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Resolution 2022-32087RESOLUTION NO. 2022-32087 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA ACCEPTING THE RECOMMENDATION OF THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE AT ITS FEBRUARY 25, 2022 MEETING AND AUTHORIZING THE CITY MANAGER TO ISSUE A REQUEST FOR LETTERS OF INTEREST (RFLI) FOR MIXED -USE DEVELOPMENTS ON CITY -OWNED PARKING LOTS NEAR 41ST STREET. WHEREAS, the 41 st Street corridor is largely flanked by low -scale, commercial properties featuring street level retail with nearby schools, houses of worship, and a business environment primarily characterized by medical and professional services offices, restaurants, and other retail uses; and WHEREAS, the City is the owner of six (6) surface parking lots located adjacent to 41st Street, a major east -west thoroughfare and commercial corridor in the Middle Beach area; and WHEREAS, to incorporate stakeholder feedback and build upon the Alta -Gehl 41 st Street Vision Plan (2018), the City engaged AECOM to produce conceptual design options for G.O. Bond Project #40, the 41 st Street Corridor Streetscape Project (the "Project"); and WHEREAS, on January 13, 2021, the Mayor and City Commission approved the conceptual design and authorized issuance of a Request for Quotes (RFQ) for Design Development and Construction Administration Services for the Project; and WHEREAS, on September 17, 2021, the Mayor and City Commission adopted Resolution 2021-31838, authorizing negotiations with Brooks + Scarpa Architects, Inc. for architectural and engineering design services, with negotiations having concluded and the agreement being finalized; and WHEREAS, the Project is expected to revitalize the corridor with streetscape and infrastructure improvements such as new high-tech street lighting, landscaping, an expanded tree canopy, sidewalks, crosswalks, street furnishings, and reprogrammed on -street parking to enhance public safety, aesthetics, comfortability, and walkability for pedestrians with planned improvements and investments also intended to encourage business growth, and promote private investment and development; and WHEREAS, at its March 25, 2021 meeting, the Mayor's 41 st Street Blue Ribbon Committee adopted a motion to support ways to incentivize future development of the 41 st Street corridor including a potential upzoning of the adjacent city -owned parking lots and with a specific focus on residential and commercial uses); and WHEREAS, prompted by recent observations of businesses relocating and people migrating to Miami -Dade County and Miami Beach, and noting the City's efforts to promote Class A office development on Lincoln Lane through a Request for Proposals (RFP), during the its April 29, 2021 meeting, the Mayor's 41 st Street Blue Ribbon Committee unanimously voted in favor of recommending that a RFP be issued to repurpose lots adjacent to 41 st Street for Class A office space; and WHEREAS, parking revenue information for Fiscal Year 2018 through Fiscal Year 2021 shows a downward trend ranging from 20 percent to 45 percent, depending on the parking lot location, and although revenue data for Fiscal Year 2020 and Fiscal Year 2021 is influenced by the COVID-19 pandemic, the general downward trend was already evident in Fiscal Year 2019; and WHEREAS, since 2020, real estate analysts and national media have documented the influx of businesses, capital, and investment from various parts of the countryincluding California, Northeast and Midwest regions, and South Florida, including Miami and the relocation of financial, technology, and other business industries have had a particularly positive effect on the office real estate market, with professionals drawn to the sunny lifestyle and companies leasing spaces in amenity -rich buildings at record rates; and WHEREAS, some recent notable business deals and real estate transactions have been reported on 41 st Street, potentially paving the way for private redevelopment and adaptive reuse opportunities that may invigorate the corridor; and WHEREAS, the private sector has expressed development