Suburban office buildings scarce in Miami-Dade as owners prefer to lease space
By Sherri C. Ranta
Investors want small suburban office buildings but the number of properties for sale is not meeting demand, real estate agents say, because owners are holding their properties and listing excess space for lease.
"The few buildings that are selling are selling at incredibly high prices. As of today, we haven't seen the trend in the market go the other way. It just keeps going up, up up," said Debrah Bennett of Bennett Real Estate Group, who specializes in Coral Gables office space under 10,000 square feet.
"It has slowed down a bit," she said. "Sellers don't want to part with their buildings. They have no other place to put their money."
Tom Byrne, president of EWM Commercial of South Miami, sees similar patterns.
"I have a building at 6100 SW 76th St. with 6,000 square feet for lease. I've had a hundred calls asking if it was for sale."
Many professionals, he said, such as attorneys, accountants and real estate agents are looking to own their offices close to home.
"The theory is, if you can afford to own - at these interest rates - you can freeze your rent."
Buyers also see the advantage of buying an existing building, Mr. Byrne said, rather than purchasing land and building.
"Nobody wants to go through the building and zoning process," he said.
Increasing hostility from neighborhood associations is also fueling the race to own these small office buildings.
"The neighborhoods aren't getting any friendlier toward commercial uses. It's more difficult to develop suburban office," Mr. Byrne said, "and that's all the more reason to have one. It's not going to get any easier."
While offices for sale are hard to find, space for lease in these buildings is plentiful. The owners operate their businesses there, Mr. Byrne said, and then lease out the remaining space.
Waronker & Rosen of South Miami, real estate appraisers, are busier than ever, said principal Josh Rosen. Buyers are looking to secure their money in real estate, and existing owners are looking to refinance at rates between 4% and 6%, he said.
"Small suburban office buildings may be expensive per square foot, but it's not a lot compared to what you could lose in the stock market," he said. "Tomorrow you can go out and touch it. It's still there."
Many of today's buyers, he said, are investors looking to make "1031 exchanges" - sheltering money made in other deals from federal taxes. The law gives them a certain amount of time to move the money to other properties.
"They're looking for anything," Mr. Rosen said. "They're designating several properties to make sure they can at least buy one."
While movement in Coral Gables' small office market has slowed, Ms. Bennett said other factors could push owners to sell.
Many owners are older people, she said. When the amount coming in monthly rents starts to decline because of increased taxes and insurance premiums, some owners may decide to cash out.
"It's the age factor. Who wants the hassle?"