One of downtown Miami’s newest office towers is undergoing some adjustments to reduce a vacancy rate of nearly 60 percent.
Four months after MetLife took control of the two-year-old Wells Fargo Center — buying out the project’s developer — the institutional owner is implementing a new leasing strategy.
The move comes as the 752,000-square-foot Wells Fargo building competes against two other new properties: 600 Brickell, totaling about 615,000 square feet; and 1450 Brickell, totaling about 580,000 square feet, which is now boasting occupancy rates upwards of 77%.
Since taking full ownership of the Wells Fargo Center, MetLife has hired a new property management and leasing company, redecorated the lobby, crafted a new marketing campaign and is assembling incentive packages to entice tenants.
Until recently, Miami-based developer MDM Group USA hired the leasing company and managed the office tower at 333 SE Second Ave.
MDM and MetLife became partners in 2008, when MetLife provided a $160 million loan to help build the office tower and adjacent Marriott Marquis Hotel. MDM continues to co-own the 42-story hotel with MetLife.
Tim Weller, MDM’s vice president of development, said in a statement the ownership change was always part of the plan.
“From the onset of our successful relationship with MetLife, the intention has been an eventual succession of ownership at Wells Fargo Center, wherein MetLife would take full ownership of the office component and MDM would retain ownership interest in the hotel.”
MDM is planning on building a parking garage and a Whole Foods store on a parcel near the office tower. MetLife is not involved in that project.
MetLife spokesman Chris Breslin said the company purchased MDM’s stake in Wells Fargo Center after working with MDM to develop the office tower. He said his company plans to hold on to the property for a long time.
“We are committed to our long-term investment in the development, which is just one of several properties that make up our real estate portfolio in Miami.”
Studley real estate broker Bob Orban, who represents tenants, says the owner’s new effort is good news for his clients.
“Hopefully the institutional owner will be more aggressive putting some bodies in the building,” Orban said. “The way you do that is [by] making aggressive financial packages for tenants in the marketplace.”
Wells Fargo’s asking rental rate is $41 per square foot, full service.
“To make some real deals in there, they need to come down somewhere in the order of 15 percent to 20 percent,” he added.
Orban said he toured the building with a number of potential tenants and received some lease proposals in the past.
But after looking at the “economics” of the deal, his clients decided to lease elsewhere.
MDM began signing leases in 2008, in the middle of the recession. Tenants include Greenberg Traurig, Deloitte and Wells Fargo, which acquired naming rights to the tower. But the early leasing success had no momentum.
The building, which opened in 2010, is 43 percent leased.
“When was the last time they signed a lease?” asked real estate consultant Tim Prunka, the former leasing agent for the Southeast Financial Center. “It was about a year ago. MetLife took an equity position, and after awhile they said, ‘You know what, we think it’s time for a change.’ ”
Prunka said MDM, led by Ricardo Glass and Luis Pulenta, did a good job given the market conditions.
“It is a much bigger building and half of the building is blocked on the east side by the hotel,” he said. “That is a leasing challenge. In a soft market, people have more choices.”
Prunka said this is not the first time MetLife took over ownership of an office building in the downtown and Brickell areas.
In the mid-1980s, MetLife gained control of 701 Brickell from developer Lincoln Properties in Dallas. The property had been half empty for a couple of years as Brickell experienced “a monumental glut of office space that lasted several years,” Prunka said. “It gets to a point where the equity partner says, ‘I can leave you here or I can take you out.’ ”
Since taking full ownership of Wells Fargo Center, MetLife has removed MDM as property manager and terminated Flagler Real Estate Services’ leasing agreement.
Flagler Real Estate Services broker Jack Lowell, who was in charge of leasing, declined to comment.
The new owner brought in Taylor and Mathis to manage and lease the 47-story tower. Taylor and Mathis has been providing property management and leasing services for MetLife’s South Florida properties for several years. Those properties included the Waterford at Blue Lagoon, an office park in Miami; Venture Corporate Center, an office park in Hollywood; and Miramar Centre, a suburban office building in Miramar.
Taylor and Mathis broker Brian Gale, who does the leasing for Wells Fargo, said the new campaign to reposition the building includes a new slogan: “Tenancy Has Its Privileges.” The effort also includes a new logo and tenant discount packages for use of some of the Marriott Marquis amenities such as the Jim McLean Golf School & Virtual Golf, Virtual Bowling and an NBA-approved basketball court.
The lobby, with gray marble floors and gray walls, is being dressed up with carpeting, new furniture, paintings, planters and chandeliers.
When it comes to Wells Fargo’s rental rate, Gale said the owners are ready to negotiate with tenants.
“In today’s market, when you are competing with 600 Brickell and other buildings, we are definitely becoming a little bit more aggressive,” he added.
Get the latest industry news and information from CRE-sources delivered right to your email inbox! And we promise…no more than one email each morning.
And we promise…no more than one email each morning.