Looking for a co-working space in Miami? You’ve got options — by one measure, more than any other city in the U.S.
A new study has found Miami is now home to the most co-working space in America as a share of total commercial real estate. And yes, it even beats out Manhattan.
While the vast majority of commercial space still falls into traditional offices and bullpens, nearly 3 percent of all commercial office space in Miami-Dade County is now occupied by 59 co-working sites, according to the study by data and research group Yardi Matrix. In Manhattan, only about 2 percent of all offices are located in co-working, though the total square footage is more than five times the 1.4 million square foot here.
Miami’s No. 1 ranking comes as international co-working behemoth WeWork opens its fifth Miami-area location in Coral Gables. That location, and the growing number of spaces popping up in neighborhoods from South Miami to Aventura — and yes, north to Broward — shows Miami stands at the forefront of a global co-working explosion.
“Miami’s young demographics, the fundamentals of its office market and composition of its economy – which attracts entrepreneurs and start-up firms and is home to extensive trade with Latin America – all work to produce a favorable environment for the co-working industry,” Yardi researcher Paul Fiorilla said in an email.
The boom is also translating to a buyer’s market for anyone looking to downsize from a traditional office or upgrade from the kitchen table. For just a couple-hundred bucks a month, you can get fast internet, perks like coffee, snacks, and even beer for free — and perhaps most importantly, a built-in community to network with.
The co-working boom allowed Jennifer Hardcastle, the founder of a start-up that lists art and music spaces, to move from a shared rented office in Hallandale Beach to WeWork’s Lincoln Road location. In Hallandale, Hardcastle’s of MADSTUDIOS paid about $1,100 a month. But about 18 months ago, she was lured by a introductory offer from WeWork, which was then recruiting members for its first Miami location. The first three months would be free, with the next three months 50 percent off, and the third three 25 percent off.
That was followed by another discount that she declined to disclose. But Hardcastle, 30, and her team of four will soon start paying full freight, at $1,800 because she says the amenities and community WeWork offers, including access to all other WeWork Miami locations, make the price worth it.
“Most of our clients and locations are in Miami, we attend church in Miami — it just made sense to go down there,” she said.
In the past, says Tom Roth, a developer with Grass River property, a Miamian looking to start a business on a dime likely worked at home, their garage or in subleased space.
But in 2018, businesses, entrepreneurs, artists, writers, and designers now have an array of turn-key office options at their disposal here, he says. Along with WeWork, Miamians can choose from homegrown companies including Büro, with five locations across the county, Pipeline, with four locations between Dade and Broward; and Building.co in Brickell. CIC Miami, an outpost of a Cambridge, Mass.-based company, has made a name for itself here by hosting weekly networking events at its Allapattah office. And Regus and Servcorp, two older-shared space models, are still going strong with locations throughout the area.
Driving the expansion is the region’s active — albeit fluid — entrepreneur base, as well as its international business ties.
“In Miami, you have a lot of people coming and going,” Roth said. “A lot of people who are coming from Latin America and looking to test the waters here, or who are otherwise looking for short-term space options.”
Bobby Condon, general manager of WeWork’s U.S. Southeast division, agrees.
“We know Miami is an epicenter for business and entertainment, and also international trade – it’s a gateway for Latin America,” he said. “We want to provide an entry point to a global community.”
While start-ups continue to comprise the majority of co-working memberships, giant companies now are also using co-working spaces to establish a presence in South Florida. Samsung, Microsoft, Uber, eBay, Spotify and Twitter have all set up their Miami beachheads at co-working shops.
Scaled-up businesses have been the primary tenants for Pipeline, a Miami-born co-working company now expanding across Florida. Philippe Houdard, a Pipeline co-founder, said Pinkerton, one of the oldest security firms in America, maintains its Miami office at the Pipeline Brickell location.
“We wanted to go after established companies who are serious about their work and serious about being treated as professionals,” he said.
The co-working trend is starting to affect Miami real estate. Roth, the developer, is overseeing the renovation of CocoWalk in Coconut Grove. He says he is considering co-working ventures to serve as the main tenant in the new vision for the space.
“I’m delighted to have a co-working guy in the building who can manage the space needs of his tenants,” Roth said. A co-working tenant means a single, long-term deal with a large client, a preferable outcome to managing leases of varying lengths with multiple tenants, he said.
