With Education, Manufacturing Will Lead Florida Forward In 2021

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The economy is in dire need of restructuring in Florida, and according to experts with the Florida International University of Miami, manufacturing will be key in building resilience in 2021 and onwards.

This is not the dirty manufacturing of old, however. Using new technology and tools, exciting new industrial developments and manufacturing businesses will be able to tie together old processes with the new to create a high-tech and profitable new manufacturing environment.

Diagnostic Tools

Florida has a very diverse manufacturing history, and this has lent itself to the need for technological upscaling. Business consultants SME note this: manufacturing encompasses everything from plastics, to tortillas, to motor vehicles. This makes the use of new technology that can be used to improve tech, new and old, very important, and can bring a high-tech tilt to manufacturing.

Industrial tech experts SPI Borescopes (www.spiborescopes.com) note this in relation to optical technology; pairing the simple use of newer optical tech in conjunction with older manufacturing processes and technology can help to upscale older equipment and make it more useful.

Upscaling Old Processes

Building new manufacturing resilience in South Florida is going to be important if the industry is to continue to develop and thrive. This is because Florida as a whole suffers a skills gap; despite there being over 500,000 unemployed Floridians, 260,000 jobs remain open due to a lack of appropriately skilled workers to place into these roles. Key technological advances that make new and old processes accessible to Floridians is crucial, as is education.

Technology-Driven Education

A positive result of the events of 2020 has been an upscaling of digital skills and education. Reuters highlights the current generation of newly digitally-able people as a promising change in the overall labor market. Nowhere will this be more beneficial than in the Florida of the future. Providing the skills for manufacturing workers in all sectors to be able to cross-skill and drive new industry is going to help the state create a new economic profile and uplift society in general.

In much the same way as other industries are experiencing, technology and digital skills are leading the way.

 

Source: South Florida Reporter

A New Life For Old Macy’s Site In Pompano: A 356-Unit Apartment Complex

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A new chapter is emerging for the closed Macy’s at the Pompano Citi Centre as developers have applied to replace the now-shuttered department store with a 356-unit apartment complex.

The Pompano Beach review committee on just gave an initial blessing to the proposal by the Morgan Cos. of Houston, which has developed or is in the process of building rental projects in Fort Lauderdale, Miami and Boynton Beach. Besides Florida, Morgan has projects in its home state of Texas, as well as in Missouri, Arizona and California.

The proposed luxury multi-family development in Pompano Beach is yet another installment in a trend where vast shopping complexes are giving way to new uses as consumers opt to shop online instead of driving to crowded malls and big box stores.

“I think shopping center owners are recognizing they have good pieces of land in good locations,” said Hugo Pacanins, Morgan’s regional development partner for South Florida. “Bringing residential to that existing mix accomplishes everything. You’re activating the center and bringing 24-7 people to the shopping center. It’s a trend we’re seeing nationally. You’re starting to see a lot of these projects being delivered in Pompano Beach and doing really well. I think that will bring new life to the area.”

But the face of commercial life in the Pompano Citi Centre neighborhood has changed along with a major overhaul in retailing. Macy’s shut the Pompano store last spring as part of a plan to streamline its operations amid sizable financial losses nationwide. That left an opening for the Morgan Group to buy over 12.1 acres of land — most of it from Macy’s and a portion of the mall parking lot from the shopping center owners. The developer has yet to set any prices, sizes or layouts for the apartments. But the buildings will be four stories in height with views of the nearby municipal golf course.

“We’ll have a big range of units from studios to three bedrooms,” Pacanins said.

After gaining its first green light in a lengthy approval process, Morgan will make “minor adjustments” to its application, which will then move to the Planning and Zoning Board for a public hearing in January, a city spokeswoman said.

The city’s board is currently targeting Jan. 27, 2021, for a public hearing. The full City Commission would then have to give its approval, and a Broward County land-use plan needs to be changed to reflect the proposed new land use to “irregular residential.” It is currently zoned commercial.

The review committee also has urged Morgan to communicate with residential neighbors who live north of Copans Road, which borders the northern edge of the Citi Centre.

“One of the advantages this site has is we’re abutting a golf course and it’s adjacent to a shopping center,” Pacanins said. “Traffic is always a concern, but there will be a lot less traffic than what Macy’s was generating. We’ve still got a long way to go and looking forward to getting this deal started in 2022.”

 

Source: SunSentinel

Cold Storage, Hot Assets: Online Food Shopping, Pharma And Vaccine Bring CRE’s Strongest Property Class To Forefront

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Long before the novel coronavirus pandemic sent Americans racing for their smartphones to order groceries, industrial real estate observers were keeping a close eye on the availability of temperature-controlled warehouses.

Covid-19 vaccines that require very specific temperatures — Moderna Inc.’s vaccine requires temperatures of minus-20 degrees Celsius and Pfizer Inc.’s candidate requires storage at minus-70 degrees Celsius — have put cold-storage warehouses in the spotlight in recent weeks.

