Interest from Latin American investors—in particular Argentine entrepreneurs used to such investments back home—is bringing the South Florida market in office condos back from the dead.
Willing to pay top dollar for office space, the investors have not only been behind a recent flurry of transactions involving existing office space but also are credited with spurring the first office development announcement in Miami-Dade County since 2012.
“There’s not a lot of opportunities to buy in many places where [office] investors want to be,” said Camilo Lopez, president of the Solution Group. His company is using commitments by office condominium investors as a catalyst to build Ofizzina 1200, a Class A office building at 1200 Ponce de Leon Blvd. in Coral Gables. “The expansion Miami is having is enough to support not just one but I believe various luxury office building projects.”
The new building will feature 97,000 square feet of office space with 47 office suites on a 28,502-square-foot parcel. The 16-story Mediterranean-style building with ground-floor retail and restaurant space will replace a two-story cylindrical office building.
Lopez said he’s already placed between 60 percent and 70 percent of the building with interested buyers and is targeting a sales price of $600 per square foot. Most investors are potential end-users rather than speculators, Lopez said. Lopez promises “the Ofizzina brand will not be a one-off,” suggesting there’s enough investment appetite to support similar projects.
Investor demand has prompted several Miami real estate companies to engage in complex transactions converting an office building to condos and selling the pieces to myriad buyers.
Victor Ballestas, a principal at Integra Solutions LLC, bought the Chase Bank building at 150 SE Second Ave. in a 2012 distressed sale. His company paid $16.47 million for the asset, or $131 per square foot. He said the original play his company had in mind was a “price per pound acquisition” that revolved around upgrading the infrastructure and renting to mid-market tenants.
“We didn’t consider the condo conversion because we didn’t think that market was coming back for awhile,” Ballestas said. But while working on the improvements, Ballestas said, “A friend of ours approached us who does a lot of business with South American investors. It’s investors that were buying residential condos at $300 per foot and were accustomed to getting 7 or 8 percent in returns but are now getting squeezed on that market and not seeing those yields.”
Ballestas said his company sold its stake in the Chase building to investors at around $285 per square foot, and they are leasing office space at about $30 per square foot.
Like Lopez, he will try it again.
“We’re doing the one across the street, the Ocean Bank building,” he said.
Nearby, One Flagler at 14 NE First Ave. in downtown Miami plans a condo conversion that will sell its 141,000 square feet to investors. Following a $7 million renovation of the 1952 building, the goal is to sell office suites at $285 per square foot, according to a broker arranging the marketing.
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