17 developers are vying to build offices near Lincoln Road. Will Miami Beach want them?
Seventeen national developers have submitted formal letters of interest in building new office space near Lincoln Road — proof that Miami Beach’s lagging commercial district is on the rise.
Despite a slowdown in the office market as many companies observe COVID-19 protocols, an October call by the City of Miami Beach drew submissions from some of South Florida’s most successful developers, along with high-profile out-of-towners.
“[These developers] believe that people will be going back to the office at some point in the future,” said Commissioner Ricky Arriola. “These opportunities are going to cater to a more local market for people who want to live, work and play all in the same neighborhood.”
In play are three city-owned lots between Lincoln Road and 17th Street, steps away from Regal Cinemas South Beach, Colony Theatre and City Hall. All currently are used for open parking. The city is seeking a single development team that would create more than 380,000 square feet of office space with a 99-year lease; the developer would pay construction costs.
“Instead of building another hotel or more retail space, this would be Class A office space,” said Arriola. “One would imagine a major hedge fund, production studio, media company or law firm [opening its offices there]. That’s local jobs being created and those companies will bring clientele that will fill our hotels. Those employees will shop at Lincoln Road. Hopefully, a large portion of those people will live in Miami Beach and no longer have to commute into Miami Beach.”
Companies that expressed interest include locally based Adler Group, Comras Company, COO Premium Development, Russell Galbut of Crescent Heights, David Mancini & Sons, Design District Management, East End Capital, Integra Investments (in partnership with Starwood Capital), Peebles Corporation, Related Group, 13th Floor Investments and Tricera Capital (partnering with Mangrove Real Estate and Sasaki).
Firms based elsewhere include Andalex Capital of New York; Northwood Investors (offices in London and the U.S.), Oak Capital Group of Los Angeles, R&B Realty Group of New York and Sterling Bay of Chicago.
Developers point to recent purchases of multimillion-dollar homes by hedge fund and tech magnates as an encouraging sign.
“The heads of all these companies are buying homes on the Venetian Islands, Star Island and North Bay Road. They want to be close to where they are working, and their employees are living,” said Related Group President Jon-Paul Perez in a November interview with the Herald. His company is building a Class A office building on Terminal Island at the MacArthur Causeway entrance to Miami Beach and has expressed interest in the Lincoln Road sites.
The city has not yet issued a request for proposals. The Miami Beach Finance and Economic Resiliency Committee is set to meet Friday to decide whether it will submit a formal recommendation to the Miami Beach Commission to seek formal proposals. The commission is set to meet March 17.
Michael Comras, president and CEO of The Comras Company, hopes the city will proceed with the project. He previously developed two Class A office spaces near Lincoln Road and has expressed formal interest in the new project in partnership with Terra developer David Martin.
“When you look at Miami Beach and how neighborhoods evolve and ask we diversify our economic base, office is a great part of that,” Comras said.
“We need to strengthen our economic base. ... The city is being forward-thinking, and when things align and you get a response from 17 different developers, that means there’s a worthwhile level of interest.”
Even prior to the pandemic, Lincoln Road struggled to keep tenants as rents soared; since then, retailers including Adidas Y-3 Miami Beach, Books & Books and restaurant Balans have abandoned the historic shopping strip, though a number of small businesses signed on late last year.
New offices would help sustain retailers and restaurants along Lincoln Road and across Miami Beach, said Lyle Stern, vice president of the Lincoln Road Business Improvement District and president of retail leasing and consulting company Koniver Stern Group.
“The folks that are going to occupy these buildings are going to go out to shop,” Stern said. “When we start peeling back the onion, it creates everything from [adding to the] city tax base to increasing home values here. It will flood more money onto the streets.”
COVID-19 left Miami Beach on life support when the number of tourists and hotel occupancy rates hit record lows countywide. While tourism has begun to rebound, county occupancy rates have risen above 60%.
.jpg)
Miami Herald writers Rene Rodriguez and Jane Wooldridge contributed to this report.
This story was originally published February 17, 2021 at 2:15 PM.