But the sector has seen little vacancy for years, and industrial real estate experts don’t expect that to change as consumers shift more of their food shopping online, even after the pandemic is in the past.

Historically, the national vacancy rate of cold-storage warehouses has hovered below 10%, according to JLL, and much of that inventory is aging and rapidly approaching functional obsolescence. The average cold-storage warehouse in the U.S. is 42 years old, according to JLL.

“If we have a client who wants to know all the available temperature-controlled storage in the U.S. … on any given day, this isn’t something that takes up 10 pages,” said Tray Anderson, Cushman & Wakefield Inc.’s logistics and industrial lead for the Americas. “It’s more like two or three.”

The lack of available space is a function of economics: Temperature-controlled warehouses cost nearly twice as much to build as their dry-storage counterparts, according to JLL, which forecasts that those construction costs will only rise as demand intensifies. A temperature-controlled warehouse can cost $130 to $180 a square foot, whereas construction costs for a conventional warehouse range from $70to $90 a square foot.

“That pricing makes speculative construction — breaking ground without a signed tenant in place — difficult but not impossible,” said Anderson, who is based in North Carolina.

But the uptick in demand from food companies and retailers — coupled with the variable of a massive vaccine-distribution effort — is enough to embolden some developers to try their hand at speculative construction. Already, 95% of U.S. food goes through a third-party distribution center before it reaches consumers, according to CBRE Group Inc. And as early as May 2019, CBRE predicted that the country needed an additional 75 million to 100 million square feet of cold-storage space to meet demand for direct-to-consumer food orders — and that was before the pandemic threw online ordering of everything from furniture to food into overdrive.

“JLL is tracking more than 20 speculative cold-storage developments,” said Dustin Volz, a managing director on JLL’s capital markets team who specializes in such properties.

Cold-storage properties tend to be specific to individual users, but Anderson said projects could at least begin construction by pouring a floor that can handle a specific temperature.

“Speculative cold storage is still challenging, but a few select developers are figuring it out,” said Volz, who is based in Dallas.

Vaccines for the novel coronavirus aren’t expected to drive much additional supply for cold storage because the goal will be to administer the vaccines quickly. What that might do for short-term demand for space is another matter.

“The growth we’re talking about isn’t really vaccine-related; it’s food,” Anderson said. “Especially at minus-20 degrees … Minus 20 is much more common with pharma and food. You can find space that can do minus 20. You’re not going to find any vacant space at minus 80.”

Volz agreed that food is driving the majority of the demand — and that the pandemic highlighted weaknesses in the U.S. food supply chain, such as its reliance on international vendors and inability to handle sudden upticks in demand.

“The need for excess warehouse space is therefore a result of keeping additional inventory to handle any surges in food demand,” Volz said, “and maintaining a domestic supply chain with the unrestrained geographical access for the population with supplemental food imports to complement the new infrastructure.”

 

Source: SFBJ

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Rauch Robertson Commercial Realty Advisors LLC (RRCRA) Completes Sale of Palm Beach County Brewing Facility

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Michael Rauch and Tom Robertson, Senior Managing Partners with the Boca Raton-headquartered firm, negotiated the sale of a ±16,879-square-foot, FDA-qualified industrial manufacturing building located in Boynton Beach, Florida.

Rauch and Robertson represented the seller, a Palm Beach County-based commercial real estate developer/owner/operator, in a transactional broker capacity.

The property, located at 151 Commerce Road in Boynton Beach, traded for $2,750,000 ($163 PSF) and is well suited for FDA qualified manufacturing uses. Copperpoint Brewing Company, an independently owned and operated full production brewery and tap room, purchased the facility. Rauch brokered the lease of the property to Copperpoint in 2014.

“This state-of-the-art brewing facility and tap room was opened in 2014 by two skilled entrepreneurs, and they are proud to be the new owners of this state-of-the-art facility,” Rauch commented.

 

“Mike and Tom were instrumental in getting this transaction closed, providing first-class guidance throughout the due diligence and closing process,” said investor Al Lettera. “We could not have done it without them,” added Head Brewmaster Matthew Cox.

 

Rauch and Robertson are currently working with several buyers looking for 10,000 – 40,000 SF industrial buildings in Broward and Palm Beach County.

The brokerage company is also seeking leasing and investment sales professionals for its growing commercial real estate expansion in Miami-Dade, Broward and Palm Beach counties.

Multiple positions are available within these and other Florida markets, which offer a unique ground-floor career opportunity to work closely with the firm’s founders Tom Robertson and Michael Rauch to move their vision for the RRCRA brand forward. Commission and benefits are commensurate with experience. A Florida Real Estate License and Commercial Real Estate experience are required. Only qualified candidates should apply by forwarding resumes to mail@crefloridapartners.com, attention Michael Rauch.

