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HomeMy WebLinkAboutArticlesOFFICE SPACE AitA4 1-Pe12-11-1 c/i Thicht ki ARAI') 1 0,7006, Broken windows no bar to sale • Demand for office space in downtown Miami is strong enough; for the owners of 1221 Brickell to put it up for sale before fixing windows damaged by Wilma. BY MATTHEW HAGGMAN mhaggman@Miarnillerald.com fH •cane o urriSUBMITTED INTO THE A Brickell Avenue office building that became symbola Wilma's destruction when hundreds up for sale. of its windows were blown out is now PUBLIC RECORD FOR The decision to sell 1221 Brickell, Irtvi‘ ON 34344 . known to many as the Greenberg ITEM Traurig building because the law firm's name is atop the tower, comet ,k amid increased demand for office: property. No new offices have been built in downtown or along Miami's Brickell Avenue in recent years, yet occuRancy rates in existing 'buildings have increased with the strong econ- omy. - "Recently, the conditions in the commercial real estate market have shifted," said Sherry Frankel, vice- president of building owner Brickell Equities, in a statement. "The demand from investors looking to acquire this type of real estate is extremely high, which has prompted our decision to selL" Among other such moves, Ameri- can Ventures Property Fund in Coral Gables recently agreed to sell 15-story 1401 Brickell — an office building a few blocks south of 1221 Brickell in Miami — to Madrid -based Testajor $61 million. And Massachusetts -based Brookwood Financial Partners put 30-: story New World Tower at 100 Bis- cayne Blvd. in downtown Miami on the sales block. 1221 Brickell, however, is going up for sale while the 27-story building remains in an unsightly state, scarred by sheets of plywood covering hun- dreds of punched out windows. It will be several months before repairs are • TURN TO BliICKELL, 6C 6'J= d I 51/ - si OFFICE SPACE I FROM THE FRONT PAGE Briekell tower up for sale •BRICKELL, FROM IC completed. Yet tenants within the building have returned to work, the building's lobby was recently renovated, and installation of new windows has started.. Several real estate brokers not involved in the sale Pre- dicted the hot office market will attract eager buyers despite the damage "Either a new buyer will work through the issues or a new buyer will work through it with the current owner," said Michael T. Fay, president of Colliers Abood Wood -Fay. "It complicatesthings, but there are so many sophisti* cated buyers out there it would get worked out." Peter R. Harrison,senior vice president of Transwes- tern Commercial Services in Miami, added: "They'll fiat the skin. Might as well ''take advantageof the capital chas mg very few deals." iln recent years, many sites have been snapped up by resi- dential developers to build new condo towers. At ,the same time, the high cost of construction has scared office developers away because pre- vailing rental rates often aren't enough, to justify the, cost of a' new office building. Several developers now plan to build new office tow- ers, but those projects won't be Completed for more than tw`o years. As a result, rental rates are expectedto increase in the .next, two years as the market for office space tightens fur- ther — making office owner - slated tor lattice constructionship ever more attractive. "We think rental rates will increase by 10 to 20 percent in the next two years because of the shortage," Fay said. J. Daniel Carlo of Holliday Fenoglio Fowler in Coral ' Gables is marketing 1221 Briekell's sale but he declined comment. ' The office building at 1221 Bricllellnue , square feet:Aveof office space122. I547t is currently 73 percent leased, with law firth Greenberg Traurig occupying the most Space. . The building is owned by an investment group called Erickell Equities, led by Amos Kaminsky of AFA Asset Ser- vices in New York. Kaminsky, whose group purchased 1221 Briclrell in 1993, is also part of an invest ment.group that owns Erickell Bay Office Tower at 1001 Brickell Bay Drive in Miami. Submitted Into the public record in connection with item PZ- it, on 3)s-3)oi- Priscilla A. Thompson City Clerk THE KISS OF WILtIA:1221 Brickell, known as the Greenberg Taurig building, is up for sale in spite of pending repairs. CHARLES TRAINORJ. MIAMI HERALD STAI MIAMI • FRIDAY, MARCH 17,2006 — sz.00 VOL. 8o, NO. 194 ALM by Oscar Pedro Musibay An investment group plans to make the biggest com- mitment to Miami office construction in years, a com- plex with 952,000 square feet of office space at 600 Brickell Ave. Sherlon Investments plans o begin -building a 485-foot tower before the end of the decade and start an adjacent 9o3-foot tower to the west in zotc. Sherlon, which owns the. block, received a recommen- dation for approval of the $723 million project from the city zoning board Monday. The plan still must be reviewed by the planning board and the City Commission. The proposal calls for the DEVELOPMENT A big vote for offices Investment group has plans for huge commercial complex on Brickell Avenue, with construction to begin before office space plus i8,000 - square feet of retail, 134 resi- dential units and 36o hotel units. Sherlon wants to be a "frontrunner" in terms of