interest in city -owned parking lots to provide residential and commercial amenities such as workforce housing and a grocery store; and WHEREAS, the G.O. Bond Program investment for the 41st Street Streetscape Project may trigger private investments and potential redevelopment of existing properties desperately needing revitalization and activation and development of Class A office and other uses on 41st Street could have a complementary effect; and WHEREAS, with the steady demand for Class A office space regionally, Miami Beach is well positioned to incorporate additional inventory to attract local, regional, and national businesses; and WHEREAS, additional housing and commercial opportunities may be the catalyst for cultivating and strengthening the 41st Street corridor and business community by promoting economic resiliency and equity; and WHEREAS, at the February 25, 2022 meeting of the Finance and Economic Resiliency Committee (FERC), the FERC discussed development and issuance of a Request for Letters of Interest (RFLI) for Class A office development on city -owned parking lots and contemplated potential development scenarios and the benefits of incorporating additional uses such as residential (including workforce housing) and commercial uses in order to enhance and support business activity and provide employment opportunities for residents; and WHEREAS, the FERC unanimously recommended that a RFLI be developed and issued to gauge interest from the development community to develop mixed -use projects to include Class A office, residential, and/or commercial uses on city -owned surface parking lots adjacent to 41st Street; and WHEREAS, in furtherance of diversifying the Miami Beach economy and providing opportunities for residents, the Administration recommends that the Mayor and City Commission accept the February 25, 2022 FERC recommendation and authorize the development and issuance of a Request for Letters of Interest (RFLI) to gauge interest from the development E community to develop mixed -use projects to include Class A office, residential, and/or commercial uses on city -owned surface parking lots adjacent to. 41 st Street. NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE : CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission .hereby accept the 'recommendation of the Finance and Economic Resiliency Committee, at its February 25, 2022 meeting, and authorize the City Manager to issue a Request for Letters of Interest (RFLI) for mixed -use developments on, city -owned parking lots. near 41st street. PASSED and ADOPTED THIS Q day of ATTEST: MAR 1 4 2022, Rafael E. Grana o, City Clerk &arG/A 2022. Dan Gelber, Mayor 'IRORP,ORA €D•` L2 11_C,y..... 3 APPROVED AS TO FORM & LANGUAGE & FOR EXECUTION City Attorney DH Date Resolutions - R7 D MIAMI BEACH COMMISSION MEMORANDUM TO: Honorable Mayor and Members of the City Commission FROM: Alina T. Hudak, City Manager DATE: March 9, 2022 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF 'THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND ECONOMIC RESILIENCY COMMITTEE AT ITS FEBRUARY 25, 2022 MEETING AND AUTHORIZING THE CITY MANAGER TO ISSUE A REQUEST FOR LETTERS OF INTEREST (RFLI) FOR MIXED - USE DEVELOPMENTS ON CITY -OWNED PARKING LOTS NEAR 41ST STREET. RECOMMENDATION The Administration recommends development and issuance of a Request for Letters of Interest (RFLI) to gauge interest from the development community to develop mixed -use projects to include Class A office, residential, and/or commercial uses on city -owned surface parking lots adjacent to 41 st Street. Miami Beach's Middle Beach neighborhood is accessed via 41st Street, a major east -west thoroughfare and commercial corridor. The 41 st Street corridor is largely flanked by low -scale, commercial properties featuring street level retail. The corridor also features nearby schools, and houses of worship. The business environment is primarily characterized by medical and professional services offices, restaurants, and other retail uses. To the north and south are six (6) city -owned surface parking lots to the rear of properties