Corporate Relocations And A Strong Housing Market Continue To Draw Top Developers To Miami

Rendering of RFR’s potential 25K SF development site alongside the Waldorf Astoria Hotel & Residences.

Miami real estate continues to post records. According to the Miami-Dade Beacon Council, the county’s public-private economics development partnership, 57 companies relocated to Miami last year.

In addition, another 150 indicated they were likely to move their operations to South Florida. Competition for available office space is intense and rents are rising.

Miami-area office vacancies were at 10.3% in Q3, Colliers reported. That compared favorably to a national average of about 15%, with vacancies reaching as high as 20% in major business hubs such as Chicago and Los Angeles.

The corporate relocations are complemented by trends such as housing values  appreciating nearly 30% in the past year across the state, while Miami-Dade marked one of its best years ever in home sales.  

RFR is one of many national and international developers taking advantage of the unique market fundamentals and growing opportunity set.  

“We plan on increasing our investment activity in Miami and we are actively pursuing a robust pipeline of opportunities,” said Aby Rosen, co-founder and principal of Manhattan-based RFR. “We believe that, long-term, Miami is going to experience significant growth compared to other core gateway markets in the United States, and we want to be a part of it.”

Miami “is on a tear,” said Rosen, saying it is fueled by trends such as more people seeking permanent residences there, drawn by the state’s favorable tax structure, infrastructure investment and business-friendly attitude. 

“This has driven both corporate and real estate players to Miami, making it a sustainable, high-growth real estate market,” he said.  

Rosen’s optimism is shared by Stephen Ross, whose Related Cos. is active in the South Florida office market, where he predicted growth will continue.

“Growth [here] has been phenomenal, and I don’t really see it ending,” Ross told the Urban Land Institute’s Miami summit in December. “I believe in Miami. It’s such an exciting place and I think people are recognizing that.”

Rosen said RFR has been selectively investing in Miami over the past couple of decades, including in office, retail, hospitality and residential assets. Its properties in the city include the W South Beach hotel and residences and luxury retail in the city’s Design District and on Lincoln Road.

The difference now is that RFR, responding to Miami’s gravitational tug, is even more invested today and putting down permanent stakes there.

Last month, RFR opened a Miami office in its recently purchased office building at 100 Biscayne Blvd., a 310K SF high-profile office building in the city’s central business district.

RFR’s efforts are paying off at 100 Biscayne, where it has increased occupancy from 50% to 85% in its first year of ownership and at all-time record rents. The property is in the midst of a $30M upgrade that includes a new, high-end food court at the base in a former 7-Eleven space.

In addition, RFR strategically assembled multiple lots to create a 25K SF prime waterfront development site facing Biscayne Bay, with the potential to build a 2M SF mixed-use building incorporating hotel, residential, retail and office uses with great access and protected views.

The site is well-positioned to draft off the success of the Waldorf Astoria Hotel and Residences under construction one block away. That property is more than 85% pre-sold, with asking prices for condo units averaging more than $2K per SF.

Miami is a diverse place to live and invest, said John Crotty of Avison Young, one of the highest-grossing investment sales brokers in Miami.

“Our firm typically transacts with foreign investors on approximately 30% of our annual transactions,” Crotty said. “However, during the pandemic, we saw a huge influx of U.S. capital coming into Miami like never before and RFR was one of those groups that recognized the existing buildings on its site are not the highest and best use for this waterfront location. Sometimes it takes an out-of-town developer to bring a new perspective to identify obvious value and opportunities that others may not see.”

New projects can look to an expanding contingent of global companies, which represent a variety of industries, to fill space. 

The exodus of businesses to Miami in 2022 included a who’s who of top-tier companies, including Citadel Securities, asset management firm Millennium and boating retailer West Marine. New tenants expanding into the market include Apollo, Point72, Goldman Sachs, SoftBank, Schonfeld, Elliot Management, Icahn Enterprises, Microsoft and Blackstone.  

The record number of corporate transplants “further solidifies greater Miami’s position as a global business hub,” William D. Talbert III, Beacon Council interim president and CEO, said in a statement. 

Miami-Dade County Mayor Daniella Levine Cava said these trends bode well for the area’s future.

“Supporting job creation and attracting business investment to Miami-Dade County has never been more important as we plan for a resilient future and work to sustain our economic momentum,” Levine Cava said in a statement. 

This article was produced in collaboration between RFR Holding and Studio B. Bisnow news staff was not involved in the production of this content.

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