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Bringing Tri-Rail Into Downtown Miami In Peril

If all of the entities involved in bringing Tri-Rail into downtown Miami can’t finalize financial agreements by May 17, All Aboard Florida may withdraw its offer to have commuter service operate out of its MiamiCentral terminal.

So said a May 2 letter from Alice Bravo, director of Miami-Dade County’s Transit and Public Works department, to Jack Stephens, executive director of the South Florida Regional Transportation Authority, the agency that operates Tri-Rail.

All Aboard Florida, a wholly owned subsidiary of Florida East Coast Industries, “has advanced construction of the commuter rail platforms and is incurring significant costs since the station has gone vertical and columns have been erected,” Ms. Bravo’s letter said. “If we are not able to execute agreements by the aforementioned date, All Aboard Florida has advised us that they will be forced to cease construction on the commuter rail infrastructure.

“Without a definitive plan of action and inter-agency coordination to pursue new agreements, we could forfeit this unique opportunity to bring commuter rail to the central business district.”

“For several months, Mayor Gimenez has been leading efforts to identify a funding solution for Tri-Rail’s downtown station,” said Francois Illas, vice president at Florida East Coast Industries. “We appreciate his leadership and the specific schedule put forth. We are in the process of confirming the other partners’ commitments to the timeline so we can continue construction at the station.  If this timeline is not met, we will have no choice but to stop construction immediately on the Tri-Rail station.”

Within the next two weeks, contributing entities such as the commissions of Miami-Dade County and Miami, Miami’s community redevelopment agencies, the Citizens’ Independent Transportation Trust, Miami’s Downtown Development Authority, Bayfront Park Management Trust and the county’s Transit and Mobility Committee must sign agreements to move the project forward, Ms. Bravo’s letter said.

“Miami-Dade County would like to expedite the approval of the necessary documents to honor our collective partnership with All Aboard Florida and help them seek reimbursement for the costs they are currently incurring,” Ms. Bravo’s letter adds. “Miami-Dade County stands ready to help facilitate coordination between the agencies.”

“We would certainly encourage all funding parties to work together in order to expedite this project to the benefit of the citizens of Miami-Dade County, the City of Miami, the Southeast Overtown/Park West and Omni community redevelopment agencies, Miami DDA and Bayfront Park Trust,” Mr. Stephens said. “The governing board of the South Florida Regional Transportation Authority has done all in its power to see that this project comes to fruition.”

 

Source:  Miami Today

Miami Office Market Becomes Magnet To Investors

Miami’s high-performing office market has become a magnet to institutional and foreign investors, brokers say, and the competition is causing top-tier buildings to trade for record prices.

For example, Alex Zylberglait, senior vice president in Marcus & Millichap’s Miami office, reports the sale of the Northern Trust Bank Building in Aventura for just over $610 a square foot, one of the highest levels ever recorded in that area.

“Office-market sales are very strong,” said William Holly, president of Patton Real Estate, “with lots of new properties coming on the market. The biggest thing is the premium being paid for core properties in core locations that are fully amenitized.”

Prominent among factors driving investor interest is a rapid rise of lease rates countywide.

“Leasing has been very strong,” said John Bell, Transwestern’s managing director of capital markets.


Transwestern’s Real Estate Outlook
for third quarter 2015 reports that the average price for suburban class A offices exceeds $35 a square foot, an historic high – and average rates in class A buildings in the urban core are hovering in the mid-$40s.

Chart 1_7_16.indd

Brokers say lease hikes, in turn, are being nudged northwardby falling vacancy rates. Transwestern’s Outlook reported an eight-year low in direct vacancy at the end of the third quarter, registering just over 13% in competitive class A and class B office stock. “Vacant supply is almost evenly divided between the two classes of space,” Transwestern’s researchers found.

“Office buildings are driven primarily by employment,” Mr. Zylberglait said. “A decreasing unemployment rate and strengthening employment market means hiring is up, and that has driven an increase in demand for office space and absorption.”

Though with the recovery of the economy many employers haven’t hired to previous levels, Mr. Holly said, they still need more space – and the trend is abetted by the lack of significant new inventory.

“There is virtually no new product in the market,” Mr. Zylberglait said, “and some of the existing inventory has been depleted by office condo conversions and the repositioning of existing office space to other products in areas such as Edgewater and the Biscayne corridor,” where office sites were bought to be torn down and redeveloped for other uses.

After rising lease rates, Mr. Bell said, the announcement of an imminent rise in the interest rate is also pushing sales activity.

“We don’t expect the interest rate to rise significantly,” Mr. Bell said, “to where it will affect cap rates,” which he quoted at 3.5% to 4% in the central business district, another historic low.

“With interest rates as low as they have been, investors can justify high prices for these assets,” Mr. Zylberglait said, “because that fuels their ability to finance it. And people will want to lock in these rates before they go up further.”

One interesting feature of the current run on Miami-Dade office properties, Mr. Bell said, is that it’s not limited to trophy towers in the Brickell-downtown core.

“Coral Gables is a very strong second in terms of interest,” Mr. Bell said, “and Doral is turning into quite a market of its own. It’s not just industrial anymore. There are extremely high levels of institutional and foreign capital waiting to invest in office and retail. Anywhere there’s a deal with a Miami-Dade address, people are interested. Though quite a few transactions have occurred, given we’re still at top of the cycle we will probably easily see at least one tower in Brickell and another in downtown trade in the near future. Institutional money and private money are taking a strong look at getting while the getting’s good.”

“In Brickell and Coral Gables particularly, Mr. Holly said, “in the first quarter I would expect to see more good properties come on the block to capitalize on this good market. Buyers for class A and larger class B properties are mostly institutional, and we have a healthy international market here for sales up to about $20 million.”

“A strong influx of Latin American capital going after smaller properties has magnified the velocity of transactions,” Mr. Zylberglait said. “Foreign buyers now have more financing available to them, and they see US commercial properties as great diversifiers for cash flow.”

The foreign market, Mr. Bell predicts, is about to get even stronger.

“President Obama recently signed legislation that took away the 1980 Foreign Investment in Real Property Tax Act, known as FIRPTA,” Mr. Bell said. “In the past foreign investors were taxed on investments in the US and couldn’t be majority holders. So they were hesitant to get involved in assets they couldn’t have much control over. This is going to be really huge for Miami.”

 

Source: Miami Today