South Florida’s office market felt the sting of elevated interest rates, skittish lenders and remote work in 2023.
Only two deals this year clocked in at more than $100 million, a drop from last year, when four deals surpassed that figure.
The top sale this year was $250 million in Miami’s Brickell Financial District, marking a continuation of investment appetite for the neighborhood. Brickell became a major recipient of the influx of out-of-state companies to South Florida from late 2020 to early last year, giving it a reputation as an office real estate haven insulated from the woes plaguing markets elsewhere in the U.S.
Last year’s top deal, Ken Griffin’s $286.5 million purchase, also was in Brickell.
But South Florida as a whole no longer remained entirely resilient to headwinds, with sublease availability ticking up. Some companies downsized their space to accommodate remote work, and others freed up square footage as higher capital costs necessitated more careful budgeting. Plus, more expensive financing suppressed pricing, with the runner-up deal this year coming in at $104 million, less than last year’s second biggest sale of $171.5 million.
Here are the top 10 office sales in South Florida of 2023.
Brickell bonanza continues
Monarch Alternative Capital and Tourmaline Capital Partners paid $250 million for 801 Brickell in Miami in October.
Nuveen Real Estate, the investment arm of TIAA, sold the 28-story tower, which has 415,000 square feet of offices and additional commercial space, with tenants including Groot Hospitality’s Komodo restaurant. The tower, at 801 Brickell Avenue, was over 90 percent leased at the time of the sale.
Led by co-founder Michael Weinstock, Monarch Alternative has offices in New York, London and West Palm Beach. Tourmaline, based in Bryn Mawr, Pennsylvania, is led by Brandon Huffman.
The deal breaks down to $602 per square foot.
Pebb, BH buy Office Depot’s HQ
Pebb Enterprises and BH Group bought Office Depot’s headquarters in Boca Raton for $104 million in April.
The deal was the first in 2023 to top $100 million.
Office Depot’s parent company, ODP Corporation, sold the campus at a 21 percent discount off its $132 million purchase price in 2017. The retailer now leases its headquarters space.
Boca Raton-based Pebb and Aventura-based BH plan to renovate the 650,000-square-foot property at 6600 North Military Trail, as well as add apartments and retail. Pebb is led by Ian Weiner, and BH is led by Isaac and Liat Toledano.
The joint venture’s purchase breaks down to $160 per square foot.
Princeton makes South Florida debut
Princeton International Properties bought the 355 Alhambra office building in Coral Gables for $90 million, or $404 per square foot.
The deal marked Princeton’s first investment in South Florida real estate, after the New York-based firm for years tried to enter the tri-county region’s market, CEO David Tawfik told The Real Deal at the time of the closing in September.
PGIM Real Estate sold the 16-story building at 355 Alhambra Circle. It was completed in 2001 and has 225,000 square feet of offices. The property was roughly 85 percent leased at the time of the sale.
Ken Griffin strikes again
Billionaire Ken Griffin joined the office real estate shopping spree.
The founder of Citadel hedge fund paid $83 million for the three-story, 50,000-square-foot building at 125 Worth Avenue in Palm Beach. Frisbie Group and Dreyfuss Management sold the building at a 170 percent markup from the building’s last sale price of $30.7 million in 2017.
Griffin, who moved his Citadel and Citadel Securities headquarters to Miami from Chicago last year, has poured over $1 billion in South Florida real estate over the past decade. Last year, he paid $286.5 million for the 1221 Brickell tower in Miami, marking the biggest South Florida office sale since 2016. He also paid a record $363 million for a 2.5-acre development site at 1201 Brickell Bay Drive in Miami, where he plans to build a new Citadel headquarters. In the meantime, the firm is leasing space in Miami.
Griffin’s purchase of the Worth Avenue building breaks down to $1,680 per square foot.
Franklin Street sells Waterford Business District building
Franklin Street Properties sold an office building in the Waterford Business District near Miami International Airport for $68 million in December.
The Wakefield, Massachusetts-based firm sold the eight-story 5505 Waterford at 5505 Blue Lagoon Drive in unincorporated Miami-Dade County, according to a news release from the seller’s broker.
