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CRE Companies Put Old Hotels To New Uses

If you find yourself with a batch of lemons, the wise move is to make lemonade.

What if you’ve got hotel properties in a down hospitality market? Luckily, you’ve got some choices.

For example, California-based Vivo Living, which turns hotels into multifamily properties, announced at the beginning of September that it opened its tenth “boutique efficiency apartment” complex. They come both furnished and non-furnished. Such hotel standards as free Wi-Fi, lounge areas, pools, and gyms become amenities. The company claims more than 1 million square feet of properties with more than 10,000 apartment units.

”Vivo aims to reduce traffic, waste and sprawl by carefully selecting each location to be in physical proximity to shopping, markets, entertainment and other necessities,” a company press release quoted CEO Dan Norville. “We are reusing buildings versus building ground-up.”

Vivo is hardly the only company turning underused hotels into other opportunities for profit. Private equity investment firm Pebb Capital partnered with Maxwelle Real Estate Group recently to announce the acquisition of the historic Bancroft Hotel and adjacent Ocean Steps commercial building in Miami Beach. About half of the 100,000 square feet of indoor and outdoor space will become a “super Class A” office offering fitness/wellness and food and beverage for a commercial use high-end concept property.

“With the current market, many real estate owners are finding that speed to market is essential today,” John Cerra, founding principal of CetraRuddy Architecture, which has done more than 40 conversions of offices, hotels, industrial lofts, and more, tells GlobeSt.com. “Turnaround time is now a key factor, and many developers are looking for strategies to create successful conversions through minimal interventions.”

“The key evaluative criteria for these projects are floor layout and egress, existing plumbing, number and locations of elevators, and availability of vertical riser ducts, pipes or conduits,” Cetra says. 

“In real time, businesses are occupying multi floors within hotels as work/ stay arrangements,” Michael Silver, chairman of Vestian, says. “Citadel recently took over a hotel in Florida which they converted into a trading floor. The trend towards converted use of hotels will continue to accommodate employees working remotely. No longer as a hotel arrangement but as an apartment arrangement or a work use arrangement.”

But it takes work. Cetra notes that zoning and building codes can be hurdles and ensuring potential profit is key. “The project has to pencil out,” he says.

 

Source:  GlobeSt.

 

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Four-Building Office Complex Trades In Off-Market Deal

Julian Huzenman, Vice President of Leasing & Brokerage with FIP Commercial Realty, arranged the sale of a four-building office complex located at 1515 NW 167th Street in Miami Gardens, Florida.

KEI Properties, led by Kenneth Israel, paid $9.1 million to 1515 NW 167 Street LLC, an entity tied to Niznik Behavioral Health, for the Plaza Executive Centre North, a 51,000-square-foot, single-story asset. The deal represents a sale-leaseback with additional office tenants. The acquisition also represents a value-add with future redevelopment opportunities.

Huzenman represented both the buyer and seller in the transaction. The deal closed September 24.

“This was a unique opportunity for the buyer, who has other assets in the area, to acquire a single-story office park with a great parking ratio, which is a rare asset,” commented Huzenman.

KEI Properties focuses on office and warehouse real estate in Fort Lauderdale, North Miami, Aventura, Coral Springs, Pompano, Hollywood and Hallandale Beach, according to its website, and owns other assets within close proximity of Plaza Executive Centre North including a 66,439-square-foot warehouse/office-flex/showroom property at 900-1000 Park Centre Blvd,

Built in 1972, the property is within the Golden Glades area with close proximity to the Golden Glades Interchange and 15 minutes from Aventura, Sunny Isles, Miami Beach, Golden Beach, Hollywood and Hallandale. It features gated parking with a 5/1000 parking ratio.

 

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David Edelstein, Related And Partners Plan Resi Project On Former RedSky Property In Wynwood

David Edelstein’s TriStar Capital, Related Group, Alex Karakhanian’s Lndmrk Development and Tricera Capital paid $26.5 million for a development site where they plan to build a residential project.

Chinese firm Seven Valleys, led by real estate moguls Zhang Xin and Pan Shiyi, sold the nearly 1.3-acre property anchored at 2700 Northwest Second Avenue in Miami’s Wynwood neighborhood. Seven Valleys had been the lender for the property, which previously belonged to RedSky Capital and JZ Capital Partners, whose planned developments never came to fruition.

TriStar and its partners plan to build “well over” 300 residential units on the site, Edelstein told The Real Deal. They could break ground in about 10 months, he said. The venture secured a roughly $20 million loan from Comerica Bank.

Edelstein said the market for new development in Wynwood is “on fire” and that there is very little undeveloped land left.

