San Francisco developer seeks to cement Wynwood as Miami’s tech mecca
Less than three years after completion, Wynwood Annex, a prime office tower filled with technology firms in the namesake hipster neighborhood, is being acquired for $49 million by a tech-focused San Francisco real estate developer.
Brick and Timber Collective, whose holdings in San Francisco and Pasadena include hundreds of millions of dollars worth of commercial space mostly occupied by tech tenants, announced the acquisition Monday. The Annex was sought by Brick and Timber in the wake of some of the biggest names in the tech world signaling their intention to depart San Francisco for Miami amid the pandemic and set up shop in Wynwood.
Brick and Timber also said Monday it would be purchasing the office located at nearby 2734 N.W. 1st Ave. Combined, the properties are being acquired for about $58 million, with the price per square foot of the Annex deal coming in at $843 for 58,091 square feet.
Miami-based Brick and Timber partner Jesse Feldman pitched the acquisitions as the cementing of Wynwood as the heart of Miami’s tech movement. They’re the first Miami properties for the firm, and Feldman said they are looking for more.
“We asked ourselves: Where is the infrastructure being laid for a generation of new technology companies to be fostered?” Feldman said in a statement. “Miami, and especially Wynwood, is an ideal environment. The business network is flourishing, but the neighborhood also has thousands of homes coming online, the best food and drink scene in Miami, and an artistic grit that is inimitable.”
Added founding partner Glenn Gilmore: “We are witnessing migratory patterns across the country and Miami is standing out as the most exciting landing space for venture capital. The ecosystem brought with them is a strong indicator for future growth.”
Originally developed by Related Group and East End Capital, the Annex stands eight stories and features 65,000 square feet of space on Northwest 24th Street just west of Northwest 2nd Avenue. In 2020, the former owners of the Annex and its adjoining residential property, Wynwood 25, secured $136 million in refinancing to pay off construction loans.
The sales of the two properties represent the latest evolution of Wynwood, known for decades as home to Miami’s garment district until developers led by Tony Goldman began turning it into an up-and-coming arts center. Now, it is offices like these that stand to define Wynwood’s next iteration.
The neighborhood’s newfound tech identity has been fueled by the arrival of groups like Founders Fund, whose co-founder Peter Thiel now lives part-time on the Venetian Islands and whose general partner, Keith Rabois, has been among the loudest online cheerleaders for the move-to-Miami movement, and Atomic, a startup “studio” led by influential entrepreneur Jack Abraham.
The Annex is now also home to entertainment promoter LiveNation, corporate card startup Ramp, payments platform Play2Pay, and ketamine therapy group Field Trip Health. Other Wynwood-based tech and finance firms include Spotify, alternative finance software group Pipe, cryptocurrency exchange Blockchain.com, and $22 billion hedge fund Schonfeld Strategic Advisors.
“It’s a culmination of Miami’s tech renaissance, seeing all these different companies coming in. A lot of them are concentrating in Wynwood, and the Annex is the epitome of that,” said Albert Garcia, Wynwood Business Improvement District chairman.
The deals are emblematic of Miami’s red hot real estate market, one that has seen surging demand get met with soaring prices. According to the S&P/Case-Shiller Home Price Index, Miami-area real estate values are now well above the levels seen during the mid-2000s housing boom.
Yet, longtime Wynwood business owners say the area, and Miami in general, has arguably been offered at a discount for at least a decade given the product it was offering.
“We have such a nice place to live, and there’s still so much room to grow,” said Adam Gersten, owner of Wynwood watering hole Gramps, which is marking its 10th year in existence. “So many people want to live here — it was underpriced for what it offers people.”
Gersten described Gramps’ own current real estate situation as “stable.”
“For us not much has changed,” he said. “We have more happy hours than ever, we’ve added late night happy hours, we’re still doing ‘Nerd Nites’. We’re seeing more people there and maybe more office workers, and hopefully residents. There’s still a need for people to come in and have a drink, not always have the typical Miami nightclub experience.”
That may be the case for some of the neighborhood’s food and beverage real estate. But when it comes to office leases, Wynwood is now Miami’s hottest market. According to Colliers’ fourth-quarter 2021 report on Miami real estate, Wynwood and the Design District have seen more “net absorption,” meaning leases signed, than any other major market in the city, with 137,591 square feet spoken for. And at $59.62 per square foot, the area has surpassed Miami Beach as the area’s third most expensive market, trailing only Brickell and Coconut Grove. (Miami Beach is in the midst of its own office push to stay competitive.)
Colliers echoed the overall booming back-to-work trend in Miami.
“South Florida is leading the nation in the workforce recovery,” the real estate group said in its report. “The drop in the unemployment rate is a positive sign for the office market as confidence returns to a rebounding economy and tenants make commitments to longer-term lease plans.”
For Tony Arellano, co-founder and managing partner of DWNTWN Realty Advisors, which represented Related and East End in the transaction, Wynwood’s status represents what he called Miami’s “paradigm shift” during the pandemic. As doubts about the future of office use began to grow elsewhere, Wynwood was selected as the destination of choice by a coterie of preeminent tech professionals.
“What started to happen was a cluster of tech and VC expats from the Bay Area and San Francisco and the West Coast, and others from New York, started to believe Miami could be their new home, and that Wynwood was sort of the preeminent and most appropriate neighborhood for their use,” Arellano said.
“And the reason they chose Wynwood is because it’s where employees wanted to live, work, and play. It’s the most walkable neighborhood we have in Miami, and it’s almost becoming the Manhattan or Williamsburg of the South.”
Correction: This story originally misstated the price of the Wynwood Annex deal. It is $49 million. It also misstated the price of the totals of the two acquisitions mentioned — it is $58 million.
This story was originally published February 28, 2022 at 11:13 AM.
