Favorable Interest Rates Fuel Sales Spree In Miami Office Building Market
Written by Marilyn Bowden on October 19, 2000
By Marilyn Bowden
Commercial brokers say brisk sales of smaller office buildings in the Miami area is the result of a healthy market and favorable interest rates.
According to statistics from The Keyes Co., office-building sales in Miami-Dade County totaled almost $176.87 million during second-quarter 2000, and accounted for 102 of the 187 office-building sales recorded across South Florida.
In Coral Gables, said William Kerdyk Jr., CEO & president of Kerdyk Real Estate, the office-building market has been "extremely active."
Among Mr. Kerdyk’s recent office sales are a 7,573-square-foot property at 262 Almeria Ave., which sold for $1.3 million, and the $720,000 sale of a 6,244-square-foot building at 1828 Ponce de Leon Blvd.
"It’s extensively driven by people setting up their own offices," he said. "These are professional users such as attorneys, doctors, public relations companies and CPAs.
"They’re looking to allow their money to work for them by buying a building they hope will continue to go up in value."
Since inventory is low, Mr. Kerdyk said, office properties are in fact appreciating.
"Rates have gone up a lot," he said. "Several office properties are listed for $230-$240 a square foot. The average used to be about $140."
Dwindling inventory and rising demand work to lower the amount of time it takes to close a transaction from an average 135 days to 60-75 days, he said.
"So many people are looking for buildings right now," he said. "For a lot of them its relocations from downtown."
With relatively low interest rates. Mr. Kerdyk said, "the mentality in general has been getting away from leasing and towards purchasing.
"They may look for a building where they can use half and lease out half, in anticipation that they could grow into the whole space. In the meantime, it helps pay their mortgage."
Ron Redlich of ComReal in Miami agreed that relatively low interest rates are fueling sales of all types of real estate, not just office space.
"I’ve been in real estate for about 15 years and in commercial banking for 18 years before that," he said. "I’ve never seen such a strong market."
Among ComReal’s recent transactions are the sale of an 11,700-square-foot office building at 2441 NW 93rd Ave. for $825,000.
Proportionately there may be a slight increase in the demand for office space, Mr. Redlich said, due to changes in the way companies do business.
"It used to be that a product might be made in Atlanta and shipped to a warehouse here for distribution locally," he said. "But now it’s shipped directly to the store or even the user. So generally, there’s less need for warehousing and more for office space."
While most buyers plan to use the space for their own businesses, he said, "recently there’s been an influx of people from Colombia and Venezuela who are seeking a safe place to invest their money. They may also plan on going in to business, but that is a secondary consideration."
Christian Lee, a vice president at Miami’s Aztec Group, said he thinks any boost in sales of office properties is a temporary phenomenon brought on by lower interest rates.
Mr. Lee recently negotiated the $4.3 million sale of the 55,000-square-foot Park Centre, 1111 Park Centre Blvd., to Westfield Financial.
In the case of that sale, he said, seller Park Centre Investments, an affiliate of Panther Real Estate, had bought the building as an investment in April 1999.
"When they bought it, it had been suffering from poor management and inattentive ownership," Mr. Lee said. "They leased it up and sold it as a full property. That’s what Panther does. And what Westfield does is to buy fully operative buildings.
"There’s a pent-up demand," he said. "The majority of people who have been planning on selling will, as a result of the change of rates."