Brickell Landlords List Sites At Record Asking Prices

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Elevated interest rates and skyrocketing insurance premiums have curbed South Florida’s commercial investment sales flurry of recent years, with cash flow and debt woes besetting some property owners.

Yet, Brickell landlords remain unfazed.

Since last fall, four large properties have hit the market, and two are for unprecedented prices that would surpass records set during the pandemic rush on Brickell, when the area became the prime choice for new-to-market companies.

Nuveen Real Estate is asking over $500 million for its 33-story bayfront 701 Brickell office tower.  The April listing would pencil out to $730 per square foot of office space, more than the biggest South Florida office deals of the last two years. In October, the 28-story 801 Brickell tower traded for $250 million –– or $602 a square foot of office space –– and in 2022, the 28-story 1221 Brickell tower traded for $286.5 million –– or $720 a square foot of office space.

In March, Aimco listed its bayfront 4.3-acre site that is home to the 32-story Brickell Bay Office Tower, and the adjacent 31-story, 357-unit Yacht Club Apartments. By right, the property has massive redevelopment potential allowing several supertalls spanning a total of more than 3.1 million square feet of condos, hotels, offices, retail or a combination of these. The asking price of $650 million would break down to $151.2 million per acre, surpassing billionaire Ken Griffin’s $363 million purchase –– or $145.2 million per acre –– of a vacant Brickell bayfront development site in 2022, which set a new South Florida record. Griffin is expected to develop a new headquarters tower for his Citadel and Citadel Securities on the site.

Brickell real estate experts stand by landlords’ unprecedented listing prices, citing the neighborhood’s reputation as perhaps the only U.S. office market still thriving. They also point to leasing by high-credit tenants in recent years, and the area’s zoning that allows for some of the densest development in South Florida. Brickell also has grown into a residential mecca, with multiple condo and apartment projects on tap.

Yet, holes have appeared in the narrative that Brickell remains untouched by economic headwinds. The influx of out-of-state companies that lease big blocks of space has dwindled, data shows, raising doubts whether Brickell will continue to grow or keep its status as a top market. The neighborhood’s office rents, which are getting close to $200 a square foot, have driven out some tenants to more affordable areas such as Coral Gables. Last fall, Brickell recorded 95,000 square feet of sublease availability, accounting for 24 percent, or the biggest share in Miami-Dade County, a CBRE report showed.

Asking prices are just that, with investment sales often closing for less, experts say. But record listing prices show landlords are betting on a continued Brickell bonanza, despite an economic slowdown and uncertainty.

Whether the boom keeps going and sales set new records, or deals materialize at all, remains to be seen.

Source: The Real Deal