Marcus & Millichap Senior Vice President and Institutional Property Advisors (IPA) senior director Douglas K. Mandel and Marcus & Millichap Vice President Investments and IPA director Benjamin H. Silver negotiated the sale of 200 Southeast First Building, a newly-renovated, 141,687-square-foot office building located at 200 Southeast First Street in Downtown Miami, Florida.
Brickman SE First LLC purchased the 1970-built property for $33,850,000, or $239 per square foot, from Downtown Building Ventures LLLP, a South Florida-based entity managed by private equity and development company Integra Investments. Integra Investments purchased the asset in May 2014 for $21 million.
Mandel and Silver represented the sellers in the sale and procured the buyers directly. The deal closed February 12.
“It was important that we effectively conveyed a couple of points to the buyer,” explained Mandel. “The market in Downtown Miami was poised to breakout and was severely undervalued. The property is squarely located between several major developments – a block from both Met 3 and Flagler Street Projects. Additionally, the property is only a few blocks down from Brickell, the city’s financial district, which is seeing rental rates double those of Downtown Miami. Because of this location and the dynamic changes occurring in Miami’s urban core, the Downtown Miami office market has been getting more attention as a less expensive solution for tenants who don’t want to pay Brickell prices but want an urban presence in the city.”
“In addition,” added Silver, “the building underperformed the market due to a number of factors and the in-place income could be increased dramatically. The property never had a marketing effort that focused on re-tenanting the vacant office and retail space and bump rents on existing tenants. Also, the building had just undergone a major interior and exterior renovation that changed the class of property significantly. This furthered the belief that current rents in the building could be improved through a focused marketing effort.”
The property was sold as a rare value-add deal, located on a main and main location (SE 2nd Avenue and SE 1st Street) in Downtown Miami. The property was originally intended for a condo conversion, however, the sellers, with guidance from the brokers, felt they could accomplish similar pricing with less complexity if the property was sold intact as an investment deal. Because the owner’s business plan anticipated an exit through condo sales, there was a lack of focus on maximizing rents and building income through marketing the space for lease. Additionally, the building contains a major infrastructure which can support heavy data related tenants and technologies. This was an untapped potential profit center for the property that had never been explored. The uniqueness of this highly specialized service was investigated and successfully conveyed as potential to prospective buyers.
The 12-story building is situated at the prime intersection of First Street and Second Avenue and enjoys direct access to I-95. The building also features ground floor retail space.
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