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The United States Postal Service has started moving into a 136,000-square-foot industrial building in the Rock Lake Business Ccenter in Pompano Beach that was once slated for use by Amazon.

Developed by Atlanta-based IDI Logistics, Rock Lake Business Center consists of two buildings that were built in 2021 and total 250,000 square feet of industrial space. The building that USPS moved into was originally intended for Amazon. However, the structure was among numerous locations across the nation that Amazon opted not to use when the company announced it was shrinking its physical footprint in 2022.

Now dubbed the Pompano Beach Sorting and Delivery Center, the Rock Lake building will consolidate letter carrier operations for five post offices in Broward County.

 

Source: SFBJ

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Bethesda Hospital East could sell a Boynton Beach office complex to an industrial developer.

The City Commission will consider a new site plan with a distribution center for the 30.7-acre property at 3800 S. Congress Ave. on Feb. 6. It’s owned by the hospital, which is part of Miami-based nonprofit Baptist Health South Florida.

The property currently has a 125,281-square-foot office/medical office complex that’s home to multiple tenants, including Bethesda Hospital’s Women’s Health Service and the Bethesda College of Health Sciences, which is also part of the hospital. The facility was built in 1970.

Under the new site plan, the property would be redeveloped by Orlando-based Foundry Commercial with two warehouses for a combined 457,026 square feet. The developer is seeking a waiver to reduce the amount of parking from the standard requirement of 914 spaces to 462 spaces. There would be 20 electric vehicle chargers. Foundry has the Boynton Beach site listed on its website under the name Bethesda Industrial Center.

The site plan by Boca Raton-based Arcadis shows warehouses of 223,249 and 233,777 square feet, each with 32-foot clear height.

 

Source: SFBJ

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A group of 14 small-bay warehouses in Powerline Business Park in Deerfield Beach sold for $72.3 million.

Gateway Powerline BP LLC, care of San Francisco Stockbridge Capital Group and the Los Angeles County Employees Retirement Association, sold the combined 416,936 square feet of warehouses at 4100 N. Powerline Road and 1791 W. Sample Road to Redhawk FL LLC, care of New York-based Investcorp International Realty in partnership with Brennan Investment Group. Metlife Real Estate Lending provided the buyer with a $76.64 million mortgage, which also covered properties in other states. Property data firm Vizzda confirmed the buyer and seller information.

The price equated to $173 per square foot.

The deal was brokered by Cushman & Wakefield’s Jim Carpenter, Will Strong, Kirk Kuller, Michael Matchett, Molly Hunt, Mike Davis, Rick Brugge, Rick Colon, Dominic Montazemi, Jeff Chiate, Rick Ellison, Matthew Leupold, Robert Buckley, Tracey Cartledge, Scott Prosser, Steve Hermann and Jack Depuy. This team also brokered the sale of Montbello Industrial in Denver between the same parties.

It last traded for $62.25 million in 2019.

The industrial buildings were developed on the 26.4-acre site from 1983 to 1984. The site is just north of Sample Road.

 

Source: SFBJ

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South Florida’s industrial market ended the fourth quarter of last year with a seismic shift in ownership of 1.4 million square feet in Miami-Dade and Broward counties.

Boston-based Longpoint Partners acquired 25 industrial buildings in eight cities from Conshohocken, Pennsylvania-based Seagis. Longpoint’s $262 million portfolio purchase clocked in as the priciest industrial deal of 2023 — a sign that South Florida warehouses remain a top target for institutional investors.

Industrial properties arguably represent a safe bet, given historically low single-digit vacancy rates and a continuing trend of rising asking rents, according to a recent CBRE report.

The tri-county region experienced a slight uptick in empty warehouse spaces in the fourth quarter, even though tenant demand remains high — except in Broward. Still, industrial landlords kept increasing asking rents, the report shows.

Miami-Dade County

In the fourth quarter, the vacancy rate rose to 3.2 percent, compared to 2.6 percent during the same period of 2022, CBRE found. The average asking rent rose to $15.50 a square foot from $15.05 a square foot in the third quarter. It also increased by nearly 16 percent compared to $13.37 a square foot during the fourth quarter of 2022.

Miami-Dade’s slight increase in vacancies was due to nearly 5.4 million square feet of new industrial space becoming available last year, the report states. About 80 percent has been leased to date.

San Francisco-based Prologis scored one of the biggest industrial lease signings of the fourth quarter. Packing and shipping firm Ameriworld Fulfillment signed a new 10-year lease valued at $25.2 million for 124,000 square feet in an industrial complex near Miami International Airport owned by Prologis.

Broward County

The vacancy rate in Broward remained relatively unchanged, hitting 3.5 percent in the fourth quarter, compared to 3.7 percent during the same period of 2022, CBRE found. The average asking rent jumped by 20 cents to $15.65 a square foot, compared to $15.45 a square foot during the third quarter of last year. It also increased by roughly 11 percent compared to $14.14 a square foot during the fourth quarter of 2022.

