- Swire is seeking to sell two properties in the Brickell area
- Firm plans to use funds raised for Mandarin Oriental project
Swire Properties Inc. has scrapped plans for a supertall tower in Miami’s Brickell neighborhood, as the large development in the heart of the region’s financial center faced challenges luring tenants.
The developer has hired brokerage CBRE Group Inc. to sell 700 Brickell Ave. and 799 Brickell Plaza.
The two sites were initially set to be a major office project called One Brickell City Centre that Swire was planning to build with Related Cos. They had envisioned the tower as a magnet for the tech and financial companies flocking to Miami, but struggled to find enough tenants to fill up what was expected to be among the tallest buildings in South Florida.
“The current office market has been challenging and the pre-leasing for that specific scheme has not materialized in the way that we had hoped,” Henry Bott, president of Swire, said in an interview.
The One Brickell City Centre pullback underscores how Miami’s market has shifted drastically in recent years. During the pandemic, developers flocked to the South Florida market to seize on demand from companies wanting to open offices in the region.
Swire and Related were part of that push, teaming up to build One Brickell City Centre, which was expected to have 68 floors, outdoor terraces and a rooftop helipad. But since then, there’s been signs of a cooling in leasing activity in the area, according to brokerage Savills Plc.
Swire’s partnership with Related, which centered around the building of the office part of the project, has expired. Swire owns 100% of the two properties.
Swire is seeking to put the funds raised from a potential sale into another one of its developments, a project on Miami’s Brickell Key, a small island near the lots that are now for sale, where the firm is building luxury Mandarin Oriental-branded condos and a hotel.
Related is still pursuing office projects nearby. The company is teaming up with Ken Griffin to build a 54-story office tower in the Brickell area to house his Citadel businesses.
Prioritizing Others
While office demand has started to struggle, the luxury residential market in South Florida is holding up. In recent months, lenders including Apollo Global Management Inc. affiliates and JPMorgan Chase & Co. have provided large construction loans to back condo projects.
Swire’s Mandarin Oriental residential project has landed $800 million of total contract sales so far. The firm is planning to fully fund the project using its own capital.
“The pre-sales there have been going extraordinarily well and that’s really encouraged Swire to focus their attention and really prioritize that development project,” Bott said.
Investors are still showing signs of interest in development sites in the region. Buyers for a waterfront site in Miami’s financial district agreed to pay more than $500 million for the 4.25-acre (1.7-hectare) properties, the largest land deal ever in the Florida city, with plans to develop it into ultra-luxury condos.
Bott said he’s encouraged by buyer interest in the two plots along Brickell Avenue. The company is still working out pricing and is aiming to find all-cash buyers.
“Sentiment is strong, and those recent transactions have offered an opportunity for us to extract maximum value from this very prime site and then recycle the capital into our flagship luxury residential project,” Bott said.
Written by: Natalie Wong @Bloomberg
The post “Supertall Miami Tower Scrapped in Sign of Weaker Demand” first appeared on Bloomberg