same name it has operated under for the last 67
years (South Florida Business Journal). BCI executed a 22,500
square foot lease for its new Downtown offices at Southeast Financial
Center during third quarter 2012.
Over the next two years, the city’s Convention and Visitor’s Bureau
counts 25 hotels slated for development. Miami’s 2013 hotel sector
performance continues to solidify its position as one of the top
investment and hospitality markets with first quarter posting sales of
$200 million. The majority of activity has and is occurring in the
Suburban Miami Beach. Looking at the total number of transactions,
most is being captured by the South Beach area with independent
boutique assets. Demand is fueled by the near 14.0 million overnight
visitors, further underscoring the city’s international trade and
destination for international tourists – which account for half of
overnight visitors. Since 2010, Miami has witnessed REITs, private
equity and institutional investors pumping $1.6 billion of capital into the
market. Going forward, Jones Lang LaSalle’s Hotels & Hospitality
Group expects investors to place nearly $750 million of capital into the
marketplace this year (South Florida Business Journal, Miami Today).
4
5
Miami property clock
Peaking market
Falling market
Rising market
Bottoming market
Aventura, Coconut Grove,
Miami Beach
Brickell,
Downtown (CBD)
Miami Airport,
Kendall
Coral Gables
Clock description
• This diagram illustrates where Jones Lang LaSalle estimate each prime office market
is within its individual rental cycle at the end of the quarter
• Markets can move around the clock at different speeds and directions
• The diagram is a convenient method of comparing the relative position of markets in
their rental cycle
• The position is not necessarily representative of investment or development
market prospects
• The position refers to prime face rental values
Miami Lakes
Q2 2013 positions
• Suburban Coral Gables is showing improving Class A fundamentals
and an increase in tour activity; Suburban Grove and Miami Beach
are each maintaining single digit Class A vacancies
• The CBD’s Class A sector remains active on both the absorption and
current leasing activity front along with Trophy towers holding onto $40.00+
per square foot asking rates for their prime spaces
Miami regional definitions
The Miami market is composed of the Downtown and Brickell
areas (CBD) and seven major Suburban submarkets.
Central Business District: Brickell, Downtown
Suburban Submarkets: Aventura/North Miami, Coconut Grove, Coral Gables, Kendall/Dadeland, Miami Airport, Miami Beach, Miami Lakes
6
7
Miami space statistics
Overall Year
End 2012 Year-To-Date
Vacancy (%) Completions
Overall
Absorption
(Including
Stock Subleases)
Year-To-Date
Overall Year-To-Date
Absorption
Overall
(Including Absorption (%
Subleases)
of Stock)
Overall
Vacancy (%)
(Including
Subleases)
Current
Quarter
Under
Construction
CBD
Brickell
19.9%
0
6,462,517
21,547
127,641
2.0%
17.9%
$39.09
0
Downtown
20.7%
0
7,059,583
35,476
72,410
1.0%
19.7%
$33.04
0
CBD market totals
20.3%
0
13,522,100
57,023
200,051
1.5%
18.8%
$35.46
0
Aventura / North Miami
9.4%
0
1,058,942
4,741
2,375
0.2%
16.4%
$38.12
0
Coconut Grove
9.5%
0
894,014
(2,344)
3,609
0.4%
9.1%
$30.37
0
Coral Gables
20.1%
0
5,535,832
9,383
5,993
0.1%
20.0%
$33.75
0
Kendall / Dadeland
16.9%
0
2,849,236
8,863
1,754
0.1%
16.8%
$28.06
0
Miami Airport
19.9%
0
9,239,763
(1,122)
31,158
0.3%
19.6%
$24.85
80,000
Miami Beach
11.3%
0
1,936,041
764
1,340
0.1%
11.2%
$34.09
0
Miami Lakes
26.1%
0
944,742
(317)
20,768
2.2%
24.0%
$23.12
0
Suburban market totals
18.2%
0
22,458,570
19,968
66,997
0.3%
18.2%
$28.61
80,000
Market totals
19.0%
0
35,980,670
76,991
267,048
0.7%
18.5%
$31.41
80,000
Suburban
* Data reflects historical adjustments, reclassifications and conversions
Miami CBD
Brickell
Downtown
8
Miami CBD boundaries
Brickell
Downtown
North by Miami River, east by Biscayne Bay, south by SW 15th
North by I-395, east by Biscayne Bay, south by Miami River,
Road, west by I-95.
west by I-95.
9
10
Brickell
Supply
Submarket boundaries map
Choice buildings comprising Brickell’s Class A competitive set now
totals 4.3 million square feet of office space. They include: 701 Brickell,
801 Brickell, Sabadell Financial Center (formerly Mellon Financial
Center), 1221 Brickell, Brickell Bay Office Tower, Courvoisier Centre I
and II, Four Seasons Tower, Espirito Santo Plaza, 1450 Brickell (2010
opening) and the 2011 completion of Brickell World Plaza.
With the delivery of new modern product along with extensive upgrade
investments in existing towers, look to older and smaller assets being
reclassified to Class B buildings as their competitive edge wanes on the
Tier I level. As such, the Banco Santander Building located at 1401
Brickell, was reclassified from Class A to Class B. The building was
built in 1974.
In terms of physical vacancy, the historic high of 30.2 percent was
recorded during third quarter 2011 among Class A buildings which
marked the last of the latest wave of the CBD’s construction with the
opening of Brickell World Plaza. With minimal sublets being marketed,
vacancy has declined each consecutive quarter since to the current
direct rate of 19.2 percent among Trophy buildings. Prior to the delivery
of new product in 2010, direct vacancy stood at 9.7 percent at the end
of 2009.
600 Brickell was delivered during third quarter 2011 and renamed “600
Brickell at Brickell World Plaza.” The newest Trophy continues to attract
quality credit tenants, and by midyear 2013, surpassed the 50.0%
leased benchmark. The largest contiguous office space has been
reduced to 122,000 square feet. The 14th floor high tech conferencing
facilities feature Lifesize telepresence capabilities, a fully equipped
fitness center, and management offices while floors 15 and 16 are
executive suites operated by the building. Tenant amenities also
include two ground floor restaurants and a significant 30,000 square foot
“smart” green space at its doorstep. During first quarter 2013, Brickell
World Plaza received its LEED Platinum certification - making it the first
(and only building in the state) high-rise office tower to receive this
certification for the “core and shell category, specific to new
construction” (South Florida Business Journal).
Key quarterly market indicators
Stock
Overall net absorption
6,462,517 s.f.
21,547 s.f.
Overall vacancy rate
17.9%
Average asking rent
$38.82 s.f.
Under construction
Change from previous quarter
-0- s.f.
11
Brickell
1221 Brickell’s largest contiguous vacancy remains on four floors (20
Average direct rental rates (Class A vs. Class B)
through 23) totaling 68,000 square feet. Current occupancy remains at
160,000 square feet due to the departure of its anchor tenant. This
Class A asset is situated at one of Brickell's busiest intersections,
$ psf
70.0 percent which has doubled since 2011 with the backfill leasing of
Class A rental rates
$50
$45
$40
Brickell Avenue and Coral Way.
$35
$30
The two building, Class A Courvoisier Centre is marketing 14,000
$25
square feet as its largest contiguous office, located in building II on the
$20
fifth floor. A new sublet became available this quarter: 3,200 square feet
$15
$10
on the ninth floor at the 601 building. Term is until May 2015. The two
$5
buildings are posting a combined vacancy rate of 13.0 percent. New
$0
dining options at the buildings opened last year for tenants. The
2008
Japanese restaurant, NAOE, was awarded five stars from Forbes’
annual ranking – one of only two restaurants in the entire state to
receive this award. The other five star restaurant is located in the
the addition of a new gym along with a focus in tenant retail amenities.
Increasing occupancy from last quarter’s 90.0 percent to the current
95.0 percent, 801 Brickell has executed nearly 116,000 square feet
year-to-date, the majority of which occurred at midyear 2013. The
building’s largest contiguous office remains at 7,100 square feet on the
24th floor. By first quarter 2014, the full 17,400 square foot 16th floor
will be available for lease. Emphasizing environmental responsibility
and energy efficiency, the building was awarded the prestigious 2013
Earth Award from BOMA for excellence in environmentally sound office
building management.
sf in thousands
to include exterior painting, new lobbies, corridors and restrooms and
2010
2011
New deliveries YTD
Vacancy Class A
restaurant, the hotel and spa were also rated five stars – Florida’s only
buildings, the asset’s ownership began extensive capital improvements
2009
2012
2Q 2013
Overall new deliveries / overall net absorption / overall vacancy rates
adjacent Mandarin Oriental Hotel. Along with the Mandarin’s Azul
triple winner (Miami Herald). Further enhancing amenities at the
Class B rental rates
Net absorption YTD
Vacancy Class B
600,000
30.0%
400,000
25.0%
200,000
20.0%
0
15.0%
-200,000
10.0%
-400,000
5.0%
-600,000
2008
2009
2010
2011
2012
2Q 2013
0.0%
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Brickell
At midyear 2013, 701 Brickell was awarded LEED-EB:OM Gold
On the Class B front, occupancy at 1428 Brickell increased from 76.0
Certification by the U.S. Green Building Council. The Trophy asset’s
percent at midyear 2012 and remained at the current 82.0 percent – up
largest contiguous vacancy this quarter is 8,504 square feet located on
significantly from 61.0 percent in late 2010. All of the availabilities are
the third floor. By third quarter 2014, 15,000 square feet on the 16th
on a direct basis with the largest contiguous office being 3,700 square
floor will become available for lease. Occupancy at the Trophy asset is
feet on the sixth floor.
currently 90.2 percent. A 21st floor, 4,400 square foot sublet became
available this quarter with term through August 2016.
At the two-tower 1101 Brickell development, the largest contiguous
office available remains at just over 13,000 square feet. The Class B
With the purchase of the Mellon United division of BNY Mellon by
asset is completing a significant renovation, which included upgrades
Spanish bank Banco Sabadell, the 1111 Brickell asset formerly known
and energy efficiency improvements.
as Mellon Financial Center has been renamed to Sabadell Financial
Center. Between 2005 and 2010, the building remained virtually leased
Also implementing a variety of upgrades to its lobby and corridors is
but is now marketing 18.6 percent of its space. The largest contiguous
1201 Brickell. Known as Colonnade Plaza, the Class B asset’s
office comprises 45,000 square feet on floors 18 through 20. On the
signature ground floor tenant is the popular Gordon Biersch restaurant
sublet front, 14,500 square feet remain available on the 26th floor.
with a prominent position fronting Brickell Avenue. Office vacancy
remains high 32.0 percent. Unchanged, all spaces are direct with an
The Four Seasons Tower remains fully occupied. On a direct basis, this
asking rate of $27.00 per square foot.
has held true for the most part since year-end 2004. Espirito Santo
Plaza became fully leased at midyear 2013.
With extensive interior and exterior renovations, 444 Brickell has a
fresh modern look and accompanying new pricing. The largest
A new full floor became available earlier in the year at Brickell Bay
contiguous vacancy is now located on the top two floors for nearly
Office Tower. This is the largest contiguous office comprising nearly
20,000 square feet. Below market pricing had stood at $22.00 per
11,000 square feet on the 16th floor.
square foot and had increased to $23.00 to $25.00 per square foot at
midyear 2012. By third quarter 2012, new asking rates stood at $28.00
Located at 15th Street and Brickell Avenue, the 35-story office tower
per square foot and have remained unchanged. Building upgrades
known as 1450 Brickell opened during midyear 2010. On-going
include elevators, common areas, the exterior plaza and lobby.
transactional activity at the 570,000 square foot Trophy asset resulted in
Situated at the Miami River Bridge which separates the Brickell and
the building’s fully leased status by the end of first quarter 2013.
Downtown sectors, one of the most desirable tenant amenities is the
new outdoor Miami River front eating plaza, associated with the
1450 Brickell offers tenants bay views and sits across the street from
upscale ground floor Capital Grill restaurant.
the prestigious Four Seasons office, hotel, residential condominium
tower and HSBC office complex. The building received Gold pre-
With occupancy at 94.0 percent, 777 Brickell has only seven direct
certification. Ground floor retail in the adjacent residential One
spaces available and one sublet. The largest contiguous office is
Broadway includes Pieduck’s Pizza and an Irish Pub. More eateries to
located on the fifth floor totaling 20,000 square feet.
complement the office tenant amenities include PM Fish & Steakhouse
and Sacha’s Café and Dominique’s Bistro. All of the retail space has
been leased since midyear 2011. 1450 Brickell represents the first
Class A product added to Brickell’s inventory since the delivery of
Espirito Santo Plaza in early 2004.
13
Brickell
Unchanged from last year, Brickell Bayview Centre’s largest contiguous
space remains on the 27th floor comprising 16,000 square feet. The
Class B asset is located just outside of the Brickell urban core on S.W.
8th Street.
As for the proposed Brickell CityCentre, initial plans for Phase I include
one multi-tenant office building totaling 120,000 square feet. Look to a
fourth quarter 2015 completion date.
Demand
Unchanged from the beginning of the year, the Brickell submarket
continues to lead the CBD’s absorption activity and among its Class A
buildings, new occupancy accounted for two-thirds of the entire metro
area’s year-to-date positive absorption. Among 2013’s top transactions
five or half were executed by law firms and another third by
banking/finance entities. On a square footage basis, the banking
segment accounted for half of the total sum executed. These two
industry sectors continue to dominate the CBD’s leasing activity.
Brickell World Plaza will welcome two of the top law firms. One of the
world’s largest law firms – Jones Day will occupy 21,000+ square feet
Significant lease transactions
Royal Bank of Canada
801 Brickell
Quest Workspaces
the top 10 largest U.S. law firms with an office in Miami. In addition, one
of the nation’s largest firms, Florida based Gunster, Yoakley & Stewart
will relocate from Downtown Miami to occupy the full 35th floor (21,000+
Fowler White Law Firm
Mesirow will also be relocating from Downtown Miami.
The largest lease executed at 801 Brickell was for the Royal Bank of
Gunster, Yoakley & Stewart
the second-largest market wide. Also growing was MasterCard who
expanded their office space by nearly 7,100 square feet. Last quarter’s
largest lease also included an expansion for Bolton Global Capital who
renewed for 8,600 square feet. .
21,000 s.f.
Law Firm
Brickell World Plaza
Jones Day Law Firm
21,000 s.f.
MasterCard
7,100 s.f.
801 Brickell
Large contiguous availabilities
Class A
122,000 s.f.
1221 Brickell
Class A
68,000 s.f.
Sabadell Financial Center
Class A
45,000 s.f.
444 Brickell
Class B
20,000 s.f.
777 Brickell
Class B
20,000 s.f.
Canada’s renewal of 65,000 square feet which included a 10,000 square
foot expansion. This is the CBD’s largest transaction year-to-date and
30,000 s.f.
Espirito Santo Plaza
square feet). Other transactions included Mesirow Financial, a global
financial services firm, who executed a near 5,200 square foot lease.
32,000 s.f.
Espirito Santo Plaza
on the building’s 33rd floor. Worldwide, the firm boasts 2,400 lawyers.
As noted by the South Florida Business Journal, this makes seven of
65,000 s.f.
Brickell Bayview Centre
Class B
16,000 s.f.
Courvoisier Centre
Class A
14,000 s.f.
14
Brickell
Another significant law firm lease was executed at Espirito Santo Plaza
At midyear, a new language school began a search for its 8,000 square
this quarter with the 30,000 square foot renewal for Fowler White
foot requirement.
Burnett et al. Fowler has offices throughout South Florida with expertise
in insurance, maritime and aviation matters. Also on the renewal front
The 35,000 square foot requirement for GrayRobinson remained active
was Quest Workspaces 32,000 square foot lease execution which
at midyear while California based Sedgwick law firm continued their
included a 13,000 square foot expansion. In a new relocation, global
search for 12,000 to 15,000 square foot requirement. PRS International
commercial realtor Newmark Grubb Knight Frank will move from Brickell
Advisory Services also remains in the market with a 7,000 square foot
Bay Office Tower to occupy 11,000 square feet.
requirement. Currently a Suburban tenant, Sellmark Corporation
began touring during first quarter for up to 10,000 square feet this
At 701 Brickell, EFG Capital International expanded for 6,300 square
quarter while Sonn Erez Law Firm began their CBD tour for up to 5,000
feet. This marked the fourth expansion for the wealth management
square feet.
services firm. In addition, the law firm of Roger Friedbauer renewed for
nearly 1,000 square feet.
Other large users still touring in Brickell with some also looking in
Downtown include:
At Courvoisier Centre, Young & Rubicam Latin America expanded again
by another 3,800 square feet at the 601 Building. During third quarter
2012, the global marketing and communications company expanded by
over 10,000 square feet. At the 501 building,
Comerciliazadora renewed their space for 2,700 square feet.
Over 12,000 square feet were executed this quarter at 1221 Brickell.
The two largest transactions were Zurich Latin America (4,000 square
foot renewal) and Wragg & Casas Public Relations (3,600 square foot
new lease). Also new to the building was Centercon Properties (2,400
square feet) while TMF USA expanded their space by 2,500 square feet.
Global luxury brand, Ferragamo Group, executed a new lease at
Sabadell Financial Center and will occupy a 5,000 square foot office.
Although executed pre-2013, Brazil’s largest bank (after purchasing
EuroBank) has finally opened its 7,000 square foot office in 800 Brickell.
Banco de Brasil is Latin America’s largest bank. With a Suburban office
in Coral Gables, Miami Today reports that the bank anticipates opening
another 19 branches over the next five years.




Marcum LLP for up to 25,000 square feet
Total Bank for up to 20,000 square feet
Deutsche Bank for up to 16,000 square feet
Bressler Amery & Ross Law Firm for up to 15,000 square feet
15
Brickell
Pricing
Full service asking rates at Sabadell Financial Center were lowered
With 1450 Brickell now fully leased, increased occupancy and new
during fourth quarter 2012 from $38.00 to $40.00 per square foot to
ownership at Wells Fargo Center and with Brickell World Plaza holding
$36.00 to $38.00 per square foot. Going forward, new ownership
the line on rents over $40.00 per square foot, sanity has returned to the
during first quarter 2013 elevated rates on floors 19 and above, where
market for rental rates at the Tier I level buildings. This trend continues
the majority of availabilities are located, to $40.00 - $41.50 per
from last year with the Trophy set of buildings posting a combined
square foot.
quoted full service rate of $42.44 per square foot. While down
somewhat over last quarter, this is the highest average since 2009.
Among the highest Class B quotes in Brickell, 777 Brickell’s direct
pricing stood at $35.00 per square foot which has remained unchanged
At Brickell World Plaza, the majority of floors have full service asking
for the last year.
rates ranging from $44.00 to $46.00 per square foot. The offices begin
on the 17th floor. Floors 31 and above, excluding the Penthouse, have
The Class B 800 Brickell asset continues to market 7,700 square feet
a quoted range from $46.00 to $48.00 per square foot. The tower’s 40th
on the 14th floor as its largest contiguous office. Full service asking
floor Penthouse has a $60.00 per square foot quote. All rates are on a
rates remained at $34.00 per square foot, up from $32.00 per square
full service basis. Brickell World Plaza continues to close deals at
foot in early 2012.
premium rates and is setting the standards for the market for Tier 1
.
product in the Brickell corridor.
