Mike Vogel | 10/1/2009

Miami: Thinking Long Term

No market in Florida faces what Miami will next year: Three, new, top-tier office towers adding 1.9 million square feet to a market struggling with falling occupancy and lease rates.

“The market has actually improved significantly from what it was six, nine months ago. That’s not to say we haven’t had to mark to market and be competitive to attract the quality of tenants we want. Existing landlords have been extremely aggressive.” — Tere Blanca

Tere Blanca, whose company handles leasing for one of them, 1450 Brickell, argues for context: It’s a market with 47 million square feet, a nearly empty pipeline of new projects and significant barriers to entry. Still, she acknowledges, “It’s a tenant’s market. No one can deny that.”

Many of those tenants, too frightened by the economy to ink a long-term lease, instead sign short term with existing landlords who are eager to please. Meanwhile, the new builders must be cautious in leasing. Because building out space for a major tenant can cost millions of dollars, owners want multimillion-dollar deposits or letters of credit, something some prospects told Brickell Financial Centre developer Loretta Cockrum they currently lack the strength to provide.

Cockrum says her project never was meant to catch one market cycle. She calls it a flagship, “the Rockefeller Center of Miami,” eventually comprising two towers totaling 1.5 million square feet of office, retail and hotel. Her project has an advantage in being self-funded. “We will complete the building empty or half full or whatever it is.”

1450 Brickell (under construction) [Photo: Aerial Photography Inc.]

1450 Brickell Developer: Rilea Group Height: 35 stories Size: 586,673 square feet Completion: 1st quarter 2010 Financing: A $175.2-million loan from a 15-bank consortium led by Bancaja and Banco Sabadell Cost: $280 million Major tenants: None yet

Brickell Financial Centre Developer: Foram Group Height: 40 stories Size: 600,000 square feet Completion: End of 2010 Financing: Self-funded Cost: $300 million Major tenants: None yet

Met 2 Developer: MDM Development Group and MetLife Height: 47-story office tower and a 42-story hotel tower Size: 750,000 square feet of office space Completion: Spring 2010 Financing: A $250-million loan from Bank of America, HSBC Bank USA, RBC Bank, Bank of Scotland and the former Wachovia Cost: $500 million Major tenants: Greenberg Traurig, Deloitte, Business Centers International