Federal Government Looks To Sell Office Building In The Heart Of Brickell

The U.S. government is looking to sell a 53 year-old office building in Miami's sought-after Brickell neighborhood as it works to streamline its portfolio.

The General Services Administration, which oversees the federal government's real estate portfolio, has identified 909 SE First Ave., its Brickell Plaza Building, as one of eight properties it will move to dispose of, according to a press release.

The nine-story structure was built in 1971 and occupies a 60K SF lot in the heart of Miami’s Brickell district, along the Metromover rail system and within walking distance of the Brickell City Centre.

Agencies with a presence in the building include the Department of Housing and Urban Development's Office of Inspector General and Customs and Border Protection.

The GSA acquired the building in 1986 for $13.9M when it needed to move Coast Guard offices out of the Miami Federal Building to clear space for an asbestos removal project, according to a Government Accounting Office report from 1989.

The purchase was criticized in the report for its cost — the price tag was 119% of the building's appraised value at the time, and the government's policy is not to pay more than 110% of an appraisal.

The building had been pegged for a pricey renovation before the GSA decided it would rather sell it to save taxpayers money. In its fiscal year 2023 five-year capital investment plan, the GSA allocated $40M to modernize the building.

Instead, Brickell Plaza is one of eight properties across the country the federal government has said it plans to offload, alongside buildings in Vermont, Indiana, North Dakota, Utah, Oregon, Washington state and Washington, D.C. 

The GSA said those sales would reduce its portfolio by 1.5M SF and avoid more than $475M in costs to taxpayers. The department plans to engage stakeholders before deciding if the properties will be transferred, exchanged or sold to a federal, state or local entity or the public.

“The actions we’re announcing today demonstrate our commitment to accelerating the disposition of federal buildings that don’t use taxpayer dollars effectively — and the opportunity to do even more with full access to the Federal Buildings Fund,” GSA Administrator Robin Carnahan said in a statement.

Over the last decade, the GSA has worked to dispose of almost 11M SF of federally owned space and cut almost 18M SF of leased space to reduce its footprint with underutilized assets.

The GSA didn't respond to Bisnow’s request for comment before publication.

Few of the government's unwanted assets have more real estate potential than its Brickell building, which sits in one of the hottest markets in the country. Its office vacancy rate is 11.9%, below Miami's 15.2% average and the 19% nationwide rate, according to CBRE.

Class-A office space in Brickell has an average asking rent of $100 per SF, with the most recently constructed building, 830 Brickell, delivering fully leased in the fall with the final available space renting for $200 per SF, the Financial Times reported.

“The building and central location and the fact that it's in arguably the hottest market in South Florida right now is going to gain a lot of attraction from investors and developers,” said Kevin Gonzalez, senior vice president at Colliers’ South Florida brokerage team.

Because of the building's age, Gonzalez said a buyer would only pay for the value of the land, which is considerable. 

The overall property's market value is $61.3M, according to the Miami-Dade County property appraiser, and its land was appraised at $48.4M. Because it is owned by the federal government, it has been exempt from local property taxes.

“They should have no trouble offloading that,” Gonzalez said. “There’s going to be plenty of bidders for it.”

Less than half a mile away, Citadel CEO Ken Griffin paid $363M in April 2022 for a 2.5-acre site where he plans to develop a 1,032-foot-tall headquarters for his hedge fund and market-making businesses, as well as a luxury hotel. 

Jon Banister contributed reporting for this article.