Miami office market favors building owners
The absence of new office construction in Miami and extensive office-to-condo conversions have made office space scarce, giving landlords more leverage in lease negotiations.
A report from commercial real estate firm CB Richard Ellis said downtown asking rents rose from $26.40 in the second quarter of 2006 to $26.70 in the third quarter, indicating a tighter market. Despite demand for space, only a few Class A office buildings are in the pipeline. A 400,000-square-foot Class A office building at 2222 Biscayne Boulevard will be completed in late 2009. Construction is also underway for Met 2, a 750,000-square-foot office tower that is part of the Metropolitan Miami mixed-use project.
CBRE reported the new supply isn’t enough to meet demand in downtown Miami. It also said insurance premium hikes will keep small developers from creating new offices.
Condo projects stall in the pipeline
Condo projects are languishing in the slow residential market, the Miami Herald reported. Developments such as Lynx, a high-profile Miami mixed-used hotel condo tower, haven’t seen any building despite approved plans. Other suspended condo towers include Electra Bay in Midtown Miami, Onyx 2 in Biscayne Bay and Premiere Towers, dual condo buildings next to high-profile shopping center Mary Brickell Village.
Analysts say the projects were not financially viable and rising construction and insurance premiums forced some developers to drop construction plans. Shelved projects are also the result of banks waiting for more than 22,000 condo units to be absorbed into the market. Developers are holding onto properties until prices stabilize and the market readjusts before building their projects.
Not all stalled projects are failures, though. Some investors are flipping their land sites, brokers say.
Miami gets first green office building
Miami is getting a green office building, an environmentally friendly first for the Sunshine State.
Holly Real Estate recently began construction on Miami Green, a green-glass tower to be completed in 2008 that will be located on 3150 SW 38th Avenue. The 13-story structure is designed in an L-shape, allowing ample sunlight in each office window. Miami Green will also have office parking on each floor to decrease the use of elevators, Commercial Property News reported. A sunlight absorbing roof garden on Miami Green will also reduce air conditioning requirements.
Holly Real Estate is seeking “silver” certification under the Leadership in Energy and Environmental Design Green Building Rating System developed by the U.S. Green Building Council, which provides standards for environmentally sustainable construction.
Mortgage fraud widespread in Florida
Florida has the highest amount of mortgage fraud in the nation, mortgage company Fannie Mae reported. In mortgage applications filed since August 2005, Florida had more cases of misrepresentations and origination fraud than any other state.
After reviewing loans since 2003, Fannie Mae found Pompano Beach, Miami, Hialeah and Miami Beach as major fraud hot spots. Analysts say mortgage fraud is a result of economic stress on borrowers and believe the problem stems from the market slowdown, the Miami Herald reported.
Developers seek beachfront mobile home park
In a deal that would generate an average of $1 million for each of its 488 owners, residents of a mobile home park in Palm Beach County may sell the 43-acre site for $510 million.
The board of directors of Briny Breezes already agreed to sell, but the sale is awaits a January 10 vote by residents who co-own individual shares of the corporation, the Palm Beach Post reported.
The deal would make it the largest sales transaction in the area on record, according to Palm Beach County’s property appraiser.
Ocean Land Investments Inc., which made the buyout offer, is one of several companies that wanted the beachfront property located on State Road A1A near Palm Beach and Delray Beach. Ocean Land’s plans include developing a mixed-use community over a 10- to 15-year period.
Home sales prices reach new low
The median price for existing single-family homes in Miami-Dade County dropped to $356,000 in October, the lowest since August 2005, according to the Florida Association of Realtors.
Existing home prices have dropped enough that buyers who were waiting out the market are now purchasing, some brokers say. In Broward, average prices went down to $349,400, the lowest since April 2005. Brokers say, however, that the next three to five years will be characterized by rising prices among single-family homes in South Florida.
Investment picks up in Airport West
The Airport West industrial market is Miami’s new site for investor activity.
Real estate investment trust Hines recently bought Doral Corporate Center for $55.75 million, or around $201 a square foot. The Hines deal is its fifth major buy in the area and follows the purchase of Airport Corporate Center less than a year ago, Miami Today News reported. In addition to the building, Hines’ purchase included 13.6 acres; the company has announced plans to develop the land for commercial use.
Commercial brokers say Airport West is satisfying some demand for prime industrial space. However, the limited supply is pushing some investors into surrounding locations, including Hialeah.