Quoted rates at Brickell Bayview Centre were have increased over the
last two quarters, from $31.50 to $33.50 per square foot (first quarter
Quoted full service rates at the Trophy 701 Brickell asset remained at
2013, up from five percent at year-end 2012) to the current range of
$36.00 per square foot for low-rise space to $44.00 per square foot for
$33.00 to $36.00 per square foot.
high-rise space. The premium, high-rise floors are nearly fully occupied.
At 1401 Brickell, the Banco Santander Full service rental rates also
At 801 Brickell, current asking rates remain at $36.00 to $42.50 per
remain unchanged at $32.00 to $34.00 per square foot.
square foot. All pricing is on a full service basis.
Rates were increased during third quarter 2012 at the 1101 Brickell
While pricing at 1221 Brickell was restructured during midyear 2010, full
asset and remain at $28.00 to $30.00 per square foot (up from $27.00
service quotes have remained at $34.00 per square foot for lower floors
to $29.00). Lower rates were also unchanged at $26.00 to $27.00 per
and extended up to $40.00 per square foot for the full Penthouse floor.
square foot at 1428 Brickell.
By midyear 2013, the asking rate for the Penthouse had increased to
$45.00 per square foot.
.
Courvoisier Center raised pricing during midyear 2012, from $36.00
on the low end to $38.00 to $40.00 per square foot for the majority
of spaces.
16
Brickell
Trends
Mirroring the trend to provide free health and fitness centers in the Tier
The CBD’s largest (20,000+ square feet) leases executed year-to-date
1 towers on Brickell, 701 Brickell completed a total renovation which
occurred in the Brickell submarket. Totaling nearly 280,000 square feet,
includes all new equipment and renovations to the entire 10,000 square
the eight transactions were all signed in Trophy towers. Brickell World
foot health club this quarter. This will be a free amenity for the tenants
Plaza executed four of the transactions for over 100,000 square feet
at the building.
while 801 Brickell executed the largest deal at 65,000 square feet.
Following improving Class A fundamentals, Brickell’s Class B product is
Following along with Class A buildings posting the highest
also showing promise. With very little sublease being marketed, the
occupancies, several similar stabilized Class B buildings in both
current overall vacancy of 13.6 percent is a marked improvement over
Brickell and Downtown Miami increased their asking rates at midyear
the historic high of nearly 23.0 percent recorded in late 2010. Average
2012 – boding well for both Class A and Class B landlords.
rates have also increased with 2013 marking the first time quotes have
reached $30.00 per square foot since early 2010. By midyear, the direct
Brickell CityCentre – Swire Properties
quote was $31.20 per square foot.
While still in the design development stage, with floor areas subject to
change, midyear 2012 marked the official groundbreaking for Brickell
While pre-recession Trophy pricing averaged above $45.00 per square
CityCentre. Groundwork is first to be followed by other construction
foot, it plunged to the $39.00 per square foot level by the end of 2010.
and the remodeling of the onsite Eighth Street MetroMover station.
With the remaining two new CBD buildings securing their anchor
The majority of parking (over 3,000 spaces) will be connected
tenants and now holding onto their original or $40.00+ per square foot
underground.
asking rates, along with improved expansion/positive absorption activity,
current transactions for premiere Trophy spaces have remained in the
Somewhat changed from earlier reporting, the massive $1.0+ billion
$40.00+ per square foot arena. This pricing trend has continued since
Brickell CityCentre development will include the following expected
early 2012. These are primarily long term (10 to 15 years) transactions.
uses confirmed as midyear 2013. Completion for the Phase I portion is
scheduled by year-end 2015.
Handsome abatement and tenant improvement package are still
available. However, and while abatement packages have been large,
Total build-out: 5.4 million s.f. on a 9.1 acre site
they are diminishing to less than one month of abatement for every year
 505,000 SF of retail in an open-air shopping center
of term for the majority of the Trophy assets. On the tenant
improvement front, previous generous offers extended as high as
$80.00 per square foot for over 10-year lease commitments at the newly
 263 room EAST lifestyle business hotel, managed by Swire Hotels
 89 serviced apartments, managed by Swire Hotels
developed towers. Today, look to deals landing at an average of $65.00
 Two residential condo towers comprising 1.1 million SF
per square foot from new buildings and $45.00 per square foot for
 120,000 SF multitenant office building
existing buildings.
 145,000 SF wellness office
In addition to increased rental rates for high floor offices, users can
expect incremental increases in rental rate quotes for mid-rise floors
as well.
17
Brickell
Brickell CityCentre continued
Situated in between Mary Brickell Village and Brickell CityCentre, a near
To be developed by Swire Properties, the multitenant office building will
1.4 acre parcel was acquired this quarter in one of the priciest land
be situated on S.W. 7th Street and South Miami Avenue the Wellness
deals recorded for the area. The new owners, Related Group and
office will be located on S.E. 7th Street and South Miami Avenue.
Crescent Heights, paid $32 million – a substantial markup from the 2005
Brickell CityCentre’s Phase II includes a now expanded 742,000 square
sale of $18.1 million. As reported by the Daily Business Review, the
foot office tower, in the northeast quadrant of Brickell Plaza/ S.E. 1st
60,000 square foot property is located on the northwest corner of Miami
Avenue and S.E. 7th Street. As of this writing, there is no clear
Avenue and Southwest Ninth Street and traded for $9.0 million during
timetable for this phase of the development.
“the height of the recession”. No development plans have yet to
be finalized.
By the end of first quarter 2013, the Miami Today building (710 Brickell)
had been demolished. This site, along with the adjacent 86,000 square
Another parcel was placed on the market at quarter’s end. Located at
foot Northern Trust Building (700 Brickell) which houses the bank, were
1420 South Miami Avenue, the 2.78-acre site was known as “The
collectively put on the market for sale. Together, the 1.5+/- acre parcel
Capital at Brickell”. With 1.3 million square feet of development already
occupies one of Miami’s most prized urban locations with frontage along
approved, a total of 3.0 million square feet is eligible for a total build out
Brickell Avenue and S.E. 8th Street. According to the Miami Herald,
(South Florida Business Journal).
zoning allows up to 1.0+ million square feet, including “any combination
of high-density residential, office and hotel uses”. Northern Trust is
Increased office tenant amenities are on the way with the recently
relocating its offices next door to Brickell World Plaza. The 710 and 700
announced new development of SLS Brickell which will hotel, condos
buildings are not part of the competitive office market.
and upscale dining. To be located at 1300 South Miami Avenue,
construction is set to begin at year-end 2013 with completion anticipated
By July 2013, Swire Properties (the Brickell CityCentre developer)
by 2015. The Miami Herald reports the following uses to be included at
closed on the sale, acquiring the site for $64.0 million or approximately
the luxury project:
$948 per square foot for the 1.55 acre site. This will provide direct
Brickell Avenue access/frontage for the Brickell CityCentre project. No
 450 condo units and 133 hotel rooms
further development plans have been announced as of this writing.
 Spa and two pools
 Dining amenities – courtesy of two of the country’s most noted
chefs: international super star Chef José Andrés and Miami based
Michael Schwartz
18
Brickell
Florida East Coast Realty has announced proposed plans for what will
Miami now ranks among the top 25 cities in the “largest number of
be the “tallest building in Miami”. According to the firm’s website, the
energy-efficient buildings with Energy Star certification” (2012), with 104
project will comprise a high-rise, luxury residential tower on the site of
buildings holding this certification (Miami Herald).
its 1101 Brickell office buildings, along with high-end office and retail
space. The site fronts Brickell Avenue on the west and Brickell Bay
The CBD’s three new buildings represent the most modern product in
Drive on the east. To be known as Panorama, the tower will rise 85
Miami, each with LEED certification from ‘the ground up’ construction
stories and include the following uses: 941 rental apartments, 300,000
compared to retrofitting. Offerings also include above required
square feet of office space (“pending market demand”) and 100,000
hurricane resistant amenities.
square feet of ground-level retail. Marketing will begin in 2014 with a
2016 completion date (Miami Today, The Real Deal).
In addition to midyear’s awarded Gold certification for 701 Brickell, the
TIAA-CREF trophy asset also won both the local and regional TOBY
Also receiving approval and announced for development during first
(The Office Building of the Year) Earth Awards for 2010-2011. By 2012,
quarter 2013 is another residential condo to be located at 1080 Brickell
another win was bestowed on the asset in this square foot category - the
Avenue, most of which is located behind the 1101 Brickell office project.
highest score received by any property in recent history. For 2012, this
Rilea Group, who also developed the 1450 Brickell office tower, has
competition covered building operations to sustainability. In addition to
plans to construct a 300+ unit, 44 story high rise tower along with a
the benefits of a reduced carbon footprint on the environment, existing
5,000 square foot lobby restaurant. The project, to be known as “The
tenants in those buildings will enjoy the benefits of reduced operating
Bond” will begin construction by third quarter 2013. Look to pricing
expenses in years to come resulting in lower total occupancy costs.
beginning at $300,000 and extending up to $1.0 million or an average of
$500 to $600 per square foot. A Spanish entity purchased the site in
Also embracing the best in environmental building will be one of
midyear 2012 for $17.4 million. The previous sale occurred in 2006 for
Brickell’s first LEED certified residential projects, Le Parc at Brickell,
$9.5 million (Daily Business Journal, Miami Herald).
scheduled for completion by year-end 2014. The site is located west
and south of Brickell’s Trophy towers at S.W. 15th Road and S.W. 1st
Another pricing record was broken this quarter with the 70th floor
Avenue, “overlooking Simpson Park”. Sustainable design and pricing
Penthouse (residential condo) sale at the Four Seasons Tower. The
marks the 128 condos: pre-construction begins at $390 per square foot
mixed-use asset includes Trophy office space, the namesake hotel and
with total sales prices ranging from $200,000 to over $600,000
residential condos. As reported by the Daily Business Review and The
(Globest.com, PRLog).
Real Deal, the $5.2 million sale price (or approximately $1,500 per
square foot) is believed to be a record for the Four Seasons Tower and
The near fully leased 200,000 square foot mixed-use Mary Brickell
a price per square foot record for the Brickell market.
Village project has become a top retail and entertainment destination –
rivaling South Beach, South Miami and the Coconut Grove venues.
New development aspirations within the CBD as a whole have been
National chains as well as new eateries now tenant the village with P.F.
flourishing since the Swire Brickell and Genting (Omni/Herald project in
Chang’s China Bistro, Oceanaire Seafood Room, Grimpa Steakhouse,
Downtown) declarations.
Rosa Mexicana, Blue Martini, Balans, a Starbucks and Burger & Beer
Joint.
19
Brickell
Several new international eateries are also part of the Village. From
Brickell land sales during 2012 with potential redevelopment intentions
Florence, Italy, the South Florida Business Journal reported a new
included the purchase by a private foreign investment group for three
Toscana Divino along with Taverna Opa, a Greek restaurant relocating
acres ($14.78 million), which encompassed the site adjacent to a Publix
from South Beach. Doraku Sushi opened its second South Florida
retail center, located a few blocks west of the 1450 Brickell office
location here. The owner is the son of the Benihana empire. By third
building. Known as Coral Station at Brickell Way, the development
quarter 2012, another five retail shops, restaurant and spa tenants
plans have yet to be disclosed, however zoning allows for residential,
joined pushing the development to full occupancy.
hospitality and retail. Costar reports that site was only on the market for
60 days (Daily Business Review).
Attesting to the area’s growing professional urban demographic base,
Publix opened a near 32,000 square foot grocery store in 2009 - its third
A third quarter 2012 purchase, with luxury condo development in mind,
Brickell location. Additional amenities and services now include a
occurred at 1010 Brickell, which contains a 300+ parking garage. The
30,000 square foot LA Fitness center, nine boutique and other apparel
1.0+ acre site was purchased for $11.5 million by developer Key
related shops, several realtors, a Region’s bank, a pharmacy, spa,
International and real estate investor and management firm, 13th Floor
cleaners and barber shop.
Investments. The site is in close to Mary Brickell Village and the
Brickell CityCentre project now underway. Look to retail on the ground
Despite the pending foreclosure for the residential portion of the Mary
floor and hotel units as well. No immediate construction is scheduled
Brickell Village development, construction has begun on the announced
pending the uses finalized at Brickell CityCentre (Daily Business
35-story residential tower. Now named “EnV”, the 390-unit project will
Review, South Florida Business Journal).
rise above the Publix grocery story with an estimated 2014 completion
date. The project appears to have new strong backing with Blackrock
Miami’s CBD and particularly Brickell have been one of the most active
Realty Advisors (equity source), LYND Development and LNR Property
housing markets both locally and nationally. As such, Bloomberg.com
who are now the development partners (Daily Business Review, South
noted the Brickell condominium market as one of the prime glamour
Florida Business Journal).
markets characterized as “24-hour, international gateway cities, which
do business worldwide” and attract demand from global buyers.
On the hospitality front at Mary Brickell Village, midyear 2013 saw the
(S&P/Case-Shiller).
opening of a new Aloft hotel. This is one of Starwood Hotels and
Resorts “hip and trendy” upscale brands, reflecting the changing
Another significant condo skyscraper was announced at first quarter:
demographics of this marketplace and includes 160 loft-like rooms
Property Markets Group’s “Echo Brickell” which will rise 60 stories to
along with 3,000 square feet of for both meeting and social gatherings.
house 250 units. The project is located at east at 1451 Brickell Avenue,
directly across the street from the 1450 Brickell office building. Property
A 221-room Hampton Inn & Suites opened at year-end 2011. The 15-
Markets Group will close on the site by third quarter 2013 with
story hotel includes a five-story garage situated south of Mary Brickell
construction now slated for first quarter 2014 (Daily Business Review).
Village and just west of Brickell Avenue. The hotel will pursue LEED
Silver. This is the city’s first LEED certified hotel and third Hampton
Inn-branded property among its 1,700 globally to achieve the LEED
certification (Miami Today, Globest.com).
Brickell
New construction began in 2012 with the Related Group’s “Mybrickell”
192-unit condominium, the first such development since 2007. With
completion scheduled by late 2013 and 80.0 percent of the units
reportedly sold, the project is located west of Brickell and just south of
the Miami River on S.E. 6th Street.
Related has also broken ground on yet another residential development
for the neighborhood: a 42-story, 382-unit project to be known as 1100
Millecento Residences. The tower is located at 1100 S. Miami Avenue.
According to The Real Deal, the project is “100 percent sold out”.
Completion is scheduled for Summer 2014.
Joining these projects is another condo expected to be delivered in 2014
by the Newgard Development Group. Breaking ground during third
quarter 2012 was the 374-unit, 46-story BrickellHouse project located at
1300 Brickell Bay Drive. Completion is set for 2014. The $170 million
development features rooftop pool deck, a luxury health spa and fitness
center as well as a fully-automated robotic parking garage system. The
project will also be home to Meat Market Steakhouse, a successful
South Beach eatery. In addition, Argentine coffee & ice cream, Freddo
and Frank & Steins Sports Bar will join the building (South Florida
Business Journal, Miami Today).
20
21
Downtown
Supply
Choice buildings comprising Downtown’s Class A Tier I competitive set
total 3.3 million square feet of office space. They include: Southeast
Financial Center, Miami Center, Miami Tower and the newest asset,
Wells Fargo Center.
These assets posted a combined direct vacancy rate of just under 23.4
percent, down from last quarter’s 24.5 percent. While quarterly vacancy
reduction has been admirable since midyear 2010, the main drag on the
market numbers remains the near 400,000 square feet of vacancy at the
newly delivered Wells Fargo Center. Leasing this year, however, has
reduced vacancy at the building to the 48.0 percent range. Direct
vacancy rates among the remaining three competitive Trophy assets,
however, are significantly lower:
- Southeast Financial Center – 17.9 percent
- Miami Center – 15.5 percent
- Miami Tower – 10.0 percent
As the largest (1.2 million square feet) Trophy asset in the state of
Florida, Southeast Financial Center still maintains approximately 1.0
million square feet under lease. As for availabilities, notwithstanding the
Wachovia (now Wells Fargo) sublease space which has term through
2017 (91,000 square feet in the tower and 36,000 square feet in the
bank hall), the largest contiguous direct space is now located on floors
four and five for a total of 37,657 square feet. The Wells Fargo space
remains as the largest sublet offering in Miami.
Stock
7,059,583 s.f.
35,476 s.f.
19.7%
Average asking rent
$32.93 p.s.f.
Under construction
- 0 - s.f.
22
Downtown
After the relocation of nearly 100,000 square feet to the former Met 2
property, that building was also renamed and is now known as the Wells
use Trophy project located just south of the existing Class A Tier I set of
competitive office towers. Additional features include the 42-story, 313-
$ psf
Fargo Center. Now solely owned by MetLife, the building is a mixedClass A rental rates
$50
$45
$40
room hotel (Marriott Marquis) and the smaller 44-room Beaux Arts hotel.
$35
Tenant amenities also include Chophouse Miami located in the adjacent
$30
Met 1 building. Joining Chophouse is DB Bistro Moderne, the first
$25
location outside of Manhattan for Chef Daniel Boulud.
$20
$15
2013 marked the first year of several leases executions since 2011 at
$10
$5
the Wells Fargo Center. However, vacancy at the asset is still the city’s
$0
largest, totaling 390,000 square feet. Of this, the largest contiguous
2008
office is now located on floors 29 through 32 comprising 110,500 square
A product.
Miami Center’s largest contiguous offering remains on the third and
fourth floors for a total of 41,000 square feet. In addition, the full 27th
and partial 26th floor are available for a combined 33,500 contiguous
square feet. The former 34th (Penthouse) floor sublet of law firm Ferrell
Schultz also remains available on a direct basis (23,000 square feet).
The space is being advertised as “extravagant build-out, floor-to-ceiling
windows, top of the line finishes and stunning bay/city views”. The
Penthouse had carried an asking rate of $51.00 per square foot but has
been re-quoted to a range of $45.00 to $50.00 per square foot, net.
The rebranded “Miami Tower” remains at 90.0 percent occupied with the
largest contiguous vacancy at 37,530 square feet spread out on floors
14 and 13 (partial). A new 46th floor sublet (Investor Trust
Administration) became available this quarter. The space comprises
5,400 square feet and has an asking rate of $35.00 per square foot.
This is one of Miami’s most photographed and vividly illuminated I.M.
Pei designed buildings. At midyear, Miami Tower earned LEED
Silver Certification.
2010
2011
2012
2Q 2013
sf in thousands
feet. This is also the largest contiguous space among Downtown Class
2009
800,000
New deliveries YTD
Vacancy Class A
Net absorption YTD
Vacancy Class B
600,000
25.0%
20.0%
400,000
200,000
15.0%
0
10.0%
-200,000
-400,000
5.0%
-600,000
-800,000
2008
2009
2010
2011
2012
2Q 2013
0.0%
23
Downtown
New World Tower is marketing two floors (11 through 12) as its largest
SunTrust International, One Biscayne Tower, and Museum Tower are
contiguous office. The space comprises 21,000 square feet and has a
three highly recognizable figures on the Miami skyline. However, these
full service asking rate of $29.50 per square foot, unchanged from
buildings do not necessarily compete at the same level as the existing
first quarter.
and recently delivered competitive Class A set. Consequently, these
buildings compete as Class A Tier II product.
