From left: David Martin, Aby Rosen, Jorge Perez, Barry Sternlicht, Victor Ballestas and Russell Galbut (Getty)
Related Group, Dacra’s Craig Robins, Terra’s David Martin, Starwood Capital and more than a dozen other developers expressed interest in building office projects on city-owned land in Miami Beach. But some question whether the demand will be strong enough years from now.
Last year, Miami Beach launched a request for letters of interest for a public-private partnership to redevelop the three parking lots next to Lincoln Road between Alton Road and Meridian Avenue. Combined, the land could be developed into more than 383,000 square feet of mixed-use office space. Voters would have to approve any project on city-owned land through a referendum.
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The city is seeking to capitalize on major wealth migration from the Northeast, California and other high-tax markets, and the subsequent movement of major finance and tech firms.
“Inbound business is the talk of the town,” said JLL broker Steven Hurwitz, adding that it has been more than a decade since a new large Class A office building has been built in Miami Beach, with the exception of Integra and Starwood’s project that is under construction.
“There has always been a concentration of decision makers who live on Miami Beach and want office space there,” Hurwitz said. “I think the city is feeling out through this process whether or not new Class A office will help to satisfy that demand. My question is how much do we need?
Miami Beach had about 634,000 square feet of Class A inventory in the fourth quarter of 2020, according to a JLL report. The vacancy rate in Miami Beach was 15.8 percent, which is lower than the county’s total vacancy rate of 18.1 percent. Yet, office vacancy rates rose throughout South Florida due to the pandemic, according to Colliers International.
A total of 17 developers responded to Miami Beach’s RFP with letters of interest:
- 13th Floor Investments
- Adler Group
- Dacra
- Andalex Capital
- Comras Company and Terra
- COO Premium Development
- Sterling Bay, Place Projects and Deco Capital Group
- David Mancini & Sons
- East End Capital
- Integra Investments and Starwood Capital
- Mangrove Real Estate Partners, Tricera Capital and Sasaki
- Northwood Acquisitions and Northwood Investors
- Oak Capital Group
- R&B Realty Group
- Related Group
- Aby Rosen and Michael Michael Fuchs’ RFR Holding LLC (submitted after the deadline)
- Galbut Family Office (submitted after the deadline)
Following a request for proposals, the earliest residents could vote on a project would be later this year, and then the winning developer would have to seek city approvals. The new office buildings would include on-site parking garages.
Martin of Terra pointed to the limited supply of undeveloped land in Miami Beach and called the Lincoln Road area the barometer of the city’s economy. He said the project could be completed in phases, with the first building completed about three years from a referendum vote. Martin submitted a letter jointly with Michael Comras’ firm.
“We want to be design driven and think about what the ground-floor experience is, and how that relates to the neighboring properties,” Martin said. “For us, that ground-floor experience is as important as the building itself.”
Terra is developing other projects in Miami Beach, including the Miami Beach Convention Center Hotel with Jackie Soffer and Robins, and the 500 Alton Road development with Russell Galbut.
Victor Ballestas, whose firm Integra submitted a letter of interest in conjunction with Barry Sternlicht’s Starwood Capital Group, said that while he can’t predict what the future office demand will be, “We’re headed in the right direction for this type of demand.” In addition to working on Starwood’s new headquarters, Integra is renovating the office building at 1674 Meridian Avenue, just north of one of the city lots.
Miami-based Related, which also submitted a letter of interest, recently received approval from the city for a Class A office project on Miami Beach’s Terminal Island.
Commercial broker Lyle Stern, vice president of the Lincoln Road Business Improvement District, said that new office space will stimulate new and existing retail, restaurants, arts and culture.
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“As great as the velocity has been on home sales, that will slow down,” Stern said. “How do we keep that fire burning?”