For Stephen Rutchik, a Colliers International brokerage agent in Miami, a landmark moment in the city’s relationship with co-working companies came in 2015, when WeWork signed on as the principal tenant of the Security Building, 1920s-era skyscraper. WeWork took over /space originally designated for a failed condo project. The building reopened in December 2017, with WeWork claiming nearly 100,000 square feet. “Nobody had ever done it to that scale,” Rutchik said. “It represented a large statement of the belief in South Florida.”Meanwhile, Rutchik himself is handling leasing for the new Gateway at Wynwood project. He says the project developer, New York-based R&B Realty, is actively seeking a co-working space to be the lead tenant for the building.
While Brickell currently has the most shared office space, Tadd Schwartz, a public relations executive who represents several real estate clients, says the rise of business districts beyond downtown like Wynwood, Doral, and Dadeland have given co-working ventures a way to expand their footprints in the area “Miami has become a multi-market destination when it comes to business planning,” he said.
Of course, workers with co-working memberships make up just a tiny fraction of the city’s workforce, which continues to be dominated by low-paying, service-industry jobs. And with many memberships starting at more than $300 a month, co-working spaces remain well out reach in a city where the mean annual wage is less than $50,000.
But it seems to be the go-to option for those who can afford it. Jason Blilie, 32, an attorney with his own practice, now bikes from his Miami Beach apartment to his co-working space at WeWork Lincoln Road, where a shared or “hot” desk now starts at $220 a month.
“My office is less than 10 minutes from home on bike,” he said in an email. “Between that and the convenience of the WeWork model, it’s been a good fit.”
The office market in the central business district and Brickell is solid, observers say, and not likely to be blown off course anytime soon.
“The market in downtown and Brickell is tight,” said Neisen Kasdin, office-managing partner at Akerman, LLP, and vice chair of Miami’s Downtown Development Authority. “The last spurt of new buildings came into the market 10 years ago, with 1450 Brickell, 600 Brickell and the Wells Fargo Building.”
Two new offices buildings that are part of Brickell City Centre and the Miami Central office buildings that were part of the Brightline launch leased up quickly, he added.
There is a relationship between demand for office space and the influx of new residents – even some just testing the waters – from the Northeast, he said. “As businesses and individuals relocate from New York, New Jersey, Connecticut and Illinois to avoid paying state income tax, as well as for the lifestyle, there’s greater demand for office space.”
While the downtown authority has waged a successful campaign to lure hedge funds, family offices and financial services firms, “The vast majority are finding their way here on their own, by word of mouth,” Mr. Kasdin said. “The whole Brickell area has become very dynamic and desirable, partially because it offers a non-auto-dependent lifestyle. It’s not only millennials who want that lifestyle.”
“The big story is going to be April 15, when people from the Northeast see how the new tax law is going to affect them,” said Tom Byrne, senior vice president and commercial broker at EWM Realty International. Taxpayers will no longer be able to deduct state and local taxes from their federal tax returns, which eliminates a substantial deduction for many. It will contribute to the influx of buyers from the Northeast that has already begun, he predicted, and that will boost office demand.
“There are 400 million people above us (in the US and Canada) and 400 million below us (in Latin America) and that, combined with Florida’s favorable tax status, will keep demand strong,” Mr. Byrne predicted.
The central business district is a likely beneficiary, because it’s become a 24-hour destination, he said. “Like Coral Gables, downtown has become a place where you can go out at just about any time and get a good meal or find something to do,” he said. “Miami has come into its own.”
The central business district and Brickell have captured 56% of new-to-market office transactions, said Danet Linares, vice chair of Blanca Commercial Real Estate and a board member of Miami’s Downtown Development Authority. “Brickell leads in absorption” of the four major office markets (downtown, Brickell, Coral Gables and Airport West) and has a lower class A and B vacancy rate (at 10.4%) than the downtown-Brickell market as a whole (15%), she said.
“There is more vacancy downtown, but that’s only going to increase rents,” she said. Class A, top-tier buildings downtown are fetching $52-$56 per square foot, and $60 per square foot is not unheard of, she said. “New class A buildings are pretty full. Miami Central is 90% leased.”
“It doesn’t hurt that 92,000 people live downtown now, which is up 40% since 2010,” she said. “You can live very close to your office and walk to work. Downtown has the most public transportation of any of the markets, and Brightline has helped. Tri-Rail coming in later this year will help, too.”
Across the Miami River, a deal at 1450 Brickell was recently signed for $65 per square foot, Ms. Linares said. That building is 99% leased. And throughout the downtown/Brickell market, 89% of leases signed are renewals, which speaks to tenant loyalty.
