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Daniella Aragon-Andre
Levy Public Relations

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The numbers show it has indeed been a historic time for Florida’s second-biggest city. Starting office rents for the Miami office market and Fort Lauderdale rose 17.7 percent between 2019 and the second quarter of 2022, according to data from CompStak. Of the deals tracked, more than 25 percent of the tenants inking deals in the region between the second quarter of 2020 and the second quarter of 2022 have come from the FIRE sector, an acronym for the finance, insurance, and real estate sectors. In addition to Blackstone, other major firms like Citadel, Goldman Sachs, and Microsoft have chosen to grow their presence in Miami, drawn by the promise of warmer weather, lower costs of living, and increasingly, talent that has relocated to the Sunshine State. This mass migration trend has been championed by the city’s leadership, especially Mayor Francis Suarez, who has made it his mission to market Miami as a better alternative for companies in traditional business hubs around the country.

Magic City

While Florida has always been a haven for retirees, tourists, and as a seasonal getaway for the wealthy, the recent migration to the state has been steadily rising. According to 2020 Census data, Florida is one of the fastest-growing states in the country in terms of population growth, adding 2.7 million residents between 2010 and 2020. On a city level, Miami’s recent growth spurt has been big news, but it does follow historical trends. Miami’s nickname, “Magic City,” derives from the city’s exponential population growth from just 5,000 in the early 1900s to more than 440,000 in 2020. However, that figure accounts for residents in Miami’s city limits. By incorporating the entire metropolitan area, the figure expands to 6.2 million.

Over the last 2 years, when the pandemic led people to flee places like New York City, once the epicenter of the coronavirus outbreak, many chose Miami. Mayor Suarez, who was first elected to office in 2017 and was reelected last fall, said in his victory speech in 2021 that he would “finish what we started,” pointing to his priorities of low taxes, courting the private sector, growing the city’s tech and finance sectors, and being “the capital of capital.” Several months later, a steady stream of companies have been moving their headquarters or opening and expanding their offices in the Miami area. Of the new leases signed in the city’s office market, 45 percent are from tenants new to the market, according to a report from the Miami Downtown Development Authority.

Eric Groffman, an Executive Vice President at CBRE’s Miami office, said there have been two distinct phases of companies migrating to Miami: in early 2021, when there was an initial wave of leasing deals with financial firms and venture capital firms; and the last 6 months up until now, where there has been a new wave of deals from many professional service firms, particularly law firms. Several big name firms including Sidley Austin, Kirkland & Ellis, and Reed Smith recently signed deals for major expansions of their office footprint. Groffman, who heads up a leasing team at CBRE that represents landlords, said he anticipates the next phase of companies that will make the move to Miami will take even larger footprints than they are seeing now.

“We think what’s coming are these bigger users and that’s why a lot of professional servicers are setting up for clients to be here in the near future,” Groffman said, pointing to Citadel’s lease at the under construction office tower 830 Brickell, where the firm will establish its new headquarters. His team is seeing more leases in the 50,000 to 100,000-square-foot range, a big change for a market where lease sypically average between 5,000 and 7,000 square feet. “I think other groups of similar size and scale will be moving to the market shortly,” he said.

Commercial real estate firms have taken notice of the Miami migration and started looking at deals. In April, New York City real estate magnate Harry Macklowe made his first buy in Miami when he acquired a development site for $31.9 million located next to Dadeland Mall. His firm has plans to build twin apartment towers at the site. Meanwhile, fellow New York-based firm Related Companies has been trying to build a residential and hotel complex at the site of the historic Deauville Beach Resort in Miami Beach. That project was approved by a city commission and will go to voters in November. Office development is picking up steam too, with more than 1.5 million square feet of office space currently under construction, according to an Avison Young report. That’s good news for Miami, which hasn’t been immune to the flight-to-quality trend. “We don’t have a huge amount of new product readily available,” Blanca said.