At One Bayfront Plaza building, the largest contiguous office was
increased substantially during third quarter 2012 and still remains at
The combined quoted direct rates at the Tier II buildings posted their
80,000 square feet on the second and third floors. This office is priced
first real increase at third quarter 2011 reaching just over $33.00 per
at $26.00 per square foot, full service.
square foot. The last three quarters, however, had quotes somewhat
down at $32.94+/- per square foot. These averages still remain below
Demand
the mid-2008 peak of $36.29 per square foot. These three assets
Among the top ten leases executed during the year, four were new to
comprise 1.3 million square feet and are options for more price
this submarket and upon final occupancy will add to positive
sensitive users.
absorption. The remaining four were renewals and two were relocations
from within the Downtown area. Some 40 leases were executed for the
Direct vacancy among the three Tier II buildings has declined each year
entire Downtown submarket year-to-date comprising 260,000 square
since 2009’s 13.6 percent, ending at first quarter’s 10.1 percent. By
feet. Of these transactions, 32 or 75.0 percent were executed in Class
midyear, this figure has risen to 12.0 percent. Current sublet space is
A assets.
less than 5,000 square feet, which is the first sublease being marketed
in two years. Unchanged at nearly 85.0 percent occupied, SunTrust
At Southeast Financial Center, three office leases were renewed during
International is marketing the 10th and 11th floors for a combined
midyear for a total of totaling 26,333 square feet.
34,000 square feet as its largest contiguous office. At One Biscayne
Tower, the two non-contiguous 25th and 27th floors remain available at
Miami Tower’s leasing this quarter two smaller transactions: architects
25,000 square feet each. Museum Tower continues to market its long-
Peggy Nye & Lodin will relocate from Brickell into a new 2,400 square
time, 14,000 square foot, 18th floor availability. With the departure of
foot office while the Peacock Foundation renewed their 2,000 square
Hyman & Kaplan law firm, a new high floor (27th) office became
foot space.
available this quarter at Museum Tower for 8,700 square feet. Hyman
relocated to Suburban Coral Gables as the practice merged with
Wells Fargo Center welcomed Arca Capital Investments at midyear.
another law firm, Siegfried Rivera et al.
The firm will office on the 25th floor in a 4,400 square foot space.
A significant contiguous block of office space has remained available
Tier II activity at One Biscayne Tower included the 15,000 square foot
since first quarter 2012 at the Class B, 25 West Flagler asset.
renewal for the law firm of Foreman Friedman. Additional leasing
Located on floors three through seven, the space can accommodate a
included Veritext Court Reporters, a new user for 11,000 square feet
65,000 square foot user. The space is priced at $23.00 per square foot,
and three law firm lease executions, the largest being Young, Bill,
full service.
Roumbos et al for 5,000 square feet.
24
Downtown
At the Class B Courthouse Tower two law firms executed transactions:
new to the building, Roig Tutan signed a lease for 4,800 square feet
while Linebarger Goggan et al renewed for 2,000 square feet. In
addition, Geico executed a new lease for 3,000 square feet.
Additional Class B leasing quarterly leasing included Bulgari, who
executed a 7,000 square foot lease at New World Tower along with
3,400 square feet for two law firms (Michael Mirer and Bruck Tischler).
The National Parkinson Foundation relocated into 12,000 square feet at
the 200 S.E. 1st Street building. At Genting’s Omni Offices, a long term
(10 years) renewal was executed by the Greater Miami Chamber
of Commerce.
Regus Business Centers began a midyear 2013 new requirement for
15,000 square feet. Last quarter, the firm executed the same square
Foreman Friedman Law
One Biscayne Tower
Veritext Court Reporters
Greater Miami Chamber
Bulgari
Young Bill et al Law Firm
Southeast Financial Center
among the top nationwide.
Class A
91,000 s.f.
One Bayfront Plaza
Class B
80,000 s.f.
25 West Flagler
Class B
65,000 s.f.
existing Downtown tenant, Marcum LLP, one of the largest
independent public accounting and advisory services firms ranked
Class A
110,500 s.f.
square foot requirement. Currently in Brickell, the GrayRobinson Law
Still touring as of midyear 2012 for up to 25,000 square feet is
5,000 s.f.
One Biscayne Tower
Wells Fargo Center
al remains in the market for 6,000 square feet.
7,000 s.f.
New World Tower
tour at midyear for 6,500 square feet.
Firm search for 35,000 square feet remains active. Barranco Kircher et
10,000 s.f.
Omni
Downtown global law firm, White & Case, with an approximate 60,000
11,000 s.f.
One Biscayne Tower
footage at the Wells Fargo asset. NPN Media also began their CBD
Beginning their search process in the third quarter of 2012 was
15,000 s.f.
Miami Center
Class A
41,000 s.f.
Miami Tower
Class A
37,530 s.f.
New World Tower
Class B
31,000 s.f.
One Biscayne Tower
Class A
25,000 s.f.
New World Tower
Class A
21,000 s.f.
25
Downtown
Pricing
Following many of its competitive counterparts and reflecting increased
Starting in early 2012 and mirroring its newly delivered Brickell
confidence in CBD market fundamentals, pricing at Miami Tower
counterparts, the Wells Fargo asset began to scale back on its above
increased during first quarter 2013. Asking rates had been reduced
market concessions for tenant improvements and rent abatement. With
during weaker market conditions and higher availabilities during 2009
new ownership representation, revised pricing indicates the majority of
to $34.00 to $39.00 per square foot (full service). By first quarter of
spaces being quoted at $40.00 per square foot, with only the three high
this year, quotes were raised to $39.00 to $42.00 per square foot, also
floor availabilities (34th, 37th and 39th) priced at $42.00 per square foot.
full service.
All quotes are on a full service basis.
At the Tier II properties, One Biscayne Tower reduced its asking rates
Miami Center’s quoted rates for the two highest largest contiguous
in early 2011 on the higher end by $3.00 per square foot; quotes have
floors (26 and 27) were $40.00 to $42.00 per square foot; lower floors
remained since at $34.00 to $36.00 per square foot. However, by
carry a general range of $38.00 to $40.00 per square foot.
midyear 2012 quotes were reduced and continue to remain at $32.00 to
$34.00 per square foot. Unchanged from the last three quarters, the
For the last few years, the Trophy Southeast Financial Center has been
average direct rate at SunTrust International Center ranged from
quoting rates on a triple net basis with asking rates remaining relatively
$32.00 to $35.00 per square foot where the majority of spaces are
unchanged. Current direct asking rents range from $23.00 per square
being marketed. Museum Tower continues to quote rates at $32.00 per
foot, triple net, to $38.00 per square foot, triple net, with an average
square foot.
2013 operating expense of $16.25.
Trends
Reflecting improving Trophy market fundamentals and increased
Recovering from one of the deepest recessions that coincided with
landlord confidence in Miami’s urban core, a healthy increase in asking
record high deliveries of new CBD product, overall combined vacancy
rates at Southeast Financial Center was implemented at the beginning
for the four Trophy buildings has improved substantially since the
of 2013:
record high of nearly 31.3 percent in late 2010. Space is gradually
being absorbed from third quarter 2010’s vacant square footage of
2012 NNN Rates
1.0+ million square feet to the current 791,000 square feet. This is
FLs 5–11
$21.00-$22.50 p.s.f.
narrowing the variety of options available to tenants, which is
FLs 16-24
$23.50-$26.00 p.s.f.
allowing Landlord’s to tighten up on concessions and start gaining
FLs 26-32
$27.00-$29.00 p.s.f.
ground on rental rates, particularly for the more desirable spaces with
FL 35
$29.00-$30.00 PLS
prime views.
FL 44
$34.00 p.s.f.
FL 54
$38.00 p.s.f.
2013 NNN Rates
Announced after the close of the quarter was the purchase of a site
located at 346 N.E. 26th Terrace, one mile north of the Omni complex.
FLs 5 – 11
$23.00-$25.00 p.s.f.
The buyer was Fairholme Midtown Association, which is managed by
FLs 16-24
$25.00-$28.00 p.s.f.
Berkowitz, who heads the Fairholme mutual fund. Purchased for $7.6
FLs 26-32
$29.00-$31.00 p.s.f.
million, the buyer intends to build an office building, as reported by the
FL 35
$31.00 p.s.f.
South Florida Business Journal.
FL 44
$34.00 p.s.f.
.
FL 54
$38.00 p.s.f.
26
Downtown
Long term redevelopment was further elaborated on this quarter for the
Another well-known landmark is the 640-room Intercontinental Hotel
site of One Bayfront Plaza (100 S Biscayne Boulevard) to encompass
which is adjacent and contiguous to the Trophy Miami Center office
4.2 million square feet of space. The project has 650,000 square feet as
asset. The iconic hotel completed a $30 million renovation in late 2012.
the office component. Reported by the South Florida Business Journal,
Of note are the tech and energy upgrades which provide a “digital
demolition will start in 2014 when the asset’s leases expire with an
canvas on the exterior that can light up in different colors or feature
anticipated 2018 completion date. The developer is Tibor Hollo who
moving images” in a New York Times Square-style. In addition, the
also plans to incorporate a multitude of uses for the 80-story tower: 700
lobby will have 18 hanging LCD screens and touchscreen coffee tables.
luxury residences; 200,000 square feet of retail; a four-star, 500-room
The hotel is owned by Chicago-based Strategic Hotels & Resorts
hotel; a five-star, 120-room hotel; and 130,000 square feet of
(Miami Herald).
exhibit/banquet space along with 2,100 parking spaces on 12 floors.
New hotel product opened up for one of Weston’s first new “B Hotels”
Downtown’s top tiered product continues to dominate leasing activity
brand. Known as b2 Miami Downtown, the completely modernized
overall and particularly for users in the 10,000 + square foot range. On
(former Continental Bayside Hotel) is located five blocks north of the
the Class B front, absorption outpaced its Class A counterpart for the
competitive Trophy office buildings across from Bayfront Park. The
year, reducing vacancy from 20.0 percent to just under 18.0 percent.
hotel features Biscayne Tavern from the famed South Beach China Grill
The Class B segment of the market houses some of Miami’s
restaurant group, also opening up on Brickell Avenue (Miami Herald).
oldest stock.
At the CBD’s largest asset, Southeast Financial Center, a relatively
Look to 2015 for some of the most anticipated large leases rolling over.
modest investment was required in becoming Miami’s first LEED EBOM
Gold Certified building. The property has invested $1.8 million
Coinciding with tenant retention efforts and mirroring its Brickell
renovating its popular plaza and has invested additional millions
competition, both Class A and Class B buildings are implementing
renovating restrooms and elevator lobbies. Construction began in late
capital improvements to help these properties to compete effectively
2011 on the Trophy asset’s 17,000 square foot refurbishment to its
with the newer buildings. Some are aesthetic changes, but many are
extensive east, west and lower lobbies which was completed in early
geared toward receiving LEED certification. Additionally,
2012. The Trophy tower won the TOBY (The Office Building of the
complementary retail is increasingly being added to buildings.
Year) award for buildings of 1.0 million square feet. It is the only office
tower in Florida over 1.0 million square feet.
Sustainable technology put a shine on a Downtown Trophy landmark
during third quarter 2012. Miami Tower, known for its creative multi-
Creating an outdoor destination for tenants, Southeast Financial Center
colored ability to light up its entire exterior has been retrofitted in what is
has opened Downtown Miami's first farmers market at its 30,000 square
considered among the most advanced lighting system in the world. The
foot outdoor plaza to be held weekly (Real Estate Biznow).
$1.5 million state of the art LED system reduces energy usage by 92.0
percent, saves $260,000 annually and reduces CO2 emissions by more
A $9.0 million renovation began this quarter at SunTrust International
than 1.2 million pounds. What used to be done manually now allows for
Center and will include a modernized lobby, a new outdoor patio,
16 million colors and hundreds of dynamic lighting effects via a smart
redesigned common corridors and elevator cabs, a new conference
phone. Following Miami Tower’s upgraded lighting system, another
center and an “updated streetscape”. In addition, the 10th floor will have
renovation was completed this quarter at the Trophy tower and included
a new conference center and gym.
an extensive modernization of its 35,000 square foot indoor/outdoor
“Sky Lobby”.
27
Downtown
Wells Fargo Center earned LEED Gold certification during third quarter
One of the largest private/public initiatives in the entire region is located
2011 for Core and Shell, a relatively new category under LEED’s rating
system that focuses on developer-driven office projects that utilize
approximately one mile north of Downtown at a former rail yard. The
.overall estimated $2.0 billion project, known as Midtown Miami, is a
innovative architecture and interior design to promote energy efficiency
mixed-use development that covers 56 acres. Phase I of the 645,000
(Florida Real Estate Journal).
square feet of retail space is nearly fully occupied. Existing tenants
include such national retailers as Target, OfficeMax and PETsMART,
Also, adjacent to Wells Fargo Center, construction of a Whole Foods
Sports Authority, HomeGoods and a Guess Factory store. The 180,000
Market began during first quarter 2013 for a 37,000 square foot store
square foot Phase II segment of the project includes national retail
street level store. Known as “Met 3”, completion is scheduled by
anchors such as FedEx Kinko, Famous Footwear and Payless Shoes.
midyear 2014. Whole Foods is the world's largest retailer of natural and
This area has become a popular eating destination. Numerous new
organic foods. Excavation has also begun on an upscale, 12-screen
restaurants have either opened or are planned for the area.
movie theatre (Silverspot Cinema) and an expanded plan to include
40,000 square feet of retail space. Potential residential development at
Developer Craig Robins, largely responsible for Midtown’s surrounding
the site could include up to 400 apartment units.
Design District revitalization and the largest property holder in the
neighborhood, has received approved for a $300+ million upscale retail
Located one block south of the Met 3 project at 151 SE First Street is
promenade development which will include residential units.
the planned Centro Lofts, a 353 condo development expected for
Comprising 19.0 acres at N.E. First and Second Avenues between N.E.
completion by 2016. Reflecting the urban sign of the times, the city has
38th and 42nd Streets and as outlined by Miami Today, the project
waived parking requirements for residential uses within 1,000 feet of a
will incorporate:
Metromover or Metrorail station. As such, this project (reportedly at
50.0 percent pre-sold) will offer no parking to residents but will have the
 143,000 square feet of department store space
“first dedicated car2go hub in Miami” as well as valet (Centromiami.com,
 318,000 square feet of retail space
Miami Herald).
 Nearly 100 residential units
 53 hotel units
One mile north of the competitive set of Trophy office buildings along
 2,500+ parking spaces
Biscayne Boulevard is a proposed luxury residential 60-story tower, to
 24-hour public pedestrian-only walkway
be known as One Thousand Museum. The project will garner world
attention as it is being designed by one of the most noted women
Completion of the Robin’s development is scheduled by 2015. Retailers
architects - Zaha Hadid, a Pritzker Prize-winning architect. This will be
now total 11 from the global luxury brand of LVMH, to be anchored by a
one of the most expensive condos on the market with pricing beginning
10,000-square-foot, two-level Hermes flagship store which is scheduled
at $4.0 million and extending upwards to $30.million (South Florida
to open in late 2014. The store has opened in a temporary 5,000 square
Business Journal, Miami Herald).
foot space. Joining Hermes are Christian Dior, Fendi, Bulgari, Pucci,
and Marc Jacobs. Cartier and Celine have opened with Louis Vuitton
opening by fourth quarter. LVMH ranks Miami among the top three
North American luxury brand markets (Miami Herald).
28
Downtown
At the close of second quarter, Robin’s development may be further
The entire CBD has dramatically changed over the past five years with a
expanded with another “423,000 square feet of commercial space and
489 residential units” as reported by Miami Today. Waiting approval
nearly unrecognizable skyline. The physical and demographic change
.remains underway around the Downtown area, which stretches north to
from the city for the amended expansion, the area includes 12
the Omni and south to Brickell. The next decade will bring another
properties along and near North Miami Avenue and N.E. Miami Court.
massive transformation, via both public and private revitalization efforts.
Garnering institutional interest, a portion of a 22 acre site abutting The
On the public front, the city hired architectural and urban design firms
Shops of Midtown to the east has a contract from a company affiliated
from New York and Switzerland to develop a new master plan for the
with the Commingled Pension Trust Fund (Strategic Property) of JP
29-acre waterfront Bicentennial Park which will be known as Museum
Morgan (South Florida Business Journal).
Park. It will include two museums for art and science as well as an
open 22-acre park plaza green space area. Museum Park is situated
Within the same neighborhood, Walmart is also planning for a Midtown
just north of Downtown’s three Class A office towers. The 250,000
market store which would be the mega-retailer’s first within the city. The
square foot $275 million Miami Science Museum broke ground in first
Miami Herald indicated a five-acre site has been identified at 3055 North
quarter 2012 and has a 2015 opening date. The project is being touted
Miami Avenue south of the Shops at Midtown to include a 156,000
among the world's most innovative and sustainable science museums
square foot store. The project is in the design/approval stage.
and is expected to “draw more than 700,000 visitors to during its first
year and an additional 600,000 on an ongoing annual basis thereafter”
Another nearby Midtown area acquisition occurred at year-end 2012 and
as noted by Globest.com. At year-end 2010, groundbreaking occurred
included the purchase of the 3550 Biscayne Boulevard office building.
for the $200 million, 200,000 square foot art museum segment of the
The 74,000 square foot (1972) Class B asset traded for $7.8 million or
development. To be named the Perez Art Museum and designed by
$105.24 per square foot and was purchased by a partnership of the
noted architect Herzog & de Meuron, opening is slated for December
Terra Group. As reported in the South Florida Business Journal, the
2013 (South Florida Business Journal, Miami Today).
existing office building will be renovated with a potential redevelopment
of the site, which includes a surface parking lot.
Fronting the Bicentennial Park, the major Biscayne Boulevard corridor is
slated for a significant redesign to include a plaza and promenade. This
Land prices continue to rise in the ever increasing trendy
is part of Downtown’s long term master plan most likely to follow the
Midtown/Design District area. Within the same block as the renowned
Port tunnel completion, as reported in Miami Today.
Michael’s Genuine Restaurant, a commercial building traded this
quarter for $2,117 per square foot. According to the Miami Herald, the
The city’s $461 million Adrienne Arsht Center Performing Arts Center
sale ranked as the District’s highest per square foot price to date. In
opened in 2006 and has contributed to the area’s surrounding
comparison, the property’s 2007 trade was $423.00 per square foot.
redevelopment. The project is located on the Biscayne Corridor in
between Miami’s Class A office buildings and the eventual revitalized
Omni area.
29
Downtown
Announced during first quarter 2013, new hotel (200 rooms) and
Genting Group Development – Omni and Herald Sites
residential units (400, either condos or apartments) are planned just one
 The notes on the Omni Center and Hilton Miami hotel, located at
block west of the Arsht Performing Center at the intersection of N.E. 2nd
.
1501, 1645 and 1701 Biscayne Boulevard, were purchased during
Avenue and N.E.14th Street. To be developed by the Melo family, no
third quarter 2011 by the Genting Group. The office/retail/hotel
construction date or hotel operator has yet to be revealed (Daily
complex is situated on the northern border of Downtown Miami.
Business Review).
Totally renovated and completed during midyear 2009, additional
new office space came on line in the redeveloped five-story 1501
Further expanding Miami’s burgeoning arts and culture scene, the
building and an additional 16,000 square feet on the ground floor.
landmark blue and white mosaic tiled Bacardi building situated on three
The office segment currently holds one of the largest contiguous
acres along Biscayne Boulevard just north of the CBD and east of the
blocks of office space (247,000 square feet).
Wynwood Arts and Midtown/Design district is slated to become a Frank
Gehry designed arts center campus. No construction schedule has yet
to be announced (Miami Herald).