abutting 41 st Street. Nearby residential areas are also serviced by the commercial corridor. The locations of the lots are as follows: • P58 — 4049 'Royal Palm Ave • P59 — 525 West 40 Street • P60 — 4000 Chase Avenue • P61 — 4141 Alton Road • P62 — 836 West 42nd Street • P63 — 4166 Royal Palm Avenue In December 2020, the City's real estate consultant analyzed each lot to identify the characteristics, opportunities, and challenges, in terms of the development potential of each lot. See Exhibit A (Parking Lot Analysis). Page 457 of 874 General Obligation (G O) Bond Streetscape Project To incorporate stakeholder feedback and build upon the Alta -Gehl 41 st Street Vision Plan (2018), the City engaged AECOM to produce conceptual design options for G.O. Bond Project #40, the 41 st Street Corridor Streetscape Project (the "Project"). On January 13, 2021, the Mayor and City Commission approved the conceptual design and authorized issuance of an RFQ for design development and construction administration services for the Project. On September 17, 2021, the Mayor and ' City Commission adopted Resolution 2021-31838, authorizing negotiations with Brooks + Scarpa Architects, Inc. for architectural and engineering design services. Negotiations have concluded and the agreement is being finalized. The $15 million Project is expected to revitalize the corridor with streetscape and infrastructure improvements such as new high-tech street lighting, landscaping, an expanded tree canopy, sidewalks, crosswalks, street furnishings, and reprogrammed on -street parking to enhance public safety, aesthetics, comfortability, and walkability for pedestrians. The planned improvements and investments are also intended to encourage business growth, and promote private investment and development. Mayor's 41 st Street Blue Ribbon Committee At its March 25, 2021 meeting, the Mayor's 41st Street Blue Ribbon Committee adopted a motion to support ways to incentivize future development of the 41 st Street corridor including a potential upzoning of the adjacent city -owned parking lots and with a specific focus on residential and commercial uses. During its April 29, 2021 meeting, the Committee unanimously voted in favor of recommending that a Request for Proposals (RFP) be issued to repurpose lots adjacent to 41 st Street for Class A office space. The recommendation was prompted by recent observations of businesses relocating and people migrating to Miami -Dade County and Miami Beach. The Committee also noted the City s efforts to promote Class A office development on Lincoln Lane through a RFP. Parking Revenue Data Parking revenue information for Fiscal Year 2018 through Fiscal Year 2021 shows a downward trend ranging from 20% to 45%, depending on the parking lot location. Although revenue data for Fiscal Year 2020 and Fiscal Year 2021 is influenced by the COVID-19 pandemic, the general downward trend was already evident in Fiscal Year 2019. Lot Spaces % Change (FY18- FY21 FY2021 FY2020 FY2019 FY2018 P58 44 -45 $30,903.72 $32,680.96 $50,860.17 $56,076.80 P59 74 -38 $36,740.24 $41,450.78 $71,434.62 $59,286.35 P60 96 -20 $52,581.21 $50,379.53 $63,309.04 $65,592.30 P61 49 -45 $34,460.45 $37,511.50 $60,625.44 $62,374.16 P62 32 -45 $25,910.63 $34,541.06 1, $46,782.38 $46,805.58 P63 199 A5 $43,249.59 $49,312.10 $76,791.64 $78,747.85 ANALYSIS Page 458 of 874 Even if revenue remained flat over the past few years, a reasonable assumption is that one or more of the parking lots may not be fulfilling its highest and best use. With G.O. Bond streetscape improvements on the horizon, it is anticipated that reconfigured parking access may promote parking utilization on the side streets connecting to 41 st Street and support business activity. Class A Office Maket-Trends Since 2020, real estate analysts and national media have documented the influx of businesses, capital, and investment from various parts of the country including California, Northeast and Midwest regions, and South Florida, including Miami. The relocation of financial, technology, and other business industries have had a particularly positive effect