July 23rd, 2009
The Miami Herald
Miami Design District investor finds a bargain
by Joel Poelhuis
A developer who helped pioneer redevelopment in the Design District has made a bargain buy -- $96 a square foot.
While pundits search for signs of a real-estate market bottom, developer Todd Glaser found a bottom-dollar price for a 3,368-square-foot building on the edge of Miami's Design District.
Glaser, who helped lead redevelopment of the area in the early 1990s, said the $325,000 purchase at 4111 N. Miami Ave. was a no-brainer.
Others in the industry think so as well.
``In the Design District, $100 a foot sounds like a steal,'' said Duff Rubin, Coldwell Banker's director of commercial real estate in South Florida.
In the heart of the Design District, recent sales prices often run three to four times that, said Craig Robins, a design district pioneer and president, chief executive and chairman of Dacra, a real estate development company.
Glaser plans to renovate the North Miami Avenue property and lease it as a restaurant or retail space. Currently the building is marred by graffiti and its doors and windows are boarded up with plywood.
It was a cash sale because the building's poor condition made obtaining financing difficult, said Mauricio Zapata, a Chariff Realty Group associate who helped broker the sale.
Dacra bought the property in 1994 for $115,000, when Glaser was still working with the firm, and sold it to nonprofit One Art in 1999 for $250,000.
The Miami-Dade property appraiser listed the building's value at more than $1 million last year. Alex Prado, the director of One Art, said his organization had opportunities to sell the property before -- once for more than $700,000 during the real estate boom -- but that profit was never a motive in decision-making.
Recent development in the Design District has been dominated by Dacra, which bought a two-story building at 4141 NE Second Ave for around $16 million last fall.
Robins said he isn't surprised to hear of Glaser's renewed interest in the area.
Next door, construction is under way on a three-story building that will house the art collection of Carlos and Rosa de la Cruz. The de la Cruzes hope to open the museum-like structure to the public during Art Basel Miami Beach in December.
Robins said Glaser's new property will be ``anchored by one of the best art collections in the United States.''
Coldwell Banker's Rubin said the Design District has become increasingly appealing to restaurateurs because of lower rents compared to high-end areas like South Beach and because the customer base is local rather than seasonal.
``I have friends in the restaurant business and they all want to be there,'' he said.
Lyle Chariff, owner of Chariff Realty Group, said retail space in the Design District rents for about $45 per square foot, compared to $150 in South Beach.
Those are the economics that first drew Glaser to the Design District in the early 1990s. ``Prices were getting high; people were moving off the Beach,'' he said. ``The same cycle is starting again.''
But Rubin cautioned that bargain-basement real estate prices are putting downward pressure on rent prices. While he said the Design District may be less affected by the recession than other areas, it's not exempt.
``The market is soft,'' he said. ``There's never been a better time to be a tenant.''
Robins said Dacra has been able to lease most of the Design District space that it owns, though he said the recession has dampened growth in the area. Dacra, he said, keeps a tight rein on its lease prices to maintain the area's high-end image.
``We generally keep a higher-than-normal vacancy factor because we like to emphasize quality,'' he said.
One Art, the nonprofit group that sold the building to Glaser, had planned to turn it into an art and music studio for children. Prado said the group was only about $30,000 short of making the needed renovations when property taxes began to take their toll.
Because the building lacked a certificate of occupancy, the group didn't receive a tax exemption for its nonprofit status. In the end, One Art took out a mortgage on the property just to pay back taxes. ``We had to get that monkey off our back,'' Prado said. ``I never wanted to let go of that dream. For me to have sold it was like cutting off a part of me.''
Prado said One Art is now looking for a new location, perhaps in the Overtown area.