April 28, 2016
Blanca Commercial Real Estate today announced that noted real estate executive Cary Cohen has joined the firm as executive vice president. Cohen will oversee the continued expansion of the firm’s investment sales practice group.
April 28, 2016
Blanca Commercial Real Estate today announced that noted real estate executive Cary Cohen has joined the firm as executive vice president. Cohen will oversee the continued expansion of the firm’s investment sales practice group.
April 22, 2016
Like most working parents, I run around most of the time like a chicken with my head cut off. I want to do so much but I always feel like I could do more, especially for my community. Well, it’s National Volunteer Month so it’s a great time to take inventory of your life and see how you might be able to give back.
When I think of role models who give back, Tere Blanca immediately comes to mind. Tere is one of the few women in commercial real estate who has a proven track record and is well respected by men and women in her field. She is founder, president, and CEO of Blanca Commercial Real Estate, the leading independent full-service commercial real estate brokerage in South Florida. She’s a working mother AND she has held prestigious positions as past chair of The Beacon Council and member of the Board of Governors of the Greater Miami Chamber of Commerce among all kinds of other positions in the community. Tere’s company encourages volunteerism among its employees by underwriting the costs of charitable work, donating money to organizations her employees are involved with, and providing paid time off to volunteer.
Today, Tere is my guest blogger and I’m thrilled to have her weigh in on how she balances work, life, and volunteering. She can be reached at firstname.lastname@example.org
Tere’s Motto: Volunteerism Drives Business Success
At my company, our passion for social causes has proved one of our most important business differentiators and drivers, helping establish our business in the midst of the 2009 economic downturn and propelling our sustained growth.
The game-changing volunteering I’m referring to goes beyond writing checks, sitting on boards, and occasionally attending galas and events. It involves identifying causes near to our hearts that we are personally passionate about, rolling up our sleeves, and generously donating our time and talents to meaningfully advance the organizations’ missions.
I founded the firm on a non-negotiable pillar of giving back, encouraging volunteerism among all brokers and employees by underwriting charitable work, donating financial resources to the organizations we support, and providing paid time off to volunteer. This linked us with our community, giving us a close feel for its pulse, and enabling us to forge strong partnerships and networks while engaging on deep, human levels.
I did this simply because I wanted to give; I later realized it would drive incredible success, with some major national clients selecting us in part for our deep local community ties, having witnessed first-hand our abilities while involved in volunteer work or leading the charge to positively impact our community.
Another essential driver of business success is the ability to attract and retain talent, which also is enhanced through corporate social responsibility. Research shows most employees consider “contributing to society” indispensable for an ideal job. Millennials who participate in workplace volunteer activities are more satisfied and loyal.
Despite running a demanding business and raising a family, I have been able to find ample time to pour my heart into causes that deeply resonate with me. Often, I am asked, “How do you do it?”
Here is some of my best advice:
First, take a deep look within yourself and identify causes that you are truly passionate about. Identify the best organizations and opportunities that allow you to engage at a meaningful level in supporting those causes. Before committing, get to know the organizations and their boards well upfront to confirm there is a fit. As part of that process, develop an accurateunderstanding of the time commitment and expectations involved.
Next, understand how much time you can reasonably contribute every month and week. For first-timers, it is best to start small and build on your success. It is better to make meaningful contributions to one or two organizations than to join six boards and do a minimal amount of non-impactful work for each. This also avoids over-committing and letting folks down when you realize you cannot attend all the board meetings or have to withdraw from the organization.
Then, when you have decided what organizations you want to join, develop a written plan for your involvement. If you have marketing or public relations support at your company, it is helpful to engage their expertise in this process. Obtain a list of board meetings and key activities upfront and bake them into your calendar.
Most importantly, make sure your team at work and your family at home are well aware of these commitments and ready to support you when needed. Proper planning also can help you identify non-essential activities that may be delegated or cut from your schedule. Something as simple as ordering in dinner rather than preparing a meal can free up your evening. Also, do not be shy to ask for support from your family and co-workers; after all, community is a fabric woven of individual lives and efforts. When we all do our part, no matter how seemingly small or trivial, the whole is strengthened and bettered.
I find it inexcusable that South Florida ranks last among 51 major metros for its volunteer rate. It also is bad business. For example, when we support City Year Miami’s mission to help keep students in school and on track to graduate, ready for college and careers, we’re building a better tomorrow for everyone: one with a broader talent pool, lower crime rates that result in lower insurance costs, and a society that is better equipped to attract business investment, fuel economic growth and enjoy a higher quality of life.
