Miami cuts county land from marina redevelopment plan, upsetting bidder

City of Miami officials threw an 11th-hour wrench into its request for proposals (RFP) to redevelop the Virginia Key Marina along the Rickenbacker Causeway after removing county-owned land from the site plan.

The changes caused the company that currently leases and operates most of the marina to fire off a letter to county staff requesting more time to submit a bid in response to the significant changes.

If the Virginia Key Marina is redeveloped, the project cost would likely be in the tens of millions of dollars.

On May 5, city project manager Jacqueline Lorenzo issued an addendum to the RFP that, among other things, removed about 2 acres of city-owned land from the site, which previously had 10 acres of upland and another eight acres of submerged land for marine operations. The bid deadline was extended to May 24 from May 18.

On May 10, attorney Richard A. Perez, representing marina operator Biscayne Marine Partners, sent a letter to Lorenzo and CBRE broker Lee Ann Korst, who was hired to market the RFP for the city, requesting that the submission deadline be extended due to the significant changes. Perez also requested a meeting to allow potential bidders to discuss alternative parking plans given the changes to the site.

“Our client’s proposal has been placed at a significant competitive disadvantage because of the number of last-minute changes that will need to be made, as the amendment as altered the total investment amount, the development approach, and the entire design of the project,” Perez wrote. “Essentially, the entire economics of the proposal have changed, and the city must provide reasonable time to make adjustments to proposals based on the city’s amendment to the RFP."

Lorenzo said she could not respond to questions because the RFP is currently in a “cone of silence.”

The city has been trying for years to redevelop the Virginia Key Marina, near the old Miami Marine Stadium and the Rusty Pelican restaurant. Three bidders submitted proposals in 2016, but the city commission voted in June 2016 to reject the selection process and start over. RCI Marina Group, operator of the Miami Beach Marina, was the top-ranked bidder at that time.

Officials at RCI couldn’t immediately be reached for comment about whether the company would bid again.

Currently, Biscayne Marine Partners has a ground lease to operate about 200 wet slips, 300 dry slips, a parking lot and the Whiskey Joe’s restaurant. That ground lease has expired, although the company has been allowed to stay on the property until the city completes the RFP process.

There is also a city-operated dry stack of about 265 slips there that is included in the RFP.

The city’s RFP requires that at least 220 spaces on the site be made available to the Rusty Pelican restaurant. The city’s requested base rent is $2.15 million, plus an unspecified percentage of gross revenue from any commercial operations on the site.

Aabad Melwani, head of Biscayne Marine Partners, said he would like at least 30 days to revise his bid due to the subtraction of the county-owned site.

“This is a very material change that requires significant adjustment to our architectural plans and our financial modeling,” Melwani said. “In order for the city to derive the greatest benefit from this project, in terms of design and functionality of the site as well as the rent payments, they need to give all proposers a reasonable amount of time to adjust for this change."

In his letter, Perez said the RFP has “ambiguities” regarding the specific development plan that the city would like to see. The RFP does not list a minimum amount of boat slips or retail/restaurant space to include in the bids.

Melwani said his proposal would aim to enhance the wet and dry slip marinas into first class facilities and improve the public access to the waterfront. He would also plant mangroves along the shoreline and create civic programming, such as ecotours.

“We want to create a park setting,” Melwani said. “We don’t want to over-commercialize the site. We want to showcase this is a public amenity open to everybody, not just boaters or people willing to spend money at a restaurant."

Original content The Real Deal

Developer proposes apartment/retail building in new downtown district in Miami-Dade

A developer has proposed a mixed-use project called Sandpiper Village in Palmetto Bay’s new Downtown Urban Village District.

The city will hold a zoning hearing May 15 for the project on the 1.33-acre site at 9701 Wayne Street and 9700 East Indigo Street. The site consists of four vacant parcels. Three of them are owned by applicant Indigo Gardens Developers, owned by Chris B. Spaulding in Homestead. The fourth site is owned by 9700 East Indigo Street LLC and is under contract to the applicant, according to the application.

