Standing on a ninth-floor balcony with distant views of Biscayne Bay and downtown Miami, Nir Shoshani and Ron Gottesman look a bit like men on an island.
The duo that three years ago bought the shell of the distressed Filling Station Lofts for $9.2 million are now renting its completed 81 units — next to an abandoned Cemex factory — for about $2.60 per square foot. They’ve gone all-in on the surrounding Omni district, with plans of building condo, rental and office towers and transforming the sparsely developed area into Miami’s arts and entertainment district.
“When you look three to five years down the road, this area,” said Shoshani, referring to a swath of vacant land and parking lots around the Filling Station Lofts, “will be important and sustainable.”
That might seem laughable if it weren’t for a flurry of speculation in the area, just north of Interstate 395 and east of the FEC tracks. Across the street, 7.4 vacant acres sold last month for $64 million. Next door, a trio that owns most of the block says they’re selling to an established rental developer. And throughout the district, prominent developers are pursuing plans to build more residential units, plus shops, clubs and restaurants.
All told, it’s enough to fuel the belief that after a prolonged slump, the Omni area is finally emerging.
“Really what’s going on in that area is there’s a lot of speculation on behalf of what the area could grow into,” said Peter Zalewski, whose Cranespotters.com tracks condo development in South Florida.
The recent activity in the Omni — once a popular complex of shops and restaurants that opened in the 1970s — dates back to 2011, when Malaysian casino operator Genting Group set off a spending spree by purchasing the 14-acre Miami Herald site for $236 million, plus the debt on the massive Omni Center. Shortly after, Espacio USA purchased the 1400 Biscayne Center for $32 million, and Publix announced it would build a grocery store two blocks away.
Genting has yet to build, although the old Miami Herald building is mostly demolished. And the company’s inertia — coupled with the Miami-Dade School Board’s tepid interest in redeveloping its holdings in the core of the Omni — slowed the pace of what several years ago seemed to be a rapid emergence of the area. But developers have continued to buy land, and in October the Related Group bought Espacio’s property for $57.3 million.
“The Related purchase, it shook all the owners in the neighborhood,” said Realtor and Florida International University professor Suzanne Hollander, who has represented Omni property owners for almost a decade now.
Many of the developers invested in the Omni are banking that the neighborhood will prove fertile ground for condos and rentals that are more affordable than downtown and Brickell but comfortable enough to draw second-home buyers and locals. The neighborhood is near the Metromover, three highways, downtown, Wynwood, and is only a short drive from South Beach.
Land prices around $60 a square foot five years ago have increased, but not so much that developers don’t believe they can sell and rent units cheaper than what’s available in downtown. The area is also zoned for dense projects. Pre-construction units at Canvas, the 37-story, 513 unit tower planned by NR Investments on Northeast First Avenue, are going for an average of about $480 a square foot.
Melo Group, the Argentine developers credited with revitalizing nearby Edgewater, are building the rental tower Melody next to the Arsht Center. They expect to begin the construction of Aria on the Bay in the northeast corner of the Omni soon. They also purchased a block on 14th Street a year ago for $4.3 million, and are among a group of property owners trying to persuade the city to upzone the west Omni.
“You have this empty pocket here that for whatever reason in the last [building] cycle and this cycle isn’t developed because the zoning isn’t appropriate for it,” said Melo attorney, Iris Escarra “For a developer to come into this area, they need to build the square footage, not necessarily to max out, but to build a viable project.”
On either side of Melo’s 14th Street property, Gloria and Emilio Estefan are planning a mixed-use tower on a block of land they accumulated for about $2.1 million in 2000 and in 2011, and NR Investments is planning office and rental towers on land it bought in May for almost $6 million.
Meanwhile, Related Group and an affiliate of CMC Group, which owns property in the Omni next to a Checkers drive-through, are among the developers that have shown interest in redeveloping at least some of the School Board’s Omni properties. The Arsht Center is also pursuing a partnership to redevelop one of the district’s parking lots.
Put these properties and plans together, and there’s a group of established players with a loose vision to overhaul a large portion of the Omni, regardless of what Genting does with its land. Still, Integra Realty Resources senior managing director Anthony Graziano says as the tight-lipped Genting goes, so too does the Omni.
“The primary driver is what’s going to happen at The Herald [site]. What’s Genting going to do and when will that come out? That’s the biggest variable,” he said. “It’s going to anchor the neighborhood in terms of speculation.”
While others wait for Genting to move, Shoshani and Gottesman have been building their brand. To encourage the idea of the neighborhood as an arts and entertainment district, they’ve hosted events, like a rooftop film session at Filling Station and outdoor concerts on the Canvas property with fires for cooking s’mores.
“We’re getting people familiar with the neighborhood and creating a sense of community,” Shoshani said.
Some analysts believe the Omni isn’t quite ready for a breakout. They predict a slump in the boom is on the horizon as construction costs rise and the Euro quivers.
“Right now its more of a developer’s dream,” Zalewski, of Cranespotters, said of the Omni. “There’s always a lot of hype. There’s always a lot of potential for this area. There’s no question. The problem is we tend to be impatient.”
Jack McCabe, of McCabe Research & Consulting, who conducted a long-term study of projected Omni property values several years ago for the city’s community redevelopment agency, puts the timetable on an Omni breakout closer to 2025. He believes a global recession and building lull are on the way in a few years, and says a glut of rentals and condos in Edgewater are going to provide competition for residential Omni projects.
“I see a tremendous wave of development between now and 2025,” he said. “For those who are expecting it’s going to boom like crazy in the next three to five years, I don’ t think that’s in the cards.”
But there’s a sense among some that the Omni isn’t just poised for a revitalization — it’s happening now. Even the Florida Department of Transportation has moved up its timeline to realign and rebuild the I-395 overpass starting in 2016. For the Arsht center, isolated in an area without shops or restaurants to bolster traffic to its own venues, all the speculation is promising, said board chairman Mike Eidson.
“It will be good for the Arsht center and it will be good for Miami — if we can control the traffic situation,” Eidson said. “We don’t want this to become Brickell.”
This article has been corrected to reflect the accurate title of Anthony Graziano, senior managing director of Integra Realty Resources.