After residents raised concerns last year with Miami-Dade County’s plan to pay well-above market-value for a new government center, the commission approved a tweaked deal that dropped the price by around 11 percent.
Miami-Dade plans to buy the six-story Flagler Corporate Center at 9250 West Flagler Street in the Fontainebleau neighborhood in an unincorporated area of the county for $182 million.
The new price is $23 million less than Mayor Daniella Levine Cava’s administration’s originally proposed price of $205 million, which had touched off a firestorm among Miami-Dade residents and real estate experts. The previous price was more than what two property appraisals deemed the site is worth, with one of the appraisals pegging the value at $188 million and the other at $194 million, assuming the building is fully leased.
Miami-Dade commissioners approved the purchase at their meeting on Tuesday. The county will use the property for a West Dade Government Center, consolidating departments that work on real estate permitting and approvals. These employees are currently in offices across the county, hindering communication and cooperation among staff members and leaving project applicants to drive across Miami-Dade to get approvals. This has contributed to a slowdown of application processing, including for homeowners who need permits for home improvements.
Completed in 1974, the 625,000-square-foot Florida Corporate Center has 467,000 rentable square feet. The county is buying the building and an adjacent lot that span a combined 26 acres.
The previous above-market purchase also came amid debt woes for offices due to elevated interest rates, higher vacancies in suburban buildings due to remote work and overall economic headwinds.
Flagler Corporate Center’s loan is listed as performing, meaning the landlord is meeting payments, but it’s also on the servicer’s “watchlist” due to a drop in occupancy after Florida Power & Light vacated its space and a drop of the debt-service coverage ratio. (DSCR of 1 is the breakeven threshold for a landlord to generate enough cash flow to cover debt service payments.) As of December, the building’s occupancy was in the low 20 percent, according to Morningstar Credit.
The building has experienced some leasing. First Quality Homecare took 8,400 square feet, and Simply Healthcare signed a five-year extension for its lease that represents 17 percent of the building’s net rentable area, Morningstar Credit shows.
Florida Corporate Center’s debt consists of a $36.7 million tranche as well as a $30.6 million tranche, Trepp records show.
New York-based Bushburg owns the property, having paid $57.5 million for it in 2014, according to records. Led by founder and CEO Joseph Hoffman, Bushburg has dubbed the property “The Current.”
Bushburg representatives didn’t return a request for comment.
Miami-Dade has touted the financial benefits of buying the building. The deal would save Miami-Dade $861.8 million over 30 years by moving administrators to a county-owned office instead of continuing to lease space, according to a county staff memo to commissioners. The savings estimate takes into account the county’s debt service payments for the purchase and capital improvement expenses, as well as the Flagler Corporate Center’s expected value appreciation.
“We are well-below market value,” Commission Vice Chairman Anthony Rodriguez said at the meeting.
Not everyone is fully convinced.
County’s administrators’ analysis in support of the deal pointed out that Lennar’s recent purchase of its headquarters for $68 million at 5505 Blue Lagoon Drive broke down to $318 per square foot. That’s more than the $291 per square foot price Miami-Dade will pay for the Flagler Corporate Center.
Commissioner Juan Carlos Bermudez argued the two deals aren’t comparable.
Lennar’s building is right off the Dolphin Expressway and has signage, while Flagler Corporate Center is west of both the Dolphin and Palmetto expressways.
They are “very different,” Bermudez said. “Let’s make sure that when we say something is apples to apples it’s really apples to apples, not apples to oranges.”
The entire project will cost the county $256 million, including debt for the purchase, due diligence costs and capital improvements, the memo shows.
Miami-Dade employees from the departments of regulatory and economic resources, water and sewer, solid waste management and information technology will work at Flagler Corporate Center, as well as staff from the clerk of court and property appraiser’s office.
Commissioners on Tuesday added two requirements to the resolution. They directed county administrators to immediately start the land-use and rezoning process to allow the development of affordable and workforce housing on a portion of the site, as well as to identify a lot on the property that could be used for a future Metromover stop.
Miami-Dade is looking into expanding the Metromover from the intermodal transit hub near Miami International Airport along Flagler Street and to Florida International University’s Modesto A. Maidique Campus.