AMERICAN LAWYER MEDIA
The news that a big law firm plans to relocate to Miami’s 1450 Brickell office tower is likely to trouble landlords of existing buildings more than developers of towers in the pipeline.
Bilzin Sumberg Baena Price & Axelrod announced Tuesday it has signed a lease for 80,000 square feet in the 1450 Brickell building in Miami’s financial district. The building, which is being developed by the Rilea Group, is to be completed in the first quarter of 2010.
Bilzin is the tower’s first tenant. The law firm leases 75,000 square feet — and subleases 5,000 square feet — in the Wachovia Financial Center in downtown Miami.
Bilzin plans to move into 1450 Brickell at the end of 2010 when its Wachovia lease expires. Bilzin will occupy the 21st through 24th floors of the 35-story tower.
Terms of the 15-year deal, the largest office lease signed in the central business district this year, were not disclosed. The lease includes expansion options, said John Sumberg, the firm’s managing partner.
Chris Lovell, senior managing director at the Miami office of Studley, said the Bilzin lease should send a message to landlords of existing buildings in Miami’s central business district: To keep tenants from bolting, they must be aggressive with concessions. Lovell was not involved in the Bilzin lease.
“The question for existing buildings is: When you lose a tenant like Bilzin, can you fill it again with one tenant or do you break up the space with smaller firms? Not only is Wachovia losing Bilzin, but they’re losing Deloitte, which creates a 140,000-square-foot hole,” Lovell said.
Bilzin earlier backed out of a deal to move to the nearby Brickell Financial Centre, and Greenberg Traurig, another large law firm, signed to be the anchor tenant in the Met 2 Financial Center.
That left Bilzin with two main options, said Jay Caplin, managing principal of commercial real estate investment firm Steelbridge Capital: Stay in the Wachovia building or jump to 1450 Brickell.
“This lends credibility to 1450 Brickell, not that it needed credibility,” he said. “It is unfortunate news for Wachovia and leaves a big hole there. I’m sure they fought like mad to keep them.”
Caplin was not involved in the Bilzin lease.
About 3 million square feet of space will be added to the Miami office inventory when 1450 Brickell, Met 2 and Brickell Financial Centre come on line. Landlords may soon be dealing with a case of “musical tenants,” as businesses seek the best lease deals, Caplin said.
Sumberg said the firm considered Met 2 and thought about staying at Wachovia. But a location further away from the congested Brickell Avenue bridge and some amenities offered at 1450 Brickell, were too much to pass up, he said.
“Wachovia is a great building and we enjoyed being there for 23 years,” Sumberg said. “Our partners decided they wanted a new building with better ingress and egress on Brickell [Avenue]. They also liked the efficient design and layout of the floors with an unobstructed view of the water.”
The building has already received the Leadership in Energy and Environmental Design gold certification.
THE BILZIN LEASE
Class A quoted office rents averaged $43.63 per square foot in the central business district at the end of the second quarter of 2009, according to CoStar Group. Using the quoted average, the value of Bilzin’s lease would be about $52.4 million over its 15-year term.
Bilzin’s lease comes nearly eight months after it backed out of a 10-year deal to occupy 115,000 square feet for about $58 million at Brickell Financial Centre. That left Brickell Financial developer Foram Group without any tenants. Foram, which has not secured any financing for its project, has since backed off a target completion date for the 40-story tower.
Foram president John Breistol declined to comment.
A 35-story, Class A tower, 1450 Brickell will have 576,379 square feet of office and retail space.
UBS Financial Services, a division of the Swiss banking giant, was to anchor 1450 Brickell, but after the economic meltdown a year ago, the bank decided to stay put in three separate Miami offices.
With negotiations underway with several other potential tenants, the Bilzin lease could spur leasing activity at 1450 Brickell, said broker Danet Linares, executive vice president of Blanca Commercial Real Estate. Linares and Blanca principal Tere Blanca represented developer Rilea Group in the Bilzin lease.
“This should get the ball rolling,” Linares said. “We have deals pending that total more square feet than what we have available in the building. Now that a prestigious firm has committed to a large deal, we feel everyone else will be as comfortable as they were.”
Before joining Blanca, Linares handled leasing for Foram’s project and helped negotiate the developer’s scuttled deal with Bilzin.
When Blanca launched her company and took over leasing of 1450 Brickell in April, discussions with Bilzin began immediately, Blanca said.
CRESA Partners brokers Barbara Liberatore Black and Matthew Goodman represented Bilzin in the deal. Calls to Liberatore Black were not immediately returned.
Brokers for Met 2, at 350 S. Biscayne Blvd. in downtown Miami, have signed three tenants: the law firm Greenberg Traurig, the accounting firm Deloitte and Business Centers International, bringing the 47-story tower’s pre-completion occupancy to 30 percent. Met 2 is scheduled to be finished in April 2010.
Wachovia brokers plan to begin reaching out to national and local law firms and potential financial and corporate tenants to fill the vacancy created by Bilzin’s departure, said Cushman & Wakefield broker Don Cartwright, director of leasing at the 55-floor tower.
Cartwright said Wachovia brokers are willing to provide concessions when appropriate and are focusing on improving the parking garage, bathrooms and common areas of the building, which is the tallest office tower in Florida.
“The strength of the building is important,” he said. “Also, we do not have one penny of debt on the property and a management team that has been in place for years.”
The Wachovia brokers are also applying for Leadership in Energy and Environmental Design gold certification for the tower, Cartwright said. They hope to secure the certification by spring 2010.
Eric Kalis can be reached at (305) 347-6651