#BizNow- State of the Office, South Florida Office Market

Major Deals, Trends & What it Takes to Meet Tenants’ Needs in South Florida’s Office Market was discussed on Thursday March 26, 2017.


I attended this event at the Wells Fargo Center in Downtown Miami. It was hosted by Biznow (not always boring) #BisnowMiami. I went to the event with Miami Real Estate Group MREG and Andres Asion. The blog below is a summary of my notes and highlights from what I took away from the event.  Make sure to read my blog South Florida Office Market Report Year Ending 2016, that outlines the overall South Florida office market.

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TopMiamiOfficeLeasingAgent

Click VIDEO: Top of the Class A Office Market.– clip from my Instagram Story from the #BizNow first session. Follow me on Instagram @Ceiliah

Meet the SPEAKERS and read my cliff notes on highlights from their Q&A Session:


 

MODERATOR Brian Gale, Vice Chair, Cushman Wakefield

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Comments: “There are four projects proposed for Wynwood about 700,000 square feet but we’ll have to see if they are developed.”


 Rudy Touzet, CEO, Banyan Street Capital

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Comments: “It’s a good time in the market, late stage of recover so we need to be more cautious  about investments. The  market first quarter 2017 was not as attractive. We are getting that second call. There are not as many bidders. Cap rates have reached bottom and I don’t see more compression. “

Comments: “The Miami environment is positive, companies are moving down as people move down. Miami like Atlanta and Tampa are seeing a trend with the younger generation moving to these cities in larger groups. Miami is an appealing location and a gateway city which is attractive. Demand will continue, rents will continue to increase. Miami like Atlanta and Tampa are seeing a trend with the younger generation moving to these cities in larger groups.”


W. Allen Morris, Chairman & CEO, The Allen Morris Company

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Q. Has the Brickell office market peaked? Are office rents in Miami becoming too expensive?

A. No Miami is a global city and rates are low in comparison to London, New York, San Francisco, Chicago but yes high compared to a city like Atlanta. $50 per square foot some consider a rent barrier but rents have gone higher before in Brickell and will go higher again. More commercial space would be built if developers could find land not already planned for residential condos.

Q. How are you dealing with density issues with landlords regarding parking ratios?

A. The younger generation is use to Uber and public transportation. We are designing parking garages that can be converted for other uses in the future because in 5, 10, 20 years the “downtowns of America” will have to deal with 80 percent of parking garages vacant due to cultural and technological changes.  The first floor design of a parking garage should accommodate retail as tenants demand and expect amenities within the surrounding neighborhood that is a short walk.

Q. How will the current administration affect the office market?

A. On one hand it is affecting cap rates and the economy is growing with more bank lending and non-bank construction funds. However, at same time changes in immigration laws restrict or the fear of restriction could have a greater affect on Miami than any other city; as we are the Latin Capital of America.  Also the uncertainty of poor exchange rates with Latin American. My guess is the positive outweighs the negatives and we see positive growth, positive absorption and increasing rental rates.


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Angelo Bianco, Managing Partner, Crocker Partners

Comments: “Miami is becoming the gateway Internationally for business in South America. We are a regional headquarter, we have good tax structure for the wealthy, we are not a big as NYC or LA but we are in the category of a “cool city” (not temperature). We need  more infrastructure and need to focus on events such as Art Basel.

Comments: “The market is tightening up, developers are getting better rates and lower concessions. However, capital markets seem to be taking a break and people are more cautious. Deals are taking longer to close.”

Q. How are you dealing with parking issues?

A. We have a building with ample parking and used that as a marketing tactic; however, it hasn’t been a huge amenity thats translated to demand. People who chose downtown appear to put parking at a lower priority. If you give tenants 1 to 1.5 spaces per 1,000/SF they seem satisfied. Uber and othercomponents have increasing been shifting the issue.

Q. How will the current administration affect the office market?

A.  I’m disturbed by what we see in Washington. We are the place that people go for stability and investment. Even after the financial crisis which we caused, people still bring their money to the United States. No one knows what Trump will do. His tweets are They should take away his cell phone.


Barbara Savage, Senior Associate Principal, Stantec Architecture & Design

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Q. What can landlords do to accommodate the Generation X workforce?

A. The new trend is shared workspace and co-working space ideal for people who don’t always want to work from home. These type spaces offer opportunities to collaborate with people and connect different businesses. The new generation wants flexibility in work space and keep the freedom working remote on the road. We will see different levels of design or grade of work space. From the “Google” style to a higher end “law firm” style with employees still in suit/ties.

Q. Do you think there is a true office market coming to Wynwood? Will this be a real sub-market in the future?

A. The big factors for Wynwood will be transportation and accessibility. There are amenities restaurants and shopping already. It is yet to be seen as Wynwood is for a certain type of client and certain type of employee. The four buildings announced for 700,000 square feet is interesting. Go-Pro and more and more companies are planned for Wynwood.


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 Josh Procacci, Chief Investment Officer, IP Capital Partners

Comments: “We only buy income producing products. Our last acquisition was in October 2016. We have seen a strong leasing environment over the last 6 to 12 months. There is a lot of money chasing very few deals, many properties are stabilized. We have acquired 50/50 off market/ to market deals. It is a unique time for us to source acquisitions. “

 


Click VIDEO: Workplace of the Future.– clip from my Instagram Story from the #BizNow second session. Follow me on Instagram @Ceiliah

The second session was Workplace of the Future Innovation in Office. As Miami and South Florida grows in its desirability to invest and “live, work & play”, the demand for Office follows. The session outlined what the Office market might look like in 5 years, 10 years and the future? The workplace moderator was Laura Kozelouzek, CEO of Quest Workspaces and panelist were: Grant Killingworth, First Vice President, CBRE; John Guitar, Senior Vice President, Brightline; Natalia Martinez-Kalinina, Director, Cambridge Innovation Center, Miami; and Edward Owen, Swire Properties.

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