Wells Fargo (Access5) LSFL
January 8, 2015

Investors Love the Keys for Their Barriers to Entry

The Florida Keys don't amount to a lot of land. That's why investors are so keen to get a piece of the action, State Street Realty president George Pino tells us. (Save a freak underwater volcano, no one is making more land down there.)

The Keys, which have seen a strong recovery in visitor numbers since the end of the recession, are delivering hospitality and multifamily yields more commonly associated with much larger top-tier markets, such as New York, George says. Investors, including large institutional players, have taken notice. Last year some noteworthy Keys properties traded hands, including two beachfront resort and marina assets in Islamorada, and a five-hotel portfolio totaling 516 rooms.

But it isn't just a shortage of land in the 1,700 islands that comprise the Keys that make for high barriers to entry, George notes. Highly restrictive rate-of-growth ordinances are also a major factor making properties attractive. George says he expects to see more deals this year as investors strive to get in. Recently State Street Realty, along with the Ocean Reef Club Real Estate Co, repped the private buyer of a three-acre property in Ocean Reef Club in Key Largo, which includes 750 feet of waterfront and consists of eight large two-bedroom rental properties. Russell Post Sotheby's International Realty also participated in the deal. The buyer plans to redevelop into a 30-unit condo property.

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Lawyers Gear Up for Downtown Expansion

Who's going to drive a lot of Miami office leasing in 2015? A lot of lawyers, says CREC president Carol Brooks. As it becomes an international hub city, Miami's legal sector is thriving, allowing law firms to grow while making forward-looking improvements to their offices, she tells us. Carol and SVP Steven Hurwitz recently repped Stearns Weaver Miller Weissler Alhadeff & Sitterson's renewal and expansion to 110k SF at Museum Tower (150 W Flagler St).

Though Stearns Weaver Miller could have moved to any number of Class-A buildings in Downtown Miami, Carol explains, they're doubling down on Flagler Street because they want to build further on the investment they've made in their current space. “They also believe the location puts them in position to grow,” she says. Gaedeke Group VP Kirk Fetter repped the building owner, Gaedeke Holdings Ltd.

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East Flagler Poised for Revival?

Also on Flagler, Israeli investor Moishe Mana has purchased another building, 38-44 E Flagler St and 41 SE 1st St. Sterling Equity Commercial's Mika Mattingly (pictured), who repped him in the deal along with colleague Shai Ben-Ami, tells us that Moishe plans to be a part of the revitalization of this stretch of Flagler, just has he has been in Wynwood, where he also owns properties. In New York, he was similarly a pioneer in the Meatpacking District. Currently, he owns about 250k SF in Miami's urban core. 

The new owner, who closed on the last day of 2014, has no public plans for the property. The 33k SF building was the second Woolworth store in Florida, opening in August 1921. More recently, F.W. Woolworth Co leased it to Foot Locker until its closing. Last year, Miami-Dade commissioners approved a $13M improvement plan for Flagler Street, with the City of Miami matching the county's contribution, and Downtown property and business owners ponying up $1M. Marcus & Millichap's Ryan Shaw repped Woolworth in the deal.

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