During the second half of last year, tenant demand was relatively weak in Broward, but the county has a limited supply of industrial space, which led to the average asking rent increasing, the report states.

In October, All Glass Production signed the second biggest industrial lease of 2023. The glass manufacturing company leased a nearly 250,000-square-foot warehouse at South Florida Logistics Center in Pembroke Pines. The property is owned by Denver-based Sagard Real Estate.

Palm Beach County

Palm Beach County experienced the largest increase in available space, with the vacancy rate hitting 4.2 percent in the fourth quarter, compared to 2.3 percent during the same period of 2022, the CBRE report shows.

The average asking rent rose by 25 cents to $15.75 a square foot, compared to $15.50 a square foot in the third quarter. It also increased by 7.5 percent compared to $14.65 a square foot during the fourth quarter of 2022.

Palm Beach County’s industrial sector experienced a gradual slowdown last year, with vacancies rising during four consecutive quarters, CBRE found.

Bush Brothers Provision Company, a meat packing and distribution company, signed a lease to move its headquarters into a 42,100-square-foot space at Royal Palm Logistics Center, a new industrial project in Royal Palm Beach developed by Orlando-based McCraney Property Company.

 

Source: The Real Deal

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The City of Riviera Beach is looking to redevelop three sites totaling approximately 80 acres across Riviera Beach.

The City intends to optimize existing City owned parcels and replace aging structures by developing a mix of residential, commercial, and retail space.

A developer and local participant workshop will be held on Jan. 24 from 2 to 4 p.m. at the Marina Event Center located at 190 E 13th St. in Riviera Beach.

The three primary sites include approximately 41 acres at 600 and 601 Blue Heron Blvd., approximately 2 acres at 2250 Broadway, and approximately 38 acres on Palm Beach County School Board property bordered by 34th St. to the North, W. 28th St. to the South, and Avenues H and J to the East and West.

The re-imagining of Rivera Beach will include a mix of civic, government, sports, and commercial mix of uses, including but not limited to: Municipal complex, new City Hall, public library, train stop /station, world class recreation center, mixed income multifamily, retail, and green and open space.

“We stand on the precipice of a transformative moment in the history of Riviera Beach,” said Jonathan Evans, City Manager for the City of Riviera Beach. “The redevelopment of our city hall and its surrounding properties is the cornerstone of the ‘Reimagine Riviera Beach’ initiative—a vision dedicated to revitalizing our city and reinforcing pride within our community. We invite partners who appreciate the City’s rich heritage to join us in reshaping Riviera Beach for generations to come.”

The City of Riviera Beach will release an Invitation to Negotiate at the end of January, which will outline specific goals related to the re-imagining of Riviera Beach.

CBRE local expert Clarissa Willis along with Lee Ann Korst, Kevin McShea, and Tess Fleming of CBRE’s Public Institutions and Education Solutions (PIES) will represent the City to solicit, negotiate and engage a developer. CBRE’s PIES Group provides real estate services to state, county, city, and educational institutions around the country.

“The scarcity of large acreage tracts of land in South Florida, coupled with Florida’s business friendly environment and in-migration, makes this project both a unique and highly opportunistic redevelopment,” said Ms. Korst, Southeast Regional Manager of CBRE’s Public Institutions and Education Solutions. “It is the development community’s opportunity to capitalize on current activity and transform Riviera Beach.”

 

Source: CRE-sources

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South Florida’s industrial sector has retreated from roaring pandemic-era activity, but a burst of year-end transactions signal that investors continue to see opportunities in the region.

Buyers spent $215M across three transactions in Miami during the last two weeks of 2023, capping off a fourth quarter that also saw the year’s largest portfolio deal. The flurry of sales came as rents continued to tick upward despite a wave of new deliveries and a steep decline in annual leasing activity.

The market is returning to a pre-pandemic pace of activity, brokers say, but tight supply dynamics still favor landlords as migration trends continue to boost demand.

“We were kind of on a sugar high with the amount of activity that was going on” in 2021 and 2022, said Christopher Thomson, vice chair at Cushman & Wakefield. “It was almost double what normal activity is, but what I am seeing today is a consistent market of tenants that are looking at spaces.”

Miami-Dade County closed 2023 with 7.8M SF of annual leasing activity, a 21.6% decline from the prior year, according to preliminary data from Cushman & Wakefield. As leasing slowed, the region also saw 3M SF of new inventory come online and a further 7M SF under construction.

Rental rates continued their upward climb in Q4 despite the influx of new supply, albeit at a much slower rate than the double-digit increases seen in the prior two years. Average rents in Miami rose 3.8% year-over-year to $15.68 per SF, as vacancy climbed modestly by 0.8% but remained tight at 2.4%.