To paraphrase Horace Mann, “Doing nothing for our community is the undoing of business.”
April 22, 2016
Cary Cohen Executive Vice President at Blanca Commercial Real Estate Cary Cohen will oversee the continued expansion of the firm’s investment sales practice group.
April 22, 2016
Signaling a growing client demand for investment sales services, Blanca Commercial Real Estate today announced that noted real estate executive Cary Cohen has joined the firm as executive vice president. Cohen will oversee the continued expansion of the firm’s investment sales practice group.
Cohen draws on 15 years of experience leading the disposition of more than 10 million square feet of property throughout his career. Prior to joining Blanca Commercial Real Estate, Cohen led the Florida operations for the Asset Solutions Group of Flagler Real Estate Services, where he focused on the disposition of commercial real estate.
The key hire comes amid a flurry of commercial real estate investment activity in Miami and South Florida, especially from out-of- state investors; in fact, New York firms alone have spent $586M in one square mile of downtown Miami in the past two years, about 56% of the total investment in this area. BCRE is representing one such investor, the New York private equity firm Brickman, after its recent acquisition of the downtown landmark Courthouse Tower.
“As we continue to meet increasing demand for first-class client service and deep market intelligence across a range of commercial real estate services as the sector evolves in Miami and South Florida, we are very pleased to welcome Cary, a respected thought leader and well-known industry heavyweight, to the team,” said Tere Blanca, president, CEO and founder of Blanca Commercial Real Estate. “With his experience and connections, we are confident that our investment sales practice group will continue to thrive and grow, offering clients the unsurpassed service and data-driven strategic direction on which we’ve built our reputation.”
Sharing the firm’s commitment to community service, Cohen takes an active role in key organizations working toward a greater good. He is a founding member of the Young Professionals benefiting Easter Seals, a graduate of the 2013 Leadership Miami class, and a member of the steering committee for P.A.T.C.H.E.S., a charity benefitting children with complex medical issues. He also serves the Salvation Army and Miami Rescue Mission.
Cohen received a bachelor’s degree in Government and International Relations from Clark University, where he graduated magna cum laude.
About Blanca Commercial Real Estate :Blanca Commercial Real Estate, the leading independently owned commercial real estate brokerage firm in South Florida, provides a complete range of brokerage and advisory services to owners and users of commercial real estate. Established in 2009, the firm is noted for delivering distinct client value through a unique methodology, data-driven insight, vast network and deep community roots. Practice areas include landlord representation, tenant representation, build-to- suit advisory services, and land/investment property acquisition and disposition. For more information, visit www.blancacre.com
April 15, 2016
There’s a certain attitude she’s looking for as she continues to grow her commercial real estate business.
MIAMI—Tere Blanca has accomplished plenty in her commercial real estate career—and moved through transition. Beyond spearheading Blanca Commercial Real Estate, she’s also a member of the board of directors of BankUnited and several other organizations.
GlobeSt.com caught up with Blanca to learn more about her goals moving forward, the opportunities she sees in the market, and how she’s leveraging these opportunities in this exclusive interview. You can still read parts one and two: Tere Blanca’s Serendipitous Start in Commercial Real Estate and Tere Blanca: I’m an Expert Juggler.
GlobeSt.com: What are your goals moving forward?
Blanca: We are focusing on continued growth through tenant representation, investment sales representing local and foreign owners and buyers, and developing various other target submarkets. Also, we’re committed to continuing to recruit bright, new talent. We look for team members who share our core values and commitment to exceptional client service, and who have a “can do” attitude and are creative solution-finders who don’t hesitate to forge new paths when necessary.
GlobeSt.com: What opportunities do you see in your market?
Blanca: Our greatest opportunity at Blanca Commercial Real Estate is to stay true to ourselves, to the unique blueprint which has defined our success: excellence in client service, a customized approach, exceptional market knowledge, and commitment to our community. We continue to see growing client demand for our services based on this formula, so we recognize there is a real market opportunity to continue to build and expand upon it.
GlobeSt.com: How are you leveraging those opportunities?