 Across the street from the Omni development, the Miami Herald site
was sold at midyear 2011. The $236 million sale encompassed
nearly 14.0 acres including the McClatchy Company’s 600,000
The mushrooming Wynwood Arts district received some national
square foot Miami Herald news and printing facility. The sale
recognition this quarter when Forbes ranked it among "America's
translates to an approximate $391.00 per square foot price tag. This
Hippest Hipster Neighborhoods". The former dilapidated and
is a prized parcel which sits at the entrance to both the Beaches and
abandoned area now houses trendy shops, cafes and an abundance of
Greater Miami and an even more significant trade. The buyer was
art galleries with regular art events. It has one of the largest permanent
Genting Group, an Asian multinational firm with vast resort, gaming
outdoor mural exhibits in the world, called Wynwood Walls. This is the
and gas/oil holdings along with a 50.0 percent interest in Miami-
only Florida neighborhood in the ranking (New Times).
headquartered Norwegian Cruise Lines. Ownership’s long term
goal, according to the news organization, is to incorporate a
destination resort with casino gambling (not approved as of this
writing in Florida). By year-end 2012, Genting gave up its petition
drive for a casino amendment on the 2014 ballot, as declared in the
Miami Herald.
 With initial plans revealed for Genting’s Omni/Herald site
redevelopment, the firm is continuing a determined land assemblage
within the area that now totals 30 acres. As indicated by the Miami
Herald, purchases and interests in play have been expanded to
include parcels within a four to five block area west and south. At
the end of third quarter 2011, Genting gained control over the entire
$206 million mortgage on the Omni site itself, which was in the midst
of foreclosure. By year-end 2011, Genting assumed the full
ownership of the entire Omni project – offices, hotel, parking garage
and retail space (Daily Business Review, CoStar).
30
Downtown
Genting Group Development – Omni and Herald Sites continued
Across the street from the Omni to the south sits another redevelopment
target: 1400 Biscayne Boulevard. This 2.69-acre site with an existing
 Further, a multi-billion dollar redevelopment price tag had been
.
office
building was purchased in 2010 by Espacio USA, the American
announced for the Genting redevelopment. As indicated by the
arm of the Spanish real estate firm Immobilaria Espacio. Up to 1.4
Miami Herald, the plans do not include any office towers however
million square feet is master planned for a major mixed-use project
the existing Hilton Hotel, Omni offices and parking garage would
designed by renowned architect I.M. Pei (now Pei Cobb Freed &
remain. A $15 million renovation is now under way for these
Partners). By midyear 2013, Phase I plans were released to include the
existing uses which will be completed by 2014.
first office building comprising 102,000 square feet. To be known as
AIR 1400 Biscayne, the asset will rise 12 stories of which nine floors will
 Upon the initial acquisition, a vivid and rather intense design was
comprise 81,596 square feet along with 3,300 square feet of retail
first announced for the Genting redevelopment (which had up to
space. Ownership will seek LEED Gold certification. Completion is
10.0 million square feet in total build out). By first quarter 2013,
scheduled for third quarter 2015. Phase 2, which will allow for over
Genting began moving forward with a “dramatically scaled down
700,000 square feet, will consist of a 55-story luxury mixed-use tower
mixed-use plan” for the Herald site, the first of which will include the
with prime street-level retail product, hotel and office space. Located
demolition of the existing 750,000 square foot building which housed
adjacent to the Performing Arsht Arts Center, the project received its
the newspaper’s operations. The phased development’s plans to
zoning approval.
date are expected to initially include 500 hotel rooms and several
hundred luxury condos (Miami Herald).
The Omni area’s growing residential base has a new Publix grocery
store. Comprising 49,000 square feet, the supermarket is located at
17th Street with frontage along Biscayne Boulevard. This is the first
Another potential development was announced during 2012 within a few
major grocer for this neighborhood. Publix is a nationwide chain with
blocks of the Omni. One of the developers expressing interest to bid on
$6.0 billion in sales. Florida comprises the majority of its stores.
the site owned by Miami-Dade County Public Schools, the fourth-largest
Joining Publix in the three story retail center is GNC, Hair Cuttery and
school district in the nation, would like to build a 54-story tower. To be
Wells Fargo along with a Publix Liquor Store.
known as 1550 The Chelsea, the proposed project would encompass
condos, offices and a hotel. Genting withdrew its interest at midyear
Just to the west of the competitive Trophy assets is a planned
2012 (South Florida Business Journal).
redevelopment of an 86 year old, Class C office building. Known as the
Langford Building and more recently as the Miami National Bank
Joining the bandwagon on the redevelopment front is Town Square
Building, developer Stambul USA will convert the historic building into a
Neighborhood Development Corp., a civic association targeting 47
132- room luxury boutique hotel. Look to completion by late 2013 (Miami
acres near the performing arts center. Their master plan envisions
Herald, Daily Business Review).
nearly 10.0 million square feet of hotel, convention, retail, entertainment
and residential space for this neighborhood, marked by “rundown
warehouses and vacant parcels” (Daily Business Review).
31
Downtown
Situated in Biscayne Bay east of the Herald and Omni sites is the long
New Convention Center and Miami World Center Projects
planned, mixed-use “Mega Yacht” development on Watson Island
New Ownership and New Plans for a $1.0+ Billion Mixed-Use
received its state approval during third quarter 2011. At midyear 2013,
.
Development
the city approved a lease extension to extend the time for beginning
One of Miami’s established developers, the MDM Group, intends to
construction. Two new co-developers have joined Flagstone on the
acquire the former Miami Arena site (700 N. Miami Avenue, a few
project: Perez’s Related Group of Florida and Ross’s New-York based
blocks west of the American Airlines Arena located on Biscayne
Related Companies. As such, the development plans have been
Boulevard) from the developers who originally proposed the mixed-use
expanded to include 500,000 square feet of retail space, 705 hotel
Miami World Center project. As reported by the Miami Herald, no final
rooms and 100,000 square foot convention center. The current
design plans have yet to be submitted nor have any construction dates
schedule calls for a 2014 ground breaking for the marina and retail use
been revealed. The project’s architect, however, has confirmed the
and a 2017 completion date (Miami Herald, Miami Today, South Florida
following uses for the proposed complex:
Business Journal).
 A 500,000 SF convention center
A joint economic development effort by both the county and city is
 1,800 room, 58-story hotel (Marriott)
underway to launch Miami as a hub for start-up technology businesses.
 1,500 SF theater
The Launch Pad Accelerator hopes to attract local and worldwide tech
 2,300 car parking garage
entrepreneurs, offer expertise for Latin American opportunities and
 80,000 SF outdoor event deck
support existing industries including healthcare. It will be based in
Downtown’s NAP (Network Access Point of the Americas) which is the
The development will be linked directly to the All Aboard Florida railway.
“physical and virtual meeting point for all optical, Ethernet, voice and
Adjacent to the convention center, the Miami World Center project is
Internet traffic between Latin America and the rest of the world. The
also back on the table for up to 1.0 million square feet of retail,
project was developed by The Launch Pad at the University of Miami
restaurant and entertainment uses.
and simulated by six other universities with the support of the
Blackstone Charitable Foundation (Miami Herald, American City
Business Journals).
On the transportation front, the first of the new 230-mile South to Central
Florida rail service and stations is expected to break ground this year on
a 10-acre site located less than one mile west of the Downtown Trophy
office buildings. Situated at N.W. 1st Avenue and N.W. Third Street, a
variety of commercial space and residential uses are planned for the All
Aboard Florida rail station (Miami Today, Curbed Miami).
Located next to Florida East Coast Industries’ All Aboard Florida railway
is a planned mixed-use, 47 story tower. The 400,000+ square foot
structure will be built above the Miami Parking Authorities’ garage
located at 56 and 70 S.W. 1st Street. Most of the space will be
dedicated to residential with ground floor retail and a rooftop restaurant.
No construction details have yet to be finalized (Miami Today).
32
Downtown
Life Science Cluster
During late 2012, eye care giant Bausch + Lomb (now Valeant
Miami’s burgeoning Health District is now the nation’s second largest
Pharmaceuticals) announced a research partnership with the medical
such district by acreage, employing 30,000 and attracting 160,000
.
tech
incubator at the park. The South Florida Business Journal reports
annual visitors. It is home to some of the nation’s premier medical and
that Cirle Inc. was started in 2010 to develop commercial products out of
research programs and a growing hub for the biotech industry (South
discoveries in eye care by leveraging its relationship with the University
of Miami’s Bascom Palmer Eye Institute. Bausch + Lomb is one of the
largest eye care companies in the world, producing contact lenses,
On the academia/healthcare front, the University of Miami embarked on
ophthalmic surgical devices and ophthalmic pharmaceuticals. For the
what will be a 1.6 million square foot University of Miami Life Science &
ninth year in a row, the Bascom Palmer Eye Institute of the University of
Technology Park (UMLSTP). UMLSTP is a seven-acre research park
the Miami Miller School of Medicine has been ranked the nation’s best
situated just two miles northwest of Miami’s CBD. The first building, a
in ophthalmology (U.S. News & World Report).
252,000 square foot state of the art facility, was developed by the
nation’s largest for profit university research park developer, Wexford
Retail amenities at the Life Science Park include Balans Restaurant,
Science + Technology. A midyear 2013 merger will continue Wexford’s
Thea Pizzeria, a UPS store, a Subway, Liberty Dry Cleaners and a
operations as a wholly-owned subsidiary of BioMed Realty Trust (South
fitness center. These tenants occupy nearly 12,000 square feet on the
ground floor in the Phase I building.
Just 15 months after starting construction, the building was delivered in
The developer of the UM’s Life Science Park also received approval for
June 2011. At 75.0 percent occupancy, the largest contiguous office
a 225-room hotel and conference center along with additional retail and
space totals 76,000 square feet.
another near 100,000 square feet of lab and office space, all of which
would total close to 300,000 square feet. No funding, construction dates
Leasing transactions at the Life Science Park have included several
or pre-leasing has yet to be secured.
new to the Miami market occupiers, including lab space for Community
Blood Centers of South Florida, corporate headquarters for the Spanish
River Landing Project
medical technology company Andago, and corporate headquarters and
In early 2013, a planned development was announced less than 2.0
R&D functions for medical device maker Emunamedica. In addition,
miles to the south and west of the Life Science Park at the site of the
20,000 square feet is occupied by Advanced Pharma. By midyear
Mahi Shrine building, on the north bank of the river. By midyear, the city
2013, another 20,000 square feet was executed by national dialysis
approved redevelopment for up to 537,000 square feet of retail space
provider, DaVita.
and 444 residences. The project will also incorporate a public park
along the river with complementary restaurant amenities. This urban
In what will be the “first shared laboratory and office space in Florida
redevelopment project falls under Miami’s 21 zoning code to foster
and the Southeast”, Right Space Management has taken 40,000 square
underserved areas and will cater to the Health District and surrounding
feet which will be available as “co-working space” for sublease to park
justice complex and working class neighborhoods. The developer is the
users. The park’s total build-out is to include lab, research/development
former head of Leviev Boymelgreen. No pre-leasing has yet to be
and office medical space with accompanying retail support for nearly
secured. (Daily Business Review, Miami Herald).
5,000 employees (South Florida Business Journal).
Miami Suburban
Aventura/North Miami
Coconut Grove
Coral Gables
Miami Airport
33
Miami Suburban boundaries
Aventura / North Miami
North by 135th Street, east by Biscayne Bay, south by I-395,
west by I-95.
Coconut Grove
North by Dixie Highway, east and south by Biscayne Bay, west by
Douglas Road.
Coral Gables
North by Tamiami Trail (SW 8th Street), east by Douglas Road, south by
Bird Road, west by Ludlum Road (SW 67th Avenue).
Kendall / Dadeland
North by Kendall Drive (SW 88th Street), east and south by Old Cutler
Road, west by Florida’s Turnpike.
Miami Airport
North by NW 58th Street, east by LeJeune Road, south by West Flagler
Street, west by Florida’s Turnpike.
Miami Beach (South Beach)
North by Lincoln Road, east by the Atlantic Ocean, south by 5th Street,
west by Biscayne Bay.
Miami Lakes
North by NW 58th Street, west by LeJeune Road, south by West Flagler
Street, west by Florida’s Turnpike.
34
35
Aventura
Supply
While still among Miami’s smallest submarkets, new deliveries during
first quarter 2013 pushed inventory above the 1.0 million square foot
mark. While geographically encompassing an area that extends west to
I-95, the bulk of the competitive core of office buildings is concentrated
to the east, along and east of Biscayne Boulevard/U.S. Highway 1.
This market is known for and anchored by Florida’s largest mall,
Aventura Mall, the 300-acre Turnberry Isle Miami hotel, golf and luxury
resort and upscale waterfront residential developments such as
Williams Island (advertised as “The Florida Riviera”). Comprising nearly
3.0 million square feet and reflecting the area’s high income
demographics, Aventura Mall ranks as one of the top five highest
grossing shopping centers in the country. Louis Vuitton opened a twostory store this quarter, one of the largest in North America (Turnberry
Marketing Group, Esri, Miami Herald).
Competitive office buildings now include six Class A assets and five
Class B assets, with the majority of stock located in Class A product.
The competitive Class A set of buildings comprises 686,000 square
feet or two-thirds of the total Aventura office market. Five of the six
buildings are marketing space for lease as Country Club Center, the
smallest building (69,000 square feet), has been completely occupied
since 2009.
Vacant Class A sublet space had disappeared since the end of 2011;
one 19,000 square foot space, however, is now available. Prior to first
quarter 2013, overall vacancy had been dropping each quarter since
year-end 2010. However with new Class A product delivered this
quarter, vacancy more than doubled – from 10.5 percent at year-end
2012 to 20.5 percent at the beginning of 2013. By midyear, it dropped
somewhat to the current 19.7 percent.
Stock
1,058,942 s.f.
4,741 s.f.
16.4%
Average asking rent
$38.12 p.s.f.
Under construction
-0- s.f.
36
Aventura
On the Class B front, vacancy remained in the single digits from late
2010 to the end of 2012 when it stood at 7.7 percent. The last quarters
availabilities have remained nonexistent among the Class B office
product since 2007.
$ psf
of 2013 had vacant space up to the 10.0 percent range. Sublease
$40
$35
$30
The three-building Class A office park at Aventura Corporate Center,
$25
with a combined 260,000 square feet, is offering the entire 14,000
$20
square foot second floor in Building III. The building’s first floor has
$15
12,000 square feet available.
$10
$5
Built in 2003, Harbour Centre is Aventura’s largest Class A asset at
$0
217,000 square feet. At 96.0 percent leased, the only space available is
2008
located on the second floor comprising 10,800 square feet.
One Turnberry Place has maintained a single digit vacancy rate since
completion of Aventura Optima Plaza, a two-building development
comprising one nine-story office building (at nearly 85,000 square feet)
and a smaller (31,000 square foot) adjacent, four-story building. The
four story building is now marketing its space to both medical and
traditional office users. The project opened with four executed
transactions totaling approximately 25,000 square feet or 29.0 percent
of the building’s space. With leases out for signature at midyear on the
ground and seventh floors, the largest contiguous office is 26,000
square feet on floors three to five. Registered for LEED Platinum
certification, this is the first new office building constructed in Aventura
since 2007.
2011
New deliveries YTD
Vacancy Class A
sf in thousands
New office inventory was delivered during first quarter 2013 with the
2010
2012
2Q 2013
late 2010 and by 2013, the building was fully leased on a direct basis.
The full 19,000 square foot ninth floor, however, is available for sublet.
2009
Net absorption YTD
Vacancy Class B
100,000
30.0%
75,000
25.0%
50,000
20.0%
25,000
0
.104
15.0%
-25,000
10.0%
-50,000
5.0%
-75,000
-100,000
2008
2009
2010
2011
2012
2Q 2013
0.0%
37
Aventura
Demand
At Building II in Aventura Corporate Center, South Florida Multispecialty
Associates executed an 8,100 square foot lease this quarter. Founded
Touro College
in 1975 by former GE engineers, Cubix Corporation executed a near
1380 NE Miami Gardens Dr.
1,850 square foot lease at Aventura Corporate Center III. The firm
designs, engineers, and manufactures COTS PC hardware systems.
At Harbour Centre, new users continued to mark transactional activity
South Florida Multispecialty
Aventura Corporate Center
Premier Radiology
ninth floor office while Boss Audio executed 2,500 square feet on the
Harbour Centre
Class B leasing included a 1,500 square foot lease ArgoProducts at
Turnberry Plaza. The firm is a custom manufacturer of complex metal
products. The 106,000 square foot asset is reporting occupancy at
nearly 93.0 percent, up from last quarter’s 91.0 percent. Of the five
office spaces available, two are being marketed as medical space.
On the western boundary of the market, Touro College executed a
Boss Audio
square feet. The firm’s search is for both northern Miami and southern
Broward Counties. Also touring the North Miami area is a new
Cubix Corporation
executed pre-2012, Brazil’s largest bank (after purchasing EuroBank) is
opening its first office in the CBD’s Brickell sector. Catering to a
growing Brazilian residential base throughout South Florida as well as
Orlando, expansion plans for Banco do Brasil Americas include
Aventura as one of its next three Florida branches (South Florida
Business Journal).
2,500 s.f.
1,850 s.f.
Aventura Optima Plaza
Class A
26,000 s.f.
One Turnberry Place
Class A
19,000 s.f.
Class A
14,000 s.f.
requirement for Advocate Group.
South Florida is the state’s international banking hub. Although
2,600 s.f.
Harbour Centre
12,000 square foot lease 1380 NE Miami Gardens Drive.
New tours during midyear included Silver Airways for up to 30,000
8,100 s.f.
Associates
this year. Premier Radiology executed a 2,600 square foot lease for its
fifth floor.
12,000 s.f.
Harbour Centre
Class A
10,800 s.f.
38
Aventura
Pricing
While the medical industry is heavily represented in Aventura, there is a
Average full service Class A quoted rates increased consistently
lack of adequate space and consequently provides landlords of
through most of the last 1.5 years, starting at $36.97 per square foot in
traditional office space another tenant base from which to draw.
early 2012 and ending midyear 2013 with $39.11 per square foot. This
Hospitals and medical facilities within the area include Mount Sinai
is the highest quote since midyear 2009.
Medical Center and Aventura Hospital along with several medical office
buildings and facilities, such as Aventura Heart and Health Building.
Also showing gains in asking rental rates were quotes for Class B
space. By midyear, the average rate was $35.58 per square foot, up
Dense waterfront communities/significant retail marks the larger
nearly 16.0 percent from year-end 2010’s $30.72 per square foot.
surrounding area
Miami’s escalating retail amenities are paralleling new housing
The newest asset, Aventura Optima Plaza has the highest quotes in the
developments, largely condos in the ocean and bay front markets –
market. In the main nine-story building, asking rates for the top two
which extend from Aventura to the southern portions of North Miami.
floors were increased over the last quarter from $41.00 (8th floor) and
$43.00 (Penthouse) to the current $43.50 and $45.00 per square foot,
Ten new development projects, as announced during first quarter
respectively. Rates for the remaining spaces range from $38.00 to
2013 in the Daily Business Review, are slated for the small upscale
$41.00 per square foot, all of which are full service. For the four story
enclave of Bay Harbor Islands. This is also where the Bal Harbour
building, quotes are net of utilities and range from $36.00 to $39.00 per
Shops are located. Development plans include up to 300 additional
square foot.
new residential units.
