'Office industry experts see mixed uses as key in city’s core'

Focusing on mixed-use projects that combine office space with residential, hotel, and other components is the trend to secure financing in the Brickell area, according to local office space developers.

The key considerations for developers when deciding between mixed-use and office-only projects in the current market are that mixed-use projects that include residential components do not require the same level of pre-leasing commitments for office space as office-only projects, said Bert Checa, principal at Lee & Associates South Florida.

“There is more uncertainty around long-term office space needs, making it challenging for office-only projects to secure enough pre-leasing commitments from tenants,” he said. “Mixed-use projects that offer a variety of uses are seen as more appealing and adaptable. The high construction costs in the Brickell area can be better justified by the higher rental rates that mixed-use projects with residential and other components can command compared to office-only projects.”

Brickell’s walkability, proximity to restaurants and entertainment, and overall appeal as a live-work-play environment also make mixed-use projects more attractive to both tenants and developers, Mr. Checa added.

“The key points comparing development trends and rental rates between Brickell and downtown Miami include Brickell is seeing more development activity, as the higher rental rates in Brickell can justify the higher construction costs,” he continued. “Developers are able to absorb and justify the costs in the Brickell market, whereas Downtown Miami is seeing less development due to lower rental rates and higher construction costs, making it more challenging for projects to be financially viable.”

Brickell has become the new financial hub of South Florida, attracting wealth management firms, law firms, and other businesses that value the walkability, amenities, and proximity to competitors in that area, he said. “Downtown Miami still struggles with issues like homelessness and vacant storefronts, making it less appealing for development compared to the more vibrant Brickell neighborhood.”

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