(Crystal Proenza is associate editor of Real Estate Florida.)
CORAL GABLES-Deka Immobilien, a German open-end property fund based in Frankfurt, has acquired the 207,000-sf BAC Colonnade class A office building here for $82.9 million in all-cash transaction. Brokers say the $382-per-sf deal may signal a new trend within the ongoing credit crunch.
ING Clarion Partners LLC advised and completed the transaction on behalf of Deka Immobilien, while the seller, Fort Worth, TX-based Crescent Real Estate Equities, was represented by Drew Barnette of Eastdil Secured. The 11-story building, located on Miracle Mile at Ponce de Leon Boulevard, contains 27,000 sf of retail, is 94% leased to 19 tenants and is associated with the adjacent 157-room Westin Colonnade Hotel.
Stephen Nostrand, executive vice president at Colliers Abood Wood-Fay in Miami, who represents the owners of the Westin, says the deal is indicative of a trend in sales over the last few months in Coral Gables. He says that two other office buildings, 2525 Ponce de Leon and 355 Alhambra, have and will in the near future sell to institutional core buyers. These buyers, investing for pension funds, endowment funds and investors who only require limited returns on their cash, don't want to take any risks and want absolute high-quality assets in the best locations, he explains.
"The reason we bought this building is we think it's one of the best in the most desirable submarkets in South Florida," says Edward Rotter, managing director at ING Clarion Partners. "I think it points to the fact that institutional buyers are recognizing Coral Gables as a good submarket. There have not been many institutional-grade properties of this caliber on the market," he says of the recent sale of 2525 Ponce and contract pending at 355 Alhambra.
"The Coral Gables submarket has very low vacancy rates (5-6%), strong demand and big supply constraints," Rotter says. "There is also the benefit of a very strong presence of Latin and South American businesses, which tempers any downturn in the domestic economy." Brokers also point to Coral Gables as a market that has a much better risk profile for return then the downtown and Brickell class A markets about to be flooded with almost 1.9 million sf of new space.
"Until that space gets leased up you just don't know where rental levels are going to end up," notes Rotter. However, that doesn't seem to be holding institutional buyers back from that market either.
"777 Brickell Avenue is on the market and there are several core buyers who are chasing that asset who are going to make the final cut," says Nostrand. The main difference to be seen in the sale of the Brickell building versus those transactions in Coral Gables would be the cap rate, he notes, because of new office space coming online.
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