ASRR Capital Ltd. — a publicly-traded Israeli company headed by New York real estate moguls Alex Sapir and Rotem Rosen — has teamed up with fashion heavyweight Gerard Guez to pay $13.3 million for an office tower in downtown Miami, The Real Deal has learned.
The buyers have signed a contract to purchase Tower 33, a 14-story, 95,000-square-foot building at 33 Southwest Second Avenue in Miami, Rosen told TRD. The purchase equates to $140 per square foot.
“We believe that the huge immigration to Miami, especially from New York City, will create substantial demand for office buildings,” Sapir, ASRR’s chairman, said in a statement. “And we are here to continue to buy and operate those [buildings.]”
The deal marks the first time that Sapir and Rosen, major New York-based landlords, have entered Miami’s office property market. ASRR made its first foray into South Florida earlier this year when it paid $40 million for an oceanfront building in Surfside, in a joint venture with with the Turkish conglomerate Suzer Group. Together with Turkish businesswoman Ozlem Onal, the group plans to build an ultra-high end hotel and condos.
Among ASRR’s deals in New York, Sapir and Rosen leased 2.3 million square feet at 11 Madison Avenue to Credit Suisse, Sony and Yelp in 2014, and then sold the office building for $2.6 billion in August, marking the largest single-building sale in New York history. Through ASRR, which is traded on the Tel Aviv stock exchange, Sapir and Rosen are raising low interest bonds on the Israeli stock market to invest in the U.S. real estate market.
Guez, CEO of Sunrise Brands, is founder and chairman of Los Angeles-based Tarrant Apparel Group, which designs and manufactures private label women’s jeans and other apparel for women, men, and children. He is also the founder of Budha Bar.
Tower 33, built in 1926, was originally used as a hotel. In recent years, it was occupied by governmental offices, and is now empty, Rosen said. According to public records, the seller is Confesa USA LLC, whose manager is Omar Al Barghouti.
“The cost to purchase the land and build the property [would] be substantially higher and here we [are buying] without the construction risk factor,” Sapir said.
Analyst reports show that office rental rates in Miami-Dade County have been rising, amid declining vacancy. Vacancy rates for the county fell to 13.3 in the second quarter, down from 15.5 percent for the same period last year, according to JLL. Cushman & Wakefield’s second quarterly office report found that downtown Miami Class A rental rates closed mid-year at 43.34 per square foot, up 2.2 percent year-over-year.
Rosen said the Tower 33 property has air rights for a 215,000-square-foot building with 36 floors. The purchase is expected to close in 30 days.
“There is huge demand for office buildings for all the hedge funds guys, the real estate gurus coming there and the banks,” Rosen told TRD, “and that is what we are counting on.”
At 8955 Collins Avenue in Surfside, the group plans a 145,000-square-foot, 80-room high-end hotel, led by Onal, and 10 ultra-luxury condos topping the new building, which will also feature a restaurant and beach club. Onal’s family owns the Turkish luxury hotel chain Dedeman Hotels & Resorts, which operates 16 hotels in Turkey, Russia and Kazakhstan. Across the street, the investors plan to put a parking lot, and on top of that, a tennis court, Rosen previously said.