Iberia Foods recently signed a 398K SF lease at an under construction warehouse at Bridge Point Commerce Center (PHOTO: Google Maps)

One of the largest new leases of the year came in the last weeks of 2023 with Iberia Foods inking a 398K SF deal at Bridge Point Commerce Center in Miami Gardens, according to CoStar. The seller and distributor of Caribbean and Latino cuisine will move into an 800K SF building at the business park, one of two warehouses under construction at the Bridge Industrial development that are expected to deliver soon.

Iberia Foods’ large lease runs counter to the trend in South Florida. New deals between 20K and 50K SF accounted for 36% of leasing activity through Q3, and the number of deals above 100K SF slipped by 71.5%, according to Avison Young.

“We saw a softness in the market on the tenants above 100K SF having real trouble making decisions,” Thomson said. “It was less to do with the microeconomics down here in South Florida and more to do with the macroeconomics of the U.S. Those dynamics are beginning to shift as the prevailing consensus that interest rates have peaked is making tenants more willing to move ahead with large investments.”

Thomson added that his team was working on several larger-footprint deals that he expected to close in the first quarter.

The expectation that a backlog of demand and a runway for growth persists in Miami was reflected in a spate of year-end acquisitions. The largest of the deals to close in the last two weeks of December was the $174M sale of a Hialeah industrial park. Codina Partners sold three parcels in Beacon Logistics Park to an affiliate of Property Reserve, the investment arm of the Church of Jesus Christ of Latter-day SaintsSouth Florida Business Journal reported.

Codina broke ground on the warehouse park in 2018 and has completed two buildings on the property’s 63 acres, with another two under construction. Another pair of buildings are permitted for development but haven’t broken ground. The property has approvals for up to 1.5M SF of space.

New Jersey-based industrial investment firm Faropoint acquired another industrial portfolio at the close of the year, spending $25M on three warehouses totaling 142K SF at 12900 NW 38th Ave. in Opa-Locka, The Real Deal reported. The seller, California-based industrial investor The O’Donnell Group, paid $17M a year earlier to acquire the properties.

On the single-tenant side, The Easton Group paid $17M for a 45K SF warehouse in Medley in a deal that closed Dec. 20. The seller was the snack company Frito-Lay, a subsidiary of PepsiCo, which will be relocating to 131K SF at Bridge Point Doral in what was the largest new lease of Q3.

Doral-based Easton was one of several bidders on the property, said Dalton Easton, an associate at the firm’s brokerage arm, Easton & Associates, who arranged the sale. Easton secured $9M in financing for the deal from Grove Bank and Trust in just three weeks, despite not having a new tenant in place and what Easton described as a challenging lending environment.

“Miami’s bread and butter tenant size is 50K SF and lower,” Easton said. “You’re seeing more normalized demand, you’re not seeing 15 or 20 users looking for half a million SF, you’re looking at the usual 50K SF and smaller.”

As part of a 25-building portfolio that sold for $260M, Longpoint Partners acquired the buildings at 2100 and 2190 SW 71st Terrace in Davie (Courtesy of Images For Business)

The deals followed a 25-building transaction earlier in the month in which Longpoint Partners paid $260M to acquire a 1.4M SF portfolio from Pennsylvania-based Seagis Property GroupCommercial Observer reported.

After acquiring the portfolio, which spans Miami-Dade and Broward Counties and is 97% leased to 77 tenants, the Boston-based private equity firm secured a $94M construction loan covering nine of the properties, South Florida Business Journal reported. The loan came from Athene Annuity and Life Co., a subsidiary of Apollo Global Management.

The performance of the industrial sector in Broward County in 2023 mirrored, and in some respects outperformed, its neighbor to the south.

The county saw 2.8M SF of leasing activity through the year, a 43% dip from 2022 levels, according to Cushman & Wakefield’s preliminary data. But a significantly smaller number of deliveries, which totaled 693K SF with 618K SF currently under construction, helped push vacancy down half a percentage point year-over-year to 2.7%.

“The tight market helped Broward County maintain double-digit annual rent growth, with average rents rising 12.1% year-over-year to $15.37 per SF,” Thomson said. “But the pace of rate increases is expected to slow in 2024 as the market returns to a level of leasing activity more in line with pre-pandemic levels. If you look at the rental rates in comparison to where they were in 2019, there has been such a run-up that I think we’re just going to really see them go back to a natural 4% increase going forward. When you talk to people that are looking at projects to purchase, they’re not budgeting 10% to 20% rental increases.”

Rockpoint paid $180M for 88 acres in Pompano Beach where it’s planning to build 1.5M SF of industrial space (PHOTO CREDIT: Rockpoint)

The dynamics are fueling some speculative development, with Rockpoint paying $180M in November for an 88-acre development site in Pompano Beach. The Boston-based private equity firm is planning to build around 1.5M SF of industrial space at the site, with the first phase slated to break ground in May.