“Savvy investors are realizing that we have a lot to offer, and investors remain very bullish on downtown and Brickell,” Ms. Linares said. “They realize this market offers a stabilized return on investment and rents will continue to rise.”
What prospective tenants in this submarket are looking for is hotel-like amenities, said Jonathon Yormak, a principal of East End Capital. The company owns and recently renovated 100 Biscayne, formerly the New World Tower. “They want a brand-new lobby, new bathrooms, a gym, shared conference space. It’s not dissimilar from a hotel.”
The central business district today offers “mostly older stock; a lot of older buildings that have not seen significant capital investment. The way we see the market, there’s a lot of opportunity to refurbish that older stock.”
An obstacle: 85% of the demand is for spaces of less than 10,000 square feet, Mr. Yormak said. “There aren’t a lot of very large tenants in Miami,” meaning users that want 50,000 to 350,000 square feet of space, he said. “And it’s not particularly affordable,” when compared to cities like Nashville, TN, which is attracting large-scale tenants.
Nevertheless, “we’re very bullish, longer-term, because of tax changes in the Northeast,” Mr. Yormak said. Family offices and hedge funds are doing well, and other companies are taking initial steps” to investigate the Miami market, he said.
“The performance of Brickell/ Downtown Miami office market, relative to suburban submarkets in South Florida, is primarily driven by the emergence of the CBD as a true live-work-play destination,” said Stephen Rutchik, executive vice president Colliers International, via email. “Additionally, the CBD offers tenants various modes of public/private transportation via Metrorail, Metromover, Brightline, bus, trolley, Citi Bike and soon to include Tri-Rail, and tenant utilization of these modes of transportation has increased dramatically. Among other changes, we have also seen the beginnings of migration of some tenants from Fort Lauderdale to the Miami CBD.”
Demand is likely to remain strong even if an oft-predicted 2019 recession does materialize, he added. “Hopefully, the combination of a more diversified tenant base and more global creditworthy tenants, along with the densification of office space, will mitigate any impact of a potential recession.”
“The Miami central business district is supported by strong fundamentals but has recently experienced a marginal uptick in vacancy,” said Christopher Dubberly, director of leasing at Transwestern, via email. “We are experiencing historically high rental rates and diversification of the tenant base.
“Congestion is a byproduct of the success of the CBD and has caused a few tenants to look at alternative submarkets (i.e. Coral Gables), but there has not been a significant migration,” he said. “The district has been transformed in this real estate cycle and there are few substitutes for a tenant who needs to be downtown (reinsurance firms in Brickell, law firms or financial institutions). They are part of the fabric of the CBD tenancy.”
The construction, at last, is mostly finished.
Nearly 25 years after developer Craig Robins scooped up his first property in the then-blighted wholesale district geared to interior designers, the latest expansion of the $1.4 billion Miami Design District is almost complete.
The barricades and cement trucks that made Northeast First Avenue look like a war zone are gone. Long-blocked roadways have been cleared for traffic. So are new pedestrian walkways, art installations and plazas. In the Design District, he has preserved historic gems like the Moore Building, which was built in 1921, while mixing in new modernist buildings, spectacularly organic facades and art installations like a Buckminster Fuller-designed dome big enough to walk through.
Two free-to-the-public museums are open, along with new stores ranging from ultra-luxury (Gucci) to urban and hip (Rag & Bone). The high-end Cuban restaurant Estefan Kitchen has been cooking since March, serving up upscale black beans and ropa vieja with live music and open mic nights. The Nite Owl Theater has been screening cult and classic films since August.
But despite attention from big-time media outlets including the New York Times and Vogue, tony soirees during Art Basel, weekly free concerts and monthly Family Day events, the Miami Design District remains a largely-unknown celebrity in its own hometown. The District spans 18 square city blocks north of downtown Miami, from NE 38th to 42nd Streets between N. Miami Ave. and Biscayne Blvd.
“There's a challenge in getting the word out about what you’re doing,” said Robins, CEO and president of Dacra development, which currently owns 900,000 square feet of property in the 25-acre Design District. “We could have bought a million ads and said ‘We're the Design District!’ in flashing lights. But the Design District is about authenticity. You have to continue being what you are and hope that over time, it attracts more and more people. We’re putting signals out to draw you in, but you have to come and discover it on your own.”
