South Florida CRE Trends To Watch For In 2014

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By Guest Blogger Ken Silberling

As 2013 fades into the rear view mirror, it’s a good time to break out our crystal ball to take a look into the future.  Are we presenting the most important trends in the market?  Maybe not, but  these are the key factors that will shape the way we search to identify opportunities in the Miami Dade,  Broward and Palm Beach County markets that we serve.

1. Multifamily Boom –  While there has been nearly no new office space developed in the market over the past few years, there are currently thousands of new rental apartment units under development.  Boca Raton and Downtown Fort Lauderdale are the most popular locations.  The big question is whether developers are betting on the changing tastes of the consumer regarding home ownership and the difficulty in obtaining home financing, or whether they are being seduced by returns of under 5% for investment grade multifamily which is driving values skyward. Whether the multi-family boom is the result of a great opportunity or whether it is the next bubble remains to be seen. Regardless, it is a key trend to watch.

2. Re-emergence of the Fort Lauderdale Uptown market – The Cypress Creek/Executive Airport market emerged in the mid-1980s as a suburban alternative to Downtown Fort Lauderdale. Its key attribute is its excellent access to the entire tri-county market via I-95. In the 1990s and 2000s, however, the completions of new highways in Southwest Broward combined with the relocation of thousands of Miami residents following Hurricane Andrew in 1992 created a huge wave of new residential and commercial development in Southwest Broward. Many companies left Cypress Creek in favor of the emerging Pembroke Pines, Sunrise and Weston markets, which replaced Cypress Creek as the primary alternative to Downtown.

While Cypress Creek has seen little new development and office vacancy rates have recently hovered in the mid twenties, we are seeing signs that the market is rebounding.   First, the recent $38.1 million sale of  Pinnacle Corporate Park to Banyan Street Capital and DRA Advisors shows that investors are beginning to take notice of an opportunity in the market.  You may have also noticed a huge new  Zimmerman Advertising sign off I-95. Omnicom, parent of Zimmerman has purchased the Cypress Centre building for Zimmerman’s new headquarters, nearly doubling the amount of space they had previously occupied on Commercial Boulevard. Finally, Texas-based Schlitterbahn is awaiting approval  to build a new $110 million water park on 64 acres that is currently the site of Fort Lauderdale baseball stadium between Commercial Boulevard and Cypress Creek Road just west of I-95. It will feature state of the art slides and a four star resort hotel. It promises to create jobs and promote tourism, all good for the local market.  As corporate residents and property owners in the uptown market, we are excited about this resurgence.

3. The B Word – While the market saw several large sales and large leases in 2013, a couple of deals caught our attention due to the use of the B word.  We normally see deals in the millions, tens of millions and occasionally hundreds of millions. In 2013, we saw two deals in the billions. Liberty Property Trust paid $1.475 billion for Cabot Industrial Value Fund III, a 23 million square foot industrial portfolio including 1.5 million square feet of South Florida assets.

In addition, Brookfield Property Partners acquired IDI (Industrial Developments International) for $1.1 billion. A large piece of the IDI portfolio is also in South Florida. Both Liberty and IDI have plans to develop new industrial space in our market.  Clearly the use of the B word in the South Florida industrial market shows that industrial real estate is big business and that South Florida warehouse space is highly desirable to both users and investors.

5. Office-Office – The merger between Office Depot and Office Max was completed in November. While we liked the name “Office Office” for the expanded company, it will in fact be Office Depot. The big news is that the new company has selected Boca Raton as its corporate headquarters and hundreds of Office Max employees will relocate from Naperville, Illinois to Office Depot’s 625,000 square foot Boca Raton facility. The loss of Office Depot would have been devastating to the Boca Raton market. Now, with more employees coming to town, these new residents will help the local economy, stimulating demand for  more homes, more supermarkets,  and more offices for accoutants, financial planners, doctors and attorneys. Office Max’s vendors will also need a local presence, all of which points to increased activity in the commercial market. At the same time, we have seen Tyco spin off ADT with both companies remaining in Boca. SBA, a developer of cell towers has also purchased the 160,000 former IBM Building on Congress Avenue and will be expanding its presence in Boca Raton.  These are all clear signs that corporations are seeing the value of a South Florida location which is good news for the local commercial real estate market.

A word of caution… any new development in South Florida has to take into account our fragile ecosystem and our potentially volatile climate. As long as developers can intelligently balance growth with protecting the environment, the outlook appears bright for the South Florida commercial real estate market in 2014 and beyond.

 

Cornerstone Buys Sunrise Office Building For $32M

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The Lake Shore Plaza II office building in Sunrise has traded for $32 million.

A company managed by Fort Lauderdale-based Stiles sold the 1300 Concord Terrace building to TR Lake Shore Plaza on Dec. 17, according to Broward County records. The county recorded the transaction on Thursday.

TR Lake Shore is managed by Connecticut firm Cornerstone Real Estate Advisers, which has had a busy month.

Cornerstone partnered with Boca Raton-based Crocker Partners on the $71 million acquisition of downtown West Palm Beach office building Esperante Corporate Center. That purchase closed on Nov. 26.

No financing was recorded for the Lake Shore purchase.

The 128,000-square-foot building was completed in 2008 on nearly nine acres. Tenants include Global Medical Management and Travel Insurance Center.

Another Stiles-managed company sold the Gateway at Sawgrass retail center in Sunrise for $16 million earlier this month.