on the office real estate market, with professionals drawn to the sunny lifestyle and companies leasing spaces in amenity -rich buildings at record rates. With economic conditions improving and unemployment down in Miami -Dade, the close of the 2021 calendar year was marked by falling vacancy, record -high rents (six consecutive quarters of rises , according to real estate services and analysts firm JLL), and positive absorption, including the 15,000 sq. ft. expansion in Miami Beach of Wix.com, a participant in the Citys targeted business incentive initiative. Leasing activity for 2021 exceeded activity for 2020 and CBRE, Inc. notes that "much of the volume is represented by new -to -market activity and internal market moves as the pandemic became a catalyst for many organizations to restructure." Quarterly reporting by JLL, CBRE, and Cushman and Wakefield all indicate that asking rental rates in Miami Beach's Class A office market are at an all-time high and the city's vacancy rate has trended downward the past three quarters. According to JLL, "the forces driving the rapid rise of Miami's office market continue to strengthen and the repeated resurfacing of the global pandemic will only compound them." Recent Real Estate Activity and Inter In recent months, some notable business and real estate transactions have been reported on 41 st Street, potentially paving the way for private redevelopment and adaptive reuse opportunities that may invigorate the corridor. In April 2021, it was reported that David Grutman, acclaimed restauranteur and part owner of Groot Hospitality, would be taking over the operations of The Forge, arguably one of 41 st Street's most well-known dining venues located at 432 West 41 st Street. In December 2021, Terranova sold its 52,000 sq. ft. Miami Beach headquarters for $22 million. Reportedly, the buyers, Fifteen Group, plan to renovate and lease the 41st Street building to family offices, wealth management and financial firms. These financial services businesses align with the City's targeted industries, as determined by the City Commission in March 2021. In addition to actual sales transactions, for years there has been private sector development interest in the P60 parking lot located at 4000 Chase, adjacent to the Roosevelt Theater, one of the oldest, underutilized properties within the corridor. The owner of the Roosevelt Theater has expressed interest in redeveloping the site in conjunction with P60, for a mixed -use project with residential and restaurant components. Likewise, there has been similar interest in P63 parking lot located at 4166 Royal Palm Avenue. Page 469 of 874 As discussed by the 41 st Street Committee, a major national grocer is evaluating the potential for a grocery store to provide a new amenity that would service the residents and business in the area. During the February 25, 2022 meeting of the Finance and Economic Resiliency Committee (FERC), the FERC discussed development and issuance of a Request for Letters of Interest (RFLI) for Class A office development on city -owned parking lots. The FERC contemplated potential development scenarios and the benefits of incorporating additional uses such as residential (including workforce housing) and commercial in order to enhance and support business activity and provide employment opportunities for residents. Ultimately, the FERC unanimously recommended that a RFLI be developed and issued to gauge interest from the development community to develop mixed -use projects to include Class A office, residential, and/or commercial uses on city -owned surface parking lots adjacent to 41 st Street. [1] Jones Lang LaSalle Miami Office Insight Q4 2021. https://www.us.jll.com/ervtrends-and- insights/research/office-market-statistics-trends/miami [2] CBRE, Inc. Miami Office Figures Q4 2021 January 25, 2022 https://www.cbre.us/people- and-offices/corporate-offices/miami [3] Cushman and Wakefield Miami -Dade Office Marketbeat Q4 2021 January 15, 2021. https://www cushmanwakefield.com/en/united-states/insights/us-marketbeats/miami-marketbeats SUPPORTING SURVEY DATA According to the 