The current asking rate for the second floor space at the Class A
Former Loehmann’s Fashion Island – 1.0 mile south of Aventura Mall
Harbour Centre was $37.00 per square foot at second quarter.
The 187,000 square foot outdoor shopping center is being redeveloped
and repositioned with construction completed by late 2013. The project
On average, tenants can look to concession offers of one month of free
will be renamed “Town Center Aventura”. Replacing Loehmann’s will be
rent per term and tenant improvement allowances in the $35.00+/- per
a 34,000 square foot Saks Fifth Avenue’s Off 5th. Loehmann’s will open
square foot range.
a larger store further north in Aventura. Look to new national retailers
and additional restaurants. By midyear, several new users were
Trends
announced including Buffalo Wild Wings restaurant, Cut-N-Play Salon, a
In a continuation from the beginning of the year, Aventura pricing
new nail salon and a gift/home accessories retailer. The project’s
maintained its status among Miami’s three top rising submarkets.
developers are Turnberry Associates and Prudential Real Estate
Aiding conditions is the current and historical absence of sublet pricing.
Investors (Miami Herald, South Florida Business Journal).
Since 1999, this segment of the market has remained extremely low
with only two quarters (during 2010) ever posting sublease space
Bal Harbour Shops – 6.0 miles to the south/east
totaling over 10,000 square feet.
As for luxury shopping, Miami’s most exclusive Bal Harbour Shops has
received the top ranking in the world with annual sales of $2,555 per
Tenants within this submarket are typically made up of professionals
square foot. This is an impressive figure compared to the overall sales
who reside within proximity. Due to the heavy concentration of high net
average of $452.00 (ICSC, Miami Herald). A longer term, significant
worth individuals, the financial and wealth management sector is well
expansion of 200,000 square feet is in the works.
represented.
39
Aventura
Accompany demographics in this waterfront village claims some of the
First quarter 2013 pre-construction marketing began on Terra Group’s
nation’s highest incomes and most affluent housing stock.
Atlantic 15, which will comprise 15 privately gated two-story singlefamily residences to be located on the ocean just south of Sunny Isles
The 243-unit ocean front St. Regis Bal Harbour Resort was recognized
Boulevard.
by Forbes as “the most anticipated hotel opening of 2012" and the
recipient of the coveted AAA Five-Diamond award for 2012.
A new luxury condo development is underway known as the Mansions
at Acqualina, a 47-story project to be delivered by 2015. This will be
Selling for $220.0 million, the oceanfront Bal Harbour Beach Club will be
one of the most expensive in South Florida with a 16,000 square foot
redeveloped into an ultra-luxury condo complex (Daily Business
Penthouse - priced at $55.0 million. Pricing for the 79 units begins at
Review).
just under $8.0 million. This is a Trump Group project (Daily Business
Review).
Indian Creek Village – 7.0 miles to the south/east
This is one of the most exclusive islands in the country with multimillion
Surfside – 6.0+ miles to the south
dollar homes, private country club and golf course. During 2012, the
The town of Surfside is adjacent to the south of the Bal Harbour and is
island posted the “most expensive sale in Miami’s history” at $47.0
another oceanfront community. In a “land rush for oceanfront properties
million for a 30,000 square foot home.
in northeast Miami” the Chateau group acquired ($50.0 million) the Best
Western Oceanfront Suites Hotel in Surfside (Daily Business Review).
Golden Beach – 2.0 miles to the north/east
This ocean front town sits on 1.3 miles along the northernmost portion of
North Miami – 5.0+ miles to the south
S.R. A1A at the Miami-Dade/ Broward County. Most of the 370 single-
A new two-tower, 468-unit waterfront project began marketing efforts at
family homes are largely located on the Intracoastal and its waterways
the former Marina Grande site located at 172nd Street and Biscayne
or directly on the beach front.
Boulevard. To be redeveloped by iStar and Plaza Group, the luxury
project includes a 112-slip marina (for yachts up to 90 feet). Advertised
Sunny Isles Beach – 3.0 miles to the south/east
pricing begins at $500,000. Named “Marina Palms”, construction is to
This city is located on a barrier island and consists mostly of
start in 2013 with completion scheduled for year-end 2015.
condominiums, much of which is geared towards not for year-round
occupancy. New construction advertising includes a starting price for
With construction funding recently received, The Echo condominium
Regalia at $6.0 million, a glass tower boasting 39 “single floor
project is set for construction. Located on a peninsula off of 187th
oceanfront” residences.
Street and Biscayne Boulevard, the 190 luxury condo unit development
is scheduled for completion by midyear 2015. Current pre-sale pricing
Dezer Development is one of Sunny Isles’ largest land holders and has
ranges from $800,000 to $2.7 million.
several ambitious plans for their properties. On the residential front is
the proposed $560 million, 132 unit Porsche Tower. Located at 185th
Causeway Square is one of the first office buildings constructed in
and Collins Avenue, the development broke ground at midyear 2013
decades in this growing area. Located at 123rd Street and Biscayne
and has an anticipated 2016 completion date. Luxury amenities feature
Boulevard, the 160,000 square foot Class A asset was completed in
an “elevator to lift residents' cars to private garages adjacent to their
2010. Anchored by a 40,000 square foot L.A. Fitness Center, the
units”. Although no construction or build out details have yet to be
building offers outstanding bay views and signage along Biscayne
formulated, the firm is also proposing a 140,000 square foot office
Boulevard/U.S.1 with 40,000 square foot floor plates.
building to be located at 18070 Collins Avenue (Daily Business Review,
The Real Deal).
Aventura
Located at 141st Street and Biscayne Boulevard, Lexus of North Miami
is one of the largest dealerships in the world with a new, $76 million
state of the art facility totaling over 1.0 million square feet. Customer
amenities include a full spa experience, haircuts, massages, manicures,
workout sessions and a “Zen Room” equipped with a waterfall and a
boutique selling brand-name luxury goods (Lexus).
Almost 200 acres with waterfront views adjacent to Florida’s largest
urban park has approved Swerdlow and the Lefrak Organization in a
long term lease to redevelop what is considered one of the “largest
contiguous pieces of land in urban Miami” (South Florida Business
Journal). Located less than 10 miles north of the CBD, this is a largely
failed EPA “Superfund” site known as Biscayne Landing with only two
existing residential buildings. To date, an 850,000 square foot mall
proposed for the first phase of the development.
This changing neighborhood has attracted a Whole Foods Grocer.
Located within a few blocks of Causeway Square, the 36,000 square
foot store opened at midyear 2013.
To the south is an area anchored by established and relatively dense
upper income waterfront communities that include both condominiums
and single family neighborhoods: Keystone Point, The Jockey Club, the
Cricket Club, The Towers of Quayside and Miami Shores.
40
41
Coconut Grove
Supply
With the condo conversion of two out of the three Class A office
buildings in Coconut Grove - Grand Bay Office Tower in 2005 and SBS
Tower in 2006 – these buildings were removed from the inventory for
the purposes of this report. Thus, the inventory of quality office space
was drastically reduced to only one 57,000 square foot institutional
asset, Bayview Executive Plaza.
The trend of diminishing demand for Class A office ownership had
dramatically changed this equation. The result is numerous “for lease”
availabilities now being marketed by both of the condo conversions.
Consequently, both Grand Bay and SBS Tower have been added back
into the statistical inventory as of midyear 2009 which accounted for the
steep rise in market size and varying vacancies.
With the elimination of one Class B asset during first quarter 2013,
Coconut Grove is now Miami’s smallest submarket with an inventory of
Class A and Class B space totaling less than 900,000 square feet. The
Class A segment of the market now comprises the largest amount of
square footage with 515,000 square feet or 58.0 percent of the Grove’s
total stock.
Market fundamentals have improved strongly among Class A assets,
where direct vacancy has been reduced to 7.2 percent, down from yearend 2012’s 10.7 percent. This has remained as the lowest Class A
vacancy in Miami during the year. Class B vacancy was just over 10.0
percent, up from the end of 2012 when it stood at 7.9 percent.
Stock
Just over 34,000 square feet continue to be marketed for lease at the
294,000 square foot SBS Tower. The largest contiguous office
available remains on the 20th floor at just under 5,000 square feet and
was being marketed as a sublet.
894,014 s.f.
-2,344 s.f.
9.1%
Average asking rent
$30.67 p.s.f.
Under construction
- 0 - s.f.
42
Coconut Grove
Grand Bay Office Tower had less than 40,000 square feet available at
first quarter 2013. Also being marketed as a sublet, the largest
With the retail to office space conversion/repositioning and substantial
$ psf
contiguous office remains on the fifth floor at nearly 13,000 square feet.
new and expansion activity, Mayfair’s largest contiguous office is nearly
$40
$35
$30
14,000 square feet. The space includes most of the former offices of
$25
international architectural firm, LEO A DALY. The 264,000 square foot
$20
Mayfair in the Grove had been a predominantly retail development. All
$15
of the office space being offered remains on a direct basis. A 1,500
$10
square foot renewal was executed this quarter by Proex Trading.
$5
$0
Grand Bay Office Tower is also marketing 34,000 square feet as
2008
available. Half of the spaces available are being offered as sublet
fifth floor.
Only a handful of small spaces remain available at Bayview Executive
Plaza, the smallest of the Class A assets. The largest contiguous office
is 3,000 square feet on the third floor.
With the retail to office space conversion/repositioning and substantial
new and expansion activity, Mayfair’s largest contiguous office remains
at 14,000 square feet. The space includes most of the former offices of
international architectural firm, LEO A DALY. The 264,000 square foot
Mayfair in the Grove had been a predominantly retail development. All
of the office space being offered remains on a direct basis.
At the nearly fully leased Class B Continental Plaza, the largest office
available was 5,900 square feet with a $29.00 per square foot, full
service asking rate.
2009
2010
2011
2012
2Q 2013
New deliveries YTD
Vacancy Class A
sf in thousands
with the largest contiguous office comprising 7,500 square feet on the
Net absorption YTD
Vacancy Class B
100,000
30.0%
75,000
25.0%
50,000
20.0%
25,000
0
15.0%
-25,000
10.0%
-50,000
5.0%
-75,000
-100,000
2008
2009
2010
2011
2012
2Q 2013
0.0%
43
Coconut Grove
Demand
Very few transactions were reported year to date. All of 2013’s positive
absorption occurred among Class A assets.
HealthSun Health Plans
Bayview Executive Plaza welcomed CrownTyre America, one of the
largest Chinese tire suppliers. The firm’s office is on the sixth floor
where they occupy 1,900 square feet.
5,000 s.f.
Continental Plaza
CrownTyre America
1,900 s.f.
Bayview Executive Plaza
As for Class B product, HealthSun Health Plans expanded by 5,000
square feet on the fourth floor at Continental Plaza.
Pricing
Mayfair in the Grove
Quoted rates at Bayview Executive Plaza’s remaining spaces were up
by $1.00 per square foot at year-end 2012 and remain at the net of
electric asking rate of $31.50 per square foot.
With a variety of pricing, look to an average asking rate of $32.18 per
square foot at the Grand Bay Office Tower. Likewise, a range of
different pricing is being quoted at SBS Tower which has a higher
average asking rate of $35.58 per square foot, unchanged from
last quarter.
Trends
The Grove remains a typically a small user market. Industry sectors are
diversified and represent full business support services such as law
firms, engineers, marketing, real estate, retailers and some restaurants.
Anchoring the Grove is the near 200,000 square foot
retail/entertainment center, CocoWalk. The complex is undergoing
another renovation and repositioning due to increased competition from
entertainment venues such as the Design District, Mary Brickell Village,
South Beach and South Miami. The Cheesecake Factory is one of its
original and most popular tenants. Replacing Crazy Pianos bar and
restaurant is the California-based Burgundy Room, an upscale bar and
music venue. Several new retailers joined the complex at midyear 2011
and include three new restaurants: Central Beer Garden, Sushi Central
and Cocowok.
Class B
14,000 s.f.
Grand Bay Office Tower
Class A
7,500 s.f.
44
Coconut Grove
Paragon Theaters at CocoWalk is a 1,500 seat ‘luxury’ venue with high
The Western portion of the submarket has been slated for a potential
end amenities including private screening rooms, valet parking, and a
repositioning. Developer Peter Gardner (Pointe Group) intends to
full bar. Chili’s also has a location at the open-air mall in a 5,600 square
redevelop six city blocks along Grand Avenue. At year-end 2011, the
foot location on the third floor. By third quarter 2012, three new tenants
project received final approval for its major use special permit. While
totaling 3,300 square feet joined the center: Maki’s Place (a Brazilian
midyear 2012 press indicated that construction for the first phase had
restaurant chain), Yogurtini and Guayabera World clothing (South
been scheduled towards year-end 2012, no further activity has yet to be
announced. Consisting of two blocks, a 2014 completion date is
targeted for Phase I. The proposed Grove Village is a 750,000 square
Adjacent to the Class A Grand Bay office condominium, the Grand Bay
foot development expected to include:
Hotel, which had been shuttered for several years, was in the process of
demolition at year-end 2012 with the site to be redeveloped as a
- 187,000 square feet of retail space
residential project. Groundbreaking for the Grove at Grand Bay occurred
- 225,000 square feet of office space
during midyear 2013 with completion set for 2014. The luxury build-out
- 277,200 square feet of residential use
includes two twisting glass towers, rising 20 stories each for a total of 96
units which will aim for Gold LEED certification. The $400 million
Final build-out of the Grove Village project could take up to seven years
project is boasting extreme high end amenities such as private elevators
(Miami Today).
for every residence, two-car air conditioned garage and staff quarters for
Penthouse and corner units and “electric cooking for the Summer
Look to potential delays for some of the proposed projects due to repairs
kitchens on all residence terraces”. Originally reported by the Miami
to the area’s sewer system.
Herald, pricing was to begin at $1.9 million. Recent press from the
developer, however, now points to units starting at $3.0 million.
At the end of 2012, Coconut Grove Bank agreed to sell its near 50 year
old, 70,000 square foot headquarters to Terra Group, eliminating one of
the submarket’s five Class B office buildings. The location at the
intersection of S.W. 27th Avenue and South Bayshore Drive is a prized
five-acre site situated next to the Ritz Carlton hotel. As such, look to a
high rise luxury condo development which will encompass spectacular
waterfront/marina views. Also expect a new 30,000 square foot bank
building for its operations, with construction scheduled for 2013 (Miami
Herald).
The market’s waterfront city-owned land which had been slated for
improvements has its lease open for re-bidding by the city.
Encompassing the central Coconut Grove prime bay front area, existing
uses up for re-bid include Key Grove Marina including the old airline
hangar, Scotty's Landing and the Chart House restaurants, as reported
by the Daily Business Review. Winning bids for the 40-year lease would
then go to a public referendum.
45
Coral Gables
Supply
The seven “elite” Class A buildings in the Coral Gables submarket
include 355 Alhambra, The Alhambra (Two Alhambra Plaza), Columbus
Center (One Alhambra Plaza), BAC-Colonnade, Alhambra Towers (121
Alhambra), 4000 Ponce and 2525 Ponce. These assets contain at
least 170,000 of square feet of rentable building area and historically
maintained full-service rental rate quotes for prime spaces in excess of
The last few years of rising vacancies due to business contractions,
closings and relocations pushed average pricing below the $40.00 per
square foot mark. As such, this set was expanded at year-end 2010 to
include three additional assets (220 Alhambra, the South, North and
Executive towers at Douglas Entrance and the Regions Bank Tower).
These additions were included because they effectively compete for
various reasons with the Trophy level in today’s market.
By midyear 2012, the Class A set was expanded further with the
addition of 255 Alhambra. With the completion of the North Tower at
year-end 2012 at 396 Alhambra, the two-building project is also included
among the competitive set of premier properties. As such, the
combined Trophy set now comprises 2.7 million square feet of space.
With the addition of new space, the historical data, particularly rental
rates, will be inconsistent from previous reporting periods.
This was the only submarket to add inventory to its stock during 2012.
As such, the Gables’ Class A sector has recorded the second-highest
vacancy rate in the Miami market year-to-date. Among competitive
Trophy product, vacancy is down from the historic high of 26.3 percent
recorded during third quarter 2012. The current overall vacancy rate
stands at 23.5 percent.
Class B buildings also reduced their combined vacancy from the historic
17.4 percent high to the current 12.8 percent. The overall vacancy has
remained in the 12.0 percent range for the last three quarters. Very little
if any sublease space has been available over the last three years.
Stock
5,535,832 s.f.
9,383 s.f.
20.0%
Average asking rent
$33.79 p.s.f.
Under construction
-0- s.f.
46
Coral Gables
The Bacardi Headquarters’, built in 2009, is not included among the
competitive multi-tenant statistical inventory as it was a build-to-suit
since opening and is available for office use. The quoted rate of $36.50
square foot has remained unchanged since 2011.
$ psf
project. The 19,500 square foot ground floor space has been marketed
$45
$40
$35
Reversing what was the largest contiguous Class A availability in the
$30
Gables, Columbus Center back filled over one-third of its vacant space
$25
$20
on floors six through eight and the entire West Tower at the Annex
$15
building with the 61,000 square foot Gibraltar Bank transaction. The
$10
bank relocated into all of its space this quarter. Earlier in the year, the
$5
South Florida Business Journal reported that the bank was for sale.
$0
Columbus Center’s largest contiguous offices remain on the entire
2008
10th floor at 19,400 square feet and most of the ninth floor at 15,600
square feet.
nearly 36,000 square feet located on the fourth and fifth floors.
At The Alhambra project’s Class A, Two Alhambra building, Penthouse
availabilities continue to make up the largest contiguous vacancies, now
being marketed at 32,500 square feet on the Penthouse I & II levels
combined. By midyear 2013, the full fifth floor became available at
22,600 square feet. The building has 58.0 percent of its space as
leased. At the Class B, 95 Merrick building (Alhambra West), the
building has one small vacancy available at 1,400 square feet.
This quarter’s transactional activity at 255 Alhambra reduced the largest
contiguous office on the 10th floor to 5,500 square feet. The space is
being marketed for $36.00 per square foot. The building recently
completed a $2.0 million capital improvement program including new
energy efficient and state of the art HVAC systems, elevator systems
and refreshed renovated common areas.
sf in thousands
Center, the largest contiguous space of this total (and at the building) is
2010
2011
2012
2Q 2013
The Gibraltar Bank relocation left 62,000 square feet available at the
220 Alhambra Circle building. Also known as Mercantil Commercebank
2009
New deliveries YTD
Vacancy Class A
Net absorption YTD
Vacancy Class B
400,000
25.0%
300,000
20.0%
200,000
100,000
15.0%
0
10.0%
-100,000
-200,000
5.0%
-300,000
-400,000
2008
2009
2010
2011
2012
2Q 2013
0.0%
47
Coral Gables
At 355 Alhambra, the full 10th floor (24,000 square feet) remains as the
550 Alhambra is also implementing upgrades with a complete lobby
largest contiguous office. Building renovations are nearing completion
renovation, mechanical and HVAC systems. The project is 80.0
with common areas being renovated from carpet and tile to marble
percent complete to date. The largest contiguous office available is
and wood.
located on the Penthouse level comprising 6,500 square feet.
Direct vacancy at BAC-Colonnade had remained in the single digits at
The city’s newest Trophy asset was delivered at midyear 2012. The
7.0 percent with the bulk of vacancy due to sublease availabilities.
