US 1 strip south of Miami brings lucrative land deals
By Jaime Levy
With Dadeland Mall and The Falls as bookends, the strip of US 1 within or near Pinecrest's village limits is becoming increasingly valuable, local real estate agents say.
Two recent land deals - one for an upscale men's clothing store and another for a shopping center where a gas station once stood - show prices climbing in one of the most affluent sections of Miami-Dade.
"Other than downtown property values, this is probably the highest," said Jeremy Larkin of Larkin Schmidt Commercial Real Estate Services. "It is a densely populated area that's virtually fully developed, surrounded by a very affluent population base. It's all the ingredients you need to have values go up."
Indeed, Mr. Larkin said, deals made in the past year indicate that prices per square foot are well above the general market, which he said runs between $8 and $30 a square foot.
For example, the owner of Damiani, a men's clothing store, in May bought the property at 8965 S Dixie Hwy. for nearly $80 a square foot, or $2.05 million. The store, which also has locations in Coral Gables, Aventura and Sawgrass Mills, will open its US 1 location by the end of July, said owner Evelio Estrella.
"We have two major shopping centers between those areas - Dadeland and The Falls," said Mr. Estrella, who said his company is spending another $1.8 million to develop the site, which used to house a discount drug store. "They generate a good amount of traffic from Latin Americans going from Saks to Bloomingdale's, or from Macy's to Burdines. Being on US 1 gives us the opportunity to reach out to Latin American clients. At the same time we put ourselves in an area with high visibility and all the high-income homes."
Larry Suchman, president of commercial brokerage and development firm Suchman Retail Group, said part of the reason prices are jumping along US 1 is because there is little space available. That fact that US 1's west side is swallowed, he said, by the Metrorail - combined with relatively small tract size along the strip - makes buyers more willing to shell out large amounts for the space.
"Part of the reason you're seeing high prices per square foot is because they are small tracts. Larger parcels wouldn't bring $70 per square foot - it would bring it back down to $50 per square foot," Mr. Suchman said. "Even in the face of the economic slump around the country, there's still a scarcity of land in that corridor for retailers to locate. A lot of retailers are going toward free-standing types of locations and willing to pay a premium to get their own piece of the rock. Because sites are so scarce, people are stepping up and paying big money."
And the neighborhood's affluence means that retailers can expect to see brisk sales, Mr. Larkin said.
"When you think you're going to sell $100 a square foot, you can afford $10 a square foot rent," he said. "In a market where you're going to sell $1000 a square foot, you can afford $100 a square foot on rent."
Indeed, said Jose Martinez, head of Adler Development, a division of real estate firm Adler Group, the possibility of drawing strong rents played into his company's decision to buy and develop the plot at 9095 S Dixie Hwy.
He said the firm bought the land in early 2001 for $2.4 million, and expects total development costs to come close to $4.5 million. According to Miami-Dade County, the assessed value of the tract - formerly a Chevron station - grew by $400,000 from 2000 to 2001. The new strip mall will be anchored by a Starbucks with a drive-through window, Mr. Martinez said.
"The demographics of Pinecrest as far as consumers there is the higher type of market. We know we can get more national tenants and collect more rent in that area.
"Pinecrest is a new, up-and-coming city that will end up like Coral Gables, or Buckhead in Atlanta, or Winter Park in Orlando," Mr. Martinez said. "This is a building we intend to keep for a while. We only feel the area is going to get better. The types of consumers, spending, average income - they're good indicators that any business that goes there will thrive."
Mr. Suchman said property values in the area would continue to rise.
"If the economy recovers, they could shoot up," he said. "Otherwise, they'll continue to gradually move upward. They're not going down. It's still precious - an 'A' location. If the economy really recovers and people are spending money, you could see those rapidly increase in value."