Blanca: Again, it’s essential that we develop our talent pool, recruiting and mentoring outstanding professionals who view the world through our same lens. As an example, we’re very excited to have just brought on a new team member, Cary Cohen, as executive vice president,
Cary is a distinguished industry leader who exemplifies these characteristics and brings a wealth of experience in the South Florida market, having been responsible for the sale of over 10 million square feet of property. And of course, we also will continue to expand our client relationships, cementing ties and expanding our service offerings with existing clients while developing new ones.
April 12, 2016
MIAMI—“I’m very fortunate that I haven’t faced some of the typical challenges that confront entrepreneurs who are trying to grow their businesses.”
Tere Blanca has seen her fair share of challenges during her commercial real estate career. The founder, CEO and chairman of Blanca Commercial Real Estate and former Cushman & Wakefield executive, has managed to thrive in the midst of adverse market conditions.
GlobeSt.com caught up with Blanca to talk about the challenge she’s faced and how she’s navigated them in part two of this exclusive interview. You can still read part one: Tere Blanca’s Serendipitous Start In Commercial Real Estate.
GlobeSt.com: What was the biggest challenge you’ve had to navigate in the commercial real estate industry?
Blanca: Commercial real estate is a business that requires a considerable investment of one’s time, energy and attention. Personally, the biggest challenge has been to juggle delivering the ultimate value to clients, while also tending to my team, family, and community. Thankfully, I’m getting to be an expert juggler and I believe that with careful planning, prioritizing, and time-management it is possible to have it all: a rewarding, successful career; a highly-motivated and expert team; a deeply committed and involved family life; and a meaningful role in helping our community.
I’m very fortunate that I haven’t faced some of the typical challenges that confront entrepreneurs who are trying to grow their businesses. Although commercial real estate is a very competitive industry, clients turn to us because of our all-out dedication to customer service and going the extra mile.
We customize our approach according to each client’s unique needs and objectives. We also pride ourselves in having exceptionally honed market knowledge that also helps advance our client’s goals. These have formed the blueprint to our success, enabling us to avoid many growing pains and challenges.
GlobeSt.com: How did you get through that challenge?
Blanca: In trying to juggle the daily requirements of work and family, I’m very fortunate to have an outstanding team at my firm as well as an incredibly supportive husband at home. My team at Blanca Commercial Real Estate is always ready to step in for me and similarly they know I am always there for them. And I’ve always shown to my daughters that they’re my priority, so they understand why I was not a homeroom mom at school.
They recognized that I always made it a priority to spend quality time with them, and that ultimately I have been committed to provide a great education and quality of life for them. I have always maintained a very close, positive relationship with my family, and those bonds have only grown stronger over the years.
As to avoiding many of the challenges faced by entrepreneurs in trying to grow their businesses, I’ve also greatly benefitted from the excellent advice and experience of high-level leaders in our community and my YPO/WPO colleagues who through the years have served as my mentors and sponsors.
April 7, 2016
“Well-meaning friends tried to discourage me, but I listened to my gut.”
Tere Blanca has over 25 years of experience in South Florida’s commercial real estate market. During that time, she’s done everything from land acquisition to master planning design and from construction, marketing and lease up to the sale of office and mixed-use assets.
Before launching Blanca Commercial Real Estate in 2009, she served as senior managing director for Cushman & Wakefield of Florida for five years. There she successfully led the firm’s South Florida operations, achieving significant revenue growth and increased profitability. Blanca also held the position of senior vice president at Codina Realty Services, ONCOR International where she was consistently among the top producers during her 14-year tenure.
GlobeSt.com caught up with Blanca, founder, president and CEO of Blanca, to learn more about her journey and the challenges along the way in this exclusive interview. Stay tuned for part two of this article, in which Blanca will share her career challenges and how she overcame them.
GlobeSt.com: How did you get your start in commercial real estate?
Blanca: It was purely serendipitous! I was in San Diego working in sales at a tech company and not feeling completely fulfilled, when a friend suggested commercial real estate. I looked into it and liked the fact that it would enable me to draw from my background in finance as well as my sales experience. I had the luck of a fantastic mentor who took me under his wing, and I absolutely fell in love with the industry! It was one of the best decisions I have ever made.
GlobeSt.com: What have been some of the key turning points in your career?
Blanca: Certainly a key turning point was opening Blanca Commercial Real Estate in April, 2009, during a time when the real estate market was in crisis. Well-meaning friends tried to discourage me, but I listened to my gut.
I felt that the time was actually ideal for starting my own firm and helping people who were in deep distress, navigating through incredibly difficult situations. They needed professionals like me who were willing to roll up their sleeves and see them through the storm.
