Miami-Dade County approves purchase of West Dade Government Center

After residents raised concerns last year about Miami-Dade County’s plan to pay well above market value for a new government center, the commission approved an amended deal that dropped the price by about 11 percent.

Miami-Dade plans to buy the six-story Flagler Corporate Center at 9250 West Flagler Street in the Fontainebleau neighborhood in an unincorporated area of ​​the county for $182 million.

The new price is $23 million less than the $205 million price originally proposed by Mayor Daniella Levine Cava’s administration, which had caused a firestorm among Miami-Dade residents and real estate experts. The previous price was more than what two real estate appraisals found the site to be worth, with one of the appraisals pegging the value at $188 million and the other at $194 million, assuming the building is fully leased.

Miami-Dade commissioners approved the purchase during their meeting Tuesday. The county will use the property for a West Dade Government Center, merging departments that deal with real estate permits and approvals. These employees are currently located in offices across the country, hindering communication and collaboration among staff members and requiring project applicants to drive through Miami-Dade to get approval. This has contributed to a delay in application processing, including for homeowners needing permits for home improvements.

Completed in 1974, the 625,000-square-foot Florida Corporate Center has 467,000 square feet of rentable square footage. The province is purchasing the building and an adjacent parcel totaling 26 hectares.

The previous above-market purchase also took place in a context of office debt challenges due to higher interest rates, higher vacancy rates in suburban buildings due to remote working and overall economic headwinds.

The Flagler Corporate Center loan is listed as performing, meaning the landlord is making payments, but is also on the servicer’s “watch list” due to a decline in occupancy after Florida Power & Light vacated its space and a decline of the debt service coverage ratio. (DSCR of 1 is the breakeven threshold for a landlord to generate enough cash flow to cover debt payments.) According to Morningstar Credit, the building’s occupancy rate was in the low 20 percent range in December.

The building has seen some rentals. First Quality Homecare took 8,400 square feet and Simply Healthcare signed a five-year extension on the lease that represents 17 percent of the building’s net lettable area, Morningstar Credit shows.

Florida Corporate Center’s debt consists of a $36.7 million tranche and a $30.6 million tranche, Trepp’s records show.

New York-based Bushburg owns the property and paid $57.5 million for it in 2014, according to records. Under the leadership of founder and CEO Joseph Hoffman, Bushburg has named the property “The Current.”

Bushburg representatives did not return a request for comment.

Miami-Dade has touted the financial benefits of purchasing the building. According to a memo from county staff to commissioners, the deal would save Miami-Dade $861.8 million over 30 years by moving administrators into a county office instead of continuing to rent space. The savings estimate takes into account the county’s repayments for acquisition and capital improvement costs, as well as the expected increase in value of the Flagler Corporate Center.

“We are well below market value,” Commission Vice President Anthony Rodriguez said at the meeting.

Not everyone is completely convinced.

County administrators’ analysis supporting the deal showed that Lennar’s recent $68 million purchase of its headquarters at 5505 Blue Lagoon Drive had fallen to $318 per square foot. That’s more than the $291 per square foot price Miami-Dade will pay for the Flagler Corporate Center.

Commissioner Juan Carlos Bermudez argued that the two deals are not comparable.

The Lennar building is located just off the Dolphin Expressway and has signage, while the Flagler Corporate Center is west of the Dolphin and Palmetto freeways.

They are “very different,” Bermudez said. “Let’s make sure that when we say something is apples to apples, it really is apples to apples, not apples to oranges.”

The entire project will cost the county $256 million, including debt for the purchase, due diligence costs and capital improvements, the memo shows.

Miami-Dade employees from the departments of regulatory and economic resources, water and sewer, solid waste management and information technology will work at the Flagler Corporate Center, as will staff from the clerk’s office and the property appraiser’s office.

Commissioners added two requirements to the resolution on Tuesday. They directed county administrators to immediately begin the land use and rezoning process to allow for the development of affordable and workforce housing on a portion of the site, and to identify much on the site that could be used for a future Metromover stop.

Miami-Dade is exploring expanding the Metromover from the intermodal transit hub near Miami International Airport along Flagler Street and to Florida International University’s Modesto A. Maidique Campus.