Miami is so expensive that the county wants its own office

2024-07-30 05:40:00

Miami has become so expensive County tenants dream of becoming landowners. To do this, it is selling $234 million in municipal debt.

he Florida’s most populous county to sell bonds this week to acquire mostly vacant office buildings, which will house several government departments. This measure will allow you to Own your real estate instead of renting it. But some local officials believe the price is too high for a financially troubled building about 13 miles from downtown Miami.

“If you can afford it, owning is better than renting,” said Jimmy Morales, the county’s chief operating officer. “We’re going to invest. We’re not leaving. “We’re not moving our headquarters. “

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Unlike other big cities, Miami has a hot commercial real estate market. Following the post-pandemic frenzy, the city’s office market is entering a “vibrant” new normal, with leasing levels near all-time highs, according to a recent report from JLL.

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New prime properties are attracting tenants, but the office buildings the county plans to purchase are older. Built in 1974, it has undergone numerous renovations, including modern escalators, a new food court and gym services. Billionaire Barry Sternlicht’s Starwood Mortgage Capital issued a loan to fund the upgrades, but the departure of the building’s anchor tenant has pushed occupancy down to about 20% by the end of 2023 , and forced the financing to be placed on the watch list.

Miami-Dade County estimates it could save more than $860 million over 30 years by buying instead of renting. Additionally, residents will no longer have to run from one government office to another. They will be able to apply for building permits, request fire inspections and submit property tax assessments in one place: the so-called West Dade Government Center.

After protesting the $205 million asking price, the county agreed to pay $182 million for the 625,000-square-foot (58,000-square-meter) building on 26 acres (10.5 hectares). The bond issuance will also fund renovations and some issuance costs, according to the prospectus.

County Commission Vice Chairman Anthony Rodriguez, who supports the operation, said the office building “will focus county department services and resources in one of the fastest-growing areas of our county” and save taxpayers money.

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The bonds are backed by county revenue. Officials chose to issue special debt bonds rather than general debt bonds to save time and avoid the hassle of voter approval, officials said.

The idea to purchase the office building came about after the county Department of Supervision and Economic Resources learned of lease expirations and rent increases at the current location.

“We have to do something,” said David Clodfelter, director of the Office of Management and Budget. “The market here is a little crazy right now. Rents have gone up significantly in recent years.

Clodfelter said there aren’t many options on the market. When the office building at 9250 West Flagler Street came on the market, the county decided to take action.

“It ticks all the boxes,” Claudefelter said. Mayor Daniella Levine Cava’s administration led the purchase of the property in December 2023. month, and negotiated a reduction of US$23 million.

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Several officials said it was a bad business. At the time of negotiations to purchase, less than a quarter of the 467,000 square feet of floor space was occupied by tenants. The building will be completely filled once eight county departments move in.

Commissioner Rene Garcia, whose inner district includes the city of Hialeah, voted against the bond issue on July 2, saying the adjusted price was still too high.

“Just because we are the government, it doesn’t mean we should throw money away,” Garcia said in an interview. “I think the county could have gotten a better price.”

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The building is located in the Fontainebleau neighborhood in west Miami. It was built in the 1970s and is the headquarters of Florida Power & Light Company, the state’s largest electric utility company.

Backers of the sale say the new price is a good deal and is lower than two independent appraisals. They also said the 26 acres purchased could be used for affordable or worker housing.

Moody’s gave the bond issue an Aa2 rating, the third highest level, the same as the county’s credit rating, because the bond is backed by “broad revenue,” a report said. S&P Global Ratings assigned it the equivalent of an AA rating.

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