Christian Lee and Sean Kelly of CBRE represented Franklin Street. The buyer wasn’t disclosed, and the deal has not yet hit public records.
Franklin Street, led by George Carter, had paid $48 million for the 501,600-square-foot 5505 Waterford in 2003, according to records.
The recent sale breaks down to $136 per square foot.
Moishe Mana
Already the biggest landlord in downtown Miami, Moishe Mana beefed up his portfolio in the neighborhood in May.
Mana paid $66.9 million for the 28-story Museum Tower at 150 West Flagler Street, with a plan to reimagine the building in a way that better lures attorneys, courthouse employees and the rest of the legal community in downtown Miami.
Salt Lake City, Utah-based Bridge Investment Group sold Museum tower, which spans 250,000 square feet, for $268 per square foot. The building was about 90 percent leased at the time of the sale.
Mana has amassed most buildings along and near Flagler Street, with a vision to create a mixed-use tech hub that also capitalizes on South Florida’s reputation as “The Gateway to Latin America”. The overhaul would create a campus-like atmosphere, Mana has said. While he has started work on some buildings, most of the project is yet to be finished and partly relies on the city’s completion of the Flagler Street Beautification Project.
Three-way JV buys in Coral Gables
Alhambra Circle in Coral Gables was popular for office investment in 2023.
In the second purchase along the street this year, Torose Equities, Lndmrk Development and Terranova bought the 13-story 255 Alhambra building for $54.4 million in August. Deutsche Bank and RREEF Real Estate Investment Trust sold the building, at 255 Alhambra Circle, for $246 per square foot.
Torose is led by Scott Sherman. Lndmrk is led by Alex Karakhanian, and Terranova is led by Stephen Bittel. Torose and Lndmrk are based in Miami, and Terranova is based in Coral Gables.
Downtown Fort Lauderdale scores deal
Out of this year’s top 10 deals, only one was in Fort Lauderdale.
Pebb Capital, Intalex Capital and CDS International Holdings bought the 24-story 110 East building at 110 East Broward Boulevard in downtown Fort Lauderdale for $43 million in May. Stockbridge Capital Group sold the 369,000-square-foot building for $117 per square foot.
The deal embodied this year’s economic headwinds that stalled many office sales. After 110 East hit the market last year without an asking price, buyers competed for the property and also dealt with more difficult access to capital, as lenders had become skittish on office real estate.
Also, 110 East was about 28 percent occupied at the time of the sale, though the buyers have since increased occupancy to 60 percent, according to a Pebb spokesperson. They also are negotiating with prospective tenants to lease about 80,000 square feet.
Todd Rosenberg leads Boca Raton-based Pebb. Fort Lauderdale-based Intalex Capital is led by Bryson Ridgeway, and Delray Beach-based CDS is a family office led by Carl DeSantis.
Ryder System bids adieu to its longtime HQ
Logistics firm Ryder System sold its Miami-Dade County headquarters of 18 years for $42.1 million.
Chicago-based Bridge Industrial bought the nearly 250,000-square-foot office building at 11690 Northwest 105th Street in unincorporated Miami-Dade for $169 per square foot. The deal was a sale-leaseback, allowing Ryder to remain at the property for up to a year after the March sale.
Ryder, founded in Miami 90 years ago, sold the building after deciding to downsize due to the remote work shift. The firm already found a new home, leasing a new headquarters space on two floors at the Colonnade office building at 2333 Ponce de Leon Boulevard in Coral Gables.
Auto dealer makes office play
Auto dealerships owner Ali Ahmed bought the Biscayne Centre office building in North Miami for $39 million.
Ahmed, through an affiliate, paid $249 per square foot for the eight-story, roughly 156,000-square-foot building at 11900 Biscayne Boulevard. An entity managed by Ami Shashoua sold the property, which was 81 percent occupied at the time of the sale.
Source: TRD analysis of brokerage data, as provided by Colliers and Cushman & Wakefield.
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Here are South Florida’s top office sales of 2022