| | | | | | | | TO: | Finance and Economic Resiliency Committee Members
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| FROM:
| Alina T. Hudak, City Manager |
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| DATE: | February 25, 2022
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| SUBJECT: | DISCUSS ISSUING A REQUEST FOR PROPOSALS TO REPURPOSE CITY-OWNED SURFACE PARKING LOTS ADJACENT TO 41ST STREET INTO CLASS A OFFICE SPACE. |
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| | | | | | | | HISTORY:
| Miami Beach’s Middle Beach neighborhood is accessed via 41st Street, a major east-west thoroughfare and commercial corridor. The 41st Street corridor is largely flanked by low-scale, commercial properties featuring street level retail. The corridor also features nearby schools, and houses of worship. The business environment is primarily characterized by medical and professional services offices, restaurants, and other retail uses. To the north and south are six (6) city-owned surface parking lots to the rear of properties abutting 41st Street. Nearby residential areas are also serviced by the commercial corridor. The locations of the lots
are as follows:
· P58 – 4049 Royal Palm Ave
· P59 – 525 West 40 Street
· P60 – 4000 Chase Avenue
· P61 – 4141 Alton Road
· P62 – 836 West 42nd Street
· P63 – 4166 Royal Palm Avenue
In December 2020, the City’s real estate consultant analyzed each lot to identify the characteristics, opportunities, and challenges, in terms of the development potential of each lot. See Exhibit A (Parking Lot Analysis).
General Obligation (G.O.) Bond Streetscape Project
To build upon the Alta-Gehl 41st Street Vision Plan, the City engaged AECOM to produce conceptual design options for G.O. Bond Project #40, the 41st Street Corridor Streetscape Project (the “Project”). On January 13, 2021, the City Commission approved the conceptual design and authorized issuance of an RFQ for design development and construction administration services for the Project. The $15 million Project will revitalize the corridor with streetscape and infrastructure improvements such as new high-tech street lighting, landscaping, an expanded tree canopy, sidewalks, crosswalks, street furnishings, and reprogrammed on-street parking to enhance public safety, aesthetics, comfortability, and walkability for pedestrians. The planned improvements and investments are also intended to encourage business growth, and promote private investment and development.
Mayor’s 41st Street Blue Ribbon Committee
During the April 29, 2021 meeting of the Mayor’s 41st Street Blue Ribbon Committee, the Committee unanimously voted in favor of recommending that a Request for Proposal (RFP) be issued to repurpose lots adjacent to 41st Street for Class A office space. The recommendation was prompted by recent observations of businesses relocating and people migrating to Miami-Dade County and Miami Beach. The Committee also noted the City’s efforts to promote Class A office development on Lincoln Lane through a RFP.
Parking Revenue Data
Parking revenue information for Fiscal Year 2018 through Fiscal Year 2021 shows a downward trend ranging from 20% to 45%, depending on the parking lot location. Although data for Fiscal Year 2020 and Fiscal Year 2021 is influenced by the COVID-19 pandemic, the general downward trend was already evident in Fiscal Year 2019
Lot
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Spaces
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% Change(FY18-FY21)
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FY2021
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FY2020
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FY2019
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FY2018
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P58
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44
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-45
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$30,903.72
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$32,680.96
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$50,860.17
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$56,076.80
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P59
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74
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-38
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$36,740.24
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$41,450.78
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$71,434.62
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$59,286.35
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P60
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96
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-20
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$52,581.21
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$50,379.53
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$63,309.04
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$65,592.30
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P61
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49
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-45
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$34,460.45
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$37,511.50
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$60,625.44
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$62,374.16
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P62
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32
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-45
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$25,910.63
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$34,541.06
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$46,782.38
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$46,805.58
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P63
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199
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-45
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$43,249.59
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$49,312.10
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$76,791.64
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$78,747.85
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| | | | | | | | ANALYSIS:
| Even if revenue remained flat over the past few years, a reasonable assumption is that one or more of the parking lots may not be fulfilling its highest and best use. With G.O. Bond streetscape improvements on the horizon, it is anticipated that reconfigured parking access may promote parking utilization on the side streets connecting to 41st Street and support business activity.
Class A Office Market Trends
Since 2020, real estate analysts and national media have documented the influx of businesses, capital, and investment from various parts of the country including California, Northeast and Midwest regions, and South Florida, including Miami. The relocation of financial, technology, and other business industries have had a particularly positive effect on the office real estate market, with professionals drawn to the sunny lifestyle and companies leasing spaces in amenity-rich buildings at record rates.