“We are excited about this opportunity given the attractiveness of our basis combined with significant rent growth that Broward County is experiencing,” Tom Gilbane, managing member at Rockpoint, said in a statement following the acquisition.

The burst of activity in Q4 is likely to carry into this year, industrial brokers said, with any interest rate cuts at the Federal Reserve unlocking capital for acquisitions in the supply-constrained South Florida markets, which CoStar predicts will be among the top U.S. regions for rent growth over the next four years.

“If the Fed starts cutting rates, the cost of capital will follow and it’ll create a surge of activity,” Easton said. “From an acquisition standpoint, across the board, there has been capital on the sidelines waiting to be deployed down here for a long time.”

 

Source: Bisnow

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Industrial, with multifamily one of the two investment darlings of the pandemic and after, did relatively well in November.

But not well enough as it still took a big hit according to MSCI’s November 2023 report on the sector. It took a 64% year-over-year drop.

“Deal volume through November puts the sector behind apartments as the second most traded sector for the year,” they wrote. “Deal volume still fell in November even with these positive elements supporting the sector. Macro forces have simply made it difficult for investors to underwrite investments.”

Individual asset sales took the biggest hit, down 69%, a change from early in the year.

“The pace of sales for individual assets had fallen at a 53% YOY rate in April and had generally improved in subsequent months,” MSCI wrote. “It is unclear at this point if the 69% decline is simply a number that will be revised up in coming months as smaller deals are found or a sign of a new sense of hesitancy.”

Flex saw a drop of 76%; warehouse was down 61%. The smallest drop was in portfolio and entity, at 36%. Things look better on a year-to-date year-over-year basis. Total industrial was off by 49%. Flex was down 63%, warehouse dropped by 46%, single access fell 41%, and portfolio and entity dropped 64%.

There were no “entity-level deals” during November. That wasn’t an additional loss compared to 2022 as there were also none last November. But had there been, the month might ultimately have looked different with a large boost to the total. Overall, these big-level deals have undergone a major shift. In 2022, they represented 16% of the entire total industrial investment. This year, the cut is 3%.

Even if things had been better in November, with declines that were no worse than October, the chances of 2023 matching 2022 would still have been slim.

“To match the $160b of industrial property sales seen last year, sales in December of this year would need to total $84b,” wrote MSCI. “The single strongest December ever was in 2021 when $37.1b sold.”

More than doubling a previous record, given the current pace, seems unlikely. On the positive side, industrial property prices have done better than other sectors.

“The RCA CPPI National All-Property Index fell 8.0% YOY in November but the industrial index climbed 1.8%. Industrial investors were losing ground relative to inflation at this pace, but a gain is a gain and this pace was the strongest across all property sectors.”

 

Source: GlobeSt

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Despite an undeniable slowdown in 2023, optimism still permeates Miami’s commercial real estate sector — buoyed by the Federal Reserve‘s recent signaling that rate cuts are on the horizon.

“The problem is not South Florida real estate,” said Arnaud Karsenti, managing principal at 13th Floor Investments. “We’re probably way better off than our peers around the rest of the country.”

The city has settled into a new normal and is positioned to see continued growth in 2024 despite challenges in office supply, multifamily dynamics and construction costs, nearly a dozen industry insiders told Bisnow in interviews this month.

“Out of all the markets we’re in, and we’re at a decent amount across the country, South Florida is far and away the healthiest,” said Ryan Shear, managing partner at PMG.

The rapid growth spurred by the pandemic — with corporate behemoths from Citadel to Microsoft moving to the region and an influx of $7.4B in wealth in 2022 — has slowed, but it remains the driving force behind the city’s expansion.

Investment volume has also tailed off, but the latest signal from Fed Chair Jerome Powell that 2024 could see as many as three rate cuts has buoyed the expectation among investors, developers and brokers that Miami will see an increased flow of capital next year.

“2023 was a throwaway year,” said Michael Fay, managing director of Avison Young’s Miami office and chairman of the brokerage’s U.S. Capital Markets Group Executive Committee. “People are looking for reasons to be back in the market and looking for opportunities, but to do that they need to have rates participate in that look.”

‘We Feel Like We’re At The End Of The Cycle’

Miami was far from immune to a rate-driven slowdown. The office sector saw 12 transactions through the first three quarters of 2023, compared to 26 deals over the same period a year prior. But even as volume plummeted, the sales that closed signaled confidence in the market, with the price per SF dipping only slightly from 2022 and outperforming 2019, before the pandemic helped boost the city’s profile.

Investors and brokers told Bisnow deal volume across all asset types is poised to rise again next year. But there is some debate as to when capital will begin flowing more freely, with some expectation that any rate cuts from the Fed will take time to percolate down to banks and loan originators.

“A lot of us are expecting some rate decreases in the first half of next year, which will lead to a more attractive forward curve,” Karsenti said. “Banks will start to lend on that curve and will ultimately provide loans at lower rates.”