The development site sold at a loss compared to its $31 million sale to RedSky and JZ in 2016. The previous owner, Wynwood pioneer Goldman Properties, had planned a mixed-use development with 72 residences, 68 hotel rooms, about 11,000 square feet of ground floor retail and 47,000 square feet of offices.

In Wynwood, Related, Karakhanian and Tricera are partnering to develop another project, called the Dorsey Wynwood, at 2801 Northwest Third Avenue. They broke ground earlier this year. The project will have more than 300 rental apartments, commercial space, office space and amenities.

 

Source:  The Real Deal

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Five-Property Assemblage Near Miami Beach’s Iconic Lincoln Road Hits The Market

A five-property assemblage and redevelopment opportunity at 1656-1680 Alton Road, a premier location in Miami Beach, has hit the market.

Totaling 1.38 acres on the block running up to the iconic Lincoln Road, the portfolio includes 1.21 acres or 52,500 square feet of contiguous developable lots with an existing 55,516-square-foot mixed-use/retail structure along Alton Road and an additional 0.17-acre or 7,500-square-foot parking lot on the West Avenue side.

Avison Young Principals John K. Crotty, CCIM; David Duckworth; Michael T. Fay, who is also Managing Director of the firm’s Miami operations; Vice President Brian C. de la Fé; and Associate Berkley Bloodworth will spearhead the sale on behalf of Alton Road Invest, LLC. Avison Young Principal George Vail is available for debt and equity discussions.

“Investor-developer interest remains high for prime location opportunities,” said Crotty. “There is currently no other property on the market in the area like this Alton Road portfolio, considering its development potential and proximity to Lincoln Road retail and the beach.”

Several investment scenarios are possible with the asset. In-place zoning permits redevelopment into residential and hospitality uses, which would be supported by the major Lincoln Road shopping destination. Nearby projects with similar zoning, such as the recent 17 West to the north and the high profile 1212 Lincoln Road to the south, were recently redeveloped to include residential, hospitality, or retail uses. Additional investment options include a covered land play with the existing retail structure or the in-place retail use. Ace Hardware and Elevation Fitness are current tenants at the property.

“We expect the strongest interest from potential buyers seeking to redevelop and maximize the use of the property and location,” continued Crotty. “The asset will also receive significant attention from investors attracted to high retail values on and near Lincoln Road, a tourist hotspot and primary outdoor mall in Miami Beach.”

Lincoln Road sees a retail spend in excess of $1 billion and more than 11 million visitors annually.

 

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Aventura Office Park Could Be Rezoned For Mixed-Use Project

Part of the Aventura Corporate Center could be redeveloped into a mixed-use project that includes apartments.

The City Commission and its Local Planning Agency on Sept. 23 will consider a zoning change for the 10.5-acre site at 20801, 20803, 20805 and 20807 Biscayne Blvd. The 8.6-acre office park there is owned by Aventura Opportunity Owner LLC while the AC Hotel on the remaining land is owned by Norwich Aventura II LLC. The development would take place on the office parcel.

Aventura Opportunity Owner, in care of Atlanta-based Stonecutter Capital Management, acquired the office park for $140 million in August. It currently has 251,773 square feet of leasable office space in three buildings.

The application seeks to change the zoning from “business and office” to “town center.” Miami-based Zyscovich Architects was hired to create the site plan.

According to a site plan letter sent to Aventura officials by Aventura Opportunity owner on Sept. 16, the plan is to demolish the easternmost office building and keep the two other office buildings. The office would be replaced with 208 multifamily units, plus five townhouses on the ground floor and 24 live-work units on the southwest corner of the property. In addition, the developer would redevelop the parking garages along Biscayne Boulevard to add offices, retail and live-work units. This would create 370,143 square feet of offices and 42,254 square feet of retail.

 

Click here to read more about this story.

 

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South Florida Has Third Fatest-Growing Rental Market In U.S.

If you’re in the market for a rental home or apartment, South Florida may be a tough spot to look.

According to a new report from Realtor.com, the Miami-Fort Lauderdale-West Palm Beach area is the third fastest-growing rental market in the country among metro areas.

The average rent in August was $2,432, up 27% from the same time last year.

Only the Tampa-St. Petersburg-Clearwater and Riverside-San Bernardino-Ontario, Calif. rental markets had faster growth.

“After months of stalled rent growth during the peak of the pandemic, gradual recovery gave way to price surges in 2021,” the report said.

In the South Florida market, the average rent for a one-bedroom apartment was $2,150 in August, while the average rent for a two-bedroom was $2,802. Both of those were up roughly 25% from last year.