2019 Customer Satisfaction Survey, the majority of Miami Beach businesses, approximately 70%, have a positive overall image of the city. The survey notes that a majority of Miami Beach businesses have a favorable perception towards quality of life, quality of city services, cultural offerings, crime prevention, sustainability, and quality of public schools— all factors cited as necessary when businesses consider relocating to a new market. Additionally, the Mayor and City Commission have identified the need for workforce and affordable housing in the City as a key objective in the City's 2019 Strategic Plan Through the Lens of Resilience with a management objective to "support affordable, compatible workforce housing through public and private partners for key industries, including the use of development incentives." FINANCIAL INFORMATION No fiscal impact is anticipated at this time. CONCLUSION The investment of $15 million through the G.O. Bond Program for the 41 st Street Streetscape Project will trigger private investments and potential redevelopment of existing properties desperately needing revitalization and activation. Development of Class A office and other uses on 41 st Street could have a complementary effect and was recommended by the Mayor's 41 st Street Committee and the FERC. As demand for Class A office space grows regionally, Miami Beach is well positioned to incorporate additional inventory to attract local, regional and national businesses. Business executives who have recently moved their residence to Miami Beach, and their businesses to other areas, may also be interested in new office inventory in Miami Beach in the long term. The Administration is conscious of the potential Class A office inventory being proposed and/or developed on Lincoln Lane and other areas of the City. Likewise, the Administration is mindful of the growth and absorption needed to create a sustainable and resilient business climate and Page 460 of 874 supportive of opportunities to increase affordable and workforce housing options to promote economic resiliency and equity. The Administration recommends developing and issuing a RFLI in Fiscal Year 2023, incorporating the city -owned parking lot(s) with the most appropriate development potential in consideration of community needs. Issuance of the RFLI in Fiscal Year 2023 offers the following benefits: - The level of interest in and responses to the RFLI may be influenced by the potential Lincoln Lane voter referendum outcome; - Potential RFLI respondents may be more or less interested in Class A office development depending on the Class A office inventory to be added to the market through the proposed Lincoln Lane projects; and - RFLIs provide an indication of current market interest for a Request for Proposal (RFP) process. Concerns regarding the Administration's ability to simultaneously develop a complex RFP while negotiating multiple transactions and achieving public support for Lincoln Lane needs to be considered if a RFLI and subsequent RFP are aggressively pursued. Applicable Area Middle Beach Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? Yes Does this item utilize G.O. Bond Funds? No Strategic Connection Prosperity - Revitalize targeted areas and increase investment. Legislative Tracking Economic Development ATTACHMENTS: Description ❑ CB RE 41st Street Parking Lot Analysis ❑ CBRE Miami Florida Office Figures Q4 ❑ Cushman Miami Market Beach Office Q4 2021 ❑ JLL Miami Office Insights Q4 2021 Page 461 of 874 STRENGTHS • Abutting CD-3 fronting 41 st Street • Approximately 1 /2 regular shaped site zoning acre, OPPORTUNITIES • Potential assemblage with two CD-3 parcels fronting on 41 st Street. -If upzoned, potential for small residential development or medical and/or corporate office -Close proximity to City garage CHALLENGES • Viability of investor acquiring this lot and abutting retail buildings unknown • Existing tenant lease(s) may encumber redevelopment THREATS • Referendum would be required to upzone the site P58 4049 Royal Palm Ave Parking Spaces 44 Lot Area 22,500 SF Maximum FAR 1.625 * Permitted FAR 36,562 