Over the Presidents’ Day weekend, the District is sending out a giant beacon with the first Watches & Wonders fair ever held in the U.S. The event, which runs Feb. 16-19, features exhibits by 21 of the world’s top watchmakers showing off their latest models, a series of lectures and seminars for watch hobbyists and collectors, kid-friendly activities and timepiece-themed virtual reality and film installations.
Also debuting this weekend is the Miami Design District Concours, a day-long exhibition on Feb. 17 of more than 125 exotic and rare cars from private collections around the U.S.
All of the events are free — except for the watches. You have to pay for those.
Robins said he intentionally chose the President’s Day holiday to capitalize on the out-of-towners who will flood Miami for the Miami International Boat Show and the Miami Yacht Show, which are also going down this weekend.
But he hopes these events will lure locals who think of the Design District primarily as a place to drop thousands of dollars on a Louis Vuitton purse. He wants you to know you can also see original works by Andy Warhol and Roy Lichtenstein for free, grab a sandwich or burrito at the casual OTL cafe or enjoy a cone of soft serve ice cream made by one of Miami’s best-known pastry chefs.
A DIFFERENT KIND OF RETAILCritics and competitors say the District falls short of fulfilling its potential as a retail center. Currently, the District is home to more than 80 stores and boutiques and 70 home design showrooms. But that traditional market of brisk sales — the sight of patrons clutching stacks of shopping bags as they stroll the streets — is relatively rare.
On a recent Saturday night, few pedestrians dotted the neighborhood plazas. Open tables at restaurants were plentiful. Those beautiful, gleaming stores were mostly empty.
That’s unusual for Miami-Dade’s retail scene, which is one of the strongest in the U.S. Overall 2016 sales hit $55 billion, according to the Fall 2017 Miami Retail report by Cushman & Wakefield. The nation’s top-grossing mall, Bal Harbour Shops, raked in sales of $3,185 per square foot, according to a 2016 ranking conducted by research firm Green Street Advisors — despite fierce competition that led some famous retailers to leave Bal Harbour in favor of the Design District.
But some experts say it’s simply too soon to judge the Design District’s growth, because the area is still a work in progress. Due to arrive over the next six months are four new restaurants by culinary stars Brad Kilgore, Joël Robuchon and Jean-Georges Vongerichten. So is a large food hall, St. Roch Market, featuring 12 eateries. Dolce & Gabbana, Balenciaga and Céline stores are on the way. A film-and-music superstar is said to be considering launching his own restaurant there.
“The making of a neighborhood is a process: It doesn’t happen overnight,” said Tony Cho, founder and CEO of Metro 1, whose office is based in nearby Edgewater. “You can’t expect to see a lot of foot traffic while the place is still under construction. The Design District is a multi-year, multi-phase project. Craig is doing all the right things by doing events like this and keeping the parking costs low.”
An analysis published this week by Fung Global Retail & Technology cited leisure shopping — stores surrounded by restaurants, entertainment venues and service businesses — as one of the biggest potential growth areas for the retail industry. That would give the Design District’s locale a distinct advantage over traditional malls.
“I love seeing what happens to a neighborhood if it's truly a creative laboratory and not just a commercial mall,” Robins said. “People who come here see what they're experiencing is unique. This is not the kind of thing that can be experienced in a mall. This can only happen in a real urban environment.
The Design District is about authenticity. We’re putting signals out to draw you in, but you have to come and discover it on your own.
Dacra Development CEO and co-founder Craig Robins
Also working in the Design District’s favor: Its average rent per square foot is $163, which is higher than Coral Gables ($53) or Brickell Avenue ($110) but lower than Bal Harbour ($300) and Aventura ($200).
Despite the work-in-progress construction schedule that has been ongoing for the last decade, the District’s improvement has helped elevate property values in nearby areas. The median price of single-family homes in the 33137 zip code — which includes Buena Vista, the residential neighborhood directly north and east of the District — more than doubled from 2012 to 2017, shooting up 136 percent from $248,438 to $587,450, according to Property Shark.
Stephen Rutchik, executive vice president with Colliers International, hopes the District will also help lure tenants to the nearby Gateway at Wynwood, home to 200,000 square feet of office space at North Miami Avenue and Northwest 29th Street that is slated to open in 2019.
“Any one of these three districts by itself — Wynwood, Midtown or the Design District — would not support this much office space,” Rutchik said. “It’s the critical mass that comes from these three neighborhoods combined that is making tenants look beyond the urban core. The Design District has reached its tipping point: It has helped to elevate the foundation of Miami.”