office, said attorney Tony Recio of Weiss Serota Helfman Pastoriza Cole & Boniske, which is represent- ing the developer on zoBing. Calls to Sherlon were not returned. - While most developers in downtown Miami aiii the financial district are focusing on condos to the exclusion of office space, Recio said, "We don't need any more residen- tial." About 5,000 condo units are planned from the Miami River to Southwest Eighth Street and between Brickell and Miami avenues. Sherlon-- ` 'Inv See 20I0 Planned office towers would be the largest built in Miami since the 198os. des Loretta Cockrum, is controlled by Lu Siong Ng, the developer's permit teiproiect would be huge, but the ow.n r�has veral advantages. rh"e loci ought the property for frit thillion in various transac- tions from ' 1990 through 1998. The .property was assembled before the ---coiri4n)?Oorin pushed up land prices. Sherlon=has hired Swire Properties — which -built out most of Brickell Key:- as its real estate consultant, said a source who asked not to be identi- fied. The focus on office comes as vacan- cy rates shrink to their lowest level in about five years, leasing rates are set - tine records, and only one other major Brickell office project is planned. Park Place . developer Alan Ojeda, who is developing S7o,000 square feet of office space in the 33-story Park Place at 145o Brickell Ave., believes the potential rival is overreaching. "If we were inundated companies from the rest of the. would say there is a need fortt, square feet, but that is not the. Ojeda said. He said he has yet to sign for his office project, but he is-1' cussions with a local law firm financial institutions about 'pass_ moves. He also is building ap- on the site. FRIDAY, MARCH 17, 2006 • DAILY BUSINESS REVIEW • A15 I_1EIIM•IR l: new office space with annual absorp- tion running at 300,000 square feet along Brickell Avenue and in down- town Miami, Ojeda said. Ojeda said he bought before the biom in land prices but his margin is still tight because of rising construc- tion costs. Some developers have reported a 4o percent increase in costs during the last 18 months. Sherlon's project also raises logisti- cal issues because of its proximity to the Brickell Avenue bridge and its location among other towers. The nearby Four Seasons is the city's tallest building with 7o floors. An existing six -story building will be knocked down to make way for the new towers, Recio said. The rest of the property has surface parking. The project is planned in two phas- es. The shorter tower would be built first with 49o,126 square feet of Class A office and 14,03o square feet of ground -floor retail. The second tower would offer 134 residential units, 36o hotel rooms, 463,483 square feet of office and 3,917 This building on. Brickell Avenue will be knocked down to make way for new office towers. square feet of retail. Construction is scheduled for completion by 2014. The current plan is to rent offices in the first tower for $4o a square foot and retail for $5o a square foot. When it is finished in 2014, office space in the second tower initially would rent for $5o a square foot and retail for $65 a square foot, according to the developer's economic projections. Eight years from now, the developer projects the average condo sale price of $1.75 million and the hotel room rates `of s600 a night. Recio said he and developers are "confident" that the building will not prompt objections from federal avia- tion officials who have forced design changes on downtown buildings. Planning Department spokes- woman Luciana Gonzalez said the project would "comply with Miami - Dade County aviation regulations for height because they are in a small area that allows such height." The proposal includes 2,17o parking spaces, according to city of Miami records. Bert Checa of Holly Real Estate said that if Ojeda's and Sherlon's offices come onto the market around the same time, they would amount to 12 percent of the 8.3 million square feet of high -end office space for lease in the central business dis- trict. The vacancy rate was 9 percent in the fourth quarter of 2005, down from 14 percent a year before, making it the tightest office market in years, he said. Current lease rates range from $29 to $38 a square foot. Class A landmarks such as the Wachovia Financial Center charge on the higher end. The 55-story landmark built in 1984 has 1.15 million square feet of office space. The last major office building built in Miami was the Four Seasons Hotel & Tower in zoo4. "The market is starving," Checa said. "Within a year the rents have gone up by $6." Traffic congestion could pose an issue for potential tenants, but the site's location and projections for. unmet office needs offset the nega- tives, he said. Randy Olen, a CB Richard Ellis sen- ior vice president, said existing down- town and Brickell tenants would be eager to move. He discounts traffic and access con- cerns. "They are going into the new build- ings, into the new technology," he said. "This is not overbuilding. This is not an over -reaction. This is pretty sound thinking." Oscar Pedro Musibay can be reached at omusibay@alm.com or at (Foy) 347-665r. 3UBM1TTED INTO THE. PUBLIC RECORD FOF. 7EMezj ON3.z3o&.