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Rishi Kapoor’s Co-Living, Micro-Unit Project In Miami Beach Scores Approval

Miami Beach commissioners tweaked city development regulations to benefit Rishi Kapoor’s planned co-living and micro-unit project on Washington Avenue.

Commissioners voted 6-1 on Wednesday to give final approval to an ordinance that allows for the development of co-living units on the east and west side of the North Washington Avenue district between 15th and 16th streets. Under the new code, developers have to vow that at least 20 percent of the apartments would be priced as workforce housing and that projects won’t be hotels or hostels.

Kapoor, who leads Coral Gables-based Location Ventures, is under contract to purchase the properties at 1509 and 1515 Washington Avenue. While he has previously declined to share project details, his attorney shed light on the plans during the commission meeting. It’s for 46 co-living apartments, which residents rent by the bedroom but have access to common areas; 48 micro-units that span 275 square feet; and 24 micro-units that span 448 square feet, attorney Michael Larkin said. The micro-units will include kitchens.

The vote stirred a discussion on the dais over the type of housing the city wants to provide, whether micro-units and co-living units truly address the lack of affordable housing, and if the project would amount to party houses.

After some debate, commissioners imposed a minimum lease term of six months and a day. That’s longer than the three-month to four-month terms that Larkin argued for on behalf of Kapoor, though the attorney reluctantly agreed to the longer lease term.

“There are seasonal workers who come here,” Larkin told commissioners. “We greatly prefer to have less than six months.” 

Mayor Dan Gelber said during the meeting that six months and a day would at least allow “all those New Yorkers who come down” to get their tax benefit.

Commissioners Ricky Arriola and David Richardson countered that the project would offset illegal Airbnb rentals in other parts of the city that are fueled by demand from seasonal workers and others who only need to stay in Miami Beach for a few months.

“I think it would actually present some good competition to Airbnbs, and it would put some of those Airbnbs out of business,” Arriola said. 

The ordinance also sets a three-year time limit for Kapoor to apply for a building permit.

The developer already has approval for a six-story co-living project at 1260 Washington Avenue, which is in the South Washington Avenue district. The new ordinance gives him a year to apply for building permits for that project.

 

Source:  The Real Deal

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Real Estate Lending Firm To Open 8,000-SF Wynwood Office

Arbor Realty Trust, a publicly-traded lender of residential rental projects, will move into an 8,000-square-foot office in Miami’s Wynwood Arts District later this year.

The Uniondale, New York-based company with $16.59 billion in assets as of March will open an office on the seventh floor of Wynd 28, an eight-story building at 127 N.W. 27th Ave. Its Miami office is currently in a WeWork space at 360 N.W. 27th St. in Miami.

Arbor Realty Trust specializes in providing financing for multifamily and single-family rental portfolios and other diverse commercial real estate assets.

The company opted to stay in Wynwood because the location “symbolizes the trends and growth potential of the Miami market as the neighborhood has emerged as a marquee hub for young creatives — not unlike Brooklyn and Arts District Los Angeles,” the company stated. The neighborhood is also part of Miami’s downtown submarket, “which accounts for one-fifth of the Miami multifamily market’s total inventory.”

Available office space for Wynd 28 is listed on LoopNet.com for $65 per square foot.

 

Source:  SFBJ

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Spanish Sports Retailer Pādel Nuestro Signs Wynwood Lease

A Spanish retailer specializing in padel, a tennis-like sport, will open its first U.S. store in Miami’s Wynwood district.

Pādel Nuestro signed a five-year deal for 3,000 square feet at 310-318 Northwest 25th Street.

Pādel Nuestro is Spain’s largest purveyor of padel rackets, shoes and accessories. The sport is a mash-up of tennis and squash. Padel has the same scoring system as tennis, but the balls and rackets are unique to padel. The courts have walls, and balls can be played off the walls as in squash or racquetball. Overhand serves aren’t allowed in padel.

The new store is less than two miles from Wynwood Padel Club, which has eight courts, and Real Padel Miami. It will feature a demo area where enthusiasts can test gear.

Pādel Nuestro sells gear made by such brands as Asics, Head and Adidas.

 

Source:  Commercial Observer

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Apartment Rents Forecast To Grow 0.8% Next Year

If you’ve been dismayed by this year’s apartment rent growth trajectory, brace yourself for 2024. Next year, multifamily rent growth will clock in at 0.8%, according to a new forecast by Markerr, compared to this year’s relatively robust 4%.

