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Miami Beach Adds 17th Street Garage To Class A Office Request For Proposal

Following a large response from developers interested in building Class A office space on three city-owned parking lots north of Lincoln Road, Miami Beach Commissioners this week decided to add one more option to a formal Request for Proposals (RFP) process – the 17th Street garage across from City Hall.

Eighteen developers including Design District developer Craig Robins’ Dacra, Michael Comras’ The Comras Company jointly with David Martin’s Terra, and Integra partnering with Barry Sternlicht’s Starwood Capital, responded to the City’s Request for Letters of Interest (RFLI) to build Class A office space on the three surface parking lots. It’s part of an effort to diversify a tourism-dependent economy hit hard in recent years by hurricanes, Zika, and, more recently, COVID.

Adding the aging garage structure to an RFP would allow the City to “have someone else pay for the rebuilding of that garage,” said Commissioner Ricky Arriola who raised the idea after Miami Beach Planning Director Tom Mooney suggested it. It also would open the door to a “more elegant” structure that could address concerns about a need for more height. “If we could smooth [the space] out over a greater area, we might avoid having the height issues that I think is going to be of concern to our residents,” he added.

Commissioner David Richardson said, “It’s an interesting idea and I suppose it wouldn’t hurt for us to hear solicitations, but I’m not of the belief at this point that we should surrender that piece of land right now.”

Calling it “a gateway property” leading from 17th Street to Lincoln Road, Richardson said, “There have been many discussions over the years about ways to open up the funnel” from the Miami Beach Convention Center to Lincoln Road. “I do agree the parking structure is coming to the end of its useful life” but he expressed concerns about the amount of parking that will be needed there in light of the request by the developers of the planned Convention Center Hotel to eliminate parking and reduce the hotel’s size as a way of increasing the likelihood of getting financing.

“Never hurts to listen but I would say it’s a pretty high bar for me to let that property leave government hands,” Richardson said.

Mayor Dan Gelber addressed “the funnel” to Lincoln Road. “It’s almost like people don’t walk that way sometimes because it feels like there’s a wall there,” he said. “We ought to be looking at ways to make that more of a gateway,” the opposite of what it is now, he said, which is “almost like a barrier.”

“Obviously, there’s an appetite for [Class A office space],” Gelber said, but added, “I’m not looking for Class A office buildings because I think it’s better to have… The goal is to diversify your economy so that you have more than just [tourism]” to rely on.

“We love our hospitality industry, but it’s not the most resilient industry,” he said. In addition to the potential to attract “knowledge-based industries, information-based industries,” Gelber said, “If we could have better office space here, you really do get people out of their cars and off the causeway… We have a huge number of residents who go back and forth” between Miami and Miami Beach.

“We don’t’ have to commit to it, let’s just see,” Gelber said.

Interim City Manager Raul Aguila told Commissioners, “This is really the time that this city has to consider some really bold planning ideas… This garage is a relic and we’ve been trying to reprogram Lincoln Lane for the longest time.” Developing the garage site would “activate that area,” he said.

Adding it to an RFP would not be binding, Aguila emphasized, but “since there’s been so much interest from high-profile developers, I think it’s just a terrific idea to authorize us to add the 17th Street garage as a developer’s option.”

He reminded them the RFP has to come back to the Commission for approval and any proposals would be further vetted by the Commission.

“I think it’s a cool idea,” Commissioner Michael Góngora said, while noting he wasn’t sure he could support it given the request for reduced parking for the Convention Center Hotel. He agreed the garage “is kind of a big block of cement.”

“From an aesthetic perspective,” he said, allowing a private developer to “make it more beautiful” is appealing.

Aguila noted the City could require as part of the RFP that a developer replace the parking. “This is to give you all an option to look at this as a holistic site.”

Both Arriola and Góngora expressed concerns about the potential of four active construction sites along Lincoln Road at one time. “Sometimes these progressive ideas are difficult to oversee and administer in real life,” Góngora said.

“If you don’t like it, you don’t have to approve it,” Aguila responded, “but I’d like to put something before you to consider.”

Commissioner Mark Samuelian who has made economic diversification one of his priorites said, “Possibilities and options are right up my alley so I will support this tonight.”

“Offices often can be a less intensive use, 9 to 5 office [hours] versus a hotel,” he said. “My gut says I’d probably lean toward the office being a little more community friendly.” Once again, he urged the City to “engage the community early and often” as long-term leases on the properties under consideration would require voter approval.

Richardson said, “What that particular area is begging for is a gateway to Lincoln Road” but, to do that, he said, “It seems clear to me you’ve got to chop off a northeast corner of the building [to] open it up.” He suggested asking developers to take into consideration the desire “to eliminate the funnel” when submitting proposals.

“This is just giving a bigger canvas for developers to come to us with a proposal,” Arriola said. “We would still own the land.”