But in many ways we also face turning points on a daily basis, in light of a myriad of factors including our firm’s continued growth, the nature of our dynamic industry, changing client needs, and emerging trends which include innovative technologies. The collusion of these elements creates ongoing turning points and an incredibly exciting ride.
March 31, 2016
From seeing an office building at CocoWalk to how mass transit affects office demand and whether we’ll ever see $100/SF office rents, here are five things we learned about the Miami office market at our South Florida Future of Office event last week.
Grass River Property’s Tom Roth (on right with Key International’s Dan Mathason) says the developer—which recently picked up the 198k SF open- air retail center CocoWalk in Coconut Grove in a JV with Federal Realty Investment Trust and Comras Co—is eyeing expanding the project with a
possible office offering. That’s on top of re-tenanting the project with more luxury retailers to match the affluent demographics of the area.
With Miami’s notorious traffic only growing worse as more and more residents move into the Downtown area, our panelists say office proximity to transit will become ever more critical for tenants. “Buildings that are closer to public transportation are going to be the winners,” says Swire Properties’Gonzalo Cortabarria (on right with Omni & Midtown Community Redevelopment Agency’s Pieter Bockweg). He says at the firm’s Brickell City Center project, where both the Metromover and Metrorail have stations, “that has been one of our highest selling points.”
Tom and Gonzalo were part of a panel of development luminaries that included Taylor & Mathis’ Brian Gale (who moderated), Key International Development’s Dan, Blanca Commercial Real Estate’s Tere Blanca and Pieter.
Tere—whose firm has been tapped by All Aboard Florida to lease the office in the 3M SF planned MiamiCentral mixed-use development—says the 280k SF of office there is already 60% pre-leased, in large part to demand to be located next to Tri Rail, Metrorail and Metromover stations. “We’re seeing users who are willing to pay a premium to be in a location that will offer that
connectivity to amenities and mass transit,” she says.
While Miami has become a true gateway city in the US, it likely won’t see rents reaching triple digits for office anytime soon. And partly that has to do with average wages. In cities like NYC, where average wages are very high, there is a commensurate increase in rents. “In Miami, we’re still not there,” Tere says. Still, rents for many landlords are reaching all-time highs in Miami. For instance, at 1450 Brickell Ave (below), a 580k SF downtown office tower, Blanca is already renewing and expanding tenants there for rents up to $65/SF, “and that is top of the market,” she says.
Gonzalo says rents are based solely on supply and demand, and with rising
land and construction costs, rents have to rise. But not just any office building can get developed today that would have top of the market rents. “In order for rent to grow up in a significant manner, there has to be some uniqueness of the product that makes it uncompetitive and cannot be replicated as well,” he says.
Tom says that with land prices the way they are, office is the least likely development in Downtown Miami. At least in pure form. “You’d [have] thought that Main and Main in downtowns would be office. But the fundamentals in Miami are very different. Land is expensive and condos are top of the food chain,” he says. But Tere says she’s getting more calls from landowners who, now that condo demand has likely fallen due to a strengthening dollar, are eyeing office instead. But, she cautions that not every residential site is appropriate for office. “I would really caution owners and developers to feel that, OK, just because you have a piece of land in Miami…
[they] should just build office. It doesn’t necessarily warrant success.”
Really, looking at Downtown Miami, not only has the skyline changed since the turn of the millennium, but so has the environment, Brian says. The influx of mixed-use and residential properties has altered the way Downtown Miami functions—becoming a 24-hour city. “There was a time seven, eight years ago where if you left your office building at six o’clock, there were homeless people outside, and it was pretty dangerous,” Brian says. “Today, it’s just a completely different place.”
March 23, 2016
Real estate brokerage Franklin Street is on the move — and the latest data on South Florida office space suggest it’s not alone.
When the lease on its 2,500-square- foot office in Plantation expires in December, Franklin intends to double or nearly triple its space to accommodate up to 100 employees. Its brokers are at work ferreting out 6,000 square feet of Class A space for the company whose primary business is trading investment-quality real estate.
“That’s happening throughout Broward” County, said Greg Matus, the brokerage’s regional managing partner for South Florida. “A lot of people are looking to get into premium space and solidify long-term deals.”
Across the region last year, tenants relocated across hundreds of thousands of square feet of offices as developers, who had mostly focused on residential projects in the rebounding economy, delivered limited new office options.