SF Permitted Height 40 feet (DRB may allow an additional :55 feet for resilient measures * To the north, the property is adjacent to CD-3 Zoning District (which provides maximum FAR of 2.25 for lots not exceeding 45,000 SF), but it also abuts CD-1 Zoning District (1.0 FAR) to the east. A conservative estimate assumes an average of both districts to to provide 1.625 FAR for P58 Although not factored above, per City Code Section 142-277(d), CD-1 properties containing residential/hotel may receive additional 0.25 FAR bonus. Therefore, if a redevelopment qualified for the bonus, the applicable maximum and permitted FAR would increase STRENGTHS • Abuts desirable CD-3 zoned properties that are fronting on 41 st Street OPPORTUNITIES • If zoning allows, possible potential for residential redevelopment project. CHALLENGES • Wide and shallow parcel • CD-1 zoning provides for low density site • Abutting retail buildings with multiple owners makes site assemblage challenging THREATS • Referendum required to upzone site P59 525 West 40 Street Parking Spaces 74 Lot Area 33,800 SF Maximum FAR 1.625 * Permitted FAR 54,925 SF 40 feet Permitted DRB may allow up to an Height additional 5 feet of height, to account for resiliency measures • Evaluate site feasibility for workforce housing development. Parcel may be too shallow, with an alleyway separating development from retail fronting 4151 Street • Determine average annual parking revenue pre- COVID compared to annual expense. Subject to clarity on the preceding, continue to own and operate parking lot • Note from Administration: P59's annual revenues have trended downward (207 7: $60,153; 2018: $56,076; 20 7 9: $50,860) * To the north, the property is adjacent to CD-3 Zoning District (which provides maximum FAR of 2.25 for lots not exceeding 45,000 SF), but it also abuts CD-1 Zoning District (1.0 FAR) to the east. A conservative estimate assumes an average of both districts to provide 1.625 FAR for P59 Although not factored above, per City Code Section 142-277(d), CD-1 properties containing residential/hotel may receive additional 0.25 FAR bonus. Therefore, if a redevelopment qualified for the bonus, the applicable maximum and permitted FAR would increase STRENGTHS • Abutting CD-3 site on 41 st Street controlled by investor seeking to redevelop project • Large waterfront parcel OPPORTUNITIES • Possible multifamily use on northern half of site (aggregated with abutting parcel to the north), with potential food & beverage use fronting the waterway CHALLENGES • Abutting single-family home(s) • Taking the average of CD-1, CD-3, and RS-3 to achieve FAR limits the viability of development THREATS • Referendum required to upzone site • Neighborhood resistance P60 4000 Chase Avenue Parking Spaces 96 Lot Area 41,420 SF Maximum FAR 1.25 * North: Maximum FAR, 1.625 (CD-1/CD-3) Lot Split South: 0.5 (RS-3) Permitted FAR 51,775 SF 40 feet Permitted (DRB may allow 5 5 feet Height additional, for resiliency measures • Evaluate community and City Commission resistance, and feasibility of up -zoning and referendum approval • Evaluate separating P60 into 2 separate lots to maximize development value of northern half of parcel. Most logical buyer is likely the owner of Roosevelt Theatre, in order to enhance viability of redeveloping this site • If feasible, consider selling southern half of parcel to developer of single-family homes *Per Planning Director, FAR calculated by the average of the Single -Family Residential District (RS-3) to the south, which is limited by maximum unit size, and the CD-3 District immediately north and CD-1 District to the east, which are limited by maximum FAR Although not factored above, per 142- 277(d), CD-1 properties containing residential/hotel may receive additional 0.25 FAR bonus STRENGTHS • Potential value to be captured by selling northern portion of site to single family home developer and retaining portion south of Michigan Avenue OPPORTUNITIES • Could be a "quick win" to generate near term revenue • Housing market/ speculative development is very strong CHALLENGES • Primary parking serving a number of businesses