Reiterating the Commission would have final say over the RFP that is developed and voters have the ultimate word on long-term leases, Arriola said adding the 17th Street garage is “giving ourselves a lot more flexibility [taking] an aging garage that some future Commission is going to have to deal with and get the private sector to pay for it.”

“It is a brutalist structure and it divides the Convention Center from Lincoln Road,” Arriola said. “Any design should make it a holistic integration, so I think it’s a smart move by us.”


Source:  RE Miami Beach

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Miami Beach Gets Strong Response From Developers Looking To Build Office Space

Seventeen developers have expressed interest in building Class A office space on three municipal parking lots in Miami Beach adjacent to Lincoln Road between Alton Road and Meridian Avenue. The City put out a Request for Letters of Interest (RFLI) in November to test the waters as it seeks ways to diversify an economy heavily dependent on tourism and hit hard in recent years by hurricanes, Zika, and now the more prolonged COVID impacts.

In a letter to City Commissioners updating them on the process, Interim City Manager Raul Aguila wrote, “The list of interested parties includes accomplished real estate developers and investors, known both locally in the region and nationally.”

Fifteen respondents submitted their expressions of interest before the 3 pm deadline on February 11. They include:

  • 13th Floor Investments
  • Adler Group
  • Design District Management, Inc., D/B/A Dacra & Adventurous Journeys LLC
  • Andalex Capital
  • The Comras Company of Florida, Inc. & Terra
  • COO Premium Development, Inc.
  • Sterling Bay, Place Projects, and Deco Capital Group
  • David Mancini & Sons, Inc.
  • East End Capital
  • Integra Investments & Starwood Capital Group
  • Mangrove Real Estate Partners, Tricera Capital, Sasaki
  • Northwood Acquisitions and Northwood Investors
  • Oak Capital Group LLC
  • R & B Realty Group, LLC
  • Related Group (PRH Investments, LLC)

Aguila said two additional expressions of interest came in slightly beyond the deadline but before end of day on the 11th to bring the total to 17. They are:

  • RFR Holding LLC
  • Galbut Family Office LLC

The City initially planned to issue the RFLI early last year before the pandemic hit but delayed it while dealing with public health issues first. Then, following a difficult budget process in which the COVID budget gap came into focus and the beginning of the migration to South Florida by tech and finance companies, the City issued the request for expressions of interest which were due Thursday.

“The overwhelming response of [17] highly qualified parties validates my thesis that there is an unmet demand for Class A office space in Miami Beach,” item sponsor Commissioner Ricky Arriola said.

“One thing that the pandemic has made crystal clear, as have hurricanes and Zika, is that the Miami Beach economy is married to the tourist market,” noted Arriola, chairman of the Commission’s Finance and Economic Resiliency Committee. “Our hotels, our restaurants, our shops are heavily dependent on a robust tourist market. Having companies establish headquarters or substantial business operations in Miami Beach that are not tied to the tourist industry will create jobs and diversity and thereby strengthen our local economy.”

Despite the fact that Miami “is one of the few open markets in the United States,” Arriola said resort tax revenues “were still down.”

“That’s not good for our City budget and the operations of our City services,” he said.

The municipal surface lots for which the City sought expressions of interest include the P25, P26, and P27 lots located in a four-block area to the north of Lincoln Road. Any development would require replacement of the parking for paid public use. The City did not want – and would not consider – specific proposals or offers to develop the lots. Rather it sought expressions of interest only to determine if an RFP (Request for Proposals) process would follow.

Lyle Stern, President of Koniver Stern Group, a retail leasing and consulting company that owns and operates properties on Lincoln Road, serves on the Board of the Lincoln Road Business Improvement District (BID). Stern kicked off the initial thought process about Class A space at the end of 2019, sending a white paper to Mayor Dan Gelber and City Commissioner Ricky Arriola, chair of the Commission’s Finance and Economic Resiliency Committee. Some of the southward migration had already started due to changes in tax policy that limited deductions for state and local taxes.

“I was getting calls from luxury residential brokers about the higher net worth families moving in,” Stern said. “They were looking for great Class A office space and they don’t all necessarily want to be in big buildings and, even if they do, they want to be in Miami Beach.” While there are a couple Class A buildings here, he said the newest had been built almost 20 years ago and they were pretty well leased. “There’s a lack of newer, elevated Class A office space in the City for these folks.” (Earlier this month, Related Group received approval from the Miami Beach Design Review Board for its proposed Class A office development on Terminal Island.)

He pointed to Starwood Capital’s Barry Sternlicht who is building a new headquarters here because there “wasn’t sufficient space for him at the quality level that was new.” When Carl Icahn, a Miami resident, decided to move his office to Sunny Isles, Stern said, he told Gelber and Arriola, “Maybe it makes sense to explore [Class A offices].”