In Broward County, the office market finished 2015 with 763,691 square feet of net absorption, primarily by software publishers, insurance carriers, legal services and business support firms, according to data from CBRE Inc.
Tenants in Palm Beach County leased 1.7 million square feet last year, a 38 percent increase over 2014, for 419,888 square feet of net absorption driven by organic growth as companies moved to “right size” their staff after downsizing, Cushman & Wakefield of Florida Inc. reported in its quarterly office snapshot.
In Miami-Dade County, net absorption neared 1.2 million square feet in 2015, nearly triple the previous year’s tally of 441,367 square feet.
The desire for higher quality space fueled rising rents in most markets where limited supply, especially for larger tenants, shifted the markets in favor of landlords.
“It’s great news for owners; tougher news for tenants who have fewer options and less negotiating leverage,” Cushman & Wakefield director Mark Pateman said.
Construction forecasts suggest the trend is likely to continue well into 2016.
In Broward, Cushman & Wakefield reported developers “remained reluctant to break ground on office inventory,” delivering only one project in the fourth quarter: Pembroke Pointe, Duke Realty’s 143,535-square- foot Class A building in the southwest Broward submarket.
“We’re starting to see the potential of new construction that we haven’t seen in many years,” Cushman & Wakefield executive director Deanna Lobinsky said.
But for now, most new construction still focus on multifamily, industrial and retail, pushing up development costs and making new office space a less feasible option.
Nowhere in the region is the preference for other asset types more noticeable than in Palm Beach County, where no new office projects have been built since 2011. None were under construction by the end of 2015, according to Cushman, despite a push by some city governments to encourage new Class A projects.
Trophy assets remain in high demand by investors as price leaders like Phillips Point, Esperante Corporate Center and CityPlace tower — a 2008 development that was the first Class A office tower built in West Palm Beach in more than 20 years — remain at about 95 percent occupancy.
“The buildings are actually full, and space is really tight,” Pateman said. “There are still blocks of space in creative-class spaces, but it’s getting harder and harder to accommodate the class of clients we’re seeing.”
In West Palm Beach, a city moving to create a financial district to attract wealth managers looking to escape state taxes in other parts of the U.S., the biggest need is for new premium office space for small tenants used to paying high rents for prime finishes, concierge services and other amenities.
The good news for landlords: Palm Beach County rents climbed 5.3 percent to about $37.45 per square foot for premium space as vacancies dipped and occupancy tightened to about 90 percent in most buildings in core markets, Cushman reported.
Brokers like Pateman hope this velocity will encourage new projects, especially with major infrastructure investments like All Aboard Florida’s Brightline passenger rail service under construction in all three South Florida markets.
But that could take time.
“We’re going to see a slowdown in leasing, not because there’s lack of demand but because of lack of supply,” Pateman said. That lack of supply prompted some office users to take action.
“One of the things our brokers noticed is tenants wanting to build their own space instead of leasing,” Cushman & Wakefield senior research analyst Valerie Tatum said.
One such tenant, 3Z Telecom, leases about 4,000 square feet in Miramar and purchased land to build a 34,000-square- foot owner-occupied office building as its new headquarters.
The telecom company operates in a submarket where vacancy shrank to 9.3 percent in 2015 from 10.9 percent a year earlier — on total inventory of 1.9 million square feet.
As vacancy dipped, average asking rents moved in the opposite direction, climbing to $29.67 per square foot last year from $27.72 in 2014.
“Now with Class A space limited and rents going up, Class B is starting to push their rents too because they can,” Tatum said.
Meanwhile in Miami, investors are fueling the region’s most active construction pipeline.
Developers are on track to deliver 600,000 square feet of office space this year, primarily in projects offering less than 100,000 square feet, according to Marcus & Millichap Real Estate Investment Services broker Alex Zylberglait.
They’re on schedule to complete another 412,000 square feet in 2017. CBRE’s count put the projected development for 2017 to 2019 at about 3.3 million square feet of office space.
But Zylberglait said the new projects won’t satisfy escalating demand, resulting in private capital investors redeveloping and repositioning infill properties, including several in the Biscayne corridor.
Older buildings in Miami’s central business district have been among the key beneficiaries, attracting attention from both developers and renters drawn by rental rates sometimes about 50 percent below those of neighboring high-rises in Brickell’s financial district.
