South Florida Real Estate Transactions Like ‘Adult Game of Monopoly,’ But the Economy is Giving Investors Pause

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DAILY BUSINESS REVIEW – January 26, 2022 BY MELEA VANOSTRAND South Florida real estate transactions are off to a good start in 2022, evidenced by an announcement from Terranova Corp. that it has completed over a dozen capital markets transactions totaling over $230 million so far this month. 

That exceeds typical activity, according to Terranova’s chairman Stephen Bittel.

“I feel incredibly fortunate that I get to, in my career, play the adult game of Monopoly. That’s incredible fun, we make a lot of money at it, and it enables us to take our profits and do good in our communities,” Bittel said.

However, although Bittel said he believes there’s a lot of room for growth, the overall state of the economy might cause people to rethink asset values due to rising interest rates, increasing inflation and a lack of policy coming out.

“I think there are a lot of things going on that have given investors pause and I think, as earnings begin to be released this week for year-end, I think we’ll see underperformance by retailers reflecting less in consumer confidence. We’re very much a consumer-driven economy,” Bittel said. “Supply interruptions are causing everything to go up.”

Terranova recently announced an affiliate closed on a $40 million refinancing of Palm Plaza shopping center in Miami Lakes. The deal, with Puerto Rico financial services company Banco Popular, pays a loan and provides capital for future growth.

The building is undergoing a $1.3 million renovation with new landscaping, a parking lot and landscaping. The last remodel was 19 years ago. The 90,621-square-foot retail building is 95% leased. The retail center houses tenants who produce some of the top 10% highest-grossing sales in the country. These include CVS, Sketchers and Starbucks. 

“We signed both of them through long-term renewals, which stabilized the revenue stream from that property for the next 20 years,” Bittel said.

Restaurants Recovering After ‘Terrible Year’

The leasing of restaurant space at Terranova is at 100% and rates are more than what they were pre-pandemic. Bittel said that’s a sign of the continued growth of South Florida.  

“Restaurant sales in 2021 exceed in South Florida the levels achieved by those same tenants in 2019. 2020 was a terrible year. The tenants that figured out how to do a takeout and delivery business while at the same time taking advantage of the outdoor sun have come back stronger than anyone could’ve imagined,” Bittel said.

Coral Gables is becoming a go-to place for meals at any time of the day, according to Bittel. 

“They expanded outside, they gave the people the outdoor dining they wanted, and we’ve leased up 100% of our available restaurant space,” Bittel said. 

Although there are some bright spots in many real estate markets, retailers—especially older retailers—continue to hurt. 

“Kmart just has an older model and they didn’t update their offerings, so they’re suffering.  Walmart and Target have plenty of history, but they’ve done a great job of modernizing and creating an online presence and changing the offerings in their stores,” Bittel said. “I think we’re going to see a lot more high-end, organic supermarket options in South Florida, like crazy.” 

Migration Wave Hasn’t Finished 

Bittel said he suspects migration to South Florida will continue, reasoning the first wave of people were company leadership, while the rest will be the second level of senior leadership seeking proximity to top leaders. Bittel said South Florida will also likely continue to see more out-of-market restaurants migrating.

“Institutional investors in real estate are heavily focused on industrial and multifamily. The multifamily serves the incoming population, and industrial serves the growing base of distribution both for e-commerce, as well as Central and South America and the Caribbean,” Bittel said. 

With multiple transactions, including the $22 million sale of Terranova’s headquarters building on 41st Street, $55 million refinance of its portfolio of properties along Coral Gables’ historic Miracle Mile and the recent $6.8 million acquisition of 93 Miracle Mile, Bittel said he’s excited to see what other opportunities come Terranova’s way as the year continues. 

“It’s our core business that we’ve done for 40 years,” Bittel said. “We try to buy high-quality, long-term assets.”

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In $7M deal, Terranova adds another Miracle Mile building to Coral Gables portfolio

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THE REAL DEAL- January 5, 2022 BY FRANCISCO ALVARADO In a $6.8 million deal, Terranova added another Miracle Mile retail building to its Coral Gables portfolio.

The Miami Beach-based commercial real estate firm headed by Chairman Stephen Bittel bought the one-story site at 93 Miracle Mile, making it the 15th property Terranova owns on the street, according to a press release. The holdings span 120,000 square feet. Recently, Terranova obtained $55 million in refinancing for its Miracle Mile assets.

An affiliate of Wexford Capital, which is based in West Palm Beach and Greenwich, Connecticut, sold the corner property on Galiano Street for $800,000 below the previous purchase price from five years ago. The Wexford affiliate paid $7.6 million in 2016, according to records.

The 9,000-square-foot vacant building was previously occupied by Navarro Discount Pharmacy, which closed after the chain was acquired by CVS in 2014, the release states. In a statement, Terranova President Mindy McIlory said the firm plans to bring in a “strong, high-profile tenant.”

Terranova has nearly $1 billion in commercial real estate assets and purchased its first Miracle Mile property almost 20 years ago, the release states. In the past two years, the firm has acquired five properties on Miracle Mile, which underwent a $21 million streetscape makeover by the city of Coral Gables.

In October, Terranova paid $7.8 million for two storefronts at 232 Coral Way and 330 Miracle Mile, which are a few blocks west of the firm’s most recent acquisition. In another purchase last year, Terranova acquired a single-story building at 300 Miracle Mile for $6 million.

On a site at 220 Miracle Mile the company acquired for $12.2 million in 2013, Terranova had planned a two-tower, mixed use project with a 120-key hotel. The firm’s other holdings include 308, 348 and 360 Miracle Mile.

Last year, Terranova’s wheeling and dealing extended beyond Coral Gables. In February, the firm and its partner Terra sold a nearly 24-acre development site in Doral to logistics real estate investment firm GLP Capital Partners for $55 million. And last month, Terranova sold its longtime Miami Beach headquarters for $22 million to Fifteen Group in an off-market deal.

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Terranova sells Miami Beach HQ building for $22M

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SOUTH FLORIDA BUSINESS JOURNAL – December 10, 2021 BY BRIAN BANDELL Commercial real estate firm Terranova sold its Miami Beach headquarters office for $22 million and will look for new space next year.

The company sold the six-story, 51,806-square-foot office building at 801 Arthur Godfrey Road to Miami-based Fifteen Group. Terranova Chairman Stephen Bittel said his company and a sister company currently occupy about 13,000 square feet there and haven’t been leasing it out to third parties, so much of the building is not occupied.

Terranova acquired the office for $4.26 million in 2002, so it sold it for a big gain. It was built on the 22,135-square-foot lot in 1969.

“It’s a little sad that we are letting go of something that is near and dear to us,” Bittel said. “Our business plan has evolved over the years, and we just didn’t need that much space. Low interest rates and a focus on South Florida real estate has driven pricing very high.”

Bittel said Fifteen Group plans to renovate the building and lease it to third parties, which will create more opportunities to lure companies to Miami Beach. Teranova will lease space there for a year while it looks for a new headquarters.

Bittel said Terranova and its affiliates need about 20,000 square feet and are looking in Miami Beach and Coral Gables. He might purchase a larger building and lease out part of the space. He would also consider leasing.

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