Sluggish Miami Office Market Buoyed by 80,000SF Financial District Pre-Lease
- Oct 01, 2009
By: Barbra Murray, Contributing Editor
While Miami’s office market vacancy rate lingers beneath the U.S. average, it has not gone unscathed by the worldwide economic crisis. However, law firm Bilzin Sumberg Baena Price & Axelrod L.L.P’s pre-lease of 80,000 square feet at the 576,000-square-foot 1450 Brickell office tower downtown has players in the Miami office market game buzzing. The transaction marks South Florida’s largest new office lease this year.
Presently under development by 1450 Brickell L.L.C., an entity led by Miami-based real estate development company Rilea Group, the premier office building is being erected in Miami’s coveted Brickell Financial District district. Bilzin Sumberg, represented in the lease transaction by Cresa Partners, is among the growing group of businesses that are relocating to capitalize on cut-rate prices attached to premium properties as a result of the real estate market slump. The law firm will make its home on the 21st through 24th floors of the 35-story structure under a 15-year lease agreement. Though still in the construction phase, 1450 Brickell has already turned heads by becoming the first pre-certified LEED Gold Class A office structure in the city ‘s Central Business District.
In the Miami-Dade market, which–according to a report by real estate services firm Grubb & Ellis–experienced negative net absorption of 697,142 square feet in the second quarter, large leases are few and far between. Additionally, the current average overall vacancy rate is 15 percent in Miami-Dade and 13.5 percent in the CBD, so the Bilzin Sumberg lease is quite a coup. However, Danet Linares, executive vice president with Blanca Commercial Real Estate, the firm that represented property owner Rilea in the deal with the law firm, believes the Miami office market is on the upswing and that 1450 Brickell, in particular, will buck the negative leasing trend.
“We have definitely seen an uptick in activity recently,” Linares told CPE. “We’re seeing more activity with banks, which is rare given the financial meltdown.” And despite the fact that there are two other office buildings presently under construction in the CBD, she believes 1450 Brickell will be successful. “Some in the industry are saying wait until all the product delivers; the three new properties will be putting 1.8 million square feet on the market, which represents a 30 percent increase in CBD office space. But they’ll be delivering at different times and demand varies from building to building depending on quality, and location to location.”
Linares believes 1450 Brickell has the right quality and the right location. The property will feature an exterior façade that will be one of the strongest curtain wall window systems in the country and will boast such desirable amenities as a sky deck, fitness center, high-end finishes and 10,000 square feet of ground-level retail space; in short, all the bells and whistles. As for location, 1450 Brickell sits smack in the middle=2 0of a cluster of high-end hotels, restaurants and retail shops, and with the high-traffic bridges nowhere near, movement in and out of the Brickell Financial District will be easily facilitated.
If lease inquiries about 1450 Brickell are any indication, the property’s occupancy level may very well put that of the rest of the Miami-Dade office market to shame. “We have a lot of potential lease agreements and proposals,” Linares said. “We have more square footage active than we have available in the building.” Rilea is very bullish on the property, and is in it for the long haul. “This is not an asset that’s being built to flip; it’s an asset that’s being built to hold for the long term, for years and years.”
The office tower is on target to reach completion in the first quarter of 2010, with Rilea having avoided the inhospitable lending market that has stalled or forced the cancellation of many a development endeavor. Rilea escaped the debilitating grip of the credit crunch by securing $172.5 million in construction financing for 1150 Brickell in August 2007 from a consortium of financial institutions led by Valencia, Spain-headquartered bank Bancaja; the other lenders include Banco De Sabadell, Colonial Bank, Banco de Credito E. Inversiones and Pacific National Bank.