Gerard Yetming (J. Albert Diaz)
An undeveloped 17.8 acres in Miami’s Midtown commercial district is on the market and drawing a level of interest that could see the property trade for close to $200 million, brokers involved in the marketing told the Daily Business Review.
The brokers are hoping to sell the six lots left over from the previous development cycle to a single buyer or syndicate, perhaps someone who will pay a premium for the chance to create a signature large-footprint project. Four lots are north of Northeast 29th Street on either side of the Florida East Coast Railway tracks. Two more are south of 36th Street and southwest of the tracks.
“We’re seeing folks want a big size for development,” said Robert Given, a CBRE vice chairman who is one of the brokers leading marketing. He said the size of the Midtown offering “gives you a critical mass that’ll allow someone to establish themselves as a big developer.”
In Given’s estimation, that means the site is likely to go to some deep-pockets, out-of-state developer who might not have been active in South Florida’s real estate boom.
“If you’re trying to come here from China or Russia or Venezuela or New York, it’s difficult to say, ‘I’m going to go build 300 units in a half an acre in Edgewater’ and justify all the infrastructure you’re going to need here for that,” he said. “If you have the opportunity to build 3,200 units over the next 10 years, however, that gives you something to work with. It’s very tempting to a developer who wants to become a large developer in the region if they’re not already one.”
Five parcels fall in the special Midtown community development district, which mean they are linked to debt-service obligations incurred when creating the original infrastructure. The sixth site east of the railroad tracks at just over 6 acres is technically outside the district.
Marketing materials suggest up to 150 residential units can be built per acre. While zoning varies from lot to lot, the most densely upzoned areas allow buildings up to 24 stories.
The brokers highlight the high demand for retail space and apartments in the Midtown Shoppes development that hugs the real estate being offered. According to the CBRE offering memorandum, less than 2 percent of the 645,000 square feet of retail space in the area is vacant, and quoted rates for retail space are at $42 per square foot triple net.
Marketing materials suggest apartment units are renting for over $2.80 per square foot monthly on average in the two residential developments that went up since 2007 in the community district.
That’s a hefty premium on rates for similar waterfront rentals in the nearby Edgewater neighborhood, where tenants pay $1.50 to $2.25 per square foot monthly, the document claims.
Both Given and CBRE senior vice president Gerard Yetming said the potential Midtown development would likely be mostly residential with some retail.
“There’s going to be a lot of retail folks that are going to be interested in this, too,” Yetming said
As for the potential price, Given said the land is fetching offers of $9 million to $12 million per acre, but he suggested his team is holding out for higher offers. Marketing materials list comparable undeveloped sites that have recently sold in excess of $14 million per acre.
“We’ve had interest over the $100 million mark, not quite the $200 million mark,” he said, “Because you can have an aggregate 18 acres, it’s a big number, so you have the added value of having the critical mass that you can build on.”