With economic conditions improving and unemployment down in Miami-Dade, the close of the 2021 calendar year was marked by falling vacancy, record-high rents (six consecutive quarters of rises[1], according to real estate services and analysis firm JLL), and positive absorption, including the 15,000 sq. ft. expansion in Miami Beach of Wix.com, a participant in the City’s targeted business incentive initiative. Leasing activity for 2021 exceeded activity for 2020 and CBRE, Inc. notes that "much of the volume is represented by new-to-market activity and internal market moves as the pandemic became a catalyst for many organizations to restructure."[2]
Quarterly reporting by JLL, CBRE, and Cushman and Wakefield all indicate that asking rental rates in Miami Beach’s Class A office market are at an all-time high and the city’s vacancy rate have trended downward the past three quarters.[3] According to JLL, "the forces driving the rapid rise of Miami’s office market continue to strengthen and the repeated resurfacing of the global pandemic will only compound them."
Recent Real Estate Activity and Interest
In recent months, some notable real estate transactions have taken place on 41st Street, potentially paving the way for private redevelopment and adaptive reuse opportunities that may invigorate the corridor. In April 2021, it was announced that David Grutman, acclaimed restauranteur and part owner of Groot Hospitality, is taking over the operations of The Forge, arguably one of 41st Street’s most well-known dining venues located at 432 West 41st Street.
In December 2021, Terranova sold its 52,000-sqaure-foot Miami Beach headquarters for $22 million. Reportedly the buyers, Fifteen Group, plan to renovate and lease the 41st Street building to family offices, wealth management and financial firms. These financial services businesses align with the City’s targeted industries, as determined by the City Commission in March 2021.
In addition to actual sales transactions, for years there has been private sector development interest in the P60 parking lot located at 4000 Chase, adjacent to the Roosevelt Theater, one of the oldest, underutilized properties within the corridor. The owner of the Roosevelt Theater has expressed interest in redeveloping the site in conjunction with P60, for a mixed-use project with residential and restaurant components.
This is also true of the P63 parking lot located at 4166 Royal Palm Avenue. As discussed by the 41st Street Committee, a major national grocer is evaluating the potential for a grocery store to provide a new amenity that would service the residents and business in the area.
SUPPORTING SURVEY DATA
According to the 2019 Customer Satisfaction Survey, the majority of Miami Beach businesses, approximately 70%, have a positive overall image of the city. The survey notes that a majority of Miami Beach businesses have a favorable perception towards quality of life, quality of city services, cultural offerings, crime prevention, sustainability, and quality of public schools-- all factors cited as necessary when businesses consider relocating to a new market.
FISCAL IMPACT STATEMENT
No fiscal impact is anticipated at this time.
[1] Jones Lang LaSalle Miami Office Insight Q4 2021. https://www.us.jll.com/en/trends-and-insights/research/office-market-statistics-trends/miami
[3] Cushman and Wakefield Miami-Dade Office Marketbeat Q4 2021 January 15, 2021. https://www.cushmanwakefield.com/en/united-states/insights/us-marketbeats/miami-marketbeats
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| | | | | | | | CONCLUSION:
| The investment of $15 million through the G.O. Bond Program for the 41st Street Streetscape Project will trigger private investments and potential redevelopment of existing properties desperately needing revitalization and activation. Development of Class A office on 41st Street could have a complementary effect.
With the steady demand for Class A office space regionally, Miami Beach is well positioned to incorporate additional inventory to attract local, regional and national businesses. The Administration is also conscious of the potential Class A office inventory being proposed and/or developed on Lincoln Lane and other areas of the City. Likewise, the Administration is mindful of the growth and absorption needed to create a sustainable and resilient business climate. Business executives who have recently moved their residence to Miami Beach and their businesses to other areas may also be interested in new office inventory in Miami Beach in the long term.
The Administration recommends developing and issuing a Request for Letter of Interest, in FY 2022/2023, incorporating the city-owned parking lot(s) with the most appropriate development potential in consideration of community needs. |
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| | | | | | | | Applicable Area
| Middle Beach |
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| | | | | | | | Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? | | Does this item utilize G.O. Bond Funds? | | No | | No | |
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| | | | | | | | Strategic Connection
| Prosperity - Revitalize targeted areas and increase investment. |
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