And as the city’s population grows, so has the demand for rental housing. In terms of rent growth, Miami recently ranked second in the country, according to a report from Apartments.com. “Every developer I know that has built and owns multifamily says their projects are full and whatever is delivered gets rented very quickly,” Blanca told me. In the second quarter of this year, the vacancy rate in Miami’s multifamily market was 1.2 percent, the lowest figure of all major markets in the US, according to Marcus & Millichap. Meanwhile, by the end of the year, 8,700 apartment units are expected to be completed in Miami’s metro area. While most of the projects coming online are luxury rentals, there are public-private partnerships underway to create more middle-income and workforce housing.

The right recipe

Miami has long been a top tourist destination for both domestic and international travelers. The city has the busiest cruise port in the world and is known for its vibrant nightlife and art scene. What it hasn’t historically been known for is being a tech hub, but that has started to change since late last year, when a tweet from the city’s mayor kicked off a movement of tech firms from Silicon Valley to Miami. And it’s not just the tech world and cryptocurrency that Suarez has been courting—-Miami’s mayor has been selling his city as a business-friendly utopia that has all the benefits of a big city without the higher taxes, crime, and regulation that he believes other major cities are struggling with. In an op-ed for the Wall Street Journal last month, Suarez said people are moving to Miami en masse to avoid what he calls “the socialist model” of other big cities like New York and San Francisco to adopt “the Miami model” philosophy.

Suarez’s message has clearly resonated with many people around the country, and some firms too. Citadel’s leader Ken Griffin announced he was moving his company’s headquarters from Chicago to Miami in June, months after he began raising concerns over crime rates in Chicago. In a letter to

employees announcing the move, Griffin didn’t mention crime as one of the factors leading to the relocation, but he did praise Miami’s corporate environment. “Our recipe for success is quite simple,” Suarez told Fox Business host Maria Bartiromo in a TV interview last month. “We basically keep taxes low, we keep people safe, and we lean into innovation.” He went on to say that Miami has a budget surplus of $145 million, has low unemployment, and is on track to have the lowest homicide rate since the 1930s. Suarez is a Republican, though in Miami, the office of Mayor is a non-partisan position. The city leader was reelected in a landslide last year and has become popular on a national level as well, with reports indicating he’s considering a presidential run. However, he has also taken criticism for not paying enough attention to local issues and controversy over the hiring and firing of the city’s former police chief.

While interest in Miami from corporate firms seems to be at an all-time high, there are notable hurdles that the city and development community are facing, like housing. The multifamily market is experiencing super low vacancy and rapidly rising rents, and while that’s good for the real estate industry, the higher rent burden has led residents to look outside the city limits for better deals. As a result, Miami’s population dropped by more than 30,000 residents between July 2020 and July 2021. There’s also the ever-present threat of hurricanes to the coastal city. Miami is one of the most vulnerable cities in the country when it comes to hurricanes, and recent reports have shown that the risk from storm surge and flooding will get worse over time. And while Suarez and other Florida officials have touted the ongoing migration of businesses and people to the Sunshine State, there have been reports that some people are moving back to cities they left during the pandemic.

Other cities looking to bring in more businesses and grow office districts may not take the same strategy as Suarez, especially given his message’s political bent, but what officials and the real estate industry can take from it is the role marketing and messaging can play in driving the conversation about a city, and what leads companies to act. Miami already had a lot going for it and a solid office market to begin with, and with Suarez’s appeal to businesses looking for a friendlier climate, it is gaining larger occupiers and growing rapidly. The city will have to contend with rapid increases in housing costs and the existential threat of hurricanes to its coastline going forward. Whether the office market eventually plateaus is something the industry is watching, but for now at least, the city and its commercial real estate industry are enjoying the spotlight.

About Blanca Commercial Real Estate

Blanca Commercial Real Estate, the leading independently owned commercial real estate brokerage firm in 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 personalized approach, unique methodology, data-driven insight, vast network and deep community engagement. Practice areas include landlord representation, property management, development consulting, tenant representation, tenant community services, build-to-suit advisory services, and land/investment property acquisition and disposition. For more information, visit www.blancacre.com.

