Matthew Katzen Shares Insight with The Real Deal on Citadel Impact to Brickell
Matthew Katzen Shares Insight on Brickell Office Market
Ken Griffin’s Citadel comes to Brickell — and supercharges the market. "The amount of wealth that’s coming… it’s going to be insane."
August 2, 2022
Citadel ’s move is a big boost for the thesis that Miami’s brokers and developers have been touting since the pandemic began: that the region is becoming the “it” destination for blue-chip financial and tech firms.
A wave of name-brand firms have already moved to South Florida or announced plans to do so, driving up commercial rents, land values and home prices. Asking rents for new Class A office space can now top $150 per square foot.
Citadel considered leasing space at Related Group’s new Terminal Island office project in Miami Beach, as well as at 830 Brickell, an under-construction office tower where Microsoft, Thoma Bravo and Marsh Insurance are taking space, sources said. But ultimately, Griffin decided to partner with Sterling Bay to build an office building where 1,000 Citadelers will be based.
In June, Citadel purchased a bayfront lot in Miami’s Brickell financial hub for $363 million. Some said that Griffin is also behind the $286.5 million purchase of 1221 Brickell Avenue, the existing office building across the street, which is expected to serve as a temporary space for Citadel employees while the tower is being built.
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South Florida has been recruiting companies for years, touting the state’s lack of income tax and business-friendly climate. But the lack of restrictions during the pandemic provided “rocket fuel” for the inbound migration, said Justin Oates, an executive at developer Cain International. Cain is co-developing the 830 Brickell office tower with Vlad Doronin’s OKO Group, as well as luxury condo projects in Miami and Miami Beach.
The developers are asking $150 per square foot for remaining spaces at 830 Brickell, with closed lease deals at “well over” $100 per square foot. Three years ago, top rents were in the $70-per-square-foot range. It’s become a landlords’ market for most, and that has trickled down to Class B properties and nearby neighborhoods.
“When we were sitting here three years ago, it was definitely an aggressive — some would say risky — thing we were doing,” Oates said. “It was almost like an ‘if you build it they will come’ mentality.”
Now bidding wars are common. “I wish we could build another 10 stories,” he said.
What Citadel plans to do is similar to what billionaire investor Barry Sternlicht of Starwood Capital has already done. Sternlicht, who relocated to Miami Beach in 2018, partnered with Integra Investments to develop a Class A building in South Beach, near his 1 Hotel & Homes South Beach, for Starwood’s new headquarters. Companies were “clamoring” to lease space there, one broker said.
Miami-Dade’s vacancy rate fell to 2.5 percent in the second quarter. “If I’m representing an office tenant looking for space, they’re in a tough position,” said Lee & Associates broker Matthew Katzen.
With record rents and low vacancies, the investment sales market is in overdrive.
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