Arriola put the item on a Commission agenda and the RFLI was developed. Once the decision was made to issue it, Stern suggested the Lincoln Road BID partner with the City on outreach. “We have the capacity,” he said. “Let’s partner to make this a great economic development initiative.” The BID’s marketing firm, Schwartz Media, generated media buzz while Stern reached out to developers across the country to make them aware of the RFLI. The City spent $8,000 on an eight-week strategic marketing campaign.

“This is not just about building office space so people have a place to go and the City has additional funds coming in,” Stern said. “For me, it’s how do we get back to where we were.” Class A office users would “infuse our local stores, our restaurants, our cultural facilities on a daily basis.”

The added benefit, Stern said, is additional parking. Not only would the office developers be required to replace the current parking, they would add parking for employees of the office tenants. They could also serve as overflow parking for the Convention Center, he added.

At the same time, he said, you’re taking parking lots that are “not pretty” and giving the City “the ability to take those three lots and continue to knit this quilt that connects the Convention Center, the New World Symphony, the cultural district, the Bass Art Museum, Lincoln Road, Española Way, Washington Avenue.”

It’s an opportunity, he said, to take “islands of concrete” and at the expense of private developers, create “spectacular” architecture with active rooftops and engaging areas at the pedestrian level “both for our tourists and as importantly, candidly, for our residents.”

“I feel great,” Stern said about the response. “In a world where there’s a lot of unknown, what’s known is that there’s a lot of interest in Miami Beach.

“It’s incredible and noteworthy that in the middle of a global pandemic our city received interest from some of the most successful, internationally relevant and community minded developers who have transformed neighborhoods with their vision, including Dacra, Sterling Bay, The Related Companies, Starwood Capital Group, Terra Development and East End Capital, each of them with a track record of spectacular architecture and cultural investment that attract international attention,” Stern said after the names were announced. “Truly a transformative opportunity for our city.”

“A lot of homes have been sold since March,” Stern said, “but that doesn’t continue forever.” The City “constantly needs to be improved and elevated and maintained and I think that’s what the opportunity is here.”

“The intended consequence,” Stern noted, “is more jobs for Miami Beach residents, less commuting time and traffic for Miami Beach residents who otherwise would go to the other side of the Bay to work.” Living and working here would allow them to “spend more time on Ocean Drive, Lincoln Road, Española Way, and Washington Avenue walking, shopping and dining.”

Arriola said, not only does the business community support the effort “because they recognize that having hundreds if not a couple thousand well-paying jobs year-round brings daytime and weekday customers to Lincoln Road,” but “I think residents should embrace it as well because it will strengthen our local economy and make our City budget less reliant on tourist dollars.” He sees the opportunity for an “influx of good paying local jobs” and less traffic so people “don’t have to leave the Beach to go to Brickell or the mainland to work. They can stay local.”

Until there’s an RFP, Stern said, “There’s nothing to talk about” but the RFP process “will cause folks to spend quite a bit of money to come up with some spectacular plans.”

“I just hope that my colleagues have the fortitude to move forward with this once-in-a-generation opportunity,” Arriola said. “We can expect there will be some resistance from some folks in the community, but we need to look ahead to future generations and what this can mean for the betterment of our city over the long term.”

Aguila noted in his letter, “the City Charter would likely require voter referendum approval of any development on these lots.”

“We should want the most amazing quality,” Stern said. “If we have to add some height, give some benefit, the long-term benefit to the city is spectacular and I think that’s what we should focus on.”

“It’s not about bringing developers from New York to build offices for wealthy bankers,” he emphasized. “It’s about activating amazing public spaces for people that are living and working here.”

“Look who’s moving here,” he said, citing one example – tech investor Keith Rabois who, according to The Real Deal, “paid a record $28.9 million for a waterfront mansion in Miami Beach.” Stern said Rabois is “taking office space on Brickell Avenue because Mayor Suarez has done an amazing job marketing the City. [Rabois] should be here and his friends should be here.”

“How is that possibly bad?” Stern asked.

“At the end of the day,” Arriola said, “we’re talking about converting surface parking lots… and hopefully turning them into beautifully designed buildings that will have ground floor retail [and] parking as well as jobs. So, we’re taking something ugly and turning it into something beautiful.”

Next steps: The results of the RFLI will be discussed at the February 19 Finance and Economic Resiliency Committee meeting. Should the Commission decide to issue an RFP, Aguila wrote, “Firms invited to participate in the RFP would include but not be limited to respondents to the RFLI.”

“The RFLI stipulates that the Administration may hold industry review meetings, following the receipt of expressions of interest, in order to discuss questions or concerns including any impediments to development with interested parties,” Aguila noted. “The objective of industry review meetings would be to obtain information to ensure preparation of an RFP that best promotes the City’s interests while maximizing benefits the City may receive from any development.”


Source:  RE Miami Beach

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