 

Source:  The Real Deal

Coral Springs Office Building Trades

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A San Francisco investor has acquired the Preferred Exchange Tower in Coral Springs for $12.6 million, a steep discount from the 2005 price paid for the office tower.

BB University Drive, a company tied to San Francisco-based investment and development firm Bristol Group, purchased the nearly 203,000-square-foot tower at 3111 North University Drive, according to Broward County records. The county recorded the transaction today. No financing was recorded.

The seller is 3111 North University Drive Holdings, managed by loan servicing giant CWCapital Asset Management. The CWCapital company took title to the six-acre property after a November 2012 foreclosure auction. A commercial mortgage-backed securities trust managed by U.S. Bank won the auction and turned over the deed to 3111 North three months later.

Bristol’s purchase price is about $21 million less than what a company managed by New York-based Cabot Investment Properties spent to acquire the tower in March 2005. The Cabot company was hit with a $24 million foreclosure action in April 2012.

The tower was originally built in 1985. John Bell of Rockwood Real Estate Advisors marketed the property on behalf of CWCapital.

 

Source:  The Real Deal

 

Butters To Convert Deerfield Golf Course To Business Park

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The Deerfield Country Club is set to be redeveloped into a business park.

Hillsboro Technology ParkButters Construction plans to build the Hillsboro Technology Park, a 750,000-square-foot business park on the 74-acre golf course. The park would include 450,000 square feet of industrial space and 300,000 square feet of offices. As many as 1,500 employees could work on the site near I-95 and Hillsboro Boulevard.

Hillsboro Technology Park is expected to cater to technology businesses that need distribution space and offices. The city of Deerfield Beach would receive about $1 million in fees and permits and another $1 million in annual tax revenue.

Although Butters’ proposal was met with opposition from residents, Deerfield and Broward County commissioners have approved the zoning change to accommodate the business park.

 

Source:  The Real Deal

 

Industry Veteran Leaves CBRE

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Rick Miller, SIOR, RPA, FMA, a member of both the Brokerage Services Division and Global Corporate Services (GCS) Division of CBRE, serving as an exclusive agent on behalf of tenants and landlords of corporate real estate in Miami-Dade, Broward and Palm Beach Counties in South Florida since 2002, has parted ways with CBRE effective December 16, 2013.

From 2007 to 2011, Rick served as a Managing Director for CBRE’s South Florida region. In this position, Rick was responsible for the overall operations of the Boca Raton, North Palm Beach and Fort Lauderdale offices focusing on profit and loss, corporate leadership, customer satisfaction and strategic planning. He managed more than 75 brokerage professionals specializing in all areas of the industry and provided executive oversight to CBRE Florida’s Corporate Services account practice including the Ryder System, FPL, and SFN Spherion accounts.

After 11 years at the company, Miller said, “Ultimately, my goal is to get back to basics in this industry. I’ve worked for two Fortune 500 companies now and it is important to me to be a part of a smaller and more nimble operation.  I am very driven by company culture and values. I have learned from experience that internal collaboration from top to bottom is critical to the success and health of any company.”

“Another aspect that I find important is providing best in class services to my clients regardless of their size.  Our region, by nature, consists in large part of mid-size companies and small businesses. I’ve worked with plenty of large clients and Fortune 500 companies over the years. I plan to leverage that expertise to also assist small and mid-cap companies and provide them with the same representation that they often don’t receive because they get overlooked by our industry. At the end of the day, I want my clients to engage my services as if they were hiring me to work as an employee in their organization. Brand name, platform and size are one piece of the puzzle but to me it all boils down to people and how we connect with them,” he added.

Rick has been dedicated to corporate real estate in South Florida since 1987. Prior to his career with CBRE, Miller served as an associate with Cresa Partners, LLC in Miami, Florida.

He is currently evaluating various options as he spends the holidays with his family.

 

Source:  CRE-sources

AY’s Martin & Moore Awarded Pinnacle Corporate Park Leasing Assignment

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Avison Young has been awarded the exclusive leasing assignment for Pinnacle Corporate Park, a 260,000 square foot two-building office campus located at 500 and 550 West Cypress Creek Road in Fort Lauderdale.

Currently 84 percent occupied, the Park is one of the most highly sought after office locations in the Cypress Creek submarket, and brings Avison Young’s total square footage of Florida leasing assignments retained over the past 12 months to more than 425,000 square feet.

Principal Greg Martin and Senior Associate Peyton Moore with Avison Young’s Fort Lauderdale office will oversee the leasing activities for Pinnacle Corporate Park on behalf of the new ownership investment group led by Miami-based Banyan Street Capital and New York-based DRA Advisors.

The acquisition, which took place in November, is the second notable office building sale to close in the area recently, representing an uptick in investor activity within the steadily recovering Cypress Creek submarket.

“The exclusive leasing assignment of Pinnacle Corporate Park is a direct result of our effective approach to marketing the unique attributes of properties to retain and attract tenants,” said Martin. “Working with ownership, we plan to maintain the current success of the Park by identifying potential tenants positioned for the long-term.”

“With Broward County’s increase in employment, declining vacancy rates, and office building construction at a stand-still due to the lack of available land, the search for quality office space is prevalent among growing companies,” added Martin. “Pinnacle Corporate Park’s premier location and value in the market will allow us to secure gold-standard tenants within the buildings.”