Trio Of Miami Firms Buy Coral Gables Office Building For Over $50M
A joint venture purchased a Coral Gables office building in what one of the buyers called a contrarian approach amid a slowdown in leasing across Miami this year.
Miami-based firms Torose Equities, Lndmrk Development and Terranova Corp. joined to purchase the 220K SF office building at 255 Alhambra Circle in Coral Gables, they announced in a release. A sale price wasn't disclosed, but the buyers paid “north of $50M” for the property, a source familiar with the deal told Bisnow.
The seller was a fund managed by Deutsche Bank called RREEF America REIT II. RREEF acquired the 13-story building in 2006 for just under $60M, according to deed records.
“This property is positioned to generate strong returns with stable in-place cash flow,” Scott Sherman, founder and principal at Torose Equities, said in a statement. “Our contrarian approach of buying office and retail spaces when everybody is being extremely cautious has once again enabled us to find strong value in an asset class and market we’re very bullish on.”
255 Alhambra was built on 1.2 acres in 1972 and is currently around 80% leased. It recently underwent improvements, but the joint venture plans to further upgrade the building’s amenities to attract new tenants.
The buyers expect to see increasing demand for Coral Gables office space in the coming months and years as companies located in high-priced neighborhoods like Brickell and Coconut Grove face steep rent increases if they want to renew their leases.
Class-A rents in top office submarkets are significantly more expensive than Coral Gables, averaging $93.84 per SF in Brickell and $63.39 per SF in Downtown Miami compared to $53.89 per SF in Coral Gables, according to Avison Young’s second-quarter market report.
"Coral Gables is a market with a great deal of untapped potential, and this acquisition is a tremendous opportunity for the partnership," Alex Karakhanian, founder and principal of Lndmrk Development, said in a statement. "I look forward to continuing to grow our relationship with Torose and Terranova as we explore other opportunities for acquisition and repositioning in this burgeoning submarket.”
The office building sale is one of only a handful in Miami in recent months as interest rates and high borrowing costs create financing challenges for buyers.
New York-based real estate firm Spiegel Associates paid $34M for a 130K SF office property in Little River last week. The property, called Rail 71, was converted from warehouses to commercial office space in 2014.
The only deal in Avison Young’s second-quarter market report is Miami investor Moishe Mana’s $74M purchase of the 28-story office building at 150 West Flagler St. in Downtown Miami, which he purchased from Bridge Investment Group.
Avison Young tracked three sales totaling $91M in the first quarter, but only one, Biscayne Real Estate Holding’s $39M purchase of 11900 Biscayne Blvd., was an investment sale.
Bridge Industrial also paid $41M for the former Miami headquarters of Ryder at 11690 Northwest 105th St., but it is planning to demolish the building to make way for an industrial development. The third sale was the $21M purchase of 7900 Northwest 156th St. by Ward Law Group, which is making the 75K SF property its new headquarters.
The 255 Alhambra property is situated a block from a cadre of restaurants on Giralda Avenue and four blocks from Miracle Mile, a popular shopping and dining destination. The access to leisure offerings will increase its attractiveness for tenants coming from neighborhoods with a similar mix of retail, dining and office space, said Stephen Bittel, the founder and chairman of Terranova Corp., which is also the largest owner of properties along Miracle Mile.
“The area offers companies a holistic business and lifestyle opportunity which serves as an extremely attractive alternate to traditional hot commercial real estate markets like Brickell and Downtown Miami,” Bittel said in a statement.