170,000 square foot North Tower at 396 Alhambra Circle joined the
However by midyear 2012, the landlord began marketing all of the
adjacent South Tower, an 87,000 square foot building completely
Chevron sublease space on a direct basis which included 40,000
renovated to a Class A level. The North Tower opened at nearly 53.0
square feet on the 4th and 5th floors and the full ninth floor comprising
percent leased and achieved an 88.0 percent lease rate by midyear
16,500 square feet as future vacancy. This pushed vacancy to the 36.0
2013. The project, which also includes a new 884-space parking
percent mark.
garage and approximately 30,000 square feet of retail space, received
LEED Gold certification in the North Tower at year-end 2012 – a first in
Douglas Entrance’s largest contiguous space has been reduced to the
this submarket to receive the designation for new construction. The
top Penthouse floor, comprising 12,600 square feet in the Class A South
South Tower is designed to achieve LEED Silver. The largest
Tower. Overall vacancy at the five-building project was also reduced
contiguous offices remain in the North Tower and include the entire
from a high in 2009 of 26.0 percent to the current 15.9 percent. The
eighth and 12th floors, at 11,000 square feet each. The eighth floor is
473,000 square foot development comprises both Class A and Class B
available direct with the landlord while the 12th floor is being sublet by
space. Douglas Entrance was awarded a LEED EBOM Silver
Millicom International with term through 2018.
Certification, the first to receive such in the state in the existing building
category. Recently completed is the addition of a new gym - exclusive
Gables Cititower, the 129,000 square foot Class B asset located at 999
and complimentary for tenants only.
Ponce has 17,500 square feet as its largest contiguous availability.
The space is located on the eighth floor.
After the close of the statistical quarter, 4000 Ponce reported 95.0
percent of its space as leased, leaving 6,200 square feet as its largest
Completed at midyear 2012, “The Building”, located at 2990 Ponce De
contiguous office. The space is located on the eighth floor.
Leon Boulevard opened with 65.0 percent of its space leased. This
58,000 square foot asset has 15,400 square feet available on floors
Hines’ 2525 Ponce asset was fully leased at midyear 2013. At the
three and four as its largest contiguous space. In addition, the project
adjacent Class B 2555 Ponce building, the largest contiguous office
offers 6,800 square feet of available retail space. The developer was
remains on the sixth (top) floor comprising 13,000+ square feet (former
AJP Ventures. The full service office rate had been quoted at $40.00
law firm space for Yoss). Look to a full service asking rate of $32.51 per
per square foot but has since been reduced to the current range of
square foot, which includes a 2013 operating expense of $14.51.
$37.00 to $39.00 per square foot.
The Douglas Centre office condo is marketing over 74,000 square feet
for lease. Vacancy declined during 2013 from 29.0 to 27.0 percent.
Transactional activity this year totaled 33,000 square feet. The majority
of spaces available for lease are being quoted rate at $26.00 per square
foot, full service.
48
Coral Gables
The city of Coral Gables’ largest development, Ponce de Leon Towers
396 Alhambra welcomed Professional bank who will occupy 6,600
in Old Spanish Village, is a seven-acre mixed-use project which will
square feet on the second floor along with a near 1,500 square foot
include office product. Although some townhomes have been
ground floor space. One of the oldest (175 years) premiere jewelers
constructed, most of the site remains undeveloped. Excluding the office
executed in the North Tower this quarter: Tiffany & Co., who will occupy
segment, the site had been put on the market for sale as the property
nearly 4,650 square feet on the building’s Penthouse level. In addition,
was “heading to an online auction” following an $83.1 million foreclosure
the building welcomed Hyatt in their 4,200 square foot office on the
judgment against the developer. By third quarter 2011, Agave Holdings,
seventh floor.
the developer for the recently completed 396 Alhambra office
development, had purchased the development site for $30.5 million
Midyear transactional activity at 255 Alhambra pushed occupancy to
(Miami Herald, Daily Business Review; South Florida Business Journal).
88.0 percent. Transactions included a new 8,000 square foot lease for
No further plans have been announced.
the BBC, a relocation from within the Gables, while the law firm of
Herron Ortiz leased 3,500 square feet. Both BBC and Heron offices
Proposed for development since 2007, developer Allen Morris has
are on the 10th floor. In addition, Jls Creative Solutions expanded their
shelved his plans for the 203,000 square foot Ponce de Leon Towers
11th floor office by 2,900 square feet.
office building with this quarter’s sale of the site. Construction had been
contingent upon pre-leasing. The undeveloped one acre site sold for
This quarter’s leasing at 355 Alhambra included a 7,400 square foot
$24.0 million to an entity that “shares the same address as Agave
expansion for Marquis Bank and a near 4,700 square foot renewal for
Holdings”, who owns the Old Spanish Village site and the Class A 396
Kraft Foods.
Alhambra office buildings. No development plans have yet to be
announced as of this writing by the new owner (Daily Business Review).
4000 Ponce executed a new 7,000 square foot lease for Evensky &
Katz. The wealth management firm will relocate from BAC Colonnade
Demand
by early next year. Another Gables tenant, MadisonSouth, will also
Supply continues to outstrip demand. The entire submarket has 1.1
relocate into 1,600 square feet. The building will have a new restaurant
million square feet vacant, second only in the Suburbs to the Airport’s
for tenants. Love is Blind Food & Wine will open in a 6,400 square
1.8 million square feet. The great majority, nearly 80.0 percent, of
foot space.
vacant square footage is located in Class A product. As for absorption,
the recession was unkind to this marketplace. The last 2.5 years have
At the Trophy 121 Alhambra asset, only a few small direct spaces
recorded modest but positive absorption (for both Class A and B
remain with the largest contiguous office comprising 3,800 square feet
buildings). Average levels since the 2007 start of the recession,
on the 15th floor.
however, point to a bleak annual rate of negative 66,000 square feet
over the last 6.5 years. The Trophy set of assets fared only slightly
At 550 Biltmore, Samlut & Company CPA renewed and expanded for
better during the same time frame.
4,000 square feet.
Looking at current executed leases, a closer measure to real time
At Columbus Center, Apple renewed and expanded for a total of 19,400
activity, Jones Lang LaSalle has tracked 254,000 square feet year-to-
square feet.
date. Among the top 25 transactions (4,000 to 19,000+ square feet), 17
should contribute to positive absorption/vacancy reduction via
At Douglas Entrance, new user Katz Media executed a 2,400 square
expansion activity or new to the Gables or competitive set of assets
foot lease in the North Tower while WOW factor expanded their office
surveyed. The majority of these particular leases were executed in
by another 1,300 square feet in the La Puerta del Sol building. WOW
Class A buildings.
moved into the building one year ago in a 4,200 square foot space.
49
Coral Gables
At Miami Green the largest contiguous office remains on floors eight
through 10 for a total of 27,000 square feet. Asking rates are $31.50 per
square foot, net of electric for all spaces with the exception of the top
two floors where the rate is being quoted at $32.50 per square foot, also
net of electric.
On the Class B front, Gables Cititower executed 20,000 square feet this
quarter, mostly to law firms. The largest was a new lease for Carbonell
who will occupy nearly 7,400 square feet. In addition, import/export
software firm YALAMANCHILI executed a new 2,500 square foot lease.
Other Class B transactional activity included two new users at 2555
Ponce, Weston Insurance for 7,300 square feet and Stems Law Firm,
who will occupy a 4,000 square foot office. Now a multitenant, for lease
building, two law firms executed leases at Gables Square (75 Valencia).
Alvarez Carbonell Law Firm signed a new lease for the building totaling
nearly 12,000 square feet while Otero Law Firm renewed and expanded
for 4,500 square feet. On the expansion front, Baptist Health grew their
space by 3,900 square feet this quarter at the 1500-1554 San Remo
Avenue project. At 95 Merrick (The Alhambra), a GSA user renewed for
Apple
Columbus Center
Alvarez Carbonell Law Firm
BBC
Marquis Bank
DentaQuest, an existing Gables user. Several new smaller users are
also touring the Gables for office space and include Universal Hedge
Carbonell Law Firm
National marketing public relations firm, rbb Public Relations, remains
active with a 7,500 square foot requirement. Robert Half International,
the world’s largest specialized staffing firm, has a 7,000 square foot
requirement while existing user, Genesis Investment Advisors, began
their search last quarter for up to 5,500 square feet.
7,400 s.f.
999 Ponce - Gables Cititower
BAC Colonnade
Class A
40,000 s.f.
220 Alhambra
Class A
36,000 s.f.
Two Alhambra
Class A
32,500 s.f.
355 Alhambra
Class A
24,000 s.f.
Columbus Center
Class A
19,400 s.f.
255 Alhambra
Class A
17,600 s.f.
Fund for 6,000 square feet, World Resources for 3,900 square feet and
Ocean Group for 3,500 square feet.
7,500 s.f.
355 Alhambra
South Miami and the Suburban Airport market.
New midyear tours included a 15,000 square foot search for
8,000 s.f.
255 Alhambra
requirement for the renowned world leader in pediatric healthcare,
Miami Children’s Hospital. The hospital is also touring in neighboring
11,800 s.f.
Gables Square
3,400 square feet.
Touring as of first quarter 2013 was a substantial 100,000 square foot
19,400 s.f.
Gables Cititower
Class B
17,500 s.f.
2990 Ponce – The Building
Class A
15,400 s.f.
50
Coral Gables
Pricing
With increased occupancy at the North and South Towers of 396
The 15 Trophy buildings posted a $38.50 per square foot average
Alhambra, ownership increased rates at year-end 2012 by $1.00 to
quoted rate last quarter, one of the highest in over two years. However,
$1.50 per square foot which remain unchanged. At the North Tower’s
the collective average dipped this quarter to $37.18 per square foot.
Penthouse space, the asking rate is $46.50 per square foot. The
These are weighted averages. The largest drop posted was at the 220
quoted rate for the full eighth floor is $40.25 while the 12th floor sublet
Alhambra asset (down by 7.0 percent or $2.50 per square foot). The
is $42.00 per square foot. At the South Tower, the average rate is
majority of buildings kept rates flat with four posting upticks at midyear.
$37.00 per square foot. All pricing is on a full service basis.
Rates overall, however, remain under pre-recession pricing, with only
three assets currently quoting at or above $40.00 per square foot
At the Douglas Entrance project, look to a $30.00 per square foot
on average.
average asking rate for Class A space in the towers and a higher range
($30.00 to $32.00 per square foot) for the Penthouse availability in the
 Two Alhambra, pricing for floors 5-12 range from $36.00 to $40.00
South Tower.
per square foot. During the first quarter 2013, quoted rates for the
Penthouse availabilities were increased to and remain at $42.00 per
Quoted rates at 4000 Ponce remain at $38.00 per square foot,
square foot.
full service.
 BAC-Colonnade, historically maintaining the highest-quoted rates
in the Gables with year-end 2009 rates quoted at $44.00 to $48.00
A price reduction was implemented this quarter at 220 Alhambra with
per square foot; following an adjustment in 2010, quoted rates.
quoted rates down by $2.50 to $37.00 square foot, full service.
remained unchanged at the $38.00 to $40.00 per square foot range.
 Columbus Center, pricing during most of 2009 stood at $41.00 to
With 13,000 square feet on the seventh floor remaining as the largest
$43.00 per square foot; since 2011, asking rates remained at $36.00
contiguous office, pricing at 550 Biltmore remained unchanged at
to $38.00 per square foot.
$34.00 per square foot for all of its spaces.
 355 Alhambra, reduced by $1.00 per square foot from the beginning
of 2009, quoted rates remained at $42.00 per square foot until early
Rates at 999 Ponce (Gables Cititower) were up at midyear from $24.50
2012, when they were reduced and remain at the current $41.00 per
to $26.00 per to the current range of $26.00 to $27.00 per square foot.
square foot.
With the lobby renovated, the additional upgrades for the bathrooms
 121 Alhambra, while reduced in early 2011, asking rates remained
and common areas are well under way.
mostly unchanged through midyear 2013; with only a few small
spaces left look to next quarter’s $3.00+ per square foot drop in
The largest contiguous office at 2121 Ponce is 3,000 square feet with
asking rates $39.50 - $41.50 per square foot.
all spaces quoted at $32.50 to $34.00 per square foot. 95 Merrick has
similar pricing of $32.00 per square foot for its last remaining space of
1,377 square feet.
51
Coral Gables
Trends
By midyear, this submarket recorded its first Class A institutional sale
since the Two Alhambra trade in 2008. In addition, the quarter brought
reports from area landlords who are seeing an uptick in both leasing and
tour activity. Midyear active office requirements comprised many small
Class A landlords had kept pricing stagnant since 2011, with strike
rates ranging in the $28.00 to $36.00 per square foot range, full service.
Concessions in the form of rental abatement range between three to
twelve months depending upon length of the lease term while tenant
improvements average in the $45.00 per square foot. These figures
users and “spin offs” from the legal, insurance and accounting industry.
vary widely due to the aggressive nature of lease terms at 396
Albeit unimpressive at just under 14,000 square feet, Class A buildings
existing Class A building. Look to a reduction in rental rate
captured all of the Gables’ positive absorption this year. Current leasing
activity shows a continued movement for users preferring Class A
product. Of the 254,000 square feet of total executed leases tracked
over the last two quarters, 72.0 percent or 183,000 square feet occurred
Alhambra versus the more conservative lease approach among the
abatement offerings.
While the Gables’ market fundamentals remained in the tenant’s favor
through the end of 2012, 2013 continues to point to the beginnings of
in Class A buildings.
improving conditions. Indicators include elevated occupancy levels at
Following the close of the second quarter, a Coral Gables Trophy office
for incentive packages to start diminishing later this year. Rent growth
asset was traded. The 205,195 square foot BAC-Colonnade was
acquired by Boston-based TA Associates Realty from Deka USA (a joint
venture of Deka Immobilien, a Germany-based investment fund and
ING Clarion Group) for $81 million ($395.00 per square foot) – just
the new 396 Alhambra asset and corresponding pricing bumps. Look
is not anticipated until 2014 following further absorption of the current
inventory of vacancy.
Investor interest had been invigorated at year-end 2012 marking the
under the $82.9 million Deka paid in June 2008.
first trade in three years with the acquisition of the Gables Square office
Marketing has begun on a small (65,000 square foot) nine story office
Located at 75 Valencia, this is Chopard’s Latin American/Caribbean
building. Located on Giralda Avenue, the project will sit one block south
of Alhambra Plaza, parallel to 255 Alhambra. The ground floor suites
totaling 7,300 square feet are being offered for retail use while floors
five through nine totaling 40,000 square feet are available for an office
user. Construction is expected to begin by year-end 2013 with
completion scheduled by third quarter 2015. No pre-leasing has yet
been announced.
condo by its largest user – Swiss based luxury watch maker, Chopard.
headquarters. The near 83,000 square foot, Class B asset traded for
$7.5 million or $129.60 per square foot in a partial interest transfer
(70.0%), as reported by CoStar. Following many of Miami’s office
condo products, new ownership will implement capital and other tenant
improvements and has converted the asset back to a “for lease only”
office building. Quoted full service rental rates were up from year-end
2012’s $23.00 to $25.00 per square foot to the current average of
$26.20 per square foot. The largest contiguous office remains on the
10th floor at 7,500 square feet.
Coral Gables
South of Coral Gables, new office supply is being marketed with the
repositioning of 112,000 square feet of existing retail space (a former
Nike spot) at the 515,000 square foot retail/entertainment project
known as The Shops at Sunset Place situated in the heart of the South
Miami retail district. The Shops are located south of the five Class B
office buildings which together comprise the southernmost boundary of
the submarket, outside of the Gables’ competitive urban core. At
midyear, the first and second floors with 40,000+ square feet each
remain as the largest contiguous spaces. All of the availabilities are
being marketed as “office/medical” with full service rates quoted at
$32.00 to $35.00 per square foot. Opened in 1999, this is a Simon
Property Group development.
Situated a few blocks southwest of the Village of Merrick park is Gables
Ponce, a portion of a new mixed-use residential/retail project opened
this quarter. Located at the Le Jeune Road/Ponce de Leon intersection,
the newly delivered apartment complex includes 247 units. A 24,000
square foot Epicure Gourmet Market & Café is scheduled for a late year
opening while Phase II is slated for 120 units and “8,000 square feet” of
office space (South Florida Business Journal).
Construction is scheduled to begin this year for Merrick Manor which will
comprise 174 units in a 10-story new condo development. Situated just
north of the Village of Merrick Park and located on Altara Avenue at Le
Jeune Road, the project will be developed by Astor Development and
will incorporate 17,000 square feet of retail space. First quarter’s press
announcement indicated that pre-sales reached 60.0 percent with preconstruction prices ranging from $250,000 to $1.0 million. Look to a
2014 completion date (Miami Today, Globest.com).
The proposed Gables Station project is to include 300,000+ square feet
of “vertical” retail space. The $100 million project is situated at Ponce
de Leon Boulevard and U.S. Highway 1, just north of Grand Avenue.
The developer (Jeff Berkowitz) received approval at midyear 2013 to
locate the shopping center’s entrance on Ponce de Leon Boulevard
(Miami Herald).
52
53
Miami Airport
Supply
Eight projects comprise the primary competitive market: Airport
Corporate Center, Waterford and Downtown Doral (formerly known as
Doral Center) are the three largest office parks. The balance consists of
Doral Corporate Center, Doral Concourse, Doral Costa, Westside Plaza
and the 2009 opening of One Park Square at Doral.
At 14.6 percent, overall vacancy (which includes sublease) among
Class A product was the lowest posted since the middle of 2009. On a
square footage basis, some 707,000 square remain vacant. This is the
lowest level since the middle of 2011 when vacancy reached nearly 1.2
million square feet. The Airport is the largest Class A (and overall)
submarket in Miami and the presence of sublet space (just under
100,000 square feet) while only 2.0 percent of total Class A stock does
compose one of the largest (nearly 14.0 percent) shares of available
space. On a direct basis, vacancy was at a much improved 12.6
percent, down significantly from 24.0 percent at midyear 2011.
The Class B market had a significantly higher overall rate of 25.0
percent at midyear with a total of 1.1 million square feet of vacant
space. This rate has remained above 20.0 percent since year-end 2010.
Waterford’s combined Class A product, all of which is owned exclusively
by TIAA-CREF, now totals 1.4 million square feet with the third quarter
2009 delivery of the 1000 Waterford building. The park’s overall
occupancy stands at 93.0 percent with the largest contiguous office
currently available at 11,600 square feet on the second floor at the 5301
building. By year-end 2013, however, nearly 42,000 square feet on the
eighth and ninth floors at the Class A 5301 building will be available
when Diageo relocates to the Gables. At the 91.0 percent leased 1000
Waterford building, the largest contiguous direct office is 6,200 square
feet (the former Factor Group office) while on a sublet basis, the entire
26,000 square foot (former Avaya space) fourth floor is being marketed
with term through 2018.
Stock
9,239,763 s.f.
-1,122 s.f.
19.6%
Average asking rent
$24.70 p.s.f.
Under construction
80,000 s.f.
54
Miami Airport
Prior to year-end 2011, all of the (eight) Class B buildings at Waterford,
totaling nearly 852,000 square feet, had been owned exclusively by
however, were sold in 2011 to DRA Advisors. At the “Atrium” buildings
(6100, 6303 and 6505), the largest contiguous office remains at 15,000
$ psf
MetLife. Five of the “West” buildings totaling 345,000 square feet,
$25
space remains at just under 10,000 square feet. Second quarter 2013
vacancy stood at 18.0 percent for the West buildings and 19.9 percent
$20
for the Atrium buildings.
