Two office towers sold for $230 million in Downtown Miami to New York private equity firm Blackstone, signaling the firm’s ongoing belief in the potential of Miami’s business environment.
The acquisition of 2 and 3 Miami Central comes just months after Blackstone said it would be opening a tech office at 2 Miami Central totaling 41,000 square feet. Although the two announcements are not directly related — Friday’s acquisition is by funds managed by Blackstone Real Estate, a separate group from Blackstone’s tech unit — they are driven by the same confidence in Miami’s future.
Nadeem Meghji, Blackstone’s Head of Real Estate Americas, said the acquisition, from previous owner Shorenstein Properties LLC, was motivated by the momentum Miami has seen throughout 2020 and into 2021 from corporate relocations and expansions, as well as strong demographic trends, a business friendly environment and a large pool of talent — factors that predate the pandemic.
“As long-term investors, we think the Miami market warrants our attention,” Meghji said.
The two towers comprise the office portion of Miami Central, the mixed-use development spanning six city blocks downtown that is also home to Brightline’s Miami train station. Miami Central also includes two 30-story apartment rental buildings and eateries including Chick-fil-A and Joe & the Juice.
The buildings — 2 Miami Central at 700 NW First Ave., and 3 Miami Central at 161 NW Sixth St., have a total of 320,000 square feet and enough offices for 13 to 16 firms. The buildings are 98% occupied with remaining lease terms of more than eight years on average, Blackstone said. Tenants include Carlton Fields, Ernst & Young, ViacomCBS, and New Fortress Energy, a clean energy solutions group formed in 2014 by Wes Edens.
Edens is the co-founder of Fortress Investment Group, which has owned Florida East Coast Industries since 2007. Florida East Coast was the original developer behind the Miami Central project.
Andrew Easton, vice president of Easton Group brokerage, said the sale underscores confidence in the staying power of Miami’s office market and Brightline’s ability to connect employees across downtown Miami, Fort Lauderdale and West Palm Beach.
The per-square-foot value of the deal is 15% higher than the 2019 sales of two office towers in Brickell City Centre, “showing that the values [in downtown Miami],” Easton said, “are coming parallel to those in Brickell.”
The acquisition represents Blackstone’s first major office property in Miami in recent memory. It has previously focused on industrial space in South Florida; that portfolio currently comprises 16 million square feet worth about $2.5 billion.
Shorenstein’s presence in South Florida includes The Main Las Olas, a new, mixed-use development in Fort Lauderdale featuring a 385,000-square-foot Class A office building.
Said David Levine, senior managing director of Blackstone Real Estate, in a statement: “We are high conviction, thematic investors focused on investing in growing markets with strong demographic tailwinds and talent pipelines, such as Miami. 2 & 3 MiamiCentral are extremely high-quality assets in a prime location with access to mass transit, and we are pleased to acquire them on behalf of our investors.»