The presidential election in November is likely to increase the political pressure on the Fed, said Fay, who described rate cuts as “candy” for the market. He said the beginning of 2024 will likely see a few deals before deal volume picks up in the back half of the year.

“We feel like we’re at the end of the cycle,” Fay said. “We’re hopefully going to be at a point that will mark stability. When you have stability and clarity, people can price in risk in a much better way.”

Investors across the country are raising billions of dollars to target distressed assets facing loan repayment hurdles, especially in the office sector, where an estimated 44% of properties have more debt than value at this point.

But South Florida’s office market has been an outlier to national turmoil, with Miami, Fort Lauderdale and Palm Beach all among the top five markets for annual rent growth through October. South Florida office asset values are expected to grow in 2024, according to CoStar, while most of the country is still in correction mode.

Miami’s apartment market is also ranked as the most competitive in the country, with a 97% occupancy rate and the fifth-highest rents in the country.

The $5.5B in CMBS loans on South Florida properties set to mature in 2024 account for only around 5% of the national total, according to CoStar. Falling interest rates are expected to spur acquisitions, but assets trading in South Florida are unlikely to be facing debt challenges.

“I am concerned that rates are going to come down and everybody that’s been on hold, waiting and delaying, they’re all going to try to run through the same gate at the same time, which will just drive prices right back up,” Shear said.

‘They’re Not Massive HQ Moves’

Office buildings in Miami are forecasted to grow in value in large part because the pandemic-era leasing boom has waned, but not abated.

“There’s around 3.8M SF of pent-up office demand among tenants touring in Miami,” said Tere Blanca, the CEO of Blanca Commercial Real Estate.

Around 20% of those companies are new to the market with much of the remaining activity being driven by firms that opened offices in Miami during the pandemic that are now looking to expand their footprint.

“Every lease that we do today in our existing buildings, that’s a record for the highest rate in that building,” said Brian Gale, vice chair at Cushman & Wakefield in Miami. “I think office rents could rise another 25% in 2024.”

Office development remains the third rail of real estate investment, even in South Florida where the sector has continued to perform well. Few new office developments are expected to break ground next year, leaving tenants that are engaged in an ongoing flight to quality with limited options for space.

Miami had 1.6M SF under construction at the end of the third quarter, according to Blanca, half of which is the fully leased 822K SF 830 Brickell tower.

“The lack of new construction will hinder leasing activity next year with the new-to-market tenants pausing and sitting on the sidelines because the new product is not in place,” Blanca said. “For a new office project to get financing, lenders often want to know an anchor tenant has signed on, and the companies currently in the market are generally looking for spaces ranging from 5K SF to 20K SF. A lot of these deals are not getting done, because they’re smaller transactions than the Citadels of the world,” Blanca said, referencing the 90K SF lease the hedge fund signed at 830 Brickell last year. “They’re not massive HQ moves.”

‘I Can’t Imagine A Multifamily Project That Would Pencil Out’

Apartment development is also expected to face headwinds in 2024. Rent growth has tapered off amid a wave of new supply — there are around 30,000 luxury apartments alone under construction in Miami — and cuts to interest rates won’t be enough to offset the high cost of construction, developers told Bisnow.

“I can’t imagine a multifamily project that would pencil out, and I can’t imagine a lender that’s going to lend money to multifamily,” said Armando Codina, executive chairman of Coral Gables-based developer Codina Partners. “That space is going to go down significantly.”

The state-level effort to spur apartment construction through the Live Local Act generated a wave of interest, but those proposals are also facing financial hurdles. The law created tax abatements and other incentives for projects with at least 40% of units set aside for workforce housing, but those tax savings have so far been outweighed by the high cost of debt and construction.

“In the meantime, the projects that are expected to move ahead are those near mass transit stops, which can leverage county-level zoning to achieve the needed density to make projects financially viable,” said Iris Escarra, co-chair of the land use practice at Greenberg Traurig.

Miami-Dade County has been adding to its Rapid Transit Zones as it encourages the use of rail and bus lines to alleviate growing traffic congestion and increase density around transit stops before an expected push for federal funds to expand the rail system.

“There’s always a chicken or an egg with transportation and rail lines,” Escarra said. “For the county to extend the line north, for example, they need to show that there’s enough density on the line to qualify for federal dollars.”

“Condo development, by contrast, has remained attractive for developers. Financing for condos can be easier to secure because the deposits on units that are pre-sold can offset the size of construction loans and the shorter-term investment horizon is more attractive for lenders,” said Edgardo Defortuna, CEO of Miami-based developer Fortune International Group.

Condo sales have declined from pandemic highs, but the buyer pool has been boosted by international interest extending beyond Latin America. Many buyers see the purchase of a pre-construction condo at today’s pricing as a hedge against inflation and a way to avoid today’s high cost of debt.

