The Miami Beach City Commission gave its preliminary approval during a May 4 hearing for two proposed office projects to be built on city-owned parking lots.
The approval allows the city to continue negotiating with two separate development teams to construct a pair of mixed-use buildings that will include an abundance of new Class A office space.
A June 22 vote is scheduled to review 99-year leases for both projects, said Tadd Schwartz, spokesman for the Lincoln Road Business Improvement District. Because the projects involve public land, the deals will have to be ratified by Miami Beach’s electorate in November.
One of those projects is The Garden at Lincoln Lane. That project will consist of 130,000 square feet of office space, 25,000 square feet of retail and 425 parking spaces at 1080 Lincoln Lane North and 1680 Lenox Ave.
Miami-based Integra Investments proposed the project along with The Comras Co., a commercial brokerage in Miami Beach; and Starwood Capital Group, a private investment company headed by Barry Sternlicht that manages $115 billion in assets. Starwood has its own substantially completed office building at 2340 Collins Ave. in Miami Beach.
The team would pay $2.5 million after the referendum would be passed passed as first year’s rent for Garden at Lincoln Lane. Thereafter, the base rent would be $650,000 in the second year, $725,000 in each of the third and fourth years, $750,000 in the fifth year, $1.25 million in the sixth year, and $1.27 million in the seventh year. From there, the base rent would increase between 2% and 3% annually.
Negotiations will also move forward on a project from the team of The Peebles Cos., a Coral Gables-based company headed by developer R. Donahue Peebles; as well as Miami Beach builder Scott Robins; and former Miami Beach mayor Philip Levine. The team intends to build 46 market-rate apartments, 80,000 square feet of office space, 9,500 square feet of retail, and a garage with at least 151 parking spaces at 1664 Meridian Ave.
The Peebles team would pay $2 million on the second year of its lease (on the first anniversary of the public referendum’s expected passage) plus $150,000 once construction starts. By the third year, the base rent would be $150,000. Rent would increase to $680,000 by the fourth year. Thereafter, until year 51, the base rent would increase between 1.5% and 3%. At years 52 and 75, rents would reset to $680,000 a year, with annual 2% increases, or the consumer price index, whichever is greater.
The details of the term sheets between the city and the teams are subject to change.
Since October 2020, Miami Beach officials have been exploring ways to build Class A offices on Lincoln Road as part of a larger effort to diversify the city’s economy beyond tourism and nightlife.
An initial request for developers interested in building new offices on Lincoln Road drew letters of interest from 18 development teams. In response to an official request for proposals, issued in June 2021, three development teams responded. The mayor and six city commissioners opted to negotiate with the teams lead by Starwood and Peebles in February, and left open the possibility of negotiating with Peebles for the redevelopment of the 17th Street garage at a later date.
Brokers and developers have told the Business Journal that ultra-wealthy individuals have been opening family offices in South Beach to manage their assets, mostly because the area is in close proximity to their luxurious homes. This, in turn, has triggered new proposals for office development in Miami Beach.
The resolution for preliminary approval passed by a vote of five to two. Vice Mayor Kristen Rosen Gonzalez and Commissioner Mark Samuelian cast dissenting votes. Rosen Gonzalez fretted about the traffic the two projects would generate and felt the financial terms offered to the city were “weak.” Samuelian said the city should pursue one project at a time.
Erik Bojnansky, South Florida Business Journal
