High net worth investors, families, and wealth managers from Latin America, seeking to diversify their portfolios, have been on a buying binge for office buildings and single-tenant retail properties throughout Miami-Dade County during the past 18 months, real estate advisors and developers specializing in the commercial sector told The Real Deal.
“Their appetite for well-positioned income-producing assets coupled with Miami’s prospering economy are translating into appreciating property values at a faster pace than previously anticipated,” said Alex Zylberglait, president of The Zylberglait Group at Marcus & Millichap Real Estate Investment Services in Miami. “It is fueling transaction velocity across most product types. And there is particular interest in single tenant spaces.”
Zylberglait told TRD that his firm brokered the sale of six commercial properties to buyers from Argentina, Brazil, El Salvador and Italy in the past 15 months.
For instance, Zlyberglait represented the seller of a 20,000-square-foot office building at 1250 Northwest 57th Avenue that is the headquarters of Summit Aerospace, an aircraft maintenance company that generates approximately $18 million in sales annually. The building was sold in March of last year for $2.6 million to a company called Algafin, which lists Giorgio Rubini, an Italian national, as its manager.
In another Zylberglait brokered transaction in July of last year, a Brazilian-owned entity called Kireland 41 Street Doral purchased an L.A. Fitness at 10055 Northwest 41st Street for $9.9 million. More recently, Zylberglait represented the previous owner of an office building anchored by a Wells Fargo Bank at 4995 Northwest 72nd Avenue. The property was bought for $5.3 million on March 25 by St. Helena LLC, a corporation listing Frech Hasbun and Freddie Moises of La Libertad, El Salvador, as managers.
Zylberglait’s firm is not the only commercial real estate brokerage seeing more interest from foreign buyers. Earlier this month, Fabio Faerman of Fortune International/FA Commercial told TRD he represented a foreign buyer that purchased a 2,259-square-foot Taco Bell at 1650 Northeast 163rd Street in North Miami Beach.
“International investors are looking for business opportunities like this,” Faerman said in a statement. “This is a prime location with a great franchise, Taco Bell.”
Camilo Lopez, president and managing director of real estate development and management company The Solution Group, said demand from Latin American buyers for commercial office space is the reason his firm is building an office condo in Coral Gables. In August of last year, Solution paid $6.6 million for a one-story office building at 1200 Ponce de Leon Boulevard, built in 1972.
The company is tearing down the old structure to make way for a Mediterranean-style office building called OFIZZINA. It will have 54 units totaling 96,767 square feet of office space, as well as three retail units at ground level and 332 parking spaces, Lopez told TRD.
“In our research meetings, we realized the office market is the least served sector in Miami,” Lopez said. “It doesn’t even reach 5 percent of the overall real estate market. Because of the very limited offerings, we decided to build a luxurious office condo building.”
The project, including the land purchase and construction, is being financed privately through a capital fund made up of investors from Latin America and Europe, Lopez said. He said the office condo concept appeals to South Americans.
Claudio Stivelman, a principal partner in Aventura-based S2 Development, said foreign investors staking claims to commercial properties in South Florida have buying power that begins in the $3 million to $5 million range. “These are people who have likely already bought a condo or two in Miami and are looking to upgrade their portfolio,” Stivelman told TRD. “They may want to buy a Walgreens, a strip mall or a warehouse.”
In recent months, Stivelman said, his contacts in Brazil have been introducing him to investors who are not interested in condos. “They are seeing the strength of the commercial side,” he said. “They see an opportunity to make big money.”
Zylberglait said the foreign buyers he’s dealt with view commercial properties as a safer bet. “The income generated from the properties is a much more stable situation than buying a half-a-million dollar condo that doesn’t produce income unless you can rent it,” he explained. “Buying a commercial asset not only produces a stronger yield. It also allows the buyers to leverage those investments.”