Boynton Beach Industrial Property Fetches $139 PSF

KVA Congress bought a Boynton Beach industrial building for $6.65 million, signaling growing interest in industrial properties in South Florida.

The Jupiter-based company bought the 47,626-square-foot property at 3600 South Congress Avenue for $139 per square foot, according to a press release from Cushman & Wakefield. Bridgeview, Illinois-based R.T. Milord Co. sold the property.

KVA Congress is managed by Peter Alevizos and Nancy Alevizos of Jupiter. Cushman & Wakefield represented the seller in the sale.

The building was developed in 1987 on a 3.3-acre site. The property was 100 percent occupied at the time of sale, according to the release.

Boynton Beach, located between Boca Raton and West Palm Beach, has seen a number of new developments in recent years. Among them, Gulf Stream Views, a 14-unit luxury townhome development, just launched sales this month.

In South Florida, overall investment in industrial properties is growing. Over the past five years, average prices per square foot for warehouse buildings in South Florida have increased by 65 percent, according to Colliers International South Florida’s third quarter 2018 report.

 

Source: The Real Deal

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So Many Opportunity Zones, So Many Questions For Developers, Investors

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Developers and investors are enamored enough with the federal Opportunity Zones program that they have been raising massive funds in hopes of taking advantage of the big tax incentive, but remain cautious enough over of the program’s many unanswered questions that few have deployed much of the capital raised.

Those dueling realities just played out in Washington, D.C., when the IRS’ first public hearing to solicit questions about the year-old program drew an overflow crowd. About 200 people gathered in a small room, and a couple of dozen speakers aired their concerns, according to three people who attended the hearing. The hearing had been scheduled for January, but was delayed because of the 35-day partial government shutdown.

Steve Glickman, a co-founder of Economic Innovation Group, was one of those in attendance. Glickman is credited with helping craft the Opportunity Zones program, which provides tax deferments and tax breaks for developers who invest in projects in designated low-income neighborhoods across the country. Also at the hearing were Michael Novogradac, a CPA and managing partner at Novogradac & Company; and Jill Homan, an Opportunity Zones adviser and fund manager.

“One of the biggest questions asked was about the amount of time that investment funds have to deploy capital raised for Opportunity Zones projects,” Glickman said. “Existing regulations give funds six months from the time the money is received. But many of the funds say they want to hold the cash for at least a year before deploying it.”

Numerous Opportunity Zone funds targeting hundreds of millions of dollars have been launched in recent months, by firms including Youngwoo & Associates, Somera Road, Fundrise, RXR Realty and EJF Capital. Skybridge Capital is targeting a $1 billion fund. That fund was rolled out in December with EJF as a subadviser, though SkyBridge later dissolved their partnership and found a new subadviser.

In October, the government released its first set of guidelines, but left many topics unaddressed. It did specify that a business will qualify for the program if 70 percent of the company’s property is located within a designated zone.

The Opportunity Zones program pushed forward in President Trump’s 2017 tax overhaul plan gives investors and developers the ability to defer and potentially forgo paying some of their capital gains taxes if they hold the asset for at least 10 years. But real estate investors often buy and sell assets after only a few years.

Given that fact, could an investor sell an Opportunity Zone asset after three years, then reinvest the money into another Opportunity Zone project for seven years? Would the total 10-year hold period still qualify for the program?

Another question: How much capital can an investor or developer take out of a project when refinancing an Opportunity Zone property? And after the refinance, how will the proceeds of the refinancing be distributed to investors?

Asked, but not answered. IRS officials only listened. Investors and developers will be looking for those answers when the government release its second round of rules, which is expected in the next two months.

 

Source: The Real Deal

South Florida Leaders Hope For Another Look From Amazon

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South Florida officials have a message for Amazon and Jeff Bezos: Baby come back.

The Washington Post just reported that Amazon is reconsidering its decision to award New York City part of its HQ2 project, which the company has said would come with 25,000 jobs and billions in local investment. Amazon is facing what the Post calls a wave of opposition from local elected officials about the prospect of giving financial subsidies to the world’s most valuable company. Amazon has not yet leased any land there, the Post reported.

Miami-Dade Mayor Carlos Gimenez says he hasn’t heard from Amazon since the e-commerce giant broke the news to him and other South Florida officials that the region came up short in its bid to land HQ2. Miami’s bid, jointly submitted with Broward and Palm Beach counties, did land the region on a short-list of 20 finalists.