Realtor.com said increasing COVID-19 vaccination rates and the reopening of local economies have “turbo-charged” the rental market, “with price growth seemingly determined to make up for lost time.”

“Cumulatively, rents are up 13.7% since Sept 2019 while the median home price is up 19.6% in that period, signaling some more room for rent growth to catch up,” the report said.

You can read the full report by clicking here.

 

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Real Estate Primed for Further Growth in Greater Miami’s Evolving Neighborhoods

The state of real estate development today in Miami-Dade is fueled by expectations of strong returns. One need only look at the number of cranes dotting our regional high-rise commercial and residential zones of Miami, Miami Beach, Coral Gables and elsewhere to recognize the intensity. Currently, metropolitan Miami has the third tallest skyline in the country, and nearly every commercial neighborhood has construction of some kind occurring.

The great challenge and opportunity for developers and investors has been twofold since most are seeking near-term returns that satisfy their investors. Generally, there are two considerations on their minds: when is the right time to purchase and develop property, and what barriers to entry are manageable. Although some local developers have the cash and strategy to be more patient and wait for two to 10 years to move forward with projects on land they own, that is not commonplace.

The key success metrics for many developers is tied to the highest and best use of their capital for mixed-use, residential, office, etc. Here are some market conditions and signals that may tip the prospect of successful development in one direction or another:

First, the macro conditions of the market, including inflation and monetary policies affecting access to capital, tax incentives, and the cost and availability of construction labor and materials, are key success factors for any developer.

Second, sea-level rise and climate change are ground zero in Miami-Dade. Our proximity to the bay and ocean, and the prospect of lifestyle disruption from rising tides, hurricane storm surge, and in some neighborhoods the very existential issue of structures within flood zones, create an urgency and massive investment of federal, state, and local government resources in the billions. We are already witnessing both institutional and noninstitutional lenders refusing long-term financing for certain locations, and that prospect will continue and become more prevalent this decade and beyond. Upland neighborhoods and districts, ones that will not witness flooding in the next two decades, are thus naturally more attractive.

Lastly, the story of Miami, over the past 125 years, has been one of three steps forward and one step back when it comes to development. We have witnessed growth cycles greater than most American cities, but we also tend to be on the frontline of overdevelopment and vacancy when recessions occur. Yet, the sophisticated real estate investor and developers, like those who may have battle scars from the crash and burn of 2008-2010, or who have the wisdom to know that markets ebb and flow, recognize that Miami leads with its entrepreneurial opportunity.

So, based on predictors, trending and conditions, beyond neighborhoods we would call currently “hot” where developers are executing on major projects, what are the next group of neighborhoods ripe for major development in the next decade?

Certainly, areas like Little River are enticing because of their historic position in the marketplace. Assemblages around the immediate commercial corridor along 79th Street are a good play because there is precedent for taller buildings, some of which are targets for repositioning.

We could witness more infill projects in East Little Havana, but the challenge there is tied to limited densities and parking requirements on properties that can make development cost prohibitive. Investors must buy right to make the numbers work. If commercial use is on their mind, they have to work with neighborhood residents in advance to quell concerns over noise at eateries, bars and clubs. That can be costly and time consuming, but if done right could yield great results.

There was an innovation in parking requirements, which shifted it to the street in Little Havana, but that applied to small residential buildings, which fit the small-scale profile of existing residences. Another play might be to buy a handful of these small building complexes or a portfolio of the same, which can be held as prices rise or flipped in three to five years for a nice return.

The key to development in places in the city of Miami north of the central business district is the rezoning of some properties with outdated or limited infrastructure to prepare the land to be flipped or developed. There are opportunities for four-parcel assemblages for small residential development that can produce acceptable returns with low beta.

A good partner in Miami may be its community redevelopment agency, which is looking to bid properties they own and provide tax incentives to developers and investors interested in building housing in these communities.

Lastly, there are ever greater opportunities that should be considered near Metrorail stations and along the US-1 corridor, which are zoned for higher density, with the city of Miami and Miami-Dade County incentivizing opportunities for builders. Noise is a challenge, but that is the point–managing challenges can yield good pricing on land and nice margins upon development.

Going forward, more developers will look to commercial with barriers to entry they can remove to stake their real estate project.

 

Source:  GlobeSt.

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South Florida Commercial Real Estate is ‘Off the Charts’

All eyes are on the South Florida’s real estate market as companies large and small from across the country relocate or expand to enjoy its sunny climes and tax benefits, accelerated by the pandemic.

Big businesses are breathing life into South Florida’s office market, with major companies creating a ripple effect and influencing others to come to the capital of capital. Despite the rise in the Delta and Mu variant cases, top-dollar deals aren’t diminishing and the retail and hospitality sectors are booming.