$15
$10
A substantial sublet was put on the market during third quarter 2012:
$5
73,000 square feet at the Burger King world headquarters located in the
$0
Waterford office park at 5505 Blue Lagoon Drive. This is a contiguous
2008
offering on floors four through six. The asking rate was $27.00 per
Seabourn brand to Seattle, the corporate headquarters for Holland
America Line (another Carnival owned company). The offering had
included two spaces, the largest being 20,000 square feet which also
includes 1,700 square feet of a raised IT floor room and the second
office comprises 6,000 square feet. Leasing during first quarter 2013
reduced the total sublet offering to just over 19,000 square feet. A
generator powers the entire premises. With term through 2018, the
asking rate was lowered late last year from $23.00 to the current $20.00
per square foot, full service.
The largest contiguous office at the Airport Corporate Center Park has
been reduced to one Class A space (the 7300 building) for a total of
30,600 square feet. Class A occupancy at the park grew from year-end
2012’s 78.0 percent to the current 81.0 percent, unchanged from last
quarter. Occupancy over the last three months among the park’s Class
B assets was up only slightly at 69.0 percent. Only 6,300 square feet
remain as the largest contiguous Class B office.
sf in thousands
cruise operator Carnival Corp. relocating the headquarters of the
2009
2010
2011
2012
2Q 2013
At the 6100 Atrium building in Waterford, Seabourn’s 26,000 square foot
office was put on the market during first quarter 2011 as sublease with
$30
square feet while at the five “West” buildings, the largest contiguous
square foot, full service. Term is through 2018.
$35
New deliveries YTD
Vacancy Class A
Net absorption YTD
Vacancy Class B
500,000
30.0%
400,000
25.0%
300,000
200,000
20.0%
100,000
0
15.0%
-100,000
10.0%
-200,000
-300,000
5.0%
-400,000
-500,000
2008
2009
2010
2011
2012
2Q 2013
0.0%
55
Miami Airport
The largest contiguous office among Class A product at the Downtown
5820 Blue Lagoon, a small Class B building located in the Waterford
Doral office park remains in the Trenton Building but was reduced at
Office park but not part of the TIAA-CREF, MetLife or DRA portfolios,
year-end 2012 to 23,000 square feet comprising the full second floor. At
now has 12,000 contiguous square feet as its only remaining space.
the park’s newest asset, the 8333 Building, the largest contiguous office
Consequently, pricing was increased by $1.00 per square foot at
remains at 13,500 square on the sixth floor.
midyear to $24.00 per square foot, net of electric and janitorial. A
generous parking ratio of five per 1,000 feet is available.
The overall amount of available Class B space at the Downtown Doral
Park has dropped with several buildings already having been taken off
Lennar Corporate Center’s largest contiguous space remains at 20,000
the market. Four more buildings were demolished as of year-end 2010,
square feet located on the fourth floor at the 730 building.
including the Macon, Flint, Manchester and Palm Coast making way for
the 60,000 square foot City Hall for the City of Doral and adjacent three-
Amadeus relocated in late 2010 from its namesake building located at
acre park. During 2013, the following buildings were either in the
9250 N.W. 36th Street. Now referred to as 9250 Doral, the entire Class
process or will be slated for demolition: Phoenix, Portland, Columbus,
B building still remains vacant with a significant 187,000 contiguous
Augusta, Dayton, Savannah, Athens and Rochester. The only two
square feet. Unchanged from year-end 2010, the asking rates had
buildings that will not be torn down are Monterey and Charleston.
been quoted at $24.00 per square foot, full service; by midyear 2013,
the rate was increased to $25.00 per square foot. During first quarter
Downtown Doral has all approvals in place for its master planned city
2013, ownership announced its repositioning of the asset to market the
center at the site of the Doral Center office park. This redevelopment
space for multi-tenant office use via a $1.5 million renovation
into an upscale office, residential and retail village will result in the
(Globest.com).
demolition of all 26 Class B and C buildings. When completed, this will
mean that a total of 1.0 million square feet of office space will have
Doral Court’s largest contiguous office is 20,000 square feet on its
disappeared from the market.
second floor. Leasing activity at midyear included a near 16,000
square foot renewal for SunTrust. Pricing for the Class B spaces are
Even after the Downtown Doral redevelopment project is completed,
$22.00 per square foot, full service.
the office park will retain its 400,000 square feet of existing Class A
product. As part of the redevelopment, another 400,000 square feet
Nearly 53,000 square feet is being marketed at the 60,000 square foot
are proposed.
Class B 8550 N.W. 33rd Street building, with the majority available for
occupancy in January 2014. The largest contiguous office is located on
At the two-building, Class A Doral Corporate Center project, the largest
the top two floors totaling nearly 32,000 square feet. Situated about
contiguous office remains at 10,000 square feet. Combined, the
one mile south of the Downtown Doral development, the asking rate
project’s occupancy rose from first quarter 2012’s 63.0 percent to the
had been $25.50 plus electric but was reduced to the current $22.00 to
current 76.0 percent, unchanged from first quarter 2013.
$24.00, net of electric this quarter.
Leasing this quarter at Doral Concourse reduced what was one of the
Airport’s largest contiguous offices, from 41,000 square feet to 30,000
square feet. Located on the fifth floor, the Class A asking rate remains
at $29.00 per square foot, full service.
56
Miami Airport
The Waterford office park also has what is known as its “20-acre core
site” – the final build-out of three additional Class A buildings totaling
800,000 square feet. Accompanying support amenities are proposed
to include a hotel, retail, restaurants and a health club component.
Except for the Burger King headquarters, most of their office product
has been built on speculation. TIAA-CREF is one of the market’s
largest commercial real estate owners with approximately 4.0 million
square feet of both office and retail space spread out through MiamiDade County.
In midyear 2009, Shoma Development completed a 231,500 square foot
Class A office building on a portion of the former Ryder System
headquarters’. Part of a master-planned site, One Park Square at Doral
Starboard Cruise Services
Doral Concourse
Univsion
Brinks
Magellan Health Services
Whirlpool
SunTrust
35,000 square feet as its largest contiguous office. Located in Building
II on the fourth floor, the space will be available for occupancy by yearend 2014.
By midyear 2013, the Miami Herald relocated from Downtown into their
new office headquarters building located just south of the Doral Country
Club at 3511 N.W 91st Avenue. This was the former U.S. Military’s
Southern Command Center and is renamed “Miami Herald
Headquarters”. While the Herald is the sole tenant, its 45,000 square
Hilton International
16,000 s.f.
13,000 s.f.
Waterford
9250 N.W. 36th Street
(Former Amadeus Center)
5505 Blue Lagoon
(Burger King HQs Sublet)
Flagler Station-Building 1300
Class B
187,000 s.f.
Class A
73,000 s.f.
Class A
40,000 s.f.
lease for Smart Start was executed during midyear 2013 leaving 37,000
Miami Herald Headquarters
square feet as available. The asking rate remains at $22.00 per square
(Sublet)
available at five spaces per 1,000 rentable square feet.
16,400 s.f.
Doral Court
foot first floor had been marketed as a sublet. An 8,000 square foot
foot, full service, with term up to 10 years. An extensive parking ratio is
24,000 s.f.
Airport Corporate Center
from 2012’s 60.0 percent to over 70.0 percent currently, the largest
Doral Costa Office Park, a 280,000 square foot Class A asset, has
26,000 s.f.
Flagler Station
Waterford
(seventh floor, comprising 27,000 square feet).
33,000 s.f.
Downtown Doral
is an 11-story office building with ground floor retail. With occupancy up
contiguous office has been reduced from three floors to the one floor
51,000 s.f.
Doral Costa Office Park
Class B
37,000 s.f.
Class B
35,000 s.f.
Airport Corporate Center
Class A
30,600 s.f.
Doral Concourse
Class A
30,000 s.f.
57
Miami Airport
While geographically outside of the competitive set, Flagler Station
Demand
offers three multi-tenant buildings in its office park located northwest of
Year-to-date net absorption for the entire market was small but positive
the airport in Medley. In a park comprised largely of industrial product,
at 31,000 square feet. The Class A segment captured all of the new
the development can eventually accommodate up to 10 million square
occupancy (nearly 51,000 square feet) while Class B buildings posted a
feet – 550,000 of which can be office space. Presently, the 950-acre
combined negative 19,000 square feet.
campus has 3.5 million square feet of existing space. The first two
office buildings (built in 2006 and 2007) total 118,000 square feet each,
Posting the largest Suburban transaction this quarter, Starboard Cruise
both of which are virtually leased up. Availabilities at Building 1300
Services renewed and expanded their offices for 51,000 square feet at
were reduced this quarter with the largest contiguous office now totaling
Doral Concourse. The firm is owned by the multi-national company
40,000 square feet. The asking rate for the space is $24.50 per square
LVMH Moët Hennessy. Louis Vuitton is the world’s leading luxury
foot. The project offers a generous parking ratio of 5/1,000 square feet.
brand group.
The park is also the location for Ryder Systems’ 250,000 square foot
headquarters facility.
At the TIAA-CREF Class A Waterford portfolio, year-to-date leasing
totaled 167,000 square feet of executed transactions of new, renewal
Just south of the general market boundary less than a mile from the
and expansion activity. Airbus will relocate into 10,000 square feet at
intersection of the S.R. 836 and S.R. 826 expressways, is 8700 West
the 5201 building. The space had been available as sublease (former
Flagler (Flagler West Corporate Park), a 126,000 square foot Class B
offices for TAM Airlines). Airbus is the world’s leading aircraft
asset marketing an 8,200 square foot, second floor office as the largest
manufacturer. Additional quarterly leasing activity included Yamaha for
contiguous space. Asking rates remain at $22.00 per square foot, full
7,600 square feet and airline catering group, Gate Gourmet, who will
service, a quote which has remained consistent for the last two years.
occupy a new 4,500 square foot office. Two additional Latin America
Typical of this submarket’s generous parking allotment, the building
business users also executed leases: Wireless Latin America for 3,000
offers a standard 4:1,000 ratio with additional visitor spaces adjacent to
square feet and the Central American Pepsi Bottling Company for
the onsite retail pad including retailers such as CVS, Panda Express,
1,100 square feet.
Chicken Kitchen and Sir Pizza.
Leasing at Waterford’s Atrium buildings (part of the MetLife portfolio)
Outside of the submarket core on its western-most boundary at the
included a 9,700 square foot renewal for CFA and a near 8,400 square
Florida Turnpike is Procacci’s Crossroads at Dolphin Commerce Center.
foot lease for the relocation of Hotel Connections’ headquarters to the
Crossroads is a 100-acre park existing of mostly industrial, flex and the
6100 building. Another 14,400 square feet were executed in the
recently built office product. The near fully occupied office portion of the
Waterford West buildings, the largest of which was Verizon Wireless’
development includes two three-story, 83,000 square foot buildings
renewal for 7,900 square feet followed by a 2,800 square foot renewal
which opened in 2008 and a new 90,000 square foot build-to-suit
and expansion for Mary Oliva Wealth Management.
building which opened in early 2011 for Keiser University. This was an
expansion for the school, marking a relocation from 33,000 square feet
5820 Blue Lagoon is also located in the Waterford Park but not part of
in the Kendall submarket. Another 270,000 square feet remain
the aforementioned institutional portfolios. Leasing at this Class B
proposed for the park. During first quarter 2013, a small but new
asset included a 10,000 square foot renewal for Windhaven Insurance
sublease was being marketed for 6,200 square feet (University of
and a new lease execution for the law firm of Gimenez & Carrillo, who
Phoenix space) located on the first floor of the 11410 N.W. 20th Street
will occupy 6,000 square feet.
building. Term is through May 2015.
58
Miami Airport
Also separate from the above institutional ownership, Waterford Centre
The 8700 West Flagler Class B asset executed a 9,600 square foot
(6205 building) welcomed Whirlpool in a 16,400 square foot new lease
lease this quarter, welcoming new user American Eldercare. The firm
this quarter. Whirlpool relocated from within the Waterford park.
will relocate to the building by third quarter 2013.
Waterford Centre, owned by New Boston Fund, is virtually leased up.
Also on the Class B front, Airport Financial Center executed nearly
Completed leases at Airport Corporate Center totaled 47,000 square
22,000 square feet this quarter. Among the largest leases was The
feet this quarter for both Class A and Class B product. Among the
Miami Association of Realtors’ renewal for 10,500 square feet.
largest was the Class A renewal and expansion for Magellan Health
AFSCME, the nation’s largest and fastest-growing public services
Services at 24,400 square feet while Gannett Fleming renewed its Class
employees union executed a lease for nearly 6,500 square feet. In
A office space for 6,500 square feet. Among Class B buildings, Health
addition, Subway executed a 5,000 square foot office lease.
Start signed a new lease for nearly 8,000 square feet.
Lennar expanded by 7,700 square feet this quarter at their namesake
Class A transactional activity at Downtown Doral included the 33,000
park in the 703 building.
square foot renewal for Univision at the Class A Davenport building
while a relocation from within the park to the Class A Dawson building
Miami Children’s Hospital began their 100,000 square foot tour this
was transacted for Kyosera, who also expanded for a total of 7,200
quarter. This is a world renowned children's hospital and home to the
square feet. Additional leasing at Dawson included a 6,300 square foot
largest pediatric teaching program in the Southeastern U.S. Also new
renewal for Mediterranean Shipping and a 5,000 square foot renewal for
as of the beginning of the year was a 15,000 square foot requirement
Michell Consulting Group.
for Univision Radio (currently a Suburban Coral Gables user) while the
Guardianship Program of Dade County has a 10,000 square foot
In one of the top transactions executed year-to-date, Brinks will occupy
search (presently located in Doral). Robert Half International also
26,000 square feet at Flagler Station’s Building 1300. This was a new to
began touring last quarter for up to 7,000 square feet, both here and in
market requirement for the global leader of security-related services.
Coral Gables.
Another near 18,000 square feet in leases were also executed, including
the largest (9,600 square feet) for new user Ficosha.
A new to market, 50,000 square foot corporate headquarter search
began this quarter for an undisclosed user. Although touring all three
At the Class A Doral Corporate Center, two small leases were executed:
South Florida counties, the user does have a larger parking
Easy Home Realty, a new transaction for 2,200 square feet and a
requirement ratio of five spaces per 1,000 square feet. In addition,
renewal was signed for Biscayne Bank totaling 2,100 square feet.
Gables user, DentaQuest, began their 15,000 square foot search.
AARP also has a new requirement as of midyear 2013 for up to 5,000
Nearly 10,000 square feet were executed at One Park Square, the
largest being Remasur USA’s diagnostic center for over 6,000 square
feet. In addition, Kforce Staffing and TravelMax USA each leased
approximately 2,000 square feet.
square feet.
59
Miami Airport
Additional prospects touring the market include:
Over the last quarter, Airport Corporate Center’s Class A base triple net
quote (on the low end) was increased at first quarter 2013 from $13.00
- U.S. Gas & Electric for up to 50,000 square feet
to $13.25 per square foot but was down from $14.00 to the current
- Florida Career College for up to 40,000 square
$13.50 per square foot on the higher end of the quoting spectrum.
- ADP for up to 25,000 square feet
Class A operating expenses now range from $13.65 to $13.90 per
- MGM Latin American for an expanded requirement of 24,000
square foot. For Class B buildings, triple net quoted rents were up over
the quarter from $9.00 to $9.25 per square foot, with operating
square feet
- ITE for up to 15,000 square feet
expenses reduced somewhat to $12.64 - $12.83 per square foot range.
All rates remained in effect through midyear.
Pricing
Rental rates at the TIAA-CREF owned Waterford buildings typically
At the new 8333 Downtown Doral building, pricing was reduced during
remain among the highest quoted due primarily to the quality of the
third quarter 2010 from $22.00 to $23.00 per square foot, triple net and
Class A product and its preferred location. While asking rates were
remains at the current $19.00 to $20.00 per square foot. Operating
reduced at midyear 2010, they have been increased by approximately
expenses range from $10.73 to $11.16 per square foot. Look to quotes
$1.00 per square foot and remain unchanged to the present. Operating
ranging from $22.00 to $25.00 per square foot at the park’s remaining
expenses for the 701, 703 and new 1000 buildings range from $9.50 per
Class A assets. Asking rates for the park’s Class B product
square foot to $11.00 per square foot. For the 5200, 5201 and 5301
(Charleston and Rochester buildings) dropped at midyear 2009 from
assets, the expenses are higher at $11.25, $12.25 and $13.00 per
$19.95 and also remain in the current range of $17.50 to $18.50 per
square foot, respectively.
square foot, full service.
Building
Full Service Asking Rate
Triple net pricing at One Park Square remains at $21.00 to $23.00
701
$31.00 p.s.f.
per square foot with a $10.55 operating expense – unchanged from
last year.
703
$31.00 p.s.f.
1000
$31.50 p.s.f.
5200
$29.75 p.s.f.
Lennar Corporate Center continues to maintain quoted rates of $25.00
5201
$29.75 p.s.f.
per square foot, full service.
5301
$25.25 p.s.f.
Reduced rates were implemented in early 2010 at the free-standing
Restructured year-end 2012 pricing at the Class B West Waterford
Class A Doral Corporate Center project and remained unchanged
buildings increased their full service asking rates which had remained
through midyear 2013. While quotes are on a triple net basis, the
unchanged since 2009 from $24.00 to $25.00 to the current $25.00 (for
grossed up full service rates are $24.50 to $25.05 per square foot.
the 5000 series buildings) to $26.00 (for the 6000 series buildings) per
During the early part of 2009, the quote was $28.00+/- per square foot.
square foot. Pricing for the Atrium buildings still remains at $17.00 per
.
square foot, triple net, with operating expenses ranging from $11.57 to
60
Miami Airport
Trends
Look to new retail product via a proposed 235,000 square feet mall to
New construction product now includes an 80,000 square foot office
be anchored by Wal-Mart. A joint venture between Canyon-Johnson
building located at 3895 N.W. 107th Avenue. To be delivered by fourth
Urban Fund and WSG Development, the project is located south and
quarter 2013, the development is known as Doral Park Centre which is
west of the three major office parks at West Flagler and S.W. 87th
part of a larger (200,000 square feet) mixed-use project that will include
Avenue. Named Fontainebleau Park Plaza, completion is scheduled
20,000 square feet of ground floor retail in the office building now
by third quarter 2013 (South Florida Business Journal, Business Wire).
underway, three hotels, free-standing retail, restaurants and banks. To
date, 15,000 square feet has been pre-leased to San Ignacio College for
The mixed-use portion at One Park Square is back on the development
10,000 square feet on the building’s third floor and 3,800 square feet on
schedule with proposed uses to include 150 single family homes,
the ground floor for a gym and beauty salon. At midyear 2013, the
nearly 400 multi-family units and additional retail. No construction
asking rate was $25.00 per square foot, net of electric. The largest
dates have yet to be determined.
contiguous space being marketed is located on floors three through five
totaling approximately 50,000 square feet. Retail amenities will also
A significant, upscale Terra Group residential community will span 90
include health oriented eatery, Evos, Firehouse Sub Sandwiches and
acres between N.W. 97th and 107th Avenues and N.W. 74th Street.
New York Bagel and Deli. The project is located west of the three major
Known as Doral Commons, two gated communities will comprise 300
office parks, within one mile east of the Florida Turnpike.
large (3,000 to 4,000 square feet) single family homes ranging from
$600,000 to $1.0 million. A 150,000 square foot grocery anchored
This submarket is the prime Suburban hub for international firms and
shopping center is also planned. Terra Group also has residential
firms doing business internationally. Within the Waterford office park
development plans for another 100+ acres in Doral which will include
alone, there are over 100 multinational occupiers.