Sandpiper Village would have 139 apartments, 10,000 square feet of ground-floor retail, and a 231-space parking garage. The eight-story building would feature a playground on the second level and a pool/amenity deck on the fourth level. The design by Axioma3 Architects includes covered walkways for the street-facing retail space and a public open space on the southeast corner of the site.

The unit break down would be 69 one-bedroom units of 735 to 922 square feet and 70 two-bedroom units of 1,102 to 1,211 square feet.

According to the application, the developer would offer five years of free rent to a senior/education center for 2,000 square feet of space along Franjo Road.

Gunster attorney Simon Ferro, who represents the developer, couldn’t immediately be reached for comment.

Palmetto Bay approved the Downtown Urban Village zoning in late 2015 with greater density and mixed-use development permitted between South Dixie Highway and Franjo Road. The village approved an apartment/retail project by Florida Crystals subsidiary FCI Residential there in 2016, but rejected the proposed Soleste Bay Village apartment/retail project by Estate Investment Group in March after residents told commissioners it would generate too much traffic.

Original Content South Florida Business Journal

Could Trump’s anti-immigration campaign hit apartment, office markets?

From TRD New York: Donald Trump’s anti-immigration rhetoric and targeted travel ban are already having an impact on the hotel industry. Could they hit the apartment and office markets too?

Russell Appel, founder of the Praedium Group, believes so. “My sense is the rhetoric is definitely having an impact on both tourism and immigration,” he said at a Wednesday panel discussion hosted by CollabNet and sponsored by Fried Frank and Morgan Stanley. In cities like New York “population growth is coming mostly from foreign migration,” he said. “As investors, in looking forward to where demand for space is coming from, I think we have to be really sensitive to these types of issues.”

Tony Charles, the global head of research and strategy at Morgan Stanley Real Estate Investing — who shared the stage with Appel and JPMorgan Chase’s head of real estate acquisitions in the Northeast Peter Sibilia — said he has yet to see much of an impact of new immigration rules. But he argued they could become a “potential negative” for the real estate market. “Immigration has accounted for more than 50 percent of population growth in this country over the past 30 years so if that was curtailed that would have an impact on population growth, labor force, etc.,” he said.

Appel’s comments come two weeks after Empire State Realty Trust CEO Anthony Malkin bemoaned a “P.R. bruise” to the U.S. from Trump’s travel ban against citizens of a handful of Muslim-majority countries.

Earlier in April, Marriott International’s CEO Arne Sorenson told attendees at a company meeting that the travel ban is “not good, period” for the hotel industry, according to a New York Post report. Travellers from oil-rich Muslim countries may not be numerous, but tend to spend a lot on hotel rooms. “They travel in groups of 20 to 80 and they will take entire floors at the hotel for months at a time,” David Chase, former GM of the Lotte New York Palace hotel, told the Post.

Original Content The Real Deal

The commercial market is “frothy” right now and low interest rates are to blame: Zell

From TRD New York: The commercial real estate market is getting frothy and low interest rates are to blame for asset inflation and impending oversupply issues, according to billionaire Sam Zell.

The low cost of capital has created an imbalance in the economy resulting in asset inflation, he told Bloomberg.

Before the recession, the average cost of capital was 5.6 percent. “5.6 percent versus zero? That creates quite a bit of stir, quite a bit of asset inflation and I think is not healthy,” he said.

As a result, the commercial market is “a little frothy.”

“I think we’re about to have very significant additional supply” on the commercial front, Zell said.

The residential side is in better shape, he said. “We’re building more multi-family housing units this year than we’ve built at any time in the last 25 years. Supply and demand will balance it out,” he said. “Supply is the elixir that takes care of bubbles.” [Bloomberg] — E.B. Solomont

Original Content The Real Deal

Chinese spent $24B on investor visas over last decade

From TRD New York: More than 100,000 Chinese nationals spent at least $24 billion on foreign visa programs over the last decade, a new analysis found.

The United States’ EB-5 program accounts for at least $7.7 billion of that and more than 40,000 visas issued since 2007, according to the Associated Press. But countries like Canada, Australia, and even Hungary have or once had robust programs of their own. Canada, for example, ended its national program in 2014, but issued 35,278 investor visas, totaling an estimated $4.3 billion in Chinese money that came through the national program as well as regional programs.

