Tight market, staggered openings has hopes running high for Gables' Ponce de Leon Towers, 396 Alhambra, 2020 Ponce
By Risa Polansky
Though three major Class A office projects are on the books in Coral Gables, brokers are confident the area's tight office market, and the somewhat staggered completion schedules of the new buildings, means opportunity to attract tenants even in a down economy.
"The outlook is, the Gables was and has not been overbuilt," said Darryl Robinson, leasing agent for the planned 396 Alhambra project.
The first phase, a revamped 100,000-square-foot building, is to be tenant-ready in about 14 months.
A new, adjoining 185,000-square-foot tower is expected to open in just over two years.
Mr. Robinson said he's optimistic would-be tenants will jump at the chance for large blocks of Class A space in Coral Gables.
"We're seeing 10% vacancy rates in the Gables," with Class A product hovering in the 8% to 10% range and few large blocks of space open, he said. "So we think it gives us a competitive edge for a larger user."
No lease agreements yet, Mr. Robinson said, aside from Citibank, which is to vacate the area where the new tower is to be built and move back in once it's complete.
He's been soliciting tenants for about 150,000 square feet and has two letters of interest out, he said.
Mr. Robinson said also that despite today's rough economy, by the time the project's complete "the world could be a different place."
But even in the current down market, interest in Gables office space is high, said Donna Abood of Colliers Abood Wood-Fay, handling leasing for Florida East Coast Realty's 2020 Ponce project.
The 130,000-square-foot building is to soon receive its certificate of completion, she said, and tenants should begin moving in during the fourth quarter this year.
She could not yet announce tenants but said 70% of the building is under contract for sale, leaving 30% available to buy or rent.
"We have tremendous lease activity right now," Ms. Abood said, speculating it would probably be double if not for the economy.
But "in terms of market demand, our project timing is perfect," she said.
Businesses are ready to make moves now, when 2020 Ponce is ready to house them and other area projects — such as 396 Alhambra and Allen Morris' Ponce de Leon Towers —are still a way's off, she said.
"Those projects are so far down the road, 2020 Ponce will be fully occupied before those projects are ready."
Bill Bailey, leasing director for The Allen Morris Co., noted the same.
Because the 2020 Ponce project comes online this year, it won't have an impact on leasing the planned 215,000-square-foot Ponce de Leon Towers, set to open in late 2011, he said.
The 396 Alhambra project could have some effect, Mr. Bailey acknowledged, but he said the first phase of that project — the revamped existing building — is a different type of product.
The luxury Ponce de Leon Towers, 2801 Ponce de Leon Blvd., is designed as part of the planned high-end, 7-acre Old Spanish Village development.
The developer expects to break ground on Ponce de Leon Towers this time next year.
Permits are pending, and the financing is not yet in place.
"Financing will be most likely through Wachovia," which has already provided some, Mr. Bailey said.
Financing is set for the $130 million 396 Alhambra, with owners' equity covering 80%, said Miami developer and project principal Eddie Avila.
He's teamed with Agave Florida Investments, an affiliate real estate arm of Mexican tequila producer Jose Cuervo, to build the project.
The owners have agreed to commit the equity because "we don't want to delay it," said Hector Fernandez, Agave head and chief executive officer of 396 Alhambra.
"We're really happy being here doing this project. For us, it's going to be our first project like this in the US," he said. "Coral Gables is a specific submarket that attracts all the corporate offices for the international corporations that work in Latin America, and that's what we are focused on."
The city issued a building permit for the project in February.
Though the project still awaits permits and financing, Allen Morris' Ponce de Leon Towers was the first to announce a tenant.
New York-based Rockefeller Group Business Centers is to establish its first Eastern Seaboard location outside of New York on a full floor of the Coral Gables tower.
And, Mr. Bailey said, "We've got several other companies with whom we're negotiating. Three are very imminent."