FEATURE ARTICLE, DECEMBER 2005

Miami

South Florida retail continues to experience extremely strong occupancy levels, with demand exceeding supply in most market types. A new focus toward retail, and its impact moving forward, has been emphasized with all of the mixed-use high-rise developments in the downtown and Brickell markets of Miami. There is growth in ground-floor retail housed in new residential towers. Barriers to entry for traditional suburban development in the form of lack of available supply and land, and the high cost associated with it, are fast forwarding Miami's emergence as a vertical city.

Rental rate growth is being seen in all markets. Coral Gables and South Beach are absorbing all available opportunities with limited marketing time. Doral and the Airport West/Dade market will continue to see activity. A couple of significant developments will be coming on line next year and both will be creating an environment that has similar appeal to what is offered in the downtown or South Beach markets.

Shoma Development Corporation will begin construction on Park Square at Doral in the first quarter of 2006 and deliver in mid-2007. The project will set the standard for a live/work/recreation lifestyle project on the west side of South Florida.

A major project that will affect the downtown area is Mary Brickell Village. The project, which is poised to open in early 2006, is an all-encompassing outdoor mall in walking distance to the commercial sector of downtown Miami. The project will cement the Brickell corridor as South Florida's first 24/7 environment. The critical mass of restaurants, combined with the already strong numbers from existing operators in the trade area, have a number of qualified white-table cloth operators scouring the Brickell/Downtown/Performing Arts markets for future sites.

There are some retail tenants impacting market. Equinox Fitness Centers has entered the South Florida market with deals in the 500 Block of Collins Avenue on South Beach and in the Village of Merrick Park in Coral Gables.   Touted as America's top fitness facility, Equinox brings an upscale offering to a crowded but mainstream field of operators. Also, Zara USA has taken 10,000 square feet of space in the same building. These leases have significant impact on numerous fronts. Not only does this re-anchor the Collins Avenue fashion district in South Beach, setting a new standard for pedestrian shopping, the deals once again confirm the 500 Block of Collins Avenue as the leading complex for the thriving sector. Next year, the area of focus should be in Doral.

Also, Rabina Properties, in a joint venture with the Related Companies, will begin construction of a new property in 2006 with delivery the following year.   The residential tower will set the standard for downtown Fort Lauderdale, and its signature 20,000 square feet of ground floor retail adjacent to The Cheesecake Factory will bridge the downtown side of Las Olas Boulevard with its more genteel tenancy to the east.

— Greg Masin is senior director, retail with Cushman & Wakefield of Florida Inc.

Office

The Airport/West Dade office submarket today comprises more than 10 million square feet of space. This market experienced a very difficult year in 2000, which included the introduction of 750,000 square feet of new space, a 200,000-square-foot explosion of available sublease space and a diminished demand for companies to relocate and establish their Latin America headquarters in Miami. While it took several years for this submarket to recover, this year marked the turnaround for the office submarket. In the third quarter of this year, this submarket lead the Miami-Dade County in leasing activity, continuing its trend of stable, consistent growth and absorption. A major boost to the submarket was the return of caliber corporations with large size requirements that made long-term lease commitments. A partial list of such companies to market include:   Greenberg Traurig Law Firm (28,194 square feet), Wachovia Corporation (40,927 square feet), Humana (16,046 square feet) and State Farm (65,000 square feet). With only one new office building under construction — TA Associates' 130,000-square-foot Doral Costa II scheduled for completion in October 2006 — such market change has encouraged developers to put this area back in their sites. However, developers are creating new urban city centers for Airport/West Dade instead of a single product line.    

A developer with such vision is Shoma Development, which acquired the 57-acre site previously known as the Ryder Systems World Headquarters campus in 2004. Strategically located at the epicenter of Airport/West Dade, with access to four major expressways (SP826, SR836, Florida Turnpike and Interstate 95), this site proved ideal for the introduction of a new concept in this submarket. Park Square at Doral will be a city within a city with 1,000 residential units, 120,000 square feet of retail, and an 11-story, 170,000-square-foot office building. Zyscovich Architects, Miami's master architect of urban design, has designed a state-of-the-art office building for today's corporate user. The pedestal design, with the first five floors comprising covered parking as the building's base, provides four and a half covered parking spaces per 1,000 people. The top six floors, approximately 30,000 square feet, will have vista views of Doral Country Club as well as Miami's skyline. Additionally, the building will be equipped with generator service up to life-safety capacity, with additional pad space and conduit availability for tenants requiring their own generator service. The project, scheduled to break ground next summer, will be well timed for the market's demand upon completion in summer 2007.

— Diana Parker is senior director, office with Cushman & Wakefield of Florida Inc.

Multifamily

The most interesting and active multifamily market in the Miami area is the submarket of Airport/West and Doral. Last year, Doral became an incorporated city and planned growth became a major focus.   Based on the close proximity to the airport and ports, traditionally this sector was heavily dominated by the industrial market. However, cheaper land cost, limited congestion and a healthy need for alternative lifestyles has made this area in west Miami the prime choice for development. In the past couple of years, numerous residential developments have been built in this area. In addition, the area will be home to two all-encompassing lifestyle centers. Beacon Town Center, being built by Codina, currently consists of several commercial buildings, but plans are to add shopping, dining and residential, as well as house the Doral Municipal buildings. Park Square at Doral is another major project under development.

— Masoud Shojaee is president of Shoma Development Corporation.

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