MEDIA CONTACT:

Daniella Aragon-Andre
Levy Public Relations

Full Article

The numbers show it has indeed been a historic time for Florida’s second-biggest city. Starting office rents for the Miami office market and Fort Lauderdale rose 17.7 percent between 2019 and the second quarter of 2022, according to data from CompStak. Of the deals tracked, more than 25 percent of the tenants inking deals in the region between the second quarter of 2020 and the second quarter of 2022 have come from the FIRE sector, an acronym for the finance, insurance, and real estate sectors. In addition to Blackstone, other major firms like Citadel, Goldman Sachs, and Microsoft have chosen to grow their presence in Miami, drawn by the promise of warmer weather, lower costs of living, and increasingly, talent that has relocated to the Sunshine State. This mass migration trend has been championed by the city’s leadership, especially Mayor Francis Suarez, who has made it his mission to market Miami as a better alternative for companies in traditional business hubs around the country.

Magic City

While Florida has always been a haven for retirees, tourists, and as a seasonal getaway for the wealthy, the recent migration to the state has been steadily rising. According to 2020 Census data, Florida is one of the fastest-growing states in the country in terms of population growth, adding 2.7 million residents between 2010 and 2020. On a city level, Miami’s recent growth spurt has been big news, but it does follow historical trends. Miami’s nickname, “Magic City,” derives from the city’s exponential population growth from just 5,000 in the early 1900s to more than 440,000 in 2020. However, that figure accounts for residents in Miami’s city limits. By incorporating the entire metropolitan area, the figure expands to 6.2 million.

Over the last 2 years, when the pandemic led people to flee places like New York City, once the epicenter of the coronavirus outbreak, many chose Miami. Mayor Suarez, who was first elected to office in 2017 and was reelected last fall, said in his victory speech in 2021 that he would “finish what we started,” pointing to his priorities of low taxes, courting the private sector, growing the city’s tech and finance sectors, and being “the capital of capital.” Several months later, a steady stream of companies have been moving their headquarters or opening and expanding their offices in the Miami area. Of the new leases signed in the city’s office market, 45 percent are from tenants new to the market, according to a report from the Miami Downtown Development Authority.

Eric Groffman, an Executive Vice President at CBRE’s Miami office, said there have been two distinct phases of companies migrating to Miami: in early 2021, when there was an initial wave of leasing deals with financial firms and venture capital firms; and the last 6 months up until now, where there has been a new wave of deals from many professional service firms, particularly law firms. Several big name firms including Sidley Austin, Kirkland & Ellis, and Reed Smith recently signed deals for major expansions of their office footprint. Groffman, who heads up a leasing team at CBRE that represents landlords, said he anticipates the next phase of companies that will make the move to Miami will take even larger footprints than they are seeing now.

“We think what’s coming are these bigger users and that’s why a lot of professional servicers are setting up for clients to be here in the near future,” Groffman said, pointing to Citadel’s lease at the under construction office tower 830 Brickell, where the firm will establish its new headquarters. His team is seeing more leases in the 50,000 to 100,000-square-foot range, a big change for a market where lease sypically average between 5,000 and 7,000 square feet. “I think other groups of similar size and scale will be moving to the market shortly,” he said.

Commercial real estate firms have taken notice of the Miami migration and started looking at deals. In April, New York City real estate magnate Harry Macklowe made his first buy in Miami when he acquired a development site for $31.9 million located next to Dadeland Mall. His firm has plans to build twin apartment towers at the site. Meanwhile, fellow New York-based firm Related Companies has been trying to build a residential and hotel complex at the site of the historic Deauville Beach Resort in Miami Beach. That project was approved by a city commission and will go to voters in November. Office development is picking up steam too, with more than 1.5 million square feet of office space currently under construction, according to an Avison Young report. That’s good news for Miami, which hasn’t been immune to the flight-to-quality trend. “We don’t have a huge amount of new product readily available,” Blanca said.

And as the city’s population grows, so has the demand for rental housing. In terms of rent growth, Miami recently ranked second in the country, according to a report from Apartments.com. “Every developer I know that has built and owns multifamily says their projects are full and whatever is delivered gets rented very quickly,” Blanca told me. In the second quarter of this year, the vacancy rate in Miami’s multifamily market was 1.2 percent, the lowest figure of all major markets in the US, according to Marcus & Millichap. Meanwhile, by the end of the year, 8,700 apartment units are expected to be completed in Miami’s metro area. While most of the projects coming online are luxury rentals, there are public-private partnerships underway to create more middle-income and workforce housing.