The 2024 prediction marks the lowest rent growth since 2020, or shortly after the pandemic began.

But because markets reflect regional differences, a closer look at different areas is important. For example, in 2023, Sunbelt and Tertiary markets are expected to outperform the top100 average, while Coastal and Rustbelt areas will underperform the same group. But within a year, the Rustbelt and Tertiary markets are expected to outperform the top 100 average.

At the top of the MSA forecasts for this year is Albuquerque which is projected to climb to 7.4%, followed by Wichita at 7.3%, Tampa at 7%, North Port, Fla., at 6.9%, Spokane at 6.9%, El Paso at 6.5%, Tulsa at 6.4%, Ogden, Utah, at 6.2% and Palm Bay, Fla., at 6.1%. Then, come 2024, the MSA forecasts shift dramatically with Augusta, Ga., in the lead at 4.1%, followed by Albany, N.Y., at 3.9%, Syracuse at 3.8%, Baton Rouge at 3.8%, Sacramento at 3.6%, Grand Rapids at 3.4%, Jacksonville at 3.1%, Chattanooga at 3.1%, Cleveland at 3% and Harrisburg, Penn., at 3%. And the top10 markets from 2023 are expected to fall to an average rank of 73 out of 100 in 2024.

When MSAs are calculated on a two-year compounded growth basis, Winston-Salem, N.C., North Port, Fla., and Chattanooga are forecast to lead the top 100 markets at 8.6%, 8% and 8 % respectively.

Winston-Salem wasn’t in the top markets in either 2023 or 2024. But it’s expected to jump into first place with the largest contributors to its rent growth being home prices, multifamily permits, job growth and occupancy rate. According to Markerr, “Said differently, home prices, multifamily permits, job growth and occupancy rate are driving the forecast higher while median gross income is forcing the forecast lower.”

In contrast, New York City was in the bottom 10 of the compounded two-year growth forecast at -0.4% because of unfavorable conditions of population growth, historical multifamily rent growth and median gross income.

 

Source:  GlobeSt.

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Sale Leaseback Cap Rates Continue To Attract Investors

While pricing has widened, early indications in 2023 point to a growing return to confidence for the sale leaseback market, according to a market update report from SLB Capital Advisors.

The report cites “strong credits and robust business models achieving successful processes with large interest from investors”, even in non-core markets, particularly industrial.

Due to the current interest rate environment and companies’ overall cost of capital, the SLB cap rates offer a more attractive cost-of-capital solution than ever, according to the report.

“SLB rates remain well inside of many companies’ WACCs and today, in more cases than not inside companies’ current cost of debt financing, making the sale leaseback an incredibly attractive financing alternative,” it stated.

There continues to be an attractive value arbitrage across various industry sectors driven by the delta between business and real estate multiples. The multiple implied by average SLB cap rates (i.e., 6.25% to 8.25%) implies a multiple of over 12x to 16x.

This compares favorably to general middle market transactions which averaged 6.9x LTM EBITDA for 2022. Attractive arbitrage opportunities are generally prevalent across many middle-market sub-sectors, the report said.

 

Source:  GlobeSt.

 

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Tricera Capital, Related Group Announce Schonfeld Strategic Advisors Lease Expansion At Wynwood’s The Dorsey

Tricera Capital, the Miami-based commercial real estate firm led by Ben Mandell, Alex Karakhanian’s LNDMRK Development and market leader Related Group finalized a lease expansion with New York-based hedge fund Schonfeld Strategic Advisors at the partnership’s Dorsey in the Wynwood neighborhood.

Schonfeld is doubling its office space at the Dorsey, adding a second floor to its previous lease at the mixed-use development. The lease expansion brings the Dorsey’s office component to 100-percent occupancy.

The roughly 18,000-square-foot lease expansion brings Schonfeld’s total Dorsey footprint to about 37,000 square feet. Terms of the lease were not disclosed.

“This is a testament to the quality of not only the Dorsey, but the Wynwood neighborhood as a whole,” Related President Jon Paul Perez said. “Firms like these can go anywhere in South Florida, but Wynwood is at the top of every list. The neighborhood has truly hit its stride and we look forward to continuing to drive its thoughtful growth.”