in close proximity to the lot THREATS • Long-term average annual parking revenue may be more financially attractive than fee simple sale to developer P61 4141 Alton Road Parking Spaces 49 Lot Area 14,790 SF Maximum FAR 0.5 * Permitted FAR 7,395 SF Permitted Height 24 — 27 feet • Given parcel size, location, and the parking constraints in immediate vicinity, retain as parking asset to ensure continued success of the surrounding business community * Per Planning Director, Single -Family Residential (RS-4) regulations dictate zoning due to surrounding single-family district, therefore, maximum FAR is dictated by maximum unit size limitation of 0.5 in RS-4 STRENGTHS • Viable redevelopment site • Potential for multi- family residential or medical office development OPPORTUNITIES • Potential revenue generation via fee simple sale or ground lease CHALLENGES • N/A - subject to zoning interpretation and ability to increase density, potentially via referendum • N/A THREATS P62 836 West 42nd Street Parking Spaces 32 Lot Area 17,777 SF Maximum FAR 1.75 * Permitted FAR 31,110 SF Permitted Height 50 — 75 feet ** • Explore possibility of increasing residential density to RM-3 or RM-4 in order to maximize value to the City * Per Planning Director, development standards achieved by averaging the adjacent CD-3 (2.25 FAR) and RM-1 (1.25 FAR), to provide a maximum FAR limitation of 1.75. However, FAR varies depending on Lot Size and a survey would be necessary to confirm ** Maximum height in the RM-1 Zoning District is 50 feet and maximum height in CD-3 is 75 feet STRENGTHS • Sizable parcel to provide for planning and density flexibility OPPORTUNITIES • Potential for high -end ground floor grocer to serve community, with medical office, or market rate or workforce resi above • Any development to incorporate flex parking for North Beach Elementary CHALLENGES • Development regulations require averaging CD-3 (2.25- 2.75 maximum FAR) and RS-3 district (0.5 max unit size) THREATS • Potential community pushback dependent on scale of project and proposed uses P63 4166 Royal Palm Avenue Parking Spaces 199 Lot Area 74,245 SF Maximum FAR 1.625 * Permitted FAR 120,648 SF Permitted Height 75 feet • Most viable and potentially financially attractive City -owned lot along the 4151 Street corridor *Explore level of community engagement and neighboring stakeholder views on costs/benefits of upzoning site • Evaluate monetizing asset —fee simple sale or ground lease * Per Planning Director, FAR calculated by the average of the Single -Family Residential District (RS-3) to the nouth, which is limited according to maximum unit size, and the CD-3 District immediately south, which is limited by maximum FAR FIGURES I MIAMI OFFICE 1 04 2021 Finance and tech leasing continues to thrive .18.0 % 313,000 1.8 M Vacancy Rate SF Net Absorption SF Corstruction Ycte:+a u:•:;'n�.i eae Arr q:� a :n• F r. �.� , ..,, . OVERVIEW • Current tenant requirements total 1.6 million sq. ft. with financial services, technology & healthcare being the top industries in the market. Additionally, 585,000 sq, ft, of active requirements are new -to -market. • Net absorption for the quarter totaled 313,000 sq. ft., bringing the market positive for the year. Class A product accounted for all of the positive absorption in 2021, demonstrating a demand for high quality product. Rhetoric surrounding Miami's growth in recent years are coming to fruition as many firms that made headlines announcing their move to South Florida have begun to take occupancy. This movement, accompanied by internal market movers who adopted a "wait -and -see" approach due to pandemic uncertainty, are taking back their space previously put up for sublease while others are migrating to new spaces or expanding. The momentum associated with financial and technology firms moving to Miami has continued with recent signings such as private equity firm Apollo Global Management (23,000 sq. ft.) at 701 Brickell and e-commerce platform OpenStores (Miami Labs) signing at The Gateway at Wynwood (14,900 sq. ft.) in the fourth quarter. age 4bt5 018/4 $44.30 Full Service / Leaso