In a sign that Miami’s commercial real estate market may be starting to rebound, Crocker Partners, a Florida investor, recently purchased the 34-story Miami Center from Sumitomo Corp. of America. The $262.5 million purchase is the biggest commercial real estate deal in the city since 2008, fetching $334 per square foot, or practically the same cost per square foot as the last time the title changed hands on the high-profile property. This is more than what other recent sales have fetched, but less than the average cost per square foot of over $400 in 2006. The building’s largest tenant is Citigroup, Inc., which has its logo on the building.
According to Reis, Inc., a real estate research firm, nearly 20% of the available downtown office space remains vacant today, compared to under 10% in 2007. Roughly 16% of the tower’s lower floors are unoccupied at the present and the property has to compete with newer buildings that have come onto the market with attractive lower rates.
The marble-clad building, one of Miami’s largest office towers with 786,000 square feet of rentable space, has had a troubled past. The building opened in 1983, in the midst of the savings and loan crisis, and two years later was taken over by a group of its lenders led by Bank of New York. Sumitomo, the seller, acquired the property in 2008, and sold it for approximately the same amount that it paid.
Thomas Crocker, founder of Crocker Partners, however, thinks the Miami commercial real estate market has turned enough to make purchases like this one not only attractive, but eventually profitable. The purchase of the Miami Center is one of five properties either acquired or put under contract in Miami and other cities, including Dallas and Houston. Once these acquistions have been completed, Crocker Partners will own over 3.5 million square feet of office space that Crocker plans to lease, stabilize and sell for a profit.
Janice Carpi is the National Underwriting Counsel for GRS Group email@example.com
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