Category Archives: Commercial Developments

Information pertaining to all commercial developments; proposed, under construction, and built.

Pestana Opening First US Hotel in South Beach

Portugal-based Pestana Hotels and Resorts Group plans its first North American hotel in the heart of South Beach’s Art Deco District. Portugal’s largest “tourism and leisure” group and Europe’s 25th biggest hotel brand also boasts hotels in Africa and South America.

Pestana South Beach will be located at 1835 James Avenue— one block inland from from Collins Avenue (not far from the planned Lennox Hotel). The Portuguese hotelier does not seem to think its relatively off-the-beaten-track location will deter reservations.

South Beach’s interior has long remained aloof of commercialization but there seems to be a gradual paradigm shift taking form in the nook between the Convention Center and the Bass Museum of Art—where resides some of the island’s finest Spanish Revival and Art Deco architecture.

The selection of South Beach as the launchpad for Pestana’s  North American operations is yet another indication of its remarkable gravitational pull on foreign investment.

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H&M Progress and Forever 21 Goes Big on Lincoln Road

Past glory (left). Present plight (right).

Recently, I saw a line stretch around a block to get into the H&M preview store (first such store I’d ever seen).  The actual store will occupy the historic Lincoln Theatre. I figured this must be good so I passed by to see the progress and found the theatre to be Continue reading

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Lennox Hotel is Tearing it Up in South Beach

Renderings from Kobikarp.com

Demolition activity is commencing at the planned Lennox Hotel (Peter Miller Hotel building) right across the street from the Setai. If completed, it will add to an increasingly impressive hospitality portfolio for architect Kobi KarpContinue reading

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In Memory of Las Olas Riverfront

I seldom cross the border into Broward. I did this weekend and passed by Las Olas Riverfront expecting something lively and a bite to eat. Instead I found a taste of the post apocalyptic.  Continue reading

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Foram Group Bullish on Miami’s Class A Office Market

Condo Boom Stimulating Class A Office Development

Loretta Cockrum, President of the Foram Group (builders of the Brickell Financial Center) has said that the condo market boom has impacted the demand for Class A office space. Most agree that the condo boom, with all of its problems, does have one major positive aspect: the improvement of Miami’s demographics. For Miami, the status quo means mostly low income. Although not likely to quickly change, the incoming occupancy waves in and around the urban core will bring up income levels so that they are more compatible with declining home prices. This demographic improvement, according to Loretta, has and will continue to result in significant high quality commercial development.

Local Small Business Owners Uninterested in Green

Regarding the “Green” or LEED aspects of the Brickell Financial Center, Loretta stated that local small business owners have been mostly indifferent to green development but larger outside corporations based out cities like Chicago, NYC, and San Francisco have come to expect green buildings. According to her, these types of companies are the ones likely to set up shop and bring jobs and affluence to the local market.

Commercial Market is Looking Up

If large corporations are persuaded to do business in urban Miami, then corporate condo-bundle acquisitions at below prevailing prices (sometimes 30% less) are likely. All in all, Ms. Cockrum and representatives of Cushman and Wakefield agree that the Class A commercial market will remain strong as new inventory comes in 2009. With Class A rates stagnant throughout the 1980’s and 1990’s, along with the lack of new inventory added, and a small office market compared to most other U.S. urban centers, Miami’s Class A market is primed for growth.

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Commercial Development: Brickell Village Outlook

The chart below is one of several I prepared that are based on the latest DDA Development Activity Breakdown Report. It represents office/retail development (built, under construction, and approved) from 2002 to mid-2007 in Brickell Village. In an effort to compare DDA data with with an alternative source (to get the best overall picture), I deferred to CBRE’s market outlook. Let’s look at the DDA derived chart first:

Chart Data Source: DDA

According to the DDA, there is currently 1.45 million square feet of office space under construction in Brickell Village. Let’s take a look at what CBRE reports:

The CBRE office construction sum (which doesn’t include office condo development) is +/- 1.4 million sq. ft. This coincides with the DDA figures. Since 2002, there has been a total of 461,000 square feet of new office space added to the Brickell market. The 2007 office construction figure constitutes a major increase in inventory compared to the last five years. There is an underlying concern that the demand for new office space is insufficient for a healthy rate of absorption, but falling vacancies and rising lease rates are contradicting this claim. Let’s take a look at Brickell’s vacancy history since 2004:

Chart Source: CBRE (Market Pulse)

In the second quarter of 2005, while the residential condo market was still hot, vacancies in the office market were at a dismal 16.9%. However, since then (in the third quarter of 2007), vacancies have gone down to 8.0%.