Tricera, LNDMRK and Related teamed up to develop the Dorsey, with renowned Arquitectonica designing the project. The property includes more than 300 apartments, 78,000 square feet of office, 33,000 square feet of retail and ample parking and open space.

“This is another example of high-profile financial firms showing their commitment to the Miami office market, with Wynwood remaining especially attractive to these firms,” Tricera President/Head of Leasing Dustin Ballard said. “The pandemic-era corporate migration to South Florida continues to take shape, as our region’s office sector keeps outperforming other major U.S. metropolitan areas. Relocation demand is still incredibly high as we begin 2023.”

Randy Abend and Paul Mas of JLL’s New York office and Matthew Goodman, formerly with JLL’s Miami office, represented Schonfeld in the Dorsey lease, while Cameron Tallon, Emily Brais, Eric Groffman and Randy Carballo of CBRE represented ownership.

 

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Tech, Finance And Dining Fuel Wynwood Realty

Wynwood commercial real estate continues to flourish as several large tech companies, financial institutions and top food and beverage concepts continue to choose this desired neighborhood as their headquarters.

Over the past three to four years, Wynwood has been transformed thanks to vertical development, said Randy Carballo, senior vice president of CBRE Miami Office. With the extended variety of residential offerings now in Wynwood, corporations are competing to stay in this submarket.

“Rent levels have increased significantly, well north of 20%,” said Mr. Carballo. “The office product in Wynwood, a few years prior, was repurposed warehouses and smaller projects. Now, you have true Class A product, where construction and land costs have risen rental rates.”

In the Wynwood-Design District submarket, average asking rate per square feet is at $78.35 for Class A office space and $67 for Class B, according to Blanca Licensed Real Estate Broker’s Miami Office Market 3Q 2022 report.

The vacancy rate has declined since the highest point in 2020’s third quarter, from 53.5% to 27.7% for this year’s third quarter Class A office space.

The weighted average asking rate has increased 22.4% year-over-year, direct vacancy has also decreased 37.5% compared to the same time last year. There has been 212,316 square feet of net absorption – the change in occupied space, measured between this year and last year, with the space vacated and the newly constructed space. There also are 252,428 square feet of offices under construction as of this quarter, and 320,904 square feet of total space leased, according to the Blanca report.

Some of the new-to-market tenants include Knotel, leasing 38,400 square feet in Wyncatcher; MindSpace, leasing 30,000 square feet at The Gateway at Wynwood; and The Chef’s Warehouse, leasing 4,100 square feet of space in 545 Wyn.

About 1 million square feet of new development is coming online, Mr. Carballo added.

“Our team is representing LYNQ at Wynwood, which is a about 330,000 square feet of brand-new trophy office space on Fifth Avenue. And so, you’re continuing to see a flow of high-quality office space coming into this market for users who are looking for different offerings, but also large blocks of space that really don’t exist in the [overall] market.”

According to Colliers Miami-Dade County Office 22Q3 report, there are 40 office space buildings in Wynwood and the Design District and a total inventory of 1,955,890 square feet.

Colliers retail report for the third quarter shows 2,795,620 square feet of inventory for retail space and a total vacancy of 7.3%, with 9,010 square feet of net absorption,15,000 square feet of space under construction, and an average asking rate of $69.40 per square foot.

The growth in multi-family developments in Wynwood is opening the area’s retail and office submarket to be more of a live-work-play environment. “In a couple years, we’ll have north of 5,000 residential units in Wynwood,” said Mr. Carballo. “That’s saying a lot, because, two years ago we had less than 500 residential units there. So, the neighborhood is growing ten times, and with that comes new retail offerings, new food and beverage opportunities, new services into the neighborhood. Couple that with the future potential of the Brightline station coming soon… Wynwood has a long, long way to run, and it’s truly one of the more exciting neighborhoods than South Florida.”

In an October report prepared by Related ISG Realty with data from CoStar, the top retail leases in the Wynwood-Design District area in the last year include for 2610 N Miami Ave., leased by Metro 1 Commercial; 3711 NE 2nd Ave. for Eichholtz Furniture, leased by DWNTWN Realty Advisors; and 3800 NE Miami Ct., leased by Cushman & Wakefield.

The same reports estimate average asking rent for retail in Wynwood at $61.69, with 12.4% growth since last year.

