IP Capital Targets Two Diverse Asset Types in Florida

IP Capital Partners is looking to take advantage of one struggling asset class and one that is surging – the office and industrial sectors.

Most notably the office space is looked at as a scary place for investors in the current landscape. Since the onset of the pandemic, the popularity of working from home has surged – hurting the office sector and driving up vacancies. In fact, tenants now need 18 percent less space, which comes out to below 160 square feet, a Moody’s report found.

But South Florida and Tampa Bay, which is where IP Capital has been focusing on, might be the exception.

“I would fit [them] in the category of Cosmopolitan amenity rich markets that have seen tremendous population growth,” the company’s co-founder and president, Jason Isaacson, told GlobeSt.

“The operating environment, or the ability to lease office space in those environments has been pretty good. And some markets you could argue, like Brickell [is] as good as it’s ever been.”

A second-quarter report from Blanca Commercial Real Estate revealed that Miami’s office market saw Class A and B rates increase five percent from the first three months of the year. Also, leasing activity was 1.44 million square feet, which is on par with the half-decade average.

Also, Isaacson said not to sleep on the industrial market, which is a sector IP Capital is mostly invested in. Despite Miami vacancies leaping in the second quarter to five percent from three percent at the end of last year, the demand seems to be strong, according to a CBRE report. Positive absorption in the market reached 531,000 square feet and over a million for the entire first half of 2024.

“It’s not a demand problem, it’s a supply problem,” Isaacson noted.

“We got over-supplied for what is pretty good demand relative to history in the marketplace. Our sense is there’s an opportunity right now to go out and buy some of this oversupply that we think would be good a discount or good relative value.”

And IP Capital plans to double down, after recently announcing it raised $95.4 million through its IPCP Florida Realty Value Fund IV LP, which is now closed. Of the funding, 70 percent will be used on industrial properties in Florida, Tennessee, Georgia, and the Carolinas. The rest of the money will be evenly distributed between traditional office and medical office buildings in Florida.

But the Boca Raton-based firm isn’t done there and is planning a buying spree. For one, IP Capital intends to increase the value of the fund size by nearly $30 million. It also plans to acquire more than $900 million to spend on real estate in mainly South Florida and Tampa Bay.

“We want to focus our efforts on places where people are moving to because they need more space,” Isaacson said.

For the offices, it’s a wonder if the work-from-home trend will shoot up in the upcoming years. But a report from Resume Builder found that 90 percent of companies with office space will require at least some employees to return to face-to-face work, which could help the industry in general.

While Isaacson isn’t sure what remote work will look like in the short or long term, he did say the shift to remote work was “less dramatic” in South Florida. The best thing IP Capital can do is focus on the states and areas experiencing population growth.

“The positive aspects of population growth, have outperformed the negative impact of working from home,” Isaacson said.

“People move down here, businesses need jobs, [and] jobs need space.”