Pan Am Lists Little River Business Park For $39M

For the second time in two years, Pan Am Equities is looking to cash out of an office business park in Miami’s Little River.

Affiliates managed by Scott Solomon, president and CEO of Pan Am, a New York-based real estate development and management firm, recently listed Rail 71 at 7205 Northeast Fourth Avenue with an asking price of $39 million, according to an offering obtained by The Real Deal.

DWNTWN Realty Advisors’ Tony Arellano and Devlin Marinoff are marketing the nearly 4-acre site. The duo also brokered Pan Am’s deal in 2014 when the firm and its partner Morgan Reed Group acquired the property, Marinoff said. The joint venture paid $3.2 million and the 128,000-square-foot building was completed in 1955, records show.

Pan Am bought out Morgan Reed Group over a year ago, according to Marinoff.

In 2020, a deal to sell Rail 71 after it hit the market for $33 million fell through due to the pandemic. DWNTWN immediately relisted the property on behalf of Pan Am for $32 million, but the owner took it off the market.

Pan Am and Morgan Reed renovated and repositioned the former warehouse into an office and service retail complex that’s reached 98 percent occupancy. Marinoff said the property has nearly a 6 percent cap rate, which he suggested offers immediate upside to raise rents when leases expire.

A majority of the tenants are on short-term leases with options expiring within the next six years, the offering shows. The tenant mix includes interior and industrial design firms, fitness gyms and a few food and beverage establishments. The largest tenant is Focal Brewing Company, which occupies just over 11,000 square feet, and Pubbelly Sushi has its corporate offices in Rail 71.

“When office rents in Wynwood are at $70, $80 a square foot, [potential creative office tenants] can come to Little River and get $30 a foot,” Marinoff said. “At Rail 71, the asking rent is $22 a square foot gross.”

Rail 71 is less than a mile north of Magic City Innovation District, a massive mixed-use project on nearly 18 acres in Miami’s Little Haiti neighborhood being developed by Miami-based Plaza Equity Partners, Montreal-based Lune Rouge and Dragon Global’s Bob Zangrillo. Pan Am completed an “A to Z” renovation of the building shortly after buying the property.

“It hit the market about two weeks ago and we already have four to five offers,” Marinoff said. That’s pretty significant.”

But it’s worth noting none of those offers were at the asking price, but he suggested they are getting close.

Owned by the Manocherian family, Pan Am holds 26 high-end commercial properties throughout New York City, including the New York Health and Racquet Club. In July, a Pan Am joint venture sold another Little River adaptive reuse property, a 47,000-square-foot office and industrial complex called Rail Too, for $11.6 million, records show. The partnership paid $3.8 million for Rail Too in 2015.

In November, the firm sold Fort Lauderdale Marriott Pompano Beach Resort & Spa in Pompano Beach for $54.1 million, a gain of nearly $9 million over its purchase price of $45.1 million in 2018.

Even though it is shedding South Florida properties, Pan Am remains bullish on Miami, particularly Little River, according to Marinoff.

The firm is currently a partner in Little River Center, a former office building being converted into a mixed-use project with 65 residential lofts and 30,000 square feet of retail at 7924 Northeast Second Avenue, an online listing shows. Pan Am and its partner, Dr. Robert Danial of Miami Beach, paid $10 million for the property in 2015, records show.

Contact Francisco Alvarado