Let’s take a look at recent rental rate averages:

Chart source: CBRE (Market Pulse) [Firefox users, right click to view larger clearer image]

From when the vacancies were at their highest level in the second quarter of 2005 to their lowest point in the 3rd quarter this year, the average rental rate per square foot has gone up from $28.34 to $33.03–with one instance of an asking rate of $50.00 in a prestigious Class A office development (according to CBRE, a first for the Miami office market). Decreasing vacancies and increasing rental rates are healthy growth indicators but the 1.45 million sq. ft. of new space brings the market’s absorption rate into question. Let’s take a look at the rate of absorption for new construction in Brickell Village since 2004:


Chart Source: CBRE (Market Pulse) [Firefox users, right click to view larger clearer image]

As you can see above, there hasn’t been much new space added to the market since 2004 when 260,000 sq. ft. came online. Still, 247,982 sq. ft. was absorbed that same year compared to the 260k added–a pretty good absorption precedent, but minimal when considering the projected 1.4 million sq. ft. coming online during the next year or so.

2008 is going to be pivotal for Brickell Village’s office market. The addition of over 1.4 million square feet of new space will test the market’s vitality but a successful transition will increase the overall value of Brickell Village real estate, create new jobs, add to the commercial and residential allure of BV (which already has higher office rental rates than the CBD), and balance the scales of development more evenly with the heavy residential side. If all goes well in 2008 and into 2009, and growth is proven sustainable, then who knows, the office sector might see a significant construction surge.

NEXT: Commercial Development: Central Business District

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Development Outlook: Midtown Miami & Vicinity

Image: Midtown Four and Midblock

The Foremost Symbol of Miami’s Emerging Urbanism

Midtown Miami is, in many ways, the most obvious symbol of Miami’s rapid urban transformation. It exhibits Miami’s architectural star power, represents the most ambitious push west for urbanism in the city thus far, sits on a formerly blighted and infrastructureless area of the city, and incorporates large-scale commercial and residential elements. For all intensive purposes, it is a city-within-a-city.

Image: The shops at Midtown Miami’s northwest side

The Skeptics Viewpoint

Yet, despite this, there are those that recall the past failure of the much hyped Omni Mall when considering Midtown’s prospects for success. However natural this historic allusion may seem, the Omni, which never had the residential component Midtown has, is currently owned by a New York-based firm with billion dollar plans that span 10-15 years. Suffice to say times have changed. Then there are those that claim the project is too vast and will never be fully completed. This is to suppose that after all that has taken place, the remaining land and phases are going to be disregarded. This is hogwash, as I see it.

Image: West entrance into the Shops at Midtown Miami

What Prospects Does Midtown Miami Present for Uptown’s Future?

Sunset Place in South Miami is a good starting point for considering how a large-scale destination-retail facility can affect its periphery. Before I continue, I am in no way claiming that Sunset Place is a model for Midtown to emulate, rather I am using it as an example of the effects of a large-scale destination-retail facility on its periphery. Acting as an anchor luring thousands of visitors to the heart of South Miami, Sunset Place’s southern flank along Sunset Drive has become a hub of economic activity. There are restaurants, taverns, wine bars, lounges, stores, and cafes along Sunset Drive across the facility. Each of them is a testament to Sunset Place’s catalytic effects.

Image: Sunset Place in South Miami

Is Midtown Miami’s Peripheral Effect to Be Any Different?

There are those who argue that South Miami is a more stable section of the city with an enclave of well-off single family homeowners in the surrounding the area. This same argument is predicated upon the idea that Midtown is in the inner city where stability is fleeting at best. Naturally, the “inner city” refers to the Wynwood area that only within the last few years began gaining recognition as the center of a burgeoning art scene, but remains, for the most part, largely overlooked by visitors and tourists. We’ll get further into the Wynwood aspect later in the post, but to suggest this is also to ignore the presence of two nearby exclusive bay front communities: Bay Point and Morningside. These two neighborhoods are no slouches when measuring affluence. Edgewater’s rising prominence will add luster to Midtown’s prospects as well.

Image: Restaurants, taverns, and cafes across from Sunset Place

What Makes Midtown Miami Different?

