Commercial Real Estate Thriving in S. Florida
The South Florida housing market decline has been well documented. Even as Florida mortgage rates remain low, a glut of inventory and sky-high prices have depressed sales greatly. Just the same, the commercial real estate market in the region continues to boom.
One of the top commercial real estate companies in the world has purchased a Miami office complex for about $150 million, underlining investors’ increasing desire to own a piece of South Florida’s office market, the Miami Herald reports.
Tishman Speyer bought the Courvoisier Centre office complex on Miami’s Brickell Key in a deal that closed this week, after previously pulling out of South Florida several years ago.
The company owns landmarks such as Rockefeller Center, and it closed the biggest real estate deal in U.S. history last year when it bought an 80-acre apartment complex in Manhattan for $5.4 billion.
While the South Florida housing market has slumped, the commercial market - particularly for office buildings - has still flourished, catching the attention of large investors.
One reason for the rush on office space: Amid the housing construction boom, few new offices were built. New tenants filled existing properties instead, sending up occupancy levels and rental rates.
Florida real estate developers have since responded with a spate of proposed office projects, but nothing will be completed for a few years.
So the office vacancy rate in Miami’s central business district has shrank from 14.4 percent in the first quarter of 2005 to 10.2 percent.
For Courvoisier Centre’s specific market niche of Class A offices in the Brickell Avenue area, the trend is more dramatic: Vacancy rates dropped from 15 percent in the first quarter of 2005 to 7.7 percent now.
Another reason for the demand: South Florida’s profile as an international gateway continues to grow, making it more attractive to businesses wanting offices here - even if residential real estate and Florida home mortgage activity are declining.
“Miami has moved from a second-tier city to a first-tier city,” said Jubeen Vaghefi, a managing director at Jones Lang LaSalle in Miami. “The perception is that it is a real growth market.”
Tishman Speyer did not make its return to Miami on the cheap.
Neither Vaghefi or Beneville would disclose the sale price, but a person familiar with the deal said the New York company paid about $458 a square foot for the 327,000-square-foot office property. That is not a record for South Florida commercial real estate, but it ranks high.
Courvoisier Centre comprises the only two office buildings on Brickell Key. The property was sold by Florida Office Property Company, operated by a group of private real estate investors in Chicago.
Tishman Speyer previously built offices such as 801 Brickell in Miami and owned Airport Corporate Center, a complex west of Miami International Airport, said former employee Jack Lowell, who is now at Flagler Real Estate Services in Coral Gables.
Lowell said more purchases might be in store, because Tishman Speyer often takes a significant foothold in areas it enters. He also noted that the kind of large real estate investors who left the market through the 1980s and into the early 1990s, as Tishman Speyer did, might be coming back.
SOURCE: Miami Herald