“Occupancy was off the charts. Average daily rates were off the charts. Some of my hotel owners who had gone from crazy numbers like 9% occupancy were now full and at rate said they had never been able to charge before,” said Suzanne Amaducci-Adams, partner and head of real estate at Bilzin Sumberg in Miami.

“It remains to be the most dominant sector that continues in the new-to-market sphere. I think the openness of business and business climate in South Florida has seemingly drawn in the past year, additionally our tax climate as a state, plus being a good-sized metropolis with much to offer,” said JLL’s Jeff Gordon.

“The venture capital firms are flooding this market. The hedge funds and private equity firms are flooding this market, and they’re clustering near our building at 830 Brickell, and in Coconut Grove and Wynwood and the Design District. I think we’re going to see more of these big names,” said Ryan Holtzman of Cushman & Wakefield.

 

Source:  GlobeSt.

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Global Consulting Frim To Expand In Miami’s Wynwood, Hire Hundreds

Slalom, a $2.4 billion global consulting firm, will expand its Miami presence with a new office in Wynwood.

Seattle-based Slalom signed an 8,000-square-foot lease in the 545wyn office tower, recently built by Sterling Bay. After entering South Florida with temporary space in 2019, Slalom has grown to 50 employees here. It aims to hire several hundred more employees.

“Unlike typical consulting firms, Slalom consultants live in and are committed to the cities in which we work,” said Beau Williamson, general manager at Slalom. “We’re proud of our commitment not only to this premier office space in Wynwood, but also to the people of Miami as we hire locally to build out our business and create a positive impact on this community.”

 

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City Of Miami Beach Board Approves Redevelopment Plan Along Prime North Beach Beachfront

On September 13th, the City of Miami Beach Historic Preservation Board approved the Ocean Terrace Holdings (OTH) redevelopment plan and Ocean Terrace streetscape masterplan. Led by OTH principals Sandor Scher and Alex Blavatnik, the redevelopment plan includes a 20-story, 75-unit residential building, new restaurant and retail options, and a 127-room hotel that incorporates the carefully renovated and unified historic Broadmoor and Ocean Surf properties. Following years of community outreach and negotiations with the City, the approval of OTH’s redevelopment plan will revitalize this underutilized area in North Beach along Collins Avenue, between 74th and 75th Street.

“The approved plan for Ocean Terrace is more economically viable, will attract a world-class hotel operator, and will incorporate a beautifully-designed oceanfront greenspace for the entire community to enjoy,” said Scher. “We look forward to getting to work on our long-awaited project, which will restore the street-level historic architecture, transform Ocean Terrace into a lushly-landscaped oasis and give new life to this cherished beachfront.”

The approved plan includes a few recently added enhancements that will elevate the project’s hotel and residential components. To help attract a world-class hotel flag to the project, the plan adds a new hotel building with 72 rooms that will be built within previously approved height restrictions.  The hotel will be managed as one operation with the historic Broadmoor and Ocean Surf hotel buildings. The hotel will include restaurants, bar, meeting rooms, fitness, spa, outdoor pool and deck, rooftop lounge, and on-site parking.

With an historically inspired design, the residential component will feature curvilinear designs reflective of MiMo style, such as curved balconies and eyebrows. Units will range in size from 2 to 5 bedrooms and feature a full complement of luxury amenities. The masterplan also calls for approximately 15,000 square feet of commercial space along Collins Avenue and approximately 3,000 square feet along Ocean Terrace.

“We are grateful to the North Beach community and City of Miami Beach for working together with us to create a vision for Ocean Terrace that incorporates historic preservation, activation of the oceanfront, and economic revitalization,” said Alex Blavatnik, principal of Ocean Terrace Holdings, LLC. “We are excited to now be able to bring that vision to life, starting with an iconic and activated public space that will belong to the City for future generations.” 

The first stage of the redevelopment plan will focus on a new $15 million, five-acre public greenspace along Ocean Terrace designed by world-renowned landscape architect Raymond Jungles. The asphalt street will be converted into an active, pedestrian-focused greenspace with native trees that will provide much-needed shade. A public-private partnership with the City of Miami Beach, the streetscape plan will also offer new walking trails, water features, public seating, and a covered pavilion. A mid-block open breezeway in the Ocean Terrace development will also connect Collins Avenue retail to Ocean Terrace, allowing enhanced public access to the oceanfront. OTH will fully fund the park, with no cost to taxpayers, and will deliver the greenspace on an expedited timeline.

Construction on the public greenspace is set to begin in the third quarter 2022.  Pre-construction sales for the residential building are also estimated to launch in 2022.

 

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