The right recipe

Miami has long been a top tourist destination for both domestic and international travelers. The city has the busiest cruise port in the world and is known for its vibrant nightlife and art scene. What it hasn’t historically been known for is being a tech hub, but that has started to change since late last year, when a tweet from the city’s mayor kicked off a movement of tech firms from Silicon Valley to Miami. And it’s not just the tech world and cryptocurrency that Suarez has been courting—-Miami’s mayor has been selling his city as a business-friendly utopia that has all the benefits of a big city without the higher taxes, crime, and regulation that he believes other major cities are struggling with. In an op-ed for the Wall Street Journal last month, Suarez said people are moving to Miami en masse to avoid what he calls “the socialist model” of other big cities like New York and San Francisco to adopt “the Miami model” philosophy.

Suarez’s message has clearly resonated with many people around the country, and some firms too. Citadel’s leader Ken Griffin announced he was moving his company’s headquarters from Chicago to Miami in June, months after he began raising concerns over crime rates in Chicago. In a letter to

employees announcing the move, Griffin didn’t mention crime as one of the factors leading to the relocation, but he did praise Miami’s corporate environment. “Our recipe for success is quite simple,” Suarez told Fox Business host Maria Bartiromo in a TV interview last month. “We basically keep taxes low, we keep people safe, and we lean into innovation.” He went on to say that Miami has a budget surplus of $145 million, has low unemployment, and is on track to have the lowest homicide rate since the 1930s. Suarez is a Republican, though in Miami, the office of Mayor is a non-partisan position. The city leader was reelected in a landslide last year and has become popular on a national level as well, with reports indicating he’s considering a presidential run. However, he has also taken criticism for not paying enough attention to local issues and controversy over the hiring and firing of the city’s former police chief.

While interest in Miami from corporate firms seems to be at an all-time high, there are notable hurdles that the city and development community are facing, like housing. The multifamily market is experiencing super low vacancy and rapidly rising rents, and while that’s good for the real estate industry, the higher rent burden has led residents to look outside the city limits for better deals. As a result, Miami’s population dropped by more than 30,000 residents between July 2020 and July 2021. There’s also the ever-present threat of hurricanes to the coastal city. Miami is one of the most vulnerable cities in the country when it comes to hurricanes, and recent reports have shown that the risk from storm surge and flooding will get worse over time. And while Suarez and other Florida officials have touted the ongoing migration of businesses and people to the Sunshine State, there have been reports that some people are moving back to cities they left during the pandemic.

Other cities looking to bring in more businesses and grow office districts may not take the same strategy as Suarez, especially given his message’s political bent, but what officials and the real estate industry can take from it is the role marketing and messaging can play in driving the conversation about a city, and what leads companies to act. Miami already had a lot going for it and a solid office market to begin with, and with Suarez’s appeal to businesses looking for a friendlier climate, it is gaining larger occupiers and growing rapidly. The city will have to contend with rapid increases in housing costs and the existential threat of hurricanes to its coastline going forward. Whether the office market eventually plateaus is something the industry is watching, but for now at least, the city and its commercial real estate industry are enjoying the spotlight.

About Blanca Commercial Real Estate

Blanca Commercial Real Estate, the leading independently owned commercial real estate brokerage firm in 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 personalized approach, unique methodology, data-driven insight, vast network and deep community engagement. Practice areas include landlord representation, property management, development consulting, tenant representation, tenant community services, build-to-suit advisory services, and land/investment property acquisition and disposition. For more information, visit www.blancacre.com.

MEDIA CONTACT:

Lidia Dinkova
The Real Deal

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MIAMI – January 21, 2022 – Downtown Fort Lauderdale’s return to the office is outpacing that of major markets such as New York, San Francisco and Austin, as well as the national average, a new report shows.

From 50 percent to 55 percent of workers were back to working in the office in February in downtown Fort Lauderdale, a 10 percentage point increase compared with summer 2021, according to the report from the Fort Lauderdale Downtown Development Authority.