 

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Florida Preps For Distress Deals

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Tony Arellano and Devlin Marinoff are co-founders and managing partners of Miami-based DWNTWN Realty Advisors.

The firm focuses on urban core transactions ranging from $3 million to over $20 million. GlobeSt.com caught up with them to discuss the long-awaited arrival of distressed assets on the market.

GlobeSt.com: When can we expect to see a high volume of completed distressed real estate transactions, and what opportunities are you already seeing?

Devlin Marinoff: Everyone in the industry knows what is on the verge of happening. We are starting to see the initial wave of bankruptcy and foreclosure filings, and this will accelerate quickly once the forbearance periods burns off during the fourth quarter. In Miami Beach alone, I anticipate at least 50% of the hotels there filing for bankruptcy in the coming months. We are already seeing notes on hotel properties in Miami Beach go on the market, and that’s before lenders start discounting notes to levels where investors will get interested. There have been some studies showing that up to 50% of retailers may not make it through this. This isn’t just local, statewide or national – this is global. The worldwide economy is going to be much smaller when we exit this pandemic. We will see many hotel, retail and even multifamily distressed opportunities in the fourth quarter and early 2021.

Tony Arellano: As with the broader market, the state of distressed real estate depends on the product type and neighborhood. It also comes down to the type of loan, whether it is CMBS, a conventional loan from a bank or private lender financing. Those factors will determine the urgency for a lender to get assets of their books, the appetite for acquisition and what makes for a truly enticing opportunity. Certain deals that are discounted by 20% will create a feeding frenzy. There are a lot of investors waiting for the market to flood with massive amounts of distress, but while there will be great opportunities to buy, I don’t necessarily think it will be an immediate glut of great deals.

GlobeSt.com: What are your investor contacts in South Florida and the Northeast saying about distressed real estate?

Devlin Marinoff: Pretty much every investor I know is calling me asking “what do you have?” There is an incredible amount of liquidity on the sidelines waiting for the non-performing loans to become available and for the forbearance extensions to end. It runs the gamut from small private investors to huge institutional funds with billions of dollars. Overall, there is more than $1 trillion just waiting to be deployed.

Tony Arellano: They are saying “send me every deal you have.” New York investors want out of New York and feel it won’t be investible for the next few years. They want to come to South Florida, but that doesn’t necessarily mean they will be able to understand what makes a good deal here. Real estate is local, and investors need to understand the supply and demand drivers and nuances of the different submarkets. South Florida is a particularly fragmented region with a mix of established core neighborhoods, emerging pockets and overlooked areas with upside potential.

GlobeSt.com: What do some of the high-profile South Florida assets going into special servicing (such as the Fontainebleau Hotel, Westfield Broward Mall and Southland Mall – now in foreclosure) tell us about where the rest of the year/early 2021 is heading?

Devlin Marinoff: The Fontainebleau belongs in its own category because I see that getting worked out due to the strength of Turnberry as a sponsor and size of the loan (nearly $1 billion). Every situation is unique, but there definitely are antiquated malls around the country that need repositioning. This cycle will expedite the issue of certain malls being obsolete. Looking broadly, a new Wells Fargo report showed that appraisals on CMBS properties in special servicing have averaged a 27% decline. That is staggering. For investors, the challenge with trying to acquire CMBS properties is that the servicer has all the power to make decisions with the goal of recouping the most dollars for the loan’s backers. Because of that, it’s a long road for an investor to get to the finish line.

GlobeSt.com: How is the investor interest in distressed real estate going to impact pricing?

Tony Arellano: The cost basis is relevant, but the most important thing moving forward is what the lending requirements are. It’s not about what someone paid or how much an investor bought below what someone else paid. The capital markets drive commercial real estate. If you can’t meet debt standards, coverage ratios or reserve requirements, the deals don’t work. Pricing will be determined by what something can be financed at and the underlying fundamentals. Is there a path to profit?

Devlin Marinoff: Investors are simply kicking tires until it gets to the level where they can obtain at least a 20% discount from the face value of the debt. If there is a $10 million mortgage on a commercial property previously acquired for $16 million, most of our investors would want to buy at $7-to-8 million and end up at a 50% valuation of the previous sale price.

GlobeSt.com: What are some of the challenges that could come from such a competitive environment for distressed assets?

Devlin Marinoff: People will buy debt and distressed real estate in different ways. The Starwoods and the Blackstones of the world will come in and acquire big portfolios of debt, put receivers in place, keep core assets and sell others. The buyers of debt will eventually become the sellers of assets, so there are many layers to this. The hardest thing right now is you can’t get the data. We don’t know what’s going on with the banks, they are not so transparent, so we’re guessing at this point.

Tony Arellano: The current value opportunities are hard to understand. That’s the biggest challenge in the market. At DWNTWN we like to say that we don’t find good deals, we make them. It’s going to come down to being creative and having the wherewithal to see where values and fundamentals are trending.

 

Source: GlobeSt.