The long-overlooked Flagler Street corridor in downtown Miami has become a money magnet as investors buy some of the city’s oldest buildings there with plans to redevelop the area.
“Downtown historically has been a neglected area, a home to low-end retailers. But it’s surrounded by a lot of activity, so that makes it the most logical place for the next wave of redevelopment,” said Alex D. Zylberglait, a senior vice president of Marcus & Millichap.
Zylberglait in June brokered the $9 million sale of a six-story building with 42,123 square feet of space at 219 East Flagler Street. He said the property’s cap rate, or rental income divided by purchase price, was in the range of 3 to 3..5 percent, so the price was steep relative to the rental income.
“On an income-producing basis, the building is not worth the value that was paid for it,” Zylberglait told the Wall Street Journal.
But the Canadian buyer, Danny Lavy, plans to renovate the property as an apartment building or office building with higher rental rates. Lavy also has made several other property purchases in downtown Miami, according to a published report by WSJ.
“People have a vision that this is going to be the next hot area,” Ryan T. Shaw, a vice president of brokerage firm Marcus & Millichap, he said.
Moise Mana, an investor from New York City, has invested almost $200 million in recent years to buy properties in the Flagler Street area of downtown Miami. “This is the oldest section of Miami, and the reason it hasn’t been developed is because it had very fragmented ownership,” he said in the article.
Mana recently bought the two-story Metro Beauty building for $6.8 million, about eight times more than its last sale price: $800,000 in 2001. The building has a barber shop and a beauty supply store on the ground floor and office space upstairs. It is located near the site of a planned train station for an intrastate passenger service called All Aboard Florida.
Mana said he will begin a long-term redevelopment of the properties after the City of Miami launches a public project to make Flagler Street friendlier for pedestrians by widening sidewalks and encouraging outdoor cafes to operate there. According to the Downtown Miami Development Authority, the city’s Flagler facelift is expected to start in October. [Wall Street Journal] — Mike Seemuth