Additionally, Endeavor Miami, the local branch of the global non-profit organization that supports entrepreneurs with the help of the John S. and James L. Knight Foundation, moved its Coral Gables office into Wynwood, a “strategic location” for the organization, said Claudia Duran, managing director. The new office is 3,000 square feet.

The Gateway at Wynwood, which has 24,041 square feet of flexible retail space and a total of 183,990 square feet of Class A office space, announced in May that tech start-up OpenStore is to lease about 26,000 square feet. At the same building, Baseline, an investment company, would lease 5,000 square feet of offices. Asian-Fusion Steakhouse Daliyah and Mizu Rooftop Garden are leasing about 6,000 square feet of ground floor space and 3,000 square feet of rooftop area, respectively.

Marcus & Millichap also moved its Miami office from The Waterford Business District, near Miami International Airport, into The Gateway at Wynwood, leasing 12,029 square feet on the seventh floor, paying substantially more than at its previous office space, the company announced in March. Venture capital company Funders Fund also leased 14,914 square feet on the building’s 10th floor, and Veru, a biopharmaceutical company, leased 12,155 square feet of office there too, according to the Business Journal.

PricewaterhouseCoopers, known as PwC, also closed a 38,409-square-foot deal at the 545 Wyn office building, according to the Commercial Observer; and Schonfeld Strategic Advisors has leased at The Dorsey, a mixed-use development in Wynwood, for a 20,000-square-foot space.

Other companies that have recently moved into the neighborhood include Spotify Technology, Blockchain.com, Live Nation, Chase Bank and Spearmint Energy, a renewable energy company.

Experts agree that the emerging housing development in Wynwood is contributing to the densification of commercial real estate in the area. “So, you’re going to see more and more service-oriented retailers that need to service those customers,” said Drew Schaul, executive vice president of advisory and transaction services at CBRE. “There are certain retailers that service a daytime population, and then there’s a group of retailers that not only [service] the daytime population, but also the residential population that call Wynwood home.”

 

Source:  Miami Today

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Miami’s CBD Is Getting Mind-Boggling Office Rent Increases

For the first time in history, the average asking rent for office space in Miami skyrocketed to more than $50 per SF in Q2.

Brickell is dominating the market — its 42% year-over-year rent increase surpassed Manhattan and Los Angeles, according to a JLL report.

Migration of America’s top talent to Miami is the main factor driving high rents and making Miami’s office market the hottest it has ever been, Blanca Commercial Real Estate founder and owner Tere Blanca told Bisnow.

“[Miami] is a place where you can attract talent, and the talent has migrated in big numbers during the pandemic and today,” Blanca said. “With a very diverse, educated workforce and population, companies are excited to be in a city that is growing in many ways [and experiencing] a business expansion.” 

Florida added 10,522 new tech jobs last year, the second most in the country, according to the Computing Technology Industry Association. CompTIA ranked the Miami metro fourth in the U.S. for net tech jobs added, and LinkedIn reported a 30% year-over-year increase in IT and software jobs in Miami in 2021.

Blanca CRE has been a player in the industry for over 35 years. According to the firm, office development is being spurred in Brickell and Wynwood by remote work and zoning improvements.

“Brickell and Downtown have experienced a lot of this dynamic … of new people moving and choosing to live in the urban core,” Blanca said, adding that the pandemic accelerated a workforce migration that industry leaders “felt would happen sooner or later.”

The Wynwood Rezoning project, approved in 2015, led to an explosion of interest from developers. As office buildings joined residential, corporate users and investors began flocking in.

Blanca CRE was the agent when Blackstone purchased two office buildings in Miami in 2021, and Blanca said its acquisition spurred more office activity.

“That unleashed an activity that was unprecedented in terms of companies coming here, many in the financial services sector and then later the tech industry and fintech industry,” Blanca said.

Heavy hitters such as Apollo, Babylon and Citadel have come to Brickell in recent years.

Other blue-chip, out-of-town tenants moving in include Microsoft Corp. and Marsh, a subsidiary of Marsh & McLennan Agency, which both moved into 830 Brickell. For coworking firms like WeWork and Industrious, the demand is at an all-time high.

“They have waiting lists, so there are many companies that have entered into licensed agreements with WeWork, IWG, Industrious and so on because they are recruiting talent, they are growing their accounts here and waiting for their permanent spaces to be delivered,” Blanca said. “We expect there is going to be tremendous demand for space on a longer-term basis as each company expands and as the executives choose where they are going to reside.”