Aside from the three aforementioned neighborhoods, Midtown Miami is situated next to two highly distinctive urban nodes: the Design District and Wynwood Arts District.

Image: Underutilized properties directly across from Midtown Miami.

The DD

The Design District’s Dacra-propelled plans and resulting buzz has lured numerous high-profile international tenants into the aesthetically alluring DD. Although some would describe the Design District as movie-set-like, that is to say absent of real life, there should be no doubt as to Craig Robins’ knack for smelling out the City’s next hot spot. Positive developments and activity in the Design District are sure to have a spillover effect on Midtown Miami and vice-versa.

WAD

Then, of course, there is the Wynwood Arts District, which for years, while simply known as Wynwood, had the stigma of an unsafe inner city neighborhood. Today, the hood is at the forefront of Miami’s art scene. There is a greater concentration of art galleries in Wynwood than in Coral Gables or Miami Beach. So many, in fact, that there is a website dedicated to tracking and showcasing them. However, on the surface, Wynwood doesn’t exude this fact. Passing by the neighborhood, only a keen eye will notice the various little galleries that dot the place. But, let’s be serious, Wynwood is gritty not commercial. It’s a neighborhood that is propelled by earnest passion for art not a desire to be accepted. Wynwood represents a breaking of the mold while Midtown represents a casting of it. Given such opposing characteristics, it’ll be interesting to see how the neighborhoods interact with one another.

Image: More under utilized properties across from Midtown Miami. Notice the neatly landscaped median–attributed to Midtown

The Midtown Periphery As It Is

Currently, there isn’t much new activity attributed to Midtown Miami around its periphery. This is natural since Midtown has yet to establish itself. Midtown Miami is the product of a NY-based development firm. In looking at land acquisitions in the periphery, almost all of the parcels located north of Midtown Miami are owned by NY-based firms. There is no direct connection to Cayre-Samuel that I’ve seen. Not surprisingly, the west flank of MM–and farthest from active Edgewater–has the least activity in terms of recent acquisitions. In other words, the most recent acquisitions took place in 2004, and the majority have been held for at least 7 years or, in most cases, longer. The south and east sides of Midtown are also lax on new acquisitions. If Midtown is to trigger activity along its periphery, then many existing land owners may just be playing a waiting game until the timing is right to make a move.

Image: Cynergi, which would never have been built were it not for Midtown Miami, is a prime example of the positive effect Midtown Miami presents to the area.

Anticipating Change

In anticipating the type of commercial activity that may take place around Midtown, the Sunset Place comparison becomes useful. Currently, Midtown doesn’t really offer dining options. The Design District does a better job at filling the void, but Midtown remains depressingly behind in this respect.

It’s a simple formula: where there is big box retail and new residential towers, we can expect restaurants, lounges, wine bars, and cafes to follow suit.

Sunset Place bore witness to this and Midtown Miami shouldn’t be any different. Will this happen in a few months? Of course freaking not! It will take a couple of years gradual and often painstakingly slow progress–which I will endeavor to cover–before people realize that the area is truly phenomenal. It boggles my mind to think that people doubt the positive influence that MM and the DD will have on the Uptown area. It just seems so shortsighted to me. I have heard people say that South Beach’s heyday is over and the Urban Core has only one way to go: up. Although I disagree with the South Beach side of the assertion, I know that much of our city’s dynamic social energy and economic influence will be shifting to the Core. It’s already happening. But, I bet, as time unravels its secrets, Midtown Miami will be pivotal in instigating this paradigm shift.

Map: Midtown Miami proper is outlined in Blue. Its vicinity in yellow. The WAD is colored in red, Edgewater in green, and the edge of the Media and Entertainment District in blue. The Design District lies directly across the I-395 to the north and Bay Point to the north east.

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Filed under BoB Articles, Commercial Developments, Emerging Neighborhoods, Uptown: Edgewater, Uptown: Media & Entertainment (PAC) District, Uptown: Midtown Miami, Uptown: Wynwood Arts District

Signs of Urban Life: Retail Oulook (Uptown’s Pros – M&E)

Image 1: An under utilized retail structure with blue awnings on NE 24th street and Biscayne Boulevard is shown in the foreground with new developments surrounding it.

