The pandemic killed the sale of Rail 71. It’s back on the market for $32M
Brokers say the building’s layout makes it appealing in a coronavirus world
After a deal to sell the Rail 71 property in Miami’s Little River fell through due to the pandemic, owner Morgan Reed Group is looking for a new buyer.
Brokers Tony Arellano and Devlin Marinoff of Dwntwn Realty Advisors are relisting the office and retail development at 7205 Northeast Fourth Avenue for $32 million or $253 per square foot, they said, calling it “the perfect post-Covid building.”
“Covid killed the deal but it also made us realize why the asset was set up for the new normal,” Arellano said. “I don’t necessarily see people paying $45 triple net [for office space].”
The 127,562-square-foot building, which backs up to the Florida East Coast Railway, was built on a 3.4-acre site west of Biscayne Boulevard. It hit the market in November for $33 million. A pending deal had gone through the due diligence period but when the pandemic hit the sale was canceled.
Now, the listing brokers say the layout – each tenant has its own entrance/exit, air conditioning unit, outdoor parking – makes it appealing in a coronavirus world. Both brokers worked out of the office during the lockdown.
“We realized how lucky we were,” Marinoff said.
The flex building is currently nearly 70 percent occupied with office, showroom and gallery tenants, including Dwntwn’s office, Saladino Design Studio, Twill & Texture, and Bousa Brewing. Rail 71’s annual net operating income is about $1.6 million, with average gross rents of $20 per square foot, according to the offering memo.
In November, Rail 71 was 89 percent occupied. Arellano said the landlord isn’t giving many concessions to tenants and some left due to the pandemic. Marketwide, retail and office rents are experiencing a 20 to 30 percent correction, he said.
“Our rent is so low compared to other asset classes,” Arellano said, later adding, “You can put anything here with the exception of residential. It’s recession-resistant.”
The building is part of the Little River business district, near Ironside, the Citadel and the MiMo District. Nearby, developers, including Plaza Equity Partners and Tony Cho, are planning the Magic City Innovation District, an 18-acre, $1 billion phased project at Northeast 62nd Street and Fourth Avenue.