In the largest office space deal of the year, Miami law firm Bilzin Sumberg Baena Price & Axelrod announced Tuesday it has signed a lease to move into 1450 Brickell, one of three office buildings under construction in downtown Miami.
Bilzin Sumberg will occupy 80,000 square-feet and four floors in the 35-story office tower scheduled for completion in the first quarter of 2010 by developer Alan Ojeda's Rilea Group. Financial terms of the 15-year lease were not disclosed.
The law firm will be relocating from Wachovia Financial Center toward the end of 2010. In an indication of the turbulence surrounding the current real estate market, this is the second lease Bilzin Sumberg has signed for new office space.
In April 2008, Bilzin Sumberg signed a 10-year deal with Brickell Financial Centre, 600 Brickell Ave., one of the other new buildings under construction in the downtown area. But the law firm and the developer, Brickell Holdings, agreed in February to cancel the lease because the developer did not meet its construction deadlines.
The firm's lease at Brickell Financial Centre was originally estimated at $58 million. With increased competition in the marketplace, some industry experts estimate the current deal could be closer to $50 million.
``For the developer it's probably barely break even for the first five or seven years,'' said Jonathan Kingsley, managing director of Grubb & Ellis. ``Ojeda had to do whatever he could to build momentum. Once you have that lead tenant, good things tend to happen. One deal feeds on another.''
By moving to 1450 Brickell, Bilzin Sumberg is taking advantage of the chance to lock in a long-term lease during the down market. The firm was originally courted by all the new buildings, including Met 2 Financial Center, which will house new offices for the Greenberg Traurig law firm.
``This is a great market to be a substantial tenant looking for space,'' said John Sumberg, managing partner of Bilzin Sumberg.
The firm's lease at the Wachovia Financial Center expires at the end of 2010. It has been a tenant there since 1987, when the firm started with 10,000-square-feet and about 15 employees. Today, Bilzin has over 250 employees and uses about 75,000 square feet.
``We've grown in pieces,'' Sumberg said. ``We've never had a chance to design our own space from scratch.''
The move, however, raises questions among industry experts about how the market is going to absorb the almost2 million square feet scheduled for completion with the three new buildings in the downtown and Brickell Avenue area.
``We continue to cannibalize our own product,'' said Steven Hurwitz, senior vice president of Continental Real Estate Companies. ``There is concern that tenants sizable enough to fill those spaces are still limited in South Florida.''
The owners of 1450 Brickell are touting the advantage of being the first new building ready for occupancy. Ojeda says he is investing about $250 million in the project and remains committed for the long haul, so he's not worried about how quickly the project fills up. Financing is provided by a bank consortium headed by Spain's Bancaja.
``Now that things are starting to look better, tenants are starting to make their decisions,'' said Ojeda. ``It helps that people can actually see the building now.''
The exterior of 1450 Brickell is already 98 percent complete and will be fully enclosed within the next few weeks. Unique features include glass built to withstand hurricane winds of up to 327 miles per hour and a second back-up generator. The building will also be the first precertified LEED Gold Class-A office building -- the highest environmental rating -- in Miami's central business district.
``It's the whole package that makes the deal happen,'' said Tere Blanca, president and chief executive of Blanca Commercial Real Estate, which is handling the leasing for Rilea Group.