As that happens, office demand may spill into other neighborhoods, she said.

For WeWork, this has meant finding new ways to maximize its “inherent flexibility” to accommodate the surplus of out-of-town tenants.

“We continue to see strong demand in Miami where, as shared in our Q1 2022 earnings report, we saw over 90% occupancy and accounted for 9% of commercial office leases despite representing approximately 1% of the market stock,” WeWork Territory Vice President Suzie Russell told Bisnow via email. “As a result, we have waiting lists in most of our Miami locations.” 

Russell said demand is broad-based across company sizes and industries, including tech and finance.

Initial Q2 key findings provided to Bisnow by Blanca Commercial Real Estate show that the flight-to-quality trend is positioned to continue into the foreseeable future, especially in Brickell, Wynwood, Miami Beach and the Miami Design District. That will continue driving pricing up and vacancy down.

Asking rents at 830 Brickell, considered the top-tier building in Brickell, are between $125 and $150 per SF, a $25-per-SF increase over Q1.

“This trend is extremely prominent in Tier 1 Brickell office buildings where rents increased 7.2% from the previous quarter with some landlords increasing rents between $5.00 – $7.50 per SF,” Blanca CRE said in a report. “This growth will be especially prominent in Miami’s CBD where 40% of new to market tenants are looking for space.”

Miami’s office vacancy rate is at its lowest level in eight quarters.

 

Source:  Bisnow

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The Gateway At Wynwood Welcomes Three New-to-Market Tenants

As the Miami office market continues its strong recovery, The Gateway at Wynwood – the newest office building in the Wynwood area – has secured three new-to-market tenants totaling nearly 14,000 square feet.

Recently launched Spearmint Energy, a next-generation renewable energy company enabling the clean energy revolution through battery energy storage, signed a lease to occupy about 3,500 square feet. Victory Polymers Corps., a resource to the construction and renovation trade for spray polyurethane foam insulation products and technology, will occupy nearly 4,000 square feet of space in the building’s spec suites. Ripple, a San Francisco-based company, has signed a lease to occupy about 6,500 square feet.

The Gateway at Wynwood was represented by Colliers’ Executive Managing Director Stephen Rutchik, Managing Director Tom Farmer and Director Tyler de la Pena in the office lease transactions.

“We are proud that The Gateway at Wynwood has become the place-to-be for new-to-market tenants entering South Florida,” said Shelby Rosenberg, R&B Realty’s Head of Development and Acquisitions, US Portfolio. “Leasing activity has continued to ramp up in the first half of 2022, and we are looking forward to continuing to welcome tenants to the building.”

Founded by energy industry veteran Andrew Waranch, in partnership with Kevin Kelley, CEO of Roscommon Analytics LLC, Spearmint is comprised of experienced energy professionals who combine innovative, cutting-edge financial hedging solutions and insight to bring projects to market that reduce waste while increasing affordable, long-lasting, grid-scale renewable energy. The Spearmint platform is comprised of three distinct strategies, including battery and solar project development, energy storage offtake, and renewables power trading. The office will serve as Spearmint’s first office space and headquarters.

Victory Polymers, which is headquartered in Houston, Texas, supplies state-of-the-art formulations and backs them with unrivaled customer support. This will be Victory Polymers’ first office in South Florida.

San Francisco-based Ripple is a real-time gross settlement system, currency exchange and remittance network created by Ripple Labs Inc., a US-based technology company. With 15 offices in key technology and financial centers around the world, this will be the payment company’s first South Florida office.

The Gateway at Wynwood’s first office tenants began to move in January 2022. The LEED Gold Certified building has implemented practical and measurable strategies and solutions in areas including sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. Green buildings allow companies to operate more sustainably and give the people inside them a healthier, more comfortable space to work.

The Gateway at Wynwood offers about 195,000 square feet of leasable Class A office space and nearly 25,900 square feet of prime street-level retail space. Designed by renowned architect Kobi Karp, the environmentally responsible building features flexible floorplans, a private rooftop terrace, gym, unique bay window system, 24/7 on-site security, vibrant exterior cladding, and 2:1,000 on-site covered parking. The building recently announced OpenStore’s office expansion, as well as leases with Baseline, DALIYAH and MIZU Rooftop Garden.

 

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