Development options limited for Tobacco Road landowner
Question: With the sad news Tobacco Road – Miami’s oldest saloon – is closing at the end of this month after 100 years, what will happen to the entire site? Will the current owner sell the land to a developer, or will he build something himself? What should be developed there?
If timing is everything, it is difficult not to question the decision to close Tobacco Road – the home of Miami’s oldest liquor license – at the end of this month, just weeks before the busy winter tourism season begins in South Florida.
Even more perplexing is what to do in the short term with the triangular piece of land situated between South Miami Avenue at Southwest 7th Street, where Tobacco Road and an assortment of other independent businesses are operating out of structures built at the beginning of the 20th century.
On paper, the Tobacco Road site seems like the surest of future success stories given its location immediately across the street from the $1.05 billion Brickell City Centre mixed-use complex currently under construction.
The 1.3-acre site that includes Tobacco Road was acquired for a combined $15.5 million in four transactions that occurred in April 2012 and a fifth transaction that was recorded in March 2014, according to Miami-Dade County records.
Upon closer review, the immediate options for the Tobacco Road location – short of selling to the developers of the Brickell City Centre complex – pose a variety of challenges for the property’s owner due to large amount of development activity already occurring in the area
As of Thursday, some 17 new condo towers totaling more than 5,300 units – about 29 percent of all announced units in Greater Downtown Miami – have already been announced for a 12-block stretch of South Miami Avenue from Southwest 15th Road north to Southwest 4th Street, according to the preconstruction condo projects website CraneSpotters.com.
(For disclosure purposes, my firm operates the website.)
Overall, more than 60 new condo towers totaling nearly 18,500 units have been announced for Greater Downtown Miami since 2011.
Further complicating any chance of residential development on the site, hundreds of new rental units are planned, under construction or recently completed within walking distance of the Brickell City Centre complex.
Given the announced residential units coming to market around the Brickell City Centre complex, the owner of the Tobacco Road site would probably have to consider the usual alternative options for developable land: office buildings, hotels or shopping centers.
The problem is, the Brickell City Centre complex master plan already calls for developing all of this product as part of the overall project that is scheduled to be built in two phases.
Contributing to the dilemma of what to do immediately with the Tobacco Road land is the imminent competition for users that is expected to come from the newly approved nearly 30-acre Miami Worldcenter mixed-use complex being developed about a dozen blocks north on Miami Avenue.
Further complicating the matter, some three blocks west of the Tobacco Road land is another announced mixed-use project – dubbed Miami River – that is to feature condo units, hotel rooms, retail space and a marina on the south bank of the Miami River between the Southwest Second Avenue Bridge and Jose Marti Park and would provide added competition in the area.
The unanswered question going forward is whether the Tobacco Road bar could have operated for a few more months – or even years – until its landowner formally announced definitive plans for the site given the stage of the current South Florida real estate cycle that began in 2011.
Thought Of The Week: All Aboard Florida Intends To Start Construction By Year’s End
Plans for the new All Aboard Florida passenger rail service operating east of I-95 in South Florida took a symbolic step forward this week with the announcement that work would begin by the end of the year on a planned grand central station – dubbed MiamiCentral – in Greater Downtown Miami.
The new grand central station would include “a food market, shops, restaurants, office and two residential towers with that increasingly rare commodity, 800 rental apartments affordable to people who work in the neighborhood,” according to the Miami Herald.
All Aboard Florida is reportedly pursuing $1.75 billion in tax-exempt bonds – to go along with the already issued $405 million in “private high-risk bonds” – to assist in creating the passenger rail service in two phases ultimately connecting Greater Downtown Miami with Orlando, according to the Palm Beach Post.
Peter Zalewski is a real estate market consultant, non-practicing licensed real estate broker and columnist for The Real Deal who now answers reader questions about the South Florida real estate market in a new weekly Friday column. Questions and comments can be sent to firstname.lastname@example.org. The TRD editors will choose which submissions will be addressed.