Continued from Signs of Urban Life: Development Outlook (Uptown’s Woes)

Uptown is the largest of the three primary urban core segments (CBD and Brickell Village being the other two). It contains four unique sub-segments:

  1. Media and Entertainment District
  2. Edgewater
  3. Wynwood Arts District
  4. Midtown Miami & vicinity

Map: Uptown and its four subsegments are shown above. The Media and Entertainment District is shown in blue, the Midtown Miami vicinity is shown in yellow, Edgewater in green, and Wynwood in red.

The Media and Entertainment District

This post will concentrate on the first of these subsegments. The Media and Entertainment District, known to some as the Omni District, which surrounds the Carnival Center for the Performing Arts, is located just north of the I-395 and Parkwest. Along with the PAC, the Miami Herald and Omni buildings are located within the M&E. The M&E’s character is very much non-existent. Surrounding the PAC is a considerable amount of vacant land and derelict buildings. However, there are several interesting patterns that may indicate the retailization of the area.

Image 2: View of the Carnival Center for the Performing Arts from Biscayne Boulevard

The M&E’s Layout

Looking at the map of Uptown, you’ll notice that the M&E, as defined by the DDA, juts to the north along Biscayne Boulevard. This extension is where Cite, City 24, Uptown Lofts, and Biscayne Plaza are located. These developments are vital because as mixed use projects they contribute retail space at the street level. Cite and Biscayne Plaza are good examples of how the filled retail space will enhance lifestyle options and pedestrian activity along Biscayne Boulevard.

There are still many underutilized structures that contribute nothing to the fold. Many of them are For Sale. In fact, Uptown has a greater concentration of derelict structures for sale than the CBD and Brickell Village to the south. There are implications that follow suit:

  • The area remains undeveloped
  • Many announced projects have either been scrapped or stalled
  • In terms of acquisitions, the area is conducive to extensive redevelopment

Image 3: The same structure with the blue awnings from image 1 is shown here from street level. The right side is facing south toward City 24 and the M&E and the left side is facing north away from the M&E. While the streetscape is under construction in preparation for new ground level retail on the south side, the north side remains under utilized.

In these ground level retail spaces, we’re witnessing a wide variety of businesses spring up: wellness facilities, restaurants and cafes, banks, all sorts of stores. Aside from residential units being occupied, the advent of these new businesses to the area is the most important aspect of creating a truly urban environment.

Image 4: Banner ads for restaurant in Biscayne Plaza

Ground Level Retail

Currently, only Cite and Biscayne Plaza have fostered this kind of street level retail activity. Uptown Lofts and City 24 will add more ground level retail to the M&E. Staples, interestingly enough, is constructing a store in the heart of the M&E and it’s not attached to any existing or planned project. This is indicative of a pattern that may continue along Biscayne Boulevard as under-utilized buildings get replaced with retail. Biscayne Boulevard serves as an ideal artery to spread this kind of activity along Uptown.

Image 5: People mover elevated transit line with the Marriott and Radisson in the background

Connectivity

Importantly, although most of Uptown remains disconnected from the public transit rail system, the M&E is not. There are two stations servicing the M&E (Omni and School Board stations). This allows for connectivity with the other two Core segments to the south.

Hotel Hub

The Media and Entertainment District also boasts the only major hotel chains (Doubletree, Marriot, Hilton [formerly Radisson]) in all of Uptown making the neighborhood tourist friendly. The nearest hotels are in the Financial District to the south. Here again, this is good news for retailers. Although there isn’t much reason for hotel occupants to walk the streets of the M&E just yet, the presence of these hotels adds more value to the neighborhood.

Citi Square

There is more to the M&E, however, than meets the eye. Sure, the Carnival Center for the Performing Arts is hard to ignore, but it’s what you don’t see that’s most telling. Pedro Martin’s Terra Group has plans for the land surrounding the Herald. The plans required the rezoning of the parcels to accommodate Mr. Martin’s vision of two 64 story towers and a major destination-retail component called Citi Square (641,104 sq. ft. of retail space). Since the original buzz generated by the announcement of the potential land acquisition and vision for land-use, there hasn’t been much said about the project, but the deal between the McClatchy Company and Citi SquareGroup LLC. (Pedro Martin) appears to be a work in progress.