In a statement, Gimenez said he is ready to start things up again whenever Amazon is.

“If Amazon is reconsidering getting out of its plan to open a headquarters in New York, as has been reported by the Washington Post, we welcome the opportunity to talk further with the e-commerce giant,” Mayor Gimenez said.

A spokesperson for Miami WorldCenter, which had been considered as a potential landing spot for a hypothetical Miami HQ2, said Amazon has not gotten back in touch about any new projects.

Amazon did not immediately respond to a request for comment. In November, the company announced the other half of the HQ2 project would be located in Northern Virginia. It also announced it planned to open an additional, 5,000-person office in Nashville, Tennessee.

The details of the package South Florida pitched to Amazon have still not been revealed. A spokesman for the Miami-Dade Beacon Council said a freedom of information request filed by the Miami Herald for the information is still being processed.

At a recent panel discussion about lessons learned from the process, Mike Finney, president and CEO of the Beacon Council, did not mention any specific feedback he’d received from Amazon officials about South Florida’s bid. The event was sponsored by the Miami Herald.

In a statement, Finney said the fact that the HQ2 project has been split into two now makes Miami even better positioned for it.

“The change in scope — given jobs and investment were ultimately divided among multiple communities — further enhances Miami’s opportunity to successfully deliver on the kind of partnership we know Amazon is looking for,” Finney said.

He confirmed that he has not engaged in conversations revisiting Amazon bringing any part of HQ2 to South Florida since Amazon’s final announcement was made.

Kelly Smallridge, president and CEO of the Palm Beach County Business Development Board, said she too would welcome Amazon back.

“We’re open for any new opportunities,” Smallridge said.

Miami Mayor Francis Suarez said he planned to reach out directly to Bezos to pitch the Magic City.

“We are the only global city in America with the talent, tax favorable environment and tactical position to fit a global logistics company like Amazon,” Mayor Suarez said in a statement.

And Boca Raton Mayor Scott Singer tweeted, “Hey , heard many NYS leaders oppose deal for your 2nd HQ. We have 0% income tax & lower property taxes in , so you can come to  for a lot less cost, stress & cold. Be happy in  like many HQs. See recent  reports & !”

A spokesperson for Gov. Ron DeSantis’ office did not immediately respond to a request for comment about whether he had reached out to Amazon officials. Following the Washington Post report, Crain’s Chicago Business reported that Illinois Gov. J.B. Pritzker had already reached out to Amazon officials asking them to reconsider Chicago as an HQ2 location.

 

Source: Miami Herald

Record Number of Multifamily Deliveries Predicted For South Florida

With healthy employment growth continuing, Berkadia predicts this year’s apartment market in South Florida will have the most deliveries in more than two decades.

Their 2019 South Florida Multifamily Market Outlook said construction was scheduled to be complete on nearly 12,000 units by year-end, up more than 18 percent from deliveries in 2018.

“Apartment leasing is expected to remain healthy too as employment growth – particularly in the professional and health sectors – is expected to outperform the national average in 2019,” the report found.

“South Florida’s apartment fundamentals continue to be exceptional thanks to sustained job and population growth combined with a trend away from homeownership,” said Charles Foschini, Senior Managing Director and Berkadia Florida Co-Leader. “There are an increasing number of ’lifestyle renters’ – people who could buy but want to live in a more dynamic, amenity-rich setting. Apartment owner/operators have been very creative in catering to that segment of the market.”

Added Mitch Sinberg, Senior Managing Director and Berkadia Florida Co-Leader, “The market for buying and selling apartment properties also remains healthy, although given where we are at the cycle, we anticipate deal volume to dip slightly in 2019. Interest rates have risen, but we anticipate a tightening of spreads will compensate for any price increase.”

Trends Include 2.1 Percent Employment Growth

Berkadia’s Florida Investment Sales and Mortgage Banking teams collectively completed over $4.5 billion in multifamily and commercial property sales and financings in 2018.

Trends cited by Berkadia:

  • Employment growth of 2.1 percent should drive leasing activity higher than inventory growth.
  • Healthy demand should shift average apartment occupancy up 50 basis points to 95.5 percent by the fourth quarter, which is slightly above the five-year average.
  • Average effective rent is forecast to rise 3.7 percent to $1,606 per month.

 

Source: GlobeSt.