The barrier for entry differs greatly from country to country. While $500,000 is the entry-level investment for a visa in the U.S., it only takes $100,000 in several Caribbean countries. And in Australia, you’ll need at least $5 million Australian dollars (about $3.7 million USD) to get a visa. Although that may sound high, the country has had no trouble finding investors and has pulled in more than $6 billion in Chinese investment in just the last four years. Capital controls by the Chinese government, however, could make what seems like an ever-cresting wave of outflowing cash from China finally begin to break.

In the U.S., the EB-5 program is at a crossroads. Although it’s been extended until September, the Department of Homeland Security may soon begin rolling out strict reforms first put into the pipeline under President Barack Obama, which would put pressure on Congress to come up with a more long-term solution for the program. Competition from other countries is just one factor frequently cited by pro-EB-5 lobbyists who oppose the proposed reforms.

Earlier this month, Nicole Kushner Meyer, White House adviser Jared Kushner’s sister, drew attention for appearing to promote her family’s connections to the White House in an EB-5 pitch for a Kushner Companies tower in New Jersey. The company later apologized for the incident and has since cut short its promotional China road show. [AP]  — Will Parker

Original Content The Real Deal

Miami-Dade accepting proposals from developers to rebuild historic courthouse

Miami-Dade County commissioners approved several developmental sites that could replace its downtown civil courthouse at a meeting on Tuesday.

The county is also accepting proposals from builders interested in generating revenue for a courthouse replacement, the Miami Herald reported.

Already, Crescent Heights developer Russell Galbut made an unsolicited offer to build a new $300 million courthouse in exchange for a 99-year lease that would collect $18 million a year in rent from the county. That’s $1.8 billion at the end of the lease. In his proposal, Galbut offered to build a 35-story courthouse on a lot across the street at 54 West Flagler Street.

On Tuesday, commissioners said the future of the 28-story building, which was built in 1928 at 73 West Flagler Street, is still up in the air.

The list of approved sites includes the county’s “Cultural Center,” which holds its downtown library and HistoryMiami museum. All approved sites lie relatively close to the courthouse’s original location, and could potentially cut into parts of the County Hall and nearby Metrorail station.

The endeavor to replace the historic courthouse hit a road block back in 2014 when voters rejected a $219 million bond measure to build a new civil courthouse, out of fear it would raise property taxes.

As a result, county leaders and developers are seeking a revenue stream to pay for the building.

At the commission meeting Harvey Ruvin, the county’s court clerk, suggested enforcing a fee on new development to help pay for government buildings, according to the Herald. [Miami Herald] – Amanda Rabines

Original content The Real Deal

How Miami’s improving office market could affect your life

While the lack of affordable housing and the glut of luxury condos were getting all the attention, another segment of Miami’s real estate has started to heat up: The lowly, unglamorous office space.

The total square footage of office space leased in Miami-Dade in the first quarter of 2017 shot up 40 percent over the same period last year, according to a new report by the real estate brokerage firm JLL. The average asking price per square foot was $36.99, which continues a steady climb since 2012’s first quarter price of $31.60.

“Miami’s office-space market is at an inflection point,” said Matthew Cheezem, a managing director for JLL South Florida. “There has been no development in office spaces since 2008. We're approaching 10 years since that last cycle and the market needs it.”

While Brickell and downtown remain the nexus for business, a strong office market and high prices are pushing workplaces to neighborhoods beyond the core. Case in point: Coconut Grove, where three new office buildings have been announced in recent months.

For you, Miami office dweller, the news could be good: Eventually, your place of work may be closer to your home, resulting in a shorter daily commute.

According to the recently released Commercial Industrial Association of South Florida’s 2017 Office Market Report, which also tracked activity during the first quarter, the overall office space vacancy rate dipped to 9.7 percent throughout Miami-Dade, while the absorption rate tripled over the same period in 2016, to 304,029 square feet.

