Make room, Brickell. Another Miami neighborhood is making a run at the lucrative market of prime office space.
Three new Class A office buildings — new or renovated construction featuring luxurious amenities, professional security, high-tech infrastructure and desirable locations — are either under construction or nearing completion in the historic Miami neighborhood of Coconut Grove:
▪ The Related Group, the biggest real estate developer in South Florida, is building a new eight-story Class A office building at 2850 Tigertail Ave., adjacent to the Park Grove luxury residential towers, which Related developed in joint partnership with Terra Group.
Related will relocate from its longtime home base in downtown Miami and take over the top two floors of the 105,000-square-foot building. Construction is scheduled to be completed in late 2020.
▪ Mary Street, a joint venture between Terra and the boutique luxury brokerage firm Mayfair Advisors, has received its temporary certificate of occupancy, which allows tenants to begin the build-outs of their individual spaces.
The five-story building, located at 3310 Mary St. and designed by Touzet Studio architectural firm, is an adaptive reuse of a former parking garage into 77,840 square feet of office space. The building is already leased out. The CPA firm Kaufman Rossin will move nearly 300 employees into 64,666 square feet of space in the building by mid-2020. Terra’s corporate office will occupy the remaining space.
▪ One CocoWalk, the five-story Class A building that forms the office component of the redeveloped CocoWalk, has leased out 65 percent of its available 85,762 square feet. Signed tenants include the co-working company Spaces, which will occupy the second and third floors with its ready-to-go office spaces, and the investment firm Boyne Capital, which will occupy 11,600 square feet.
The Related Group’s decision to relocate its corporate headquarters is surprising, since the company is best known for its extensive development in the Brickell and downtown corridors. But Related Group CEO and chairman Jorge Pérez has long made the Grove his primary residence, and his company has outgrown its longtime headquarters at the base of the One Miami condo towers at 315 S. Biscayne Blvd., which Related built in 2006.
“We had already expanded to additional office spaces at 444 Brickell Avenue,” said Nick Pérez, vice-president of The Related Group. “Brickell and the downtown area will always be the main urban cores of Miami. But the Grove has a unique personality — it was the original neighborhood of Miami — and we’ve always had a connection with this area, as professionals as well as a family.”
Perez said that unlike the company’s other projects, which are usually launched with a splashy ad campaign, construction of the 2850 Tigertail office building began without fanfare. The property is being marketed via a “whisper leasing campaign” using one-on-one appointments with brokers and tenants, to be as selective as possible.
“This building is boutique in nature,” he said. “We want tenants who have an appreciation of fine art — my father’s collection will be rotated in and out of the lobby — but also wants exclusivity and luxury.”
Unlike other office markets around Miami-Dade, Coconut Grove developers can afford to take a soft-sell approach with their product, because the Grove’s zoning codes do not allow for the kind of height and density that would result in a critical amount of oversupply.
According to the Colliers International Miami-Dade County Office Forecast report for second quarter 2019, more Class A office space was vacated (added to the market) in the Grove than was leased during the second quarter of 2019. But the surplus was only 4,398 square feet, which is modest compared to other areas such as Kendall, which had a surplus of 32,574 square feet.
Class A office rents in Coconut Grove are currently at an asking rate of $41.38 per square foot, according to Colliers. That is lower than nearby areas such Brickell ($51.38), downtown Miami ($45.72) and Coral Gables ($47.66).
“People are wanting to get out of the Brickell area, where it’s very congested,” said Tom Roth, principal of Grass River Property, which is developing One CocoWalk. “Coconut Grove is much more manageable. It’s similar to Coral Gables. And the supply of total square footage is pretty limited. The three buildings you are looking at combined add up to half the size of one Brickell skyrise.”
While residents in the mostly black West Grove struggle to stave off rising prices and retain the neighborhood’s identity, development in the East Grove continues to attract major investment.
In July, former New York Yankees superstar Alex Rodriguez acquired 12,700 square feet of office space at the Grove on Grand Bay condo to consolidate the various operations of his investment company A-Rod Corp into the same space (the sales price was not disclosed).
Sony Music Latin America and the advertising firm SapientNitro are among the businesses that left their former Lincoln Road location for the Grove over the last five years. General Electric also has a sizable office presence there.
“What you see in the Grove is a little more authenticity than other parts of Miami and a neighborhood that is growing hotter,” said David Martin, president and co-founder of Terra Group. “We have a high walkability index, we have a village feel, we have a great tree canopy. The Grove lost a lot of its excitement in 1995 when South Beach happened. But a lot has changed since then. The Grove has again become a place that people who are new to Miami can discover.”