Mixed-Use Development Bolsters Miami Office Pipeline

Image by Art Wager/iStockphoto.com

• The metro was in the top 3 gateway cities with largest office pipeline relative to total stock
• Several large mixed-use projects comprising significant office components broke ground in 2023
• First-quarter deal volume dropped significantly on a year-over-year basis
• Miami had the largest share of coworking space as percentage of total leasable office space among gateway cities

As of April, Miami’s office market had 2.7 million square feet underway, representing 3.4 percent of total stock. The Magic City’s under-construction pipeline decreased by nearly 50 percent from the 5.4 million square feet recorded in April 2022.

The metro’s relative to total inventory pipeline at the end of the first quarter exceeded the national figure (2.1 percent), as well as that of Manhattan (3.1 percent), Los Angeles (1.0 percent), Chicago (1.2 percent) and Washington, D.C. (1.7 percent), but was lower than in Boston (6.2 percent) and Seattle (7.1 percent).

830 Brickell remains the largest office project underway. Fully leased prior to its completion, the 55-story skyscraper is the first Class A office tower to be constructed in the city’s CBD for more than a decade. OKO Group and Cain International topped out the tower in summer 2022 and are anticipating completion this year.

Mixed-use projects underway

THE WELL Bay Harbor Islands. Image courtesy of Terra Group

In February, Terra Group announced its plans to build nearly 100,000 square feet of office space in Bay Harbor Islands, Fla., as part of the mixed-use development dubbed THE WELL Bay Harbor Island. The project received a $141.8 million construction loan and completion is expected in late 2024.

Also in February, a joint venture of The John Buck Co., Florida Value Partners, BH Group and PEBB Enterprises purchased a 1-acre site in downtown Miami. Known as Miami Station, the 42-story project has been a long time under development, undergoing various adjustments along the years. The partners paid $39.5 million for the lot that is currently set to comprise 244,000 square feet of office space, more than 7,000 square feet of retail and 301 residential units.

In March, L&L Holding Co. and Oak Row Equities, along with co-investor Claure Group and partner Shorenstein Properties, broke ground on a 1 million-square-foot mixed-use project in Wynwood. Named The Wynwood Plaza, the project landed a $215 million construction loan from Bank OZK. Designed by Gensler, the project will include a 509-unit luxury residential building, an office tower and multiple indoor and outdoor retail and dining spaces.

Shared space gains ground in Miami office scene

Wells Fargo Center. Image courtesy of Cushman & Wakefield

Across gateway cities, Miami had the largest share of coworking space as percentage of total leasable office space, reaching 3.3 percent in April. In January, flex office provider Mindspace shared plans for a new, more than 31,000-square-foot space in downtown Miami. The company signed a 10-year, three-floor lease with RFR Realty at 100 N. Biscayne Blvd.

At the end of the first quarter, flex office provider Regus had the largest footprint in metro Miami, operating locations totaling roughly 4.8 million square feet. Quest Workspaces was second, with nearly 2 million square feet, followed by WeWork, with more 924,00 square feet.

Some of the most significant lease signings in 2023 included Kaseya inking a 101,000-square-foot lease at Metropolitan Life Insurance Co.’s Wells Fargo Center building in downtown Miami, marking the tenant’s fourth location in the metro. Additionally, fast food chain Subway opened a Miami office to act as a second headquarters alongside its counterpart in Connecticut.

Deal volume cut in half year-over-year

In the first quarter of the year, Miami office sales amounted to a total of nearly $100 million and 762,836 square feet, roughly half the dollar amount from last year’s $209 million. The average sale price per square foot dropped from the $330 registered at the end of March 2022, to $222.2 one year later. Sales prices were highest in Manhattan ($1,002.2 per square foot), Boston ($554.6 per square foot) and Seattle ($293.6 per square foot).

Across gateway cities, Miami had the second lowest deal volume in the first quarter of the year, after Seattle ($46 million). Boston ($680.2 million) led the list of gateway cities with the largest transaction volume in the first three months, followed by Manhattan ($417 million), Los Angeles ($357.2 million) and Washington, D.C. ($340.8 million).

11690 NW 105th St. Image courtesy of CommercialEdge

In March, Ryder System Inc. sold its Miami headquarters campus to Bridge Industrial for $42.1 million, marking the largest office transaction within the metro in the first quarter of 2023. The 248,989-square-foot building served as the former owner’s headquarters since 2005. Ryder Chairman & CEO Robert Sanchez said in a prepared statement that the company needed less space post pandemic, which led to the decision of downsizing its footprint.

Also in March, an entity tied to Atlantic Coast Automotive Inc. acquired Biscayne Centre in North Miami, Fla., in a $39 million deal. Incomm Agent Solutions was the seller of the 156,446-square-foot office building.