One investor, Moshe Mana, has been especially active, accumulating more than 30 downtown infill sites as part of an undisclosed investment strategy.
“It’s an area in transformation,” Marcus & Millichap senior vice president Douglas Mandel said of the central business district. “It hadn’t been heavy on trade from an investor perspective, but now we’re seeing some real velocity. The focus and attention had been on Brickell, but now we’re starting to see some larger transactions taking place downtown.”
In February, Mandel helped broker the $33.85 million sale of a renovated Miami office building at 200 SE First St. The property last sold for $21 million in a foreclosure sale in May 2014. Less than two years later, seller Integra Investments made a gain of more than 61 percent in a deal that brought new capital to the market. Mandel said the buyer, a fund linked to New York-based private equity investor Brickman, was a first-time Miami investor.
“We’re seeing continued, really great appetite for product in South Florida,” Blanca Commercial Real Estate CEO Tere Blanca said. “We’ve had tremendous new-to- market activity in the last five years. It’s become so significant that it’s worth noting.”
Analysts say the office forecast is positive across South Florida with employment growth buoying occupancy and rental rates.
Broward added more than 27,000 jobs last year, including 11,700 white-collar positions in professional and business services.
Palm Beach County’s efforts to attract financial services firms appeared to be paying off. Its unemployment rate dipped 60 basis points to end the year at 4.9 percent, with business and financial services, information technology, aviation and manufacturing among the top industries driving expansion.
In Miami-Dade, the employment rate strengthened 1.6 percent with the majority of new hires in hospitality, trade and education.
Job growth helped push Florida’s net absorption of office space to nearly 6.5 million square feet in 2015 — about 3.8 million more than the previous year, CBRE reported.
South Florida submarkets like Kendall and Coral Gables joined Aventura, Miami Beach and Miami’s Coconut Grove with single-digit vacancies in 2015. And in the fourth quarter, Miami-Dade office tenants executed 132 leases for 615,000 square feet.
Of 156,407 square feet of net absorption in Palm Beach County, about 68 percent was in Boca Raton. Technology firms and legal and financial services accounted for 39 percent of that activity, according to CBRE.
In Broward, leasing activity was concentrated in suburban submarkets like Plantation, where one tenant, Magic Leap, signed a 256,737-square- foot lease in a former Motorola building on West Sunrise Boulevard.
But brokers in submarkets with concentrations of lower quality buildings say big transactions aren’t as likely.
In Cypress Creek, for instance, asking rents fell in the last year as vacancy rose. Much of that submarket’s 4 million square feet is Class B or C space. For triple net leases, which include taxes, insurance and maintenance costs with the base rent, average asking rents were $23.46 per square foot, down from $24.44. And overall vacancy rose to 14.7 percent in 2015, up from 12.3 percent a year earlier.
“We have a lot of competition in that product-type up here,” Sperry Van Ness president and CEO Keith Kidwell said. “A lot of the tenants have upgraded to nicer space.”
Kidwell, a 25-year Broward broker, said he fielded dozens of calls after a client bought the nearly 70,000-square- foot vacant building at 2200 W. Commercial Blvd. and started a million-dollar upgrade to increase rental rates and attract new tenants.
“That office market is still soft, and we continued to be approached by owner- users looking to purchase the property for their own use,” he said. For tenants on the move like Franklin Street, the competition is fierce for premium space.
“Because there are limited options, tenants aren’t necessarily going to have a lot of options,” Lobinsky said. “They’re going to have to make a decision on product type or size of space.”
March 23, 2016
Coral Gables led the region in office transactions during the final months of 2015, with three major trades bringing an eye-catching $236 million. The city long known for its Mediterranean architecture and bridal shops has hit the investor radar screen, luring financial giants from around the globe.
“You’ve got institutional investors coming in and buying Class A and B office buildings, looking to invest in them to reposition them,” said Diana Parker, senior vice president at CBRE Inc. in Miami. “Within the last 14 months, 800,000 square feet has traded.”
That’s more than a tenth of the city’s 7 million square feet of office space. South Florida’s largest office transaction was in Coral Gables last quarter, CBRE reported. The market kicked off a flurry of activity at year’s end with the $119 million sale of Alhambra, a downtown Class A office complex. A Chicago- based fund tied to Deutsche Asset & Wealth Management paid about $363 per square foot for the dual office tower property.
The seller was an affiliate of USAA Real Estate Co., which purchased the Alhambra for $72.3 million in 2004, a 65 percent gain by the time of the December sale.