“In a way, they have the best of both worlds, protection against inflation because they’re fixing the price, and also potentially getting lower interest rates when they need to close on their acquisition and finance,” Defortuna said.

Contractors ‘A Little More Hungry’

A slowdown in new development this year has reduced some of the upward price momentum on construction. With fewer projects breaking ground, developers said they have regained some leverage in negotiations with construction firms and contractors, even though material prices remain high.

“The numbers have gotten better but, even more important, I’m seeing the contractors being a little more hungry,” Codina said. “I’ve had [subcontractors] a year ago say to me, ‘I don’t want to bid unless I’m going to get the job, I’m too busy.’ Now, we’re breaking ground because we’ve seen a little bit of a different attitude.”

Jay FayetteSuffolk Construction’s president for the east coast of Florida, has seen the number of proposals coming across his desk decline but said he still expects to have a busy year as his firm moves through a backlog of projects that have been waiting to begin construction.

“We’re going to be very busy, and busier than last year,” Fayette said. “But that’s not necessarily due to the abundance in the market, it’s really due to the abundance that we had in the pipeline that we’re finally getting shovels in the ground. The shortage of workers that has plagued the construction industry is expected to continue, and Suffolk is investing resources into worker recruitment and retention to try to offset some of the challenges.”

Raw materials like wood and concrete have become more available, but switchgears, the backbone of a building’s electric system that became difficult to source during the pandemic, remain one of the largest hurdles for new construction.

“We don’t dare tell an owner it’s less than 65 weeks” to secure switchgears, Fayette said.

Construction costs have also begun to stabilize, but a crowded development pipeline in the region means strong demand for materials will keep prices from falling significantly in the year ahead.

“I think there is a world where construction costs come down. I can’t say that it’s in the Southeast region,” Fayette said. “We’re in nine regions nationwide, and we are seeing some softening of construction costs in other regions, but the state of Florida is a robust construction market.”

 

Source: Bisnow

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Brokers are giddy over the Fed’s announcement, while some caution fundamental challenges remain.

Commercial broker Jaret Turkell is ready to rock and roll. Turkell posted a GIF of Minions dancing with the tagline: “It’s time to PARTYYYYYY!” shortly after Federal Reserve Chairman Jerome Powell announced that the Fed was keeping interest rates unchanged, and signaled it would make three 0.25 percentage point rate cuts next year.

“We are back baby.  LFG!!!!!!” reads another tweet from Turkell, who focuses on multifamily and investment land sales at Berkadia in South Florida. (LFG stands for “let’s f**king go.”) The sentiment changed almost overnight,” Turkell said, tempering his initial enthusiasm a bit. “I’m not saying we’re back to 2021. Valuations will start to get a bit more attainable. Massive distress is going to be somewhat off the table, at least I hope so.”

The Fed’s decision is expected to boost confidence across commercial and residential real estate, especially in South Florida. The region has been somewhat insulated from headwinds in other U.S. markets since the Fed began hiking rates in the spring of 2022, but investment sales  volume is way down.

More than anything, the expected cuts are a sign of improving — not worsening — conditions. That could result in a boost of sales and financing in the second half of next year, brokers and attorneys say.

“Real estate is not a liquid asset, and it takes time for things to change. It takes time for that sentiment to build into transactions,” said Charles Foschini, senior managing director at Berkadia.

Still, the planned rate cuts won’t solve all problems, experts say. The high cost of insurance and construction will continue to hamper deals, brokers say.

“While South Florida maintains advantages over other major metros in the U.S., its biggest downside is insurance,” Foschini said.

Eternal Optimism Meets Reality 

Some pointed to the stock market rallying and the drop in inflation as breadcrumbs indicating that more good news is on the way.

“The signal that rates have stopped going higher and will go lower, psychologically is very impactful,” said industrial developer and broker Ed Easton. “But it’s not earth-shattering,”

In fact, most expected Powell would leave rates unchanged.

“No one was anticipating anything more than a standstill at this time of year,” said commercial broker and developer Stephen Bittel, chairman of Terranova Corp. The expected cuts are “not an enormously meaningful adjustment, but it does telegraph future expectations.”

Jaime Sturgis, CEO of Fort Lauderdale-based Native Realty, said he is already seeing that confidence translate into better terms.

“That will continue next year,” Sturgis said.

Still, asset classes like office and multifamily could suffer disproportionately, especially as suburban office tenants continue to downsize and multifamily landlords struggle to turn a profit.

“There will be pain and distress in that market, no question about it,” Sturgis said. “Some multifamily landlords and developers were already operating on razor thin margins to begin with. The smallest variations in that model can break it.”

Multifamily developer Asi Cymbal, who has projects in Miami Gardens, Fort Lauderdale and Dania Beach, agreed that rate cuts won’t solve major problems, such as if a developer overpaid for land.

