Miami office sales up, tenants gain strength
While brokers say the Miami office leasing market has generally seen more activity in 2011, it’s investments that have been the area’s driving force on the sales side, while landlords are still dealing with much of a tenant’s market in leasing.
Several large sales highlighted the second quarter outside of Miami, from the sale of the CityPlace Office Tower for $126.5 million to that of Boca Raton’s 1200 Corporate Place for $15.2 million. But Miami’s market has shown improvement.
“I can tell you that the market has been more active,” said Alex Zylberglait, vice president of investments at Marcus & Millichap in Miami. “There have been a number of transactions that have taken place, and at a stronger pace than last year — both at the private party, smaller deal side and the larger deal side.”
Zylberglait said there was still a divergence in which assets were moving — and at what prices. Quality assets tended to trade for a “nice premium,” but the less attractive sites were still seeing steep discounts.
“What you’re seeing is stabilized assets trading — or redevelopment [of] places like the Herald site, or the former Bank Atlantic building,” he said. “There’s more activity, more money, but there’s still a fair amount of discrimination between what’s good and not good.”
On the leasing side, it is still very much a tenant’s market, however, Zylberglait said.
Miami’s downtown Central Business District is adapting to the addition of three large-scale office towers — 1450 Brickell, Wells Fargo Financial Center and, soon, 600 Brickell — and is going forward with cautious optimism.
“The banks are back in business, and the international [banks] are taking an aggressive stance on new branches,” said Jack Lowell, senior managing director at Flagler Real Estate Services. “Some of the law firms are hiring, and are going to be expanding, and they’re one of our larger user groups. There are some signs of activity, but it’s still all depending on job growth, and if you look at job growth that number’s not very dynamic.”
Lowell pointed to the Kendall market as having performed better than anticipated, but Kendall is not alone — Doral, which has seen a strengthening residential market, has become a magnet for office tenants in Miami-Dade.
The western Miami-Dade County city has emerged as an alternative to the CBD, especially for companies whose employees live to the north and west of Miami.
“The Doral market I think is very attractive for corporate users, particularly those that have close proximity to the workforce coming from Broward County,” said Tere Blanca, whose firm Blanca Commercial Real Estate is marketing several properties in Doral, including One Park Square and 5835 Blue Lagoon Drive.
“[Doral] has differentiated itself significantly from the other Airport West markets, because Doral is a community with a very vibrant urban feel to it, with lots of retail, residential and residential projects at various price points.”
One Park Square’s leasing activity was headlined the high-profile signing of Harley-Davidson’s Latin American headquarters in March.
In April, three new retail tenants signed on at the building, including Mediterranean restaurant Harvest Delights, which took 4,441 square feet at the project.
Travel software firm Amadeus signed a 105,137-square-foot lease last year.
While Lowell said there weren’t any particular “bright spots” for the Miami office market, deals were getting done.
“There are some signs of activity,” he said. “And that’s a little bit better than it was in the first half of last year.”