Expansion Considered For Miami Free Zone
Written by Claudio Mendonca on July 14, 2005
By Claudio Mendonca
Owners are considering expanding the duty-free Miami Free Zone.
"We need a bigger house. So far, we have been in negotiations with two entities," said Ralph Gazitua, zone president and CEO. "We have been looking at some areas all over Miami-Dade County."
The Miami Free Zone in Doral is the county’s only private duty-free area. The county also has two public free trade zones: one in Homestead near the Air Force base and one north of downtown Miami, the Wynwood Community Development Foreign Trade Zone.
Zone owners Mr. Gazitua, Gary Goldfarb and partners Pantheon Properties and the Canyon-Johnson Urban Fund in June 2004 bought the structure at 107th Avenue and Northwest 25th Street, where tenants can import goods without paying tariffs. Although duty free, tenants do pay the zone when they bring products in or ship them abroad. Because it is a free zone, tenants don’t pay duties if they ship goods overseas, though they do if they sell goods stored in the zone within the US.
One expansion possibility, owners said, would be to use 10 acres of under-utilized land at the current site.
"We have a total of 47 acres, in which 10 to 17 acres is excess land that is not being used," said Bobby Turner, a managing partner working with Canyon-Johnson Urban Fund, a Los Angeles real estate investment firm. "Immediately, we have 10 acres available. But if we make adjustments, we can create a total of 17 acres."
Once branded a white elephant by the business community, the 825,000-square-foot complex is now 85% occupied by major companies from Brazil, China and Italy, Mr. Goldfarb said.
In early July, the zone signed a lease with an Italian chemical and pharmaceutical company. On Aug. 5, the zone plans to welcome China’s consul general to inaugurate a Florida-China Association office.
In October, zone executives plan to visit Hong Kong, Korea and Japan to attract tenants. And, later this year Miami-Dade County’s Jay Malina International Trade Consortium is expected to move into the Doral center.
Miami Free Zone executives say projects in the pipeline this year should raise capacity to slightly more than 90%. Expected future demand is prompting the look at expansion.
John Vaught, regional partner for CB Richard Ellis Global Logistics Group, said there have been many discussions on expansion of the center.
"The Miami Free Zone has been very successful," said Mr. Vaught. "An expansion would make all the sense in the world."
Among reasons for the success, he said, is recovery of Miami-Dade as an industrial market. He also credits a desire by foreign companies to establish business in the county and operators’ understanding of the free zone concept.
"The new owners outlined a strategic plan and have been able to obtain very impressive numbers," Mr. Vaught said. "Currently, the Miami Free Zone is dominating the market in Miami."
But Jonathan Kingsley, executive vice president of commercial brokerage firm Grubb & Ellis, said he finds the zone’s need for space surprising because of the county’s increase in bonded warehouses.
"It is quite a surprise. I haven’t heard there has been such a demand," Mr. Kingsley said. "There are a number of warehouses that are an extension of the port."
Mr. Goldfarb said the secret to the center’s successful first year is customer service.
"We are very proactive and involved with our customers," he said. "We always want to know on how we can help. Usually real estate landlords don’t get that involved."
Mr. Goldfarb said technology also helps. "We created an Electronic Data Interchange process allowing tenants to process paperless inbound transactions," he said.
He said the zone on Aug. 1 will launch a processing program, "an automated method of communications with customers which will take an order at 10 a.m. and have it delivered by 11 a.m. In the past, this process took 24 hours to be executed."