But, Cymbal said, “the worst is over.”

Cymbal and others expect more groundbreakings in 2024, with some self-funding initial construction, expecting that they can secure a loan. He plans to self-fund the groundbreaking of Nautico, a $1.5 billion mixed-use development fronting Fort Lauderdale’s New River, in the next 90 days.

“The Fed news could help top tier developers get lower rates on construction. But not most,” Cymbal said. “Lenders will continue to be conservative.”

“Some prospective buyers who were ready to purchase may postpone their decision until rate cuts happen,” said Bilzin Sumberg partner Joe Hernandez.

 

Source: The Real Deal

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If one project can symbolize Boca Raton’s attempt to attract more corporate tenants, it’s Mutual of America’s plan for a large, new building in the Park at Broken Sound.

The New York-based life insurance company already has a regional office in the park. Mutual wants to tear down its existing office, nearly triple the size of its space and bring another 200 employees from Manhattan. That would bring the total in Boca Raton to 400, or rouighly one-third of the company’s workforce.

The 700-acre park, formerly the Arvida Park of Commerce, was groundbreaking when it opened in 1978. Under the wonderful acronym of LIRPLight Industrial Research Park—it created the employment cluster at the core of Boca Raton’s enviable commercial tax base.

In recent years, however, property owners complained that the park’s development rules had become outdated. They sought changes to allow larger and more varied projects. The city has obliged, as the city did for the owner of the nearby Boca Raton Innovation Campus, where IBM invented the personal computer.

Mayor Scott Singer especially has urged quick action on these changes, to make Boca Raton more attractive to corporate recruiters. West Palm Beach has drawn most of the moves by companies from New York during and since the pandemic.

City Councilman Mark Wigder called the Mutual project “a catalyst” for the park and city. In addition to space for those new employees, Mutual would lease some offices to outside tenants. In its narrative to the city, Mutual says the project would “facilitate new jobs added to the local economy.”

More employees and tenants, of course, would mean more traffic at one of the city’s busiest rush-hour chokepoints—Yamato Road just west of Interstate 95. Mutual is seeking a “variation” from city engineering standards that recommend 45 minutes to clear traffic at each end of the workday.

Instead, Mutual wants times of between 70 and 75 minutes. The six-story garage that will replace surface spaces, Mutual says, will allow “a more efficient allocation of land.” In addition, Mutual says, hybrid work schedules would mean that the garage is rarely full. No nearby buildings, the company claims, would have any problems.

The project is still going through staff review. No hearings have been set.

 

Source: Boca Magazine

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Downtown Boca Raton’s new Brightline station is being positioned as catalyst for growth — with the goal of building up a transit-oriented destination that will offer more new housing, stores and plenty more.

The Boca Raton station, at 101 NW 4th St., and a station in Aventura each opened in December last year, increasing the number of South Florida stations from three to five. Resembling the babies of the family, the newer stations are expected to mimic their sibling stations, which opened in 2018 in West Palm Beach, Fort Lauderdale and Miami. The older stations already have drawn growth and redevelopment around them.

“The Brightline is hugely instrumental into the growth of Boca Raton because now you can have somebody who’s working down in Miami who can live ‘in the suburbs’ up here,” said Scott Gerow, the executive director of luxury sales at the Cotilla-Beresh-Gerow Luxury Team at Compass. “Now it makes it more of a commutable region, like Long Island or Connecticut would be to Manhattan.”

Jenni Morejon, the president and CEO of the Fort Lauderdale Downtown Development Authority, added, “Every city that has a Brightline station either today, or ultimately a commuter rail station in the future, is going to see tremendous mixed-use development because it is truly a driver for investment.”

Here’s a look at how growth is bound to come near Boca’s Brightline station.

A 13-Story Building Proposed

Evidence of a future defined by development already may be making an appearance: A proposal, recently filed with the city, calls for a 13-story multi-use project called Modera Boca Raton that would feature a 358-unit apartment building near the station.

The plan calls for about 6,500 square feet of retail space, as well as nearly 490 parking spots. The planned amenities would include a clubhouse, fitness center, courtyard, rooftop pool and sundeck.

The project would be located immediately south of the Brightline station specifically west of Northwest Second Avenue, east of Northwest First Avenue, south of Northwest Fourth Street, and north of Northwest Third Street. The Boca Raton Public Library sits nearby.

A Consultant’s Help

“The city is seeking a consultant to guide the creation of the transit-orientated development that the area currently lacks,” said Marc Wigder, chair of the Boca Raton Community Redevelopment Agency. “Such a consultant would help the city design a sustainable, transit-oriented district with a mixture of uses that would highlight the transit hub, would highlight the government center hub, and would highlight the ability to not be so vehicular dominated. That’s kind of what you want, transit-oriented development that enables neighborhood feelings without vehicular dependency.”

