The Real Deal Miami

Mexican developer breaks into U.S. with Coral Gables office towers

By Jennifer LeClaire | December 05, 2008 01:09PM

With an 18-foot ice sculpture of unbuilt skyscrapers as a backdrop, a
Mexican-led investment partnership this week announced plans for two
luxury office towers in downtown Coral Gables, five minutes from Miami
International Airport.

At the corner of LeJeune Road in the heart of Coral Gables, 396
Alhambra will be a $130 million, 150-story tower led by Agave Florida
Investments LLC, an affiliate company of Jose Cuervo Group of Mexico
City, Alhambra Investors LLC and Miami developer Eduardo Avila.

Bill Kerdyk, president and CEO of Kerdyk Real Estate in Coral Gables,
said 396 Alhambra is the right product for this market. The project
includes two office towers totaling 285,000 square feet, with the first
four floors of the new tower linking to the existing tower on the
corner of LeJeune Road and Giralda Avenue. The existing tower will also
undergo an extensive multi-million-dollar renovation.

The buildings will be designed for Silver Leadership in Energy and
Environmental Design (LEED) Certification under the standards set by
the U.S. Green Building Council.

Ultimately, Kerdyk said, timing will determine 396 Alhambra’s fate.

“It is interesting to note that a project like this, whose developers
and investors are international, is moving forward, yet projects from
local developers are on hold due to the lack of financing or the
economy,” Kerdyk said.

“We chose Coral Gables for our first foray into the United States,”
said Hector Fernandez, CEO of 396 Alhambra LLC, a joint venture of
Alhambra Investors LLC and Agave Florida Investments LLC.  “Coral
Gables is and will always be the perfect hub linking Latin America, the
United States and Europe.”

The outlook for success is uncertain.

Merrick View, a 78,454-square-foot project, came online in October, and
additional properties will come online in late 2009-2010. But new
development has largely stalled in the face of economic woes.

Fernandez, who has overseen the development of 1 million square feet of
offices and 2 million square feet of industrial property in Mexico,
with such long-term tenants as Microsoft, Johnson & Johnson and
Sony Corporation, is convinced that the real estate and credit crises
will offer huge opportunities for his group.

“We have the cash to build this property,” Fernandez said, noting
that he has secured a loan from HSBC for additional financing, but is
prepared to invest Agave’s entire $130 million in equity if the bank
pulls back for any reason.

Although the U.S. dollar is valued higher than the Mexican peso,
Fernandez said his group always bases its real estate investments on
the dollar and is comfortable with the exchange rate, as well as the
higher cost of credit in the wake of the Wall Street meltdown.

Lew Goodkin, principal of Goodkin Consulting in Miami, isn’t as
comfortable. While Coral Gable warrants a Class A, green office tower,
the global uncertainty dictates caution. His advice: break ground in
2011 rather than completing then.

Work at 396 Alhambra will begin in February 2009 with an expected
completion date of spring 2010 for Phase I and spring 2011 for Phase II.

“Just because a developer has the wherewithal to take a risk when other
people are running into financial roadblocks doesn’t mean the timing is
right,” Goodkin said. “When it comes to tequila, remember, you usually
take it with salt and a lemon.”