Less than two weeks later, Spanish investment group MDR Americana LLC pocketed the Alhambra International Center down the street at 2 Alhambra Plaza for $34 million, or about $164 per square foot. The 13-floor office building sold for half that in 2004.
Investors didn’t stop there.
In a third deal, Atlanta-based Prudential Real Estate Investors, the real estate investment arm of Prudential Financial Inc., dropped $83 million on 355 Alhambra, a nearly 500,000-square- foot office property at 355 Alhambra Circle.
Brokers say the acquisitions are typically followed by multimillion-dollar renovations to support a rent increase. Average rental rates in Coral Gables jumped to $37 per square foot in the last quarter of 2015, a 2.4 percent increase from the first quarter, according to JLL’s latest market report. The office sector ranked in the top five most expensive Miami-Dade County markets, which included Aventura and North Miami at $43.50, Miami’s Brickell financial district at $42, downtown Miami at $37.20 and Miami Beach at $36.50.
The high rates are also a factor in Coral Gables’ low vacancy rate and lack of new supply.
Job growth in the professional services sector increased demand for space last year, pushing the average vacancy rate down to 12.5 percent across Miami- Dade, CBRE reported. In Coral Gables, the rate dropped to a low 9.2 percent across all office classes.
“The Coral Gables market is one of the lowest in vacancy,” said Maggie Kurtz, senior vice president at CBRE. “It’s leasing up quicker than most of the markets.”
International food distributor Quirch Foods Co. signed a 30,000-square- foot lease downtown for its new corporate headquarters last year. The company’s decision to relocate its 155-employee team to 2701 S. Le Jeune Road was prompted by its desire to find a location near major transportation hubs, dining and shopping, reported commercial real estate firm Savills Studley.
Last year, AMC Networks international expanded to 16,424 square feet at 2020 Ponce De Leon Blvd. Pipeline Workspaces chose the city for its third co-working location, leasing 14,000 square feet at 95 Merrick Way. Parker said both Geico and the consulting firm Retail Outsource Cos. also moved into the market, leasing space in the 10,000-square- foot range.
“It screams ‘absolute best place to have a business,’ ” said Leonardo H. Da Silva, a partner with Alvarez, Carbonell, Feltman & Da Silva. The law firm at 75 Valencia Ave. sits two blocks south of the city’s famous Miracle Mile retail corridor.
Downtown Miami “is too stuffy. In Coconut Grove, you can’t walk anywhere,” Da Silva said. “In Coral Gables, every other door is a restaurant.”
And for businesses seeking to escape the stifling gridlock in downtown Miami and neighboring Brickell, Coral Gables is a breath of fresh air.
But in terms of new construction, Parker said, “Office has been the stepchild.”
Savills Studley reports large office spaces are becoming increasingly difficult to find. While more options exist for smaller space in the 10,000- to 20,000-square-foot range, tenants looking for a block of 25,000 square feet or more have only six buildings to choose from.
“We’re now reaching that famous tipping point where it makes sense for developers to consider office development in urban and suburban marketplaces of Miami,” Parker said.
Developer Camilo Lopez deems Coral Gables “the most established market in South Florida.” He is president and managing director of The Solution Group, a Miami-based company developing a 16-story office-condo at 1200 Ponce De Leon Blvd.
The developer is demolishing an existing building at the site and expects to go vertical in about a month, Lopez said.
Ofizzina, a planned 100,000-square- foot building, is 65 percent pre-sold, mostly to financial services tenants. Buyers have come from Switzerland and England to Latin American countries, Lopez said.
“They like to own their spaces,” he said of his future tenants. “They don’t want to rent.” While Ofizzina is the Solution Group’s first office project, Lopez and his team plan on launching a second one soon.
Veteran developer Armando Codina has a project underway at 2020 Salzedo St. that will bring 53,452 square feet of office space to a six-story building as part of a mixed-use complex. Codina will use half of the space for his corporate headquarters.
“There is a tremendous need for new construction,” said Tere Blanca, CEO of Blanca Commercial Real Estate.
Another 300,000 square feet of office space hangs in the pipeline in Agave Ponce’s Mediterranean Village, a proposed $500 million mixed-use development. But no construction or delivery date has been confirmed for the office portion of that project, Blanca said.
With vacancy rates pushing toward single digits, businesses may struggle to find room to grow.