Sparse credit and a looming wave of commercial mortgage-backed securities defaults dominated the year in South Florida commercial real estate. Rents fell, vacancies rose. The bottom never quite showed itself, despite the concerted hopes of landlords, lenders and brokers.
Real estate pros say that there will be more of the same in 2010.
Despite the market woes, some notable commercial real estate deals got inked in 2009. The Real Deal offers up its picks for the top such deals, marked by large office leases, healthy renewals, mega sales and lessons in discounting.
1. Foreign vultures buzzing around commercial investments; largest multi-family deal in South Florida
Propelled by a weak dollar and plunging prices, international buyers invested in South Florida commercial properties, some for the first time. Multi-family real estate development and management company LSR Group of Montreal entered the South Florida market for the first time this year, and said it will maintain a long-term investment approach.
In June, Boca Raton’s Apartment Realty Advisors represented Northwestern Mutual Life Insurance of Milwaukee in the sale of the 360-unit Arbor Oaks complex at Boca Raton to LSR Group for $40 million. It was the largest multi-family transaction in South Florida in 2009. Property records show that the 28-acre site sold for $3.4 million as vacant land in 1994.
2. Compson Financial Center sale was a lesson in discounting
In a deal that demonstrates the advantages conferred on sellers who understand the need to discount, CB Richard Ellis sold the Compson Financial Center for $20 million in April. The four-story, 93,762-square-foot Boca Raton office building sale was one of the largest transactions of its kind this year.
A discounted price allowed underwriters to approve the loan on the Federal Highway property, a step that has proved difficult for many other transactions in a time of stricter lending standards. The buyer, Marc Osheroff & Associates, brought about $2 million to the table to scoop up the office building for 30 percent less than what the seller paid for it in 2005. It was 88 percent occupied at the time of the sale.
3. Bilzin Sumberg signs on for 80,000 SF at 1450 Brickell in South Florida’s biggest new lease agreement of 2009
As developers prepare for the flood of office space coming online in Downtown Miami in 2010, 1450 Brickell got a jump start with the largest new lease agreement in the South Florida market this year. Miami-based law firm Bilzin Sumberg will occupy 80,000 square feet of space — four floors – over a 15-year term.
Of the three office towers currently under construction in Miami’s central business district, 1450 Brickell will be completed first. Bilzin Sumberg will move from the Wachovia Financial Center to take up residence in a 35-story tower that is scheduled to open in the first quarter of 2010. Blanca Commercial Real Estate represented the landlord in the deal, while Cresa Partners represented the law firm. The financial terms of the deal were not disclosed.
4. Bank of America leaves its namesake tower, while UBS Financial inks top lease renewal in Downtown Miami this year
Formerly known as the Bank of America Tower, the 600,000-square foot icon lost its signature tenant this year. But the just-renamed Miami Tower stopped the bleeding with a laundry list of lease renewals, including the mega UBS Financial Services deal.
At $7.5 million, the five-year UBS lease marks the largest renewal in the Downtown Miami office market in 2009. Fairchild Partners represented landlord Wealth Capital Management while CBN Commercial Real Estate Services represented UBS. UBS has been a tenant since 1994.
5. The first Miami Beach bulk sale
Bulk sales remain few and far between, but Miami Beach saw its first bulk sale in September. New York’s Melohn Properties bought Caribbean South Beach at 3737 Collins Avenue in September.
Melohn bought the 103-unit condo note from Corus Bank for $127 million. Only 13 units had closed, according to Miami-Dade County tax records. Competition was reportedly heavy for this two building, high-end Miami Beach development.