Within the District, sales are heading in the right direction, said Robins. Although individual stores don’t share revenues, Robins said more than a dozen retailers reported a year-over-year increase of 50-100 percent in sales in January 2018. The number of vehicles that parked inside the City View garage (which is intentionally priced low, at $3 for four hours, to encourage visitors) has gone up 50 percent every month since June 2017 (with the exception of September, due to Hurricane Irma). Ellen Salpeter, director of the Institute of Contemporary Art, Miami, said the museum has drawn 30,000 visitors since opening its doors in December.
And even though the giant Hermès flagship (one of only three in the U.S.) sometimes looks lonely, these international brands are playing a longer endgame than traditional retail. They have the resources — and the intent — to wait until the District is fully realized. By then, they will already be occupying prime locations and enjoying maximum exposure.
Hermès CEO Robert Chavez said a flagship store in Miami “allows us to express the brand in a very special and unique way. We love to be ‘pioneers’ in new locations, and we partnered with Craig because of his vision. We are able to expand our assortment and offerings to our clients with more space, and also able to offer a more special shopping experience with greater comfort and amenities.”
Chavez also said their sales at the 13,000-square-foot Design District location are 40 percent higher than they were during their last year at their previous 4,300-square-foot boutique at the Bal Harbour Shops, which closed in 2012.
“These flagship stores are built in order to expose the brand,” said Michael Comras, president and CEO of The Comras Company of Florida, a real estate developer focusing on retail who has no financial interest in the District. “They’re almost like museums for the companies. A department store cannot possibly carry all the breadth and depth of products from Hermès or Louis Vuitton.
“It’s easy to throw darts at something that’s not fully baked. There’s still much more to come. The retailers are not judging their sales volume today.”
REAL ESTATE AND ARTRobins began his real estate career with a $20,000 investment with the late developer Tony Goldman in 1986. They used the money to acquire a stake in two buildings on Fifth Street in then-sleepy South Beach. But before the revitalization of South Beach was even completed, Robins was already moving on to his next projects, on the site of Miami Beach’s former St. Francis Hospital, and in the Design District.
“Back then, there were mostly furniture stores there,” said Brian L. Bilzin, a founding partner of the law firm Bilzin Sumberg who has represented Dacra in various development projects. “It was always his vision to turn the Design District into a community and a destination.”
He’s had help. Today, Dacra shares ownership of 70 percent of the Design District with an investment unit of the French goods maker LVMH and General Growth Properties, the U.S. firm that also owns Bayside Marketplace and Shops at Merrick Park. The remaining 30 percent of the District is owned by an assortment of investors. Robins oversees its day-to-day operations.
Robins has always blended real estate with art. One of his first South Beach tenants was the artist Keith Haring. At the former hospital location, Robins’ Dacra Development brought in urban-planning designers Andres Duany and Elizabeth Plater-Zyberk to create Aqua, a pedestrian-friendly island of townhomes and mid-scale apartment buildings designed by several different architects.
The Design District’s emphasis on culture and entertainment is already reaping unexpected benefits. Filmmaker Harmony Korine (“Spring Breakers”) is editing his shot-in-Miami comedy “The Beach Bum,” starring Matthew McConaughey and Zac Efron, in a studio space in the Design District. He has also agreed to collaborate with Nayib Estefan, founder of the Secret Celluloid Society, on a retrospective festival at the Nite Owl Theater.
“Craig has made the Design District a really interesting and creative place — a lot of different worlds colliding,” Korine said during a recent break in editing. “I like the vibe here, the way it looks and feels. It’s kind of a creative playground. There’s artwork and coffee shops and clothes.”
There’s more to come, including two hotels due to be completed in 2020. A residential development is probably inevitable.
For now, though, Robins is focused on this weekend.
“This is a big moment for us. We’ve just opened the second half of the neighborhood and everything is coming together. We already have the best art fair and the best design show in the United States. I’d love for us to have the best watch and jewelry show, too. I’m optimistic and passionate about it, but we’ll see if it lives up to its potential.”
Rene Rodriguez: 305-376-3611, @ReneMiamiHerald
The first Watches & Wonders Miami fair takes place Feb. 16-19 at various locations around the Miami Design District. Admission to all panels and discussions is free, but advance registration is required. The Miami Design District Concours classic auto show takes place Feb. 17 at the Jungle Plaza in the District. Visit miamidesigndistrict.net/watchesandwonders/ for a complete lineup of events.
Colliers International Florida
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