HEALTHY JOB MARKET

Ken Krasnow, executive managing director and market leader for Colliers International South Florida, says the increased activity in office space is the inevitable result of job growth and population increase in the area. The U.S. Bureau of Labor statistics show the unemployment rate for the Miami-Fort Lauderdale-West Palm Beach region in March 2017 was 4.6 percent, down from 5.1 percent in January.

In other words: So many workers, so little office space.

“What you've seen in the last three years is a lot of strong job growth, so companies have been adding people and space,” Krasnow said. “What’s happening with office space in Miami is a typical example of supply and demand. We’ve had good absorption rates and we’ve had new-to-market companies. … That pushes pricing up and vacancies down.”

Another plus for the office space market: Many of the companies expanding or solidifying their presence in South Florida are at the higher end of the pay-scale spectrum.

“These are not low-wage jobs,” Krasnow said. “These are not call centers. These are front-office- type users. So there's a ripple in the city’s entire economy when companies invest and rent office spaces here, because it means more people buying or renting homes here.”

On Monday, Banco de Brasil Americas, the U.S. division of the Latin American banking giant, announced it has signed a new lease for 17,000 square feet of office space — the entire 22nd floor — at 1221 Brickell Ave. The company is relocating its corporate headquarters from One Biscayne Tower in downtown Miami.

Office buildings are a riskier bet for developers than residential towers, which offer a much faster return on investment. Offices rely on long-term leases to turn a profit and sustain overhead costs.

But the growing popularity of the live/work/play lifestyle, in which the need for long commutes is minimized by including home, work, schools and recreation within the same neighborhood, is making an investment in offices a worthwhile gamble, say market experts.

Following a surge in new condos, restaurants and retail developers in Coconut Grove, a new office building has been announced. LointerHome, the developer that unveiled the six-home Glass House Project in Coconut Grove earlier this year, has revealed plans for 27@Lincoln, a five-story boutique office building at 3151 SW 27th Ave.

The facility will offer 68,000 square feet Class A office space and 5,000 square feet of retail space. Groundbreaking is scheduled for the first quarter of 2018, with rents priced at $40 to $42 per square foot. (Class A refers to new, high-end office spaces; Class B are older but still quality, well-located buildings; Class C are older structures in need of renovation.)

“Miami is changing,” said Amanda De Seta, founder of LointerHome. “People are not only just vacationing or retiring here any more. We’re on top-ten lists of desired cities around the world — we’re competing with London and Paris and New York — and this new building feeds a need for Class A office space who live and work in the Grove. Downtown and Brickell can’t be the only places we go to work. Traffic and density are already proving that.”

OFFICES INVADE THE SUBURBS

The Grove isn’t the only Miami neighborhood to become an unlikely home for offices. Three proposed projects would add over 300,000 square feet of new office space to Wynwood if completed: The 12-story Gateway at Wynwood on North Miami Ave. (185,000 square feet), by New York-based developer R&B Realty, which begins construction this year; Wynwood Square, from developer One Real Estate Investment (60,000 square feet); and Cube Wynwood, from RedSky Capital, scheduled for completion in 2018 (80,000 square feet).

Other projects in the neighborhood, such as Moishe Mana’s ambitious Wynwood redevelopment project, will also offer office space.

Aventura, one of the tightest office-space markets in the county, has two new developments under construction: Integra Real Estate’s Aventura Parksquare (100,000 square feet), which will be completed this year and is already sold out; and Florida East Coast Realty’s Canal Park Office (100,000 square feet), which is due to be finished in 2018.

In April, the University of St. Augustine signed a lease to house its South Florida campus in the 53,390 square foot Annex Building of the Douglas Entrance Office Park in Coral Gables. Raymond James Financial will take over the entire fifth floor and part of the 11th floor — a total of 27,116 square feet — at the BAC Colonnade Office Tower at the intersection of Ponce de Leon Boulevard and Miracle Mile. The Texas-based stone supplier Cosentino North America has rented 23,023 square feet of offices at 355 Alhambra.

“South Beach went from a party town to a place for offices, and the financial district has class-A offices and residents,” said David Restainer, managing director of commercial real estate for Douglas Elliman Florida. “A lot of the office space is filling up and it's not a surprise to me, because the general sentiment for doing business in Miami continues to grow.”

Original Content The Miami Herald