The aim is to achieve what Wigder said is called an “internal capture,” wherein people don’t have to drive everywhere, underscoring the live, work, play concept he and other members of the council have continued to push for in Boca Raton’s downtown scape. Public input will also play a role, Wigder said, and will be gathered over the next several months.

Other Stations’ Successes

Thriving examples of growth around Brightline stations exist both north and south of Boca’s station. Take Fort Lauderdale, for example: Since its station opened in 2018, the city’s downtown population has seen an increase of more than 10,000 people and 5,000 new rental units, according to data from the Fort Lauderdale Downtown Development Authority.

In November, the Broward County Commission voted to build a new government center next to the Fort Lauderdale station, bolstering the potential growth there.

“A transit-oriented development takes care of any and all needs of the residents or employees living in that area,” said Morejon, the Downtown Development Authority’s president. “And while Fort Lauderdale experiences a similar issue to Boca Raton in terms of finding land to develop, a solution to that is developing more efficiently. You really have to go vertical. A lot of it is about redeveloping properties that already have existing development. And that’s not a bad thing because it makes for more compact cities, more walkable cities, cities that have a lot more amenities in close proximity.”

 

Source: SunSentinel

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The next boomtown in South Florida has been right under our noses all this time, and we didn’t see it.

The little city that could turns out to be, of all places, Oakland Park, smack in the middle of Broward County. You’ve driven by it, or through it, a thousand times and you never gave it a second thought.

As Sun Sentinel reporter Phillip Valys lays out in great detail in a must-read story, Oakland Park is hitting its stride and is building itself an impressive skyline.

A signature destination is Oaklyn, an 11-story mixed-use tower at 3333 N. Federal Highway, where the website apartments.com says the rent for a one-bedroom studio apartment is $1,934 a month and ranges upward to $3,770.

It’s a sure sign of progress for a town that not so long ago was little more than some warehouses, a strip club or two, the circular KenAnn building and the Peter Pan Diner.

Oakland Park Boulevard? Sure, that’s a major east-west corridor. But Oakland Park, the place? Forget it.

If you’re like most people, you probably thought it was part of Fort Lauderdale. It isn’t. Tucked in alongside U.S. 1, it’s one of Broward’s oldest cities, chartered in 1929 from the remains of the boom-and-bust town of Floranada. In this prime location, with its huge traffic counts, the Sun Sentinel article describes an emerging nightlife in Oakland Park.

After many years of working in, living in and writing about Broward, Steve Bousque, the Opinion Editor of the Sun Sentinel and a columnist in Tallahassee and Fort Lauderdale, decided a long time ago that a place so small and densely populated didn’t need so many bland cities. The county has 31 cities and towns packed into a populated area of about 400 square miles, barely one-fourth the size of Rhode Island, which is completely nuts.

To appreciate how far Oakland Park has come, take a brief trip along Old Dixie Highway back to the earlier, 1980’s version. You won’t be disappointed. If you think the political extremism of today is out of control, you’d be right. But for the sake of sanity, if nothing else, it’s worth remembering that we’ve had to endure these antics before. During the 1980s, Oakland Park became a political laughingstock after a far-right cabal of three commissioners took control of City Hall.

They drove away a competent city manager, John Stunson. They gave a key to the city to Phyllis Schlafly, an anti-ERA crusader. The ceremonial mayor at the time, Mary Laveratt, an anti-abortion activist, sued her city, claiming her colleagues illegally restricted her power. Commissioners refused to let Laveratt order the city clerk to issue a “Sanctity of Life Day” resolution.

Worst of all, Oakland Park passed a resolution urging everybody in town to go out and buy a gun. The media had a field day. It was Oakland Park’s overreaction to an ordinance by a liberal Broward County Commission that required gun buyers to get permits.

In the news media’s annual spoof of Broward politics that year, the Yellow Feather Awards (for “yellow journalism”), we could not resist skewering Oakland Park’s pro-gun resolution in song, with a takeoff on the folk classic “This Land is Your Land.” It went like this:

This gun is my gun, this gun ain’t your gun. I got a handgun, and you ain’t got one  The NRA says it’s okay To whip it out and blow you away.

The political craziness in Oakland Park did not last very long. After a couple of election cycles, voters restored some sanity to Dixie Highway.

The Oakland Park of today, high-rises and all, is a far better place than it was in 1983. It’s even getting a motorcycle-themed coffeehouse.

Back then, the town had a seediness that you just don’t see today. A strip club called the Backstage Lounge served fruit juice to customers after the city banned sales of alcohol at nude dancing clubs. It took three decades for Oakland Park to put two strip clubs out of business.

Every community should know, honor and remember its history as it really was, and Oakland Park does well at that too. On the city’s website are priceless black and white photos from its early years and asks residents to share their personal stories for the city’s upcoming centennial six years from now, in 2029. The little city is on the move.

 

Source: SunSentinel