Miami Developers Tweaking Plans To Include Less Retail, Bigger Offices
Businesses and individuals have started to see some relief to get them through the coronavirus, but "there's only so much the government can do," said Deco Capital founder Bradley Colmer during a Bisnow webinar Wednesday.
"There's going to be sectors that are going to be [an] absolute bloodbath."
"Thankfully, we sold some of our retail holdings," Colmer said during the webinar. "It's going be challenged for a good bit of time. This doesn't appear to me or any of my partners like it's going to have a V-shaped recovery until there are treatments or a vaccine that puts people at ease."
Colmer and his partners have been tweaking plans for Eighteen Sunset, a luxury residential building with retail and restaurant space in Miami Beach’s Sunset Harbour.
The project was approved in 2018 for 12 residential units, parking and ground-floor commercial space, RE Miami Beach reported. In April, a proposal submitted to the Miami Beach Planning Board changed that to include two penthouse residences but replace the other residential units with two floors of Class-A office because of the soft condo market in Miami Beach.
In the face of the coronavirus, "we redesigned it to be less reliant on retail," Colmer said. "I don't know how many restaurants can survive at 25% capacity."
Two large-format restaurant spaces had been envisioned, but Colmer said the project's retail square footage will be cut by up to 20%. The project had already had been designed with a large, open breezeway. They pushed glass lines back to create more open space.
"We hope that will offset general weakness in demand that we're seeing," Colmer said. Pre-leasing demand at this point is "basically nonexistent," he said.
Colliers International Vice Chairman Ken Krasnow said the coronavirus had caused "a true forced experiment."
His office clients are looking for less dense space or considering letting some work from home long-term, he said.
"I haven't seen a concrete shift in sentiment," he said. "Big organizations are reviewing overall policy and concept for floor plans — how big or tight, cubicle sizes, who gets office space with walls."
Urban-X Group principal Andrew Hellinger said retail won't die because people still want to get out of the house for experiences. Stores like TJ Maxx are successful because people experience "the joy of shopping" when they envision something that will make them look or feel better.
River Landing Shops & Residences, a $425M development by Urban-X, is an 8-acre, mixed-use development under construction on the Miami River and set to open in the coming months. Tenants include Planet Fitness, Publix Super Markets, Burlington Stores, TJ Maxx, Ross Dress for Less, AT&T, Old Navy, Chick-fil-A and Hobby Lobby.
Hellinger said just as online shopping didn't completely kill brick-and-mortar retail, online meetings won't replace the workplace. He said he is in talks with a potential office tenant.
"They were going to take 4K SF, but they said, 'maybe we'll take 6K or 7K SF because you can't have people working on top of each other,'" he said. "You have to put more distance between them."
He mused that a tenant that was going to take a whole floor of office might take one and a half or two. As developers go forward, they should take lessons from the coronavirus and apply them as needed.
"We have learned that we don't have enough warehouses to stock toilet paper in South Florida," he quipped.