A shorter lease on Staples’ Edgewater store sweetened the purchase price for Crescent Heights.
Crescent Heights bought less than an acre in Edgewater for $14 million in a one-tenant deal, as reported by the Real Deal. The former owners, BG 7 LLC, paid $17.4 million six years ago for the same slice of land, or $3.4 million more than the recent deal at 2121 Biscayne Blvd.
A shorter-term lease by Staples, the sole tenant, lessened the value of the property.
“When it was first acquired, it had a longer-term lease. Now it has a shorter-term lease and [as a result] it is valued for less,” said Rani Hussami, Marcus & Millichap’s commercial broker and senior associate.
Hussami listed the property for four months before approaching Crescent Heights. The developer offered the highest bid for the 20,388 square feet of space that Staples leases.
Staples did not respond to a request for comment, but a Staples employee at the store said the lease expires in three to four years.
“It is producing a good income revenue, but this could potentially be a development play down the road when the lease expires,” said Hussami.
The property is shy of an acre and, being zoned as a T6-36, allows for Crescent Heights to build 150 units per acre or up to 36 floors should it choose to build residential.
“Edgewater is one of the leading areas in Miami as far as growth and a lot of development is happening there. This is a property that they are probably going to hold for five years or maybe 10 years. What happens then I don’t know,” Hussami said.
Crescent Heights is headquartered across the street on the west side of Edgewater at 2200 Biscayne Blvd. It plans to build 800 residential units as well as 600,000 square feet of retail and office space at 3000 Biscayne Blvd., which used to house Florida Legal Services of Greater Miami.
Crescent Heights paid $40-plus million for 3000 Biscayne Blvd., as reported by the Real Deal.
Hussami said more developers are turning to Edgewater for their projects: “Brickell has become extremely expensive. If you look at the area on Edgewater, there are a lot of condos for sale. Developers are seeing that and are trying to build some apartments in that area.”
Close proximity to Wynwood, the Design District, and Miami Beach entices investors, he said.
Residents in the area want to see services come to the neighborhood, said Andres Althabe, president of the Biscayne Neighborhoods Association. He believes that altering Miami 21 Zoning regulations may be the best solution.
“We cannot be in the Wild West of development where anyone can build anything,” said Althabe.
The Kushner Companies LLC purchase last week of 2000 Biscayne with plans to build a $550 million tower with 1,100 apartment for lease units, as reported by the Herald, is motivating Althabe to take action. He wants to see developers, including Kushner Companies LLC and Crescent Heights, include retail on their ground floors and provide contributions to the community at large, including traffic lights.
Residential is far outpacing amenity space, said Althabe. He wonders where he and others in the neighborhood will go for services now provided by Staples if the decade-long tenant leaves.
An earlier version of this story, published online, incorrectly stated that Florida Legal Services of Greater Miami is a tenant at 3000 Biscayne Blvd. It no longer is a tenant there.