“I think what we are seeing is employees are eager to break the routine from the past two years from the pandemic,” said Matthew Schnur, research and innovation manager at the DDA.

The strong return to the office is partly rooted in the population influx to downtown, a “critical mass” that has fueled more retail and restaurant openings, he said. Dining and shopping options are vital to creating a vibrant downtown to draw workers, and office amenities such as gyms and rooftop bars are pivotal in prompting a return of employees, Schnur said.

The DDA study is based on estimates provided by office property managers and traffic in the garages, and compares to findings by nationwide Class A office building security provider Kastle Systems, whose “Back to Work Barometer” tracks occupancy in 10 U.S. metro areas.

Kastle Systems, which uses card swipe data for its estimates, does not track the Miami-Fort Lauderdale metro area. But it shows that almost 31 percent of New York workers were back to the office as of February, almost 25 percent in San Francisco, 50 percent in Houston and almost 52 percent in Austin. The national average of return to the office was 36.4 percent, according to Kastle Systems.

The DDA study focused exclusively on Class A office buildings from East Broward Boulevard south to the New River, and from South Federal Highway east roughly to Andrews Avenue, Schnur said.

Included in this area is the 25-story office tower that is part of The Main Las Olas, completed in 2020. It is part of the larger, 1.4 million-square-foot mixed-use development that spans a full city block and includes the Novo Las Olas apartment tower and retail. A partnership of Stiles and Shorenstein Properties developed the complex.

The Main office tower is 93 percent leased, with tenants including Synovus bank, which took 19,985 square feet, and audit and tax consulting firm RSM, which took 16,570 square feet, according to a news release.

Danet Linares of Blanca Commercial Real Estate is the leasing agent for the office building’s landlord.

The amenities at the tower, at 201 East Las Olas Boulevard, such as the gym, conference center and tenant lounge are playing a role in tenant demand, said Christina Stine Jolley, also of Blanca Commercial.

The tech company influx to South Florida largely has concentrated on Miami’s Wynwood, although the demand from these companies could start creeping north to downtown Fort Lauderdale. 

“Historically the downtown Fort Lauderdale office market has been driven by financial and legal service firms,” Stine Jolley said. “We have seen an influx of new-to-market firms in the last year or so, and that has included some tech [firms] and it also has included some real estate, legal, financial services, insurance” companies.

The direct vacancy rate across downtown Fort Lauderdale decreased to 18.7 percent in the fourth quarter of 2021, down by roughly 5 percent from the third quarter, said Stine Jolley, citing Blanca Commercial data.

“I think it speaks to the continued urbanization of downtown Fort Lauderdale. Just since the pandemic alone, we have seen over 275-plus residential move-ins every month,” she said. “People, they want to live and work here.… It’s something we are projecting is only going to increase and have greater velocity, frankly, over the next few years. “

About Blanca Commercial Real Estate

Blanca Commercial Real Estate, the leading independently owned commercial real estate brokerage firm in 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 personalized approach, unique methodology, data-driven insight, vast network and deep community engagement. Practice areas include landlord representation, property management, development consulting, tenant representation, tenant community services, build-to-suit advisory services, and land/investment property acquisition and disposition. For more information, visit www.blancacre.com.

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Brian Bandell

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MIAMI – January 21, 2022 – An affiliate of Miami-based Adrian Builders sold a retail center in the Tamiami neighborhood of southern Miami-Dade County for $26 million. The Shoppes at Hidden Lake LLLP, managed by Alvaro L. Adrian of Adrian Builders, sold the 81,680-square-foot property at 12700 and 12750 S.W. 128th St. The buyers were Palms Petroleum LLC, Palmetto Eastar Energy Petroleum LLC, Westar SC Holdings LLC, Palmetto Westar Energy Petroleum LLC, Southpoint Petroleum LLC and 27-141 Petroleum LLC, all managed by Tomas Pequeno in Miami. Cary Cohen of Blanca Commercial Real Estate represented the seller in the deal. The six LLCs each sold separate gas stations in Miami-Dade two weeks ago to Wilmington Delaware-based Trinity Petro. It appears they reinvested the proceeds of those sales into this retail center.

