Trophy Miami office towers likely to be sold
By Marilyn Bowden
The potential sale of the Miami Center, on the block since January, could be a bellwether for other institutional grade office properties to come to market, experts say.
Speculation within the real estate community is that the Miami Center will be sold to Boca Raton-based Crocker Partners, which bought downtown's 420,857-square-foot SunTrust International Center for $82 million in August 2011, though principals are keeping mum.
"The possible sale of the Miami Center to Crocker bodes well for the office market for the balance of this year," said Jason Shapiro, managing director at The Aztec Group, a real estate investment banking firm. "A number of things come into play.
"This is an astute investor buying more in downtown. The overall dynamics of the Miami economic environment are good, and things like the Panama Canal expansion will affect Miami's office market positively because regional multinational companies who will do business from here will need office space.
"I would imagine that the Miami Center sale would be the catalyst for others to be announced shortly."
Although no other trophy towers are currently on the market, said Chris Lee, vice chair of the Capital Markets Institutional Group in the Miami office of CB Richard Ellis, "I would say that the capital markets and real estate markets have improved to a point that where we would expect to see more of them."
The success of such new office properties as 1450 Brickell and 396 Alhambra in leasing up is bound to capture the attention of institutional investors, said Neil Rollnick, a shareholder with the law firm Hinshaw & Culbertson with more than four decades' experience in commercial real-estate law.
"Owners of buildings like that will either hold or wait until a major institutional investor comes along."
Although there's not likely to be a lot of active trading, Mr. Rollnick said, "if and when it comes, it will be about taking advantage of an economy turning a corner."
Mr. Shapiro agreed that continued leasing velocity in new office buildings bodes well for investment in both class A and class B office buildings.
So does DRA Advisors' purchase late last year of five buildings in Waterford at Blue Lagoon, he said. "Investors are taking the long-term perspective in Miami-Dade because of its dynamics as well as the general macro conditions, which continue to improve."
The only foreseeable event that might change the plans of local office users, Mr. Shapiro said, would involve economic turmoil in Europe.
Pricing is good, Mr. Lee said, with prospects of getting better.
"There's money looking to invest in Miami," he said. "It's not long before we will see a whole lot of new residential construction. Our city has shifted into being a 24-hour city. There are a lot of good reasons to feel good about the direction our market is heading."
Mr. Rollnick said signs of a strengthening economy abound.
"The amount of money in the downtown corridor and elsewhere is incredible," he said. "The Genting purchase [of the Miami Herald and former Omni mall sites] stirs up the economy in many ways.
"It brings excitement. Whether or not there is ever going to be gambling or a casino here, it creates the illusion that something is happening. Now other gambling interests are looking around for sites.
"Add to that people who are buying up or leasing unsold condo inventory. All of this has an impact on the office market, because once other areas become vibrant, there is no question that business picks up behind it.
"So I believe we will continue to see reasonably strong leasing activity in the office sector, and that is going to lead to sales. It means the market is swinging more towards the landlord side, and that ramps up the value of a building.
"I don't see the doom and gloom in this market that many were speaking about last year and the year before."
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