Vintage Doral with 170 homes, Doral Cay with160 homes and Las
Ramblas with 330 homes (Miami Herald, Miami Today).
Many of the leases executed this year have been in the market or up for
renewal for two or more years. As for current leasing activity, Suburban
Improving market fundamentals among competitive Class A product,
landlords are reporting a continuation of lengthy negotiations and
particularly in the three competitive parks, will diminish concessions,
delayed executions.
with a strong emphasis by some landlords on eventually discarding or
severely reducing the need for free rent. In a continuation from early
The most recent residential project underway includes The Signature
2012, rent abatement at Waterford’s Class A product is being offered
(formerly Lakeside) at Doral. Scheduled for completion by late 2013,
solely “outside of the term”. Holding the line on concessions, expect
the project will include 350 units accompanied by 50,000 square feet of
less than one month of rental abatement per each year of term.
retail/commercial space. The apartment development is situated on the
western most boundary of the submarket, just one mile west of the
Within the TIAA-CREF owned segment of the park, design plans have
under construction Doral Park Centre development. It is at the
been completed for the next 250,000 square foot building on TIAA-
intersection of the Florida Turnpike on N.W. 117th Avenue and N.W.
CREF’s core Waterford development site (near the 701 building).
41st Street.
Pending market demand fundamentals, no construction schedule has
yet to be finalized.
61
Miami Airport
The Downtown Doral redevelopment completed Doral’s City Hall at
With extensive upgrades and expansion at and related to Miami’s
midyear 2012. In addition, Cordoba II, the second apartment building
International Airport, adjacent commercial development is proposed.
was completed in 2013. This is a 224-unit development. The park’s
Back in the news again during first quarter 2013, is the proposed
revitalization efforts are coming to fruition with visible amenities
public/private $500+ million development for “Airport City” located east
attracting office users, especially those business support services
of the airport. Awaiting approval, construction is to include:
related to City Hall government.
 Up to 1.0 million square feet of office/business space
The retail phase at Downtown Doral will now begin in 2014. Located at
 Two potential hotels
N.W. 87th Avenue and N.W. 53rd Street, 80,000 square feet will include
 A seven-acre parcel for retail use
a combination of restaurants and tenant support amenities.
In the makings for over five years, this would be a seven-year, phased
Across the street from Downtown Doral is the world-renowned Doral
development which encompasses 40.0+ acres to include: $359 million
Golf Resort & Spa which hosts the annual PGA tour and is the anchor
business center with corporate offices, hotel and a new MIA mover train
amenity for the city. During 2012, Donald Trump agreed to purchase
station; $141 million hospitality, luxury hotel/dining facility and a $12
the asset out of bankruptcy for $150 million. This is the largest of
million convenience center of retail/service uses. The last phase of
Trump’s hotels and the firm will run the property. Look to significant
development would be the office segment. There will be a connected
upgrades as the new owner will embark upon a $250 million “total gut
walkway to the airport’s North Terminal (Miami Herald, Miami Today).
down to the steel” remodel in an effort to garner a five-star status for the
property which will be renamed Trump National Doral (Miami Herald).
Following last quarter’s sale and announced upgraded renovation of The
Hotel Sofitel Miami located in the Waterford office park, the Miami
Herald has announced two noteworthy Starwood lodging facilities for
this submarket:
 Its first Miami “Aloft” brand marketed as “affordable and hip”, the
145-room hotel opened less than two miles west of the Downtown
Doral office park (just east of Florida’s Turnpike).
 Expected to begin construction this year will be Starwood’s “ecofriendly’ Element Miami International Airport hotel. This 139-room
hotel will be located on an adjacent parcel to the Aloft.
Jones Lang LaSalle • Office Outlook • Miami • Q2 2013 • Appendix
Miami appendix
Statistics
New construction
Sales
Glossary
Contacts
Jones Lang LaSalle • Miami Office Outlook • Q2 2013 • Appendix
Miami Statistics
Inventory (sf)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
0
9,127,576
57,798
166,738
52,236
152,036
1.7%
1,795,281
19.7%
1,854,181
20.3%
$40.40
0
0
4,394,524
14,999
54,387
4,787
48,015
1.1%
683,528
15.6%
694,066
15.8%
$25.96
0
0
13,522,100
72,797
221,125
57,023
200,051
1.5%
2,478,809
18.3%
2,548,247
18.8%
$35.46
0
Class A
0
11,911,555
48,235
93,948
44,416
82,774
0.7%
1,995,170
16.7%
2,117,355
17.8%
$32.03
0
Class B
0
10,547,015
-29,143
-12,595
-24,448
-15,777
-0.1%
1,921,196
18.2%
1,980,782
18.8%
$24.78
80,000
Totals
0
22,458,570
19,092
81,353
19,968
66,997
0.3%
3,916,366
17.4%
4,098,137
18.2%
$28.61
80,000
Class A
0
21,039,131
106,033
260,686
96,652
234,810
1.1%
3,790,451
18.0%
3,971,536
18.9%
$35.90
0
Class B
0
14,941,539
-14,144
41,792
-19,661
32,238
0.2%
2,604,724
17.4%
2,674,848
17.9%
$25.17
80,000
Totals
0
35,980,670
91,889
302,478
76,991
267,048
0.7%
6,395,175
17.8%
6,646,384
18.5%
$31.41
80,000
YTD
completion (sf)
Class A
Class B
Totals
Under
Average asking construction /
rent ($ psf) renovation (sf)
CBD
Suburban
Market Totals
CBD
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
4,360,806
48,206
2,101,711
-15,343
146,537
47,102
-1,362
-25,555
0
6,462,517
32,863
145,175
Class A
0
Class B
0
4,766,770
9,592
2,292,813
30,342
Totals
0
7,059,583
YTD
completion (sf)
Inventory (sf)
Class A
0
Class B
0
Totals
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
Under
135,375
3.1%
838,332
19.2%
871,104
20.0%
$42.44
0
-7,734
-0.4%
275,819
13.1%
286,357
13.6%
$31.20
0
21,547
127,641
2.0%
1,114,151
17.2%
1,157,461
17.9%
$39.09
0
20,201
5,134
16,661
0.3%
956,949
20.1%
983,077
20.6%
$38.88
0
55,749
30,342
55,749
2.4%
407,709
17.8%
407,709
17.8%
$23.16
0
39,934
75,950
35,476
72,410
1.0%
1,364,658
19.3%
1,390,786
19.7%
$33.04
0
Brickell
Downtown
Market Totals
Class A
0
9,127,576
57,798
166,738
52,236
152,036
1.7%
1,795,281
19.7%
1,854,181
20.3%
$40.40
0
Class B
0
4,394,524
14,999
54,387
4,787
48,015
1.1%
683,528
15.6%
694,066
15.8%
$25.96
0
Totals
0
13,522,100
72,797
221,125
57,023
200,051
1.5%
2,478,809
18.3%
2,548,247
18.8%
$35.46
0
Suburban
YTD
completion (sf)
Inventory (sf)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
Direct
vacancy (sf)
Direct
vacancy (%)
Total vacancy
(sf)
Total vacancy
(%)
Under
Aventura/North Miami
Class A
0
686,280
5,648
11,876
5,648
11,876
1.7%
135,118
19.7%
135,118
19.7%
$39.11
0
Class B
0
372,662
-907
-9,501
-907
-9,501
-2.5%
38,375
10.3%
38,375
10.3%
$35.58
0
Totals
0
1,058,942
4,741
2,375
4,741
2,375
0.2%
173,493
16.4%
173,493
16.4%
$38.12
0
Class A
0
515,216
-1,519
10,148
1,143
12,810
2.5%
37,027
7.2%
42,571
8.3%
$32.21
0
Class B
0
378,798
-3,487
-9,201
-3,487
-9,201
-2.4%
39,096
10.3%
39,096
10.3%
$28.44
0
Totals
0
894,014
-5,006
947
-2,344
3,609
0.4%
76,123
8.5%
81,667
9.1%
$30.37
0
Class A
0
3,720,580
13,873
23,617
14,273
13,662
0.4%
857,497
23.0%
875,952
23.5%
$35.59
0
Class B
0
1,815,252
-3,326
-6,105
-4,890
-7,669
-0.4%
231,019
12.7%
232,583
12.8%
$28.33
0
Totals
0
5,535,832
10,547
17,512
9,383
5,993
0.1%
1,088,516
19.7%
1,108,535
20.0%
$33.75
0
Coconut Grove
Coral Gables
Kendall/Dadeland
Class A
0
1,042,137
1,010
-10,731
1,010
-7,731
-0.7%
211,869
20.3%
211,869
20.3%
$33.69
0
Class B
0
1,807,099
8,084
9,716
7,853
9,485
0.5%
261,474
14.5%
268,193
14.8%
$24.10
0
Totals
0
2,849,236
9,094
-1,015
8,863
1,754
0.1%
473,343
16.6%
480,062
16.8%
$28.06
0
Class A
0
4,839,666
25,164
57,483
18,283
50,602
1.0%
608,931
12.6%
707,117
14.6%
$27.72
0
Class B
0
4,400,097
-25,895
-18,057
-19,405
-19,444
-0.4%
1,052,030
23.9%
1,103,333
25.1%
$22.39
80,000
Totals
0
9,239,763
-731
39,426
-1,122
31,158
0.3%
1,660,961
18.0%
1,810,450
19.6%
$24.85
80,000
Miami Airport
Miami Beach
Class A
0
793,329
-2,141
-2,615
-2,141
-2,615
-0.3%
62,642
7.9%
62,642
7.9%
$36.32
0
Class B
0
1,142,712
2,905
3,955
2,905
3,955
0.3%
154,326
13.5%
154,326
13.5%
$33.22
0
Totals
0
1,936,041
764
1,340
764
1,340
0.1%
216,968
11.2%
216,968
11.2%
$34.09
0
Suburban (continued)
Direct net
absorption (sf)
YTD
direct net
absorption (sf)
Total net
absorption
(sf)
YTD total net
absorption
(sf)
YTD total net
absorption
(% of stock)
6,200
4,170
-6,517
16,598
20,768
YTD
completion (sf)
Direct
vacancy (sf)
Direct
vacancy (%)
Inventory (sf)
Class A
0
314,347
6,200
4,170
Class B
0
630,395
-6,517
16,598
1.3%
82,086
2.6%
144,876
Totals
0
944,742
-317
20,768
-317
2.2%
Class A
0
11,911,555
48,235
93,948
44,416
Class B
0
10,547,015
-29,143
-12,595
-24,448
82,774
-15,777
Totals
0
22,458,570
19,092
81,353
19,968
66,997
0.3%
Under
Total vacancy
(sf)
Total vacancy
(%)
26.1%
82,086
26.1%
$24.85
0
23.0%
144,876
23.0%
$21.88
0
226,962
24.0%
226,962
24.0%
$23.12
0
0.7%
1,995,170
16.7%
2,117,355
17.8%
$32.03
0
-0.1%
1,921,196
18.2%
1,980,782
18.8%
$24.78
80,000
3,916,366
17.4%
4,098,137
18.2%
$28.61
80,000
Miami Lakes
Market Totals
Miami Suburban under construction
Market/building
Class
Developer/owner
RBA
Pre-leased
80,000 s.f.
18.8%
80,000 s.f.
18.8%
Major tenants signed
Average
quoted rent
Delivery
date
$26.00/FS
4Q 2013
Suburban
Miami Airport
3895 N.W. 107th Avenue
Suburban totals
B
B & Jcm Doral
Development
San Ignacio College; Day Care Center
Miami CBD – Proposed Construction
Market/building
Class
Developer/owner
RBA
Pre-leased
Major tenants signed
Average
quoted rent
Delivery
date
CBD
Brickell
Brickell CitiCentre
A
Swire Properties
120,000 s.f.
0.0%
N/A
N/A
4Q 2015
A
Espacio USA
102,185 s.f.
0.0%
N/A
N/A
3Q 2015
222,185 s.f.
0.0%
Downtown
AIR 1400 Biscayne
CBD totals
Jones Lang LaSalle • On Point • Miami Office Outlook • Q2 2013 • Appendix
Miami select sales
Coral Gables (Suburban) – BAC Colonnade
Class
RBA
Miami Beach (Suburban) – Lincoln Place
A
205,195 s.f.
Buyer
TA Associates Realty
Seller
Deka USA
Price per s.f.
Date sold
$395.00
June 2013
Class
RBA
Buyer
A
139,887 s.f.
Parkway Properties
(Orlando)
Seller
16th Street Partners
(Managed by LNR, now Starwood)
Price per s.f.
Date sold
$472.00*
May 2013*
*Sale pending
Brickell (CBD) - XX
Glossary
Common real estate terms
Active requirements: Tenants actively seeking space in the market
Effective rent: The rental rate actually achieved by the landlord or
tenant after deducting the value of concessions from the base rental rate
Average asking rent: Quoted at a gross price exclusive of tenant
paid; usually expressed as an average rate over the term of the lease
electricity based on a weighted average of available space
Face rental rate: The “asking” or nominal rental rate published by
Available space: Existing space that is being actively marketed for
the landlord
immediate or future occupancy, including both direct and
sublease space
Gross leases: The quoted rents include tax and operating costs
(property taxes, insurance and maintenance expenses)
Build-out: The cost of configuring and finishing new space in
accordance with a tenant’s specifications
Hard cost: The cost of actually constructing property improvements
Indirect (soft) costs: Development costs other than material and labor
Build to suit: A method of leasing property whereby the landlord builds
costs, which are directly related to the construction of improvements,
a new building in accordance with a tenant’s specifications
including administrative and office expenses, commissions,
architectural, engineering and financing costs
Capital improvement: Any major physical development or
redevelopment to a property that extends the life of the property.
Lease: A legally binding agreement whereby the owner of real property
Examples include upgrading the elevators, replacement of the roof and
(i.e., landlord) gives the right of possession to another (i.e., tenant) for a
renovations of the lobby
specified period of time (i.e., term) and for a specified consideration
(i.e., rent)
Class: Building classification system broken down by Trophy, Class A,
B and C buildings. Location, building amenities, mechanical / HVAC
Leased space: Existing space under contract, regardless of if it is
systems, age of building and tenant roster are some of the components
occupied; also includes subleased space
that determine an office building's class
NNN leases: The quoted rents do not include tax and operating costs
Concessions: Cash expended by the landlord in the form of rent
(property taxes, insurance and maintenance expenses)
abatement, build-out allowance or other payments to induce the tenant
to sign a lease. The level of concessions fluctuates with supply and
Net absorption: Net change in occupied space between two dates
demand conditions in the market and is up for negotiation in a similar
measured as square footage. (i.e. a measure of the total square feet
fashion to rental rates
leased over a period of time taking into consideration office space
vacated in the same area during the same period)
Contiguous space: Adjoining office space
Occupied space: Total supply minus available space
Delivered buildings: Buildings that have completed construction and
are ready for tenant build-out. May or may not yet have a Certificate
Operating expense: The actual costs associated with operating a
of Occupancy
property, including maintenance, repairs, management, utilities, taxes
and insurance
Direct rent: Rents quoted directly from the landlord on vacant space
Preleased space: Space that has been leased prior to construction
completion date or Certificate of Occupancy date
Proposed construction: Buildings are proposed when permits are in
place, site is being actively marketed but significant base building has
not yet commenced. Proposed asking rents are not included in
market calculations
Shell space: The interior condition of the tenant's usable square
footage when it is without improvements or finishes. Shell construction
typically denotes the floor, windows, walls and roof of an enclosed
premises and may include some HVAC, electrical or plumbing
improvements but not demising walls or interior space partitioning
Sublease space: Leased space that is being actively marketed by the
tenant under contract to another party
Tenant at will: One who holds possession of premises by permission of
the owner or landlord, but without agreement for a fixed term
Tenant improvement allowance (TI): Improvements to land or
buildings to meet the needs of tenants. May be new improvements or
remodeling, and may be paid for by the landlord, the tenant, or shared
Total supply: The entire area of an office building comprised of both
usable space and an allocated portion of the common area
Turn key project: A project in which the developer is responsible for
the total completion of a building (including interior design and
construction) or demised premises to the customized requirements of a
future owner or tenant
Under construction: Buildings are under construction when significant
work is underway from ground up development (i.e. steel is going up)
Under renovation / rehab: Buildings are under renovation / rehab
when significant base building renovation is underway
Vacant space: Direct existing space being actively marketed for
immediate occupancy as of the survey date, not including
sublease space
Miami contacts
Research
Jorge L. Morales, CCIM
Catarina Jimenez
Roberta C. Steen
Vice President
Vice President
Senior Market Analyst
+1 305 603 1311
+1 305 728 7396
Grant Killingsworth
Donald Cartwright
Leasing and Management
Senior Vice President
Kurt R. Keaton
+1 305 423 4701
+1 305 347 5260
Jeff Sharmat
Jonathan Kingsley
Vice President
+1 305 439 7070
+1 305 728 3690
South Florida
Regena Blue
Nicole Vassilaros
+1 305 416 5105
Leasing Assistant
Vice President
+1 305 423 4704
+1 305 373 5235
Executive Vice President
Keith Edelman
Stephen Rutchik
+1 305 423 4701
+1 954 703 3313
+1 305 728 3692
Scott Goldstein
Kim Colquitt
+1 305 789 6505
Broker Associate
+1 305 728 3695
+1 305 728 7394
Gavin Macphail
Andrew Easton
+1 305 704 1338
Vice President
Broker Associate
+1 305 728 7393
+1 305 728-7398
+1 305 728 7390
Market Director, Florida
+1 407 872 7887
Steve Medwin, SIOR, CCIM
Managing Director,
Scott Strickland
Glenn H. Gregory
Noel Steinfeld
David Steinfeld
Vice President
+1 305 704-1402
Capital Markets
Jubeen Vaghefi
International Director
+1 305 789 6519
Denny St. Romain
Managing Director
+1 305 728 7395
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients
seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70
countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to
a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment
management business, LaSalle Investment Management, has $46.3 billion of real estate assets under management. For further information, visit
www.jll.com.
About Jones Lang LaSalle Research
Jones Lang LaSalle’s research team delivers intelligence, analysis, and insight through market-leading reports and services that illuminate today’s
commercial real estate dynamics and identify tomorrow’s challenges and opportunities. Our 350 professional researchers track and analyze
economic and property trends and forecast future conditions in over 70 countries, producing unrivalled local and global perspectives. Our research
and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives
successful strategies and optimal real estate decisions.
Jones Lang LaSalle
1221 Brickell Avenue
Suite 200
Miami, FL 33131
Tel: +1 305 728 3700
Fax: +1 305 728 3699
www.us.joneslanglasalle.com
©2013 Jones Lang LaSalle IP, Inc. All rights reserved. No part of this publication may be reproduced by any means, whether graphically, electronically, mechanically or otherwise howsoever, including without
limitation photocopying and recording on magnetic tape, or included in any information store and/or retrieval system without prior written permission of Jones Lang LaSalle. The information contained in this
document has been compiled from sources believed to be reliable. Jones Lang LaSalle or any of their affiliates accept no liability or responsibility for the accuracy or completeness of the information contained
herein and no reliance should be placed on the information contained in this document. Licensed Real Estate Broker.

2008 Firm Overview presentation - Miami Downtown Development

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