Image 6: View of the Omni from across the PAC

The Omni Center

The Omni is another critical longterm component. New York-based Argent Ventures’ $1 billion plans for the 1 million sq. ft. property span up to 15 years in four phases and include 6 large scale towers as well as 350,200 sq. ft. of retail space. A plan that spans 10-15 years is not at the mercy of existing market conditions but is susceptible to the uncertainty of time. Thoroughfares will be incorporated into the mega-project making it a city-within-city of sorts. Marc Sarnoff considers it a second Midtown. Argent recently closed on a $200+ million dollar loan to begin work on its plans.

Image 7: Filling Station lofts under construction

The M&E’s West Side Residential

The side of the M&E west of NE 2nd Avenue is rather desolate, but there are two residential developments that provide a glimpse of how the M&E’s interior may unravel: Filling Station Lofts and Parc Lofts. The latter is completed and the former is under contruction. Both are well designed mid-rise loft developments that stretch the notion of urban pioneering to the limit. Surrounding the two projects are plans for the Bayview Market, a destination retail facility, and MAX Tower, an innovative mixed use project designed to lure media and art-oriented tenants. Neither of the two have disturbed the ground yet, but add potential to the area.

Wrapping it Up

The presence of the Carnival Center for the Performing Arts, incoming street level retail, incoming occupants, presence of major hotels, large-scale long-term plans for Citi Square and the Omni, connectivity to the People Mover transit system, and its designation as a Media and Entertainment District make this urban neighborhood a very interesting prospect for retailers.

To be continued with installments dedicated to Edgewater, Midtown, and Wynwood…

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Filed under Biz Buzz, BoB Articles, Commercial Developments, Emerging Neighborhoods, The Big Picture, Uptown: Edgewater, Uptown: Media & Entertainment (PAC) District, Uptown: Midtown Miami, Uptown: Wynwood Arts District

Construction Update: Shops at Fifth & Alton

Image: Active construction site for the Shops at 5th and Alton

The Shops at 5th and Alton, which will include 185,000 sq. ft. of vertical retail space and a 943 space parking garage at the 5th street entrance to South Beach, has begun to see activity on its site. U.S. Century Bank is financing development for the Berkowitz Development Group and Potamkin family. The Shops at 5th and Alton will serve as a development anchor for the West Avenue Corridor and SoFi, and further fill-in retail activity along 5th Street.

This project is also significant for shifting economic activity towards the west side of South Beach as well as integrating a novel vertical-retail approach that has worked quite well at Dadeland Station. Publix has signed a letter of intent for space in the new facility.

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Rethinking Brickell’s Interior (west side)

Image: (from left to right) Infinity, Axis, and Vue on South Miami Avenue

Envisioning Brickell During the Boom

Since the inception of the surge in construction activity that later became known as the boom, I have envisioned how the skyline would transform. As activity picked up, so many projects were being announced that I found it increasingly challenging to remember them all off the top of my head. Still, I would look at the skyline and consider the height and design of those projects that were anticipated to fill in the sky. Now that the boom has dissipated, it has become clear that many projects that were announced may never come to exist. Several examples of this can be readily found on South Miami Avenue. Let’s see what I mean on a map:

Map:

  1. Brickell CitiCentre
  2. Premiere Towers
  3. Beacon (it’s not officially scrapped, so let’s call it dormant)
  4. Brickell Flatiron
  5. Pointe at Brickell
  • A total of eight towers in five separate projects



Image: The site of Flatiron up for sale

Rethinking the Vision After the Boom

The section of South Miami Avenue between 12th and 7th street is filled with examples of what could have been. Even Mary Brickell Village, which is beginning to fill with tenants, had a tower component planned that has not, and may never, come to fruition. It’s not clear what has happened. The area has excellent access to rail, is relatively stable, runs parallel to Brickell Avenue, is near the bay and Miami River, and has a robust restaurant scene. For all intensive purposes, it’s excellently situated. However, one project after another was scrapped.

Image: The site for Pointe at Brickell up for sale

Brickell Village’s interior (west side) has and is still seeing major construction activity with Avenue, Axis, Brickell Station Lofts, Infinity, Capital at Brickell, 1450 Brickell, BOR I and II, Brickell Financial Center, 500 Brickell, Latitude I and II, Neo Vertika, One Broadway, and Vue. The area is a success story despite the presence of so many scrapped projects. Proposals and approvals don’t mean anything until the ground is disturbed and the cranes and workers take the project vertical. Today, reality has set in, and there is a much clearer understanding of how Brickell Village is transforming. The future remains impressive

Image: The site of Premiere Towers up for sale

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