The Real Deal Miami

Flagler deal could signal rising industrial market

By Alexander Britell | September 17, 2009 02:38PM

The sale train has finally left Flagler Station.

Two years ago, First Industrial Realty Trust bought approximately eight acres in Flagler Station, about five miles down SR-821 from the Dolphin Mall, in Medley, intending to build a 156,000-square-foot Class A facility for sale or lease.

After 18 months on the market, Rigstar II Holding Corporation, specializing in electronic and computer products sales in South America and the Caribbean basin, purchased the building in cash for $11.9 million, or about $76 dollars per square foot. In a market where leases have been getting shorter, even on existing properties, the cash sale of such a large new property could be an inflection point in a battered South Florida industrial market.

“The property was on the market for a very long time,” said Reshma Parvani, a broker/associate at the Parvani Commercial Group, who represented the buyer. “It was a spec building, built with the intention to lease it, but we were able to get them to sell it. It was on the market for more than two years.”

She said there were some near-misses along the way, but the wariness in the market held up a deal.

“We did make an offer last year in July, at a much higher number, and they gave us a counter that the buyer was not very comfortable with and we continued looking at other options,” she said. “We closed in July, and had it in contract for at least two or three months. The way we proposed it was a cash deal, but other things happened, and we had to get approval from their committee, so it took a longer time.”

Parvani said that most of the properties in the area are actually leased, although there some are privately owned.

The property is unusually large, even in a 7 million-square-foot industrial park, where most properties average around 37,000 square feet, said Michael Silver, first vice president at CB Richard Ellis, who represented the seller.

“This past quarter, I have seen additional activity levels,” Silver said. “There are more companies out looking at space, asking the right questions, and you’re starting to see deals being made, more so than last quarter of last year and the first half of this year.”

Recovery will be slow, he cautioned.

“The rental rates and the sales prices have been deeply discounted due to the vacancy factor that has climbed and the lack of activity,” Silver said. “If companies have vision, and are looking to make a good deal for themselves, now’s the time. Obviously the better buildings at better prices are going to be snapped up first. As the market recovers, sale prices and rental rates will begin to climb.”