The price for this deal equated to $318 a square foot, showing there is still demand for retail property in Miami-Dade, as it holds up relatively well against competition from e-commerce. The shopping center’s tenants are mostly local businesses, including a barber shop, coffee bar, tobacco shop, sports bar and medical center. Cohen said the property is 96% leased. “This offering presented investors the rare opportunity to acquire an immaculate, newly constructed stabilized shopping center with upside potential,” Cohen said. “Assets like Hidden Lakes are highly sought after. We were able to close within 45 days of listing it.” The two-story project was built on the 4.26-acre site in 2018 and 2020.

About Blanca Commercial Real Estate

Blanca Commercial Real Estate, the leading independently owned commercial real estate brokerage firm in 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 personalized approach, unique methodology, data-driven insight, vast network and deep community engagement. Practice areas include landlord representation, property management, development consulting, tenant representation, tenant community services, build-to-suit advisory services, and land/investment property acquisition and disposition. For more information, visit www.blancacre.com.

MEDIA CONTACT:

Erik Sherman

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MIAMI – January 21, 2022 – Dwight D. Dunton III, founder and CEO of Bonaventure Holdings, drove up to one of his company’s construction sites in the fall. “The buildings all looked like giant checker boards: some siding here and some siding there,” he tells GlobeSt.com. The subcontractor was installing siding as the supplier could deliver it.

While the Wall Street Journal recently wrote about how supply chain issues are affecting new homes, the problem stretches across commercial real estate projects.

A renovation of a bank space into a furniture showroom by interior design and architecture firm, Leslie Saul & Associates has seen a big delay because linear diffuser boxes weren’t available. “They finally arrived last week, but almost two months after the original due date,” Saul tells GlobeSt.com. “The store was supposed to open by Christmas, and instead it may be the end of February.”

Nareit senior economist Calvin Schnure sees two problems supply chains have imposed on CRE building. “One is the cost that might make a developer think this might be a project that isn’t doing,” he says. The other thing is lack of availability in needed quantities. “We are seeing delays and real difficulty in getting requirements at every step in the chain.” That includes raw materials, finished products, transportation, and labor.

“Commercial real estate is impacted like the rest of the world, with logistic delays prolonging lead times on the construction front, in addition to delays on the architectural and engineering front as well,” Randy Carballo, executive vice president of Blanca Commercial Real Estate, tells GlobeSt.com. Office space needs under 10,000 square feet used to take six months. Now it’s eight to ten.

Firms try to manage. “We are ordering materials far in advance,” says Pete Tuffo, president for the south region of Suffolk Construction. “However, since the majority of projects do not have sufficient laydown area to store materials, Suffolk works with clients to rent nearby warehouse space.”

“In my area of New Jersey and Pennsylvania, there seems to be very little non-medical commercial new construction,” offers real estate attorney Bonnie Galam. “It’s largely repurposing existing commercial structures. This alleviates the need for some building materials like lumber, but commercial developers are still facing the increase in prices on items like windows and drywall.”

“Our latest building products survey showed that the supply chain remains quite stretched, with no indication that conditions are improving,” says Ivy Zelman, CEO of Zelman & Associates, with 88% of respondents seeing lead times that were “modestly or well above normal.”

The impacts lead to tensions and legal strife. “Owners-landlords and development and construction experts are trying to avoid deadline clauses, even as tenants are pushing for them,” Andy Gutman, president of full-service commercial real estate firm Farbman Group, tells GlobeSt.com. “In response, some developers are starting to insert clauses into their contracts to say they aren’t responsible for any delays or disruptions because of the current supply chain issues.”

For those who hoped that the new year would bring a quick end to the pain, there’s disappointment.

“It may be into next year to see the ability to do non-residential construction unhindered,” adds Nareit’s Schnure.

About Blanca Commercial Real Estate

Blanca Commercial Real Estate, the leading independently owned commercial real estate brokerage firm in 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 personalized approach, unique methodology, data-driven insight, vast network and deep community engagement. Practice areas include landlord representation, property management, development consulting, tenant representation, tenant community services, build-to-suit advisory services, and land/investment property acquisition and disposition. For more information, visit www.blancacre.com.