Rate FIGURE 1: Historical Absorption, Deliveries and Vacancy 1,000,000 800,000 600,000 400,000 200,000 0 (200,000) (400,000) (600,000) (800,000) (1,000,000) CBRE 2016 2017 2018 2019 2020 2021 YTD ­­" Net Absorption (sq.ft.) � Deliveries (sq.ft.) Source: CBRE cam Total Vacancy Rate (%) 20.0 18.0 16.0 14.0 12.0% 10.0% 8.0% 6.0 4.0 2.0 0.0 CBRE RESEARCH c; 2021 CBRE, INC. FIGURES I MIAMI 1 042021 DEMAND There was positive absorption for the first time since 012020, prior to the pandemic's onset. This was mostly due to the move -ins from the Knight Foundation and D1 Capital in Coconut Grove. Accompanied by ACI Worldwide in Coral Gables and a host of fintech firms in Miami CBD, absorption for the quarter reached 313,000 sq. ft., the highest quarterly total on record. With close to 1.6 million sq. ft. of tenants in the market, this momentum should carry well into 2022. Leasing activity for 2021 year-to-date exceeded activity for the entirety of 2020. Much of the volume is represented by new -to - market activity and internal market moves as the pandemic became a catalyst for many organizations to restructure. Total leasing activity in 04 2021 was quadruple the leasing activity in 04 2020. New -to -market lease transactions totaled 50,017 sq. ft. or 36% of leasing activity for 04 2021. VACANCY The quarter closed with a vacancy rate of 18.0%, representing an increase of 112 bps year -over -year. Sublease space decreased by 121,000 sq. ft. to 806,000 sq. ft. quarter -over -quarter. Total sublease space stands at just 1.9% of total inventory. Vacancy pushed northward alongside new deliveries but is not expected to continue on that trajectory. PRICING Landlords continue to raise rents amidst strong tenant demand. Overall asking rents increased by 55% year -over -year to $43.90/sq. ft.. Brickell rates increased by 12.3% year -over -year to $65.21/sq. ft. for Class A space while Downtown Class A rates increased by 10.19% to $56.13/sq. ft. year -over -year. Page 469 of 874 2 CBRE RESEARCH FIGURE 2: Statistical Snapshot 04 2021 Brickell 7,316,030 12.6 13.8 45,940 3,871 864,300 55.91 Downtown 7,844,300 24.0 25.1 13,702 -64,244 48,000 46.50 dyx { �tt� r r i rz wa I d l'z v{o u41���1 uwii y"� ryl i� �!f,1 41 oii riM iii l,i�i lull' ,a Il9i prsr MII fi - :S;:x 1 �i 1. wYlµi471hi11'4r�.�l!.Juf,�i.a+�7,?'�*.'5 'rij. Airport/Dora[ 8,837,196 19.6 20.5 9,652 -159,951 0 35.32 Aventura 1,588,575 11.2 11.8 11,225 32,392 0 47.40 Biscayne Blvd Corridor 1,218,223 8.2 8.5 11,557 22,361 40,000 40.61 Coconut Grove 1,245,597 6.6 7.7 103,226 166,820 0 57.89 Coral Gables 6,362,846 16.2 17.1 55,120 4,637 163,741 45.65 Kendall 3,225,510 8.3 8.3 19,636 -24,475 0 31.58 Miami Beach 1,717,687 10.0 10.1 6,249 -22,245 191,430 52.06 Miami Lakes 1,472,951 16.5 17.4 1,945 40,745 82,903 26.29 North Miami 602,752 3.5 3.5 11,025 21,453 0 35.61 South Dade 467,756 27.7 27.7 0 -16,614 0 28.85 Wynwood 864,895 63.6 63.6 35,172 82,529 123,764 63.36 (o 2021 CBRE, INC. FIGURES I MIAMI I Q4 2021 FIGURE 2: Class A Brickell 4,597,512 9.9 11.1 52,713 1,472 864,300 65.21 Downtown 4.308,642 25.5 26.9 6,431 (26,423) 48,000 56.13 Airport/Doral 3,552,737 19.2 20.7 23,336 32,966 0 39.49 Aventura 1,278,151 11.7 12.4 11,225 30,958 0 48.40 Biscayne Blvd 313,319 4.1 4.1 0 724 0 60.00 Coconut Grove 625,055 4.2 4.2 101,175 169,743 0 69.38 Coral Gables 3,829,226 17.6 18.4 19,478 52,960 163,471 49.28 Kendall 1,168,152 12.1 12.1 (9,055) (48,064) 0 37.72 Miami Beach 896,802 11.5 11.6 3,509 (25,375) 136,430 57.83 Miami Lakes 417,674 23.5 23.5 0 5,833 83,903 28.39 North Miami 160.000 7.0 7.0 0 (1,790) 0 46.00 South Dade 0 N/A N/A N/A N/A N/A N/A Wynwood 764,250 71.3 71.3 31,138 81,640 123,764 63.36 Page 470 of 874 3 CBRE RESEARCH FIGURE 3: Class B Brickell 1,939,966 21.7 23.3 (809) 11,240 0 44.44 Downtown 1,462,427 28.4 29.7 3,044 (46,729) 0 39.34 V Fr,A �X:'7 FUT V 04111 UN .a IT 'T iv F P�Ivh . . EN t . Airport/Dora) 5,284,459 19.9 20.4 (13,684) (192,917) 0 33.70 Aventura 310,424 9.1 9.1 0 1,434 0 42.89 Biscayne Blvd 904,904 9.7 10.0 11,557 21,637 0 38.68 Coconut Grove 620,542 8.9 11.3 2,051 (2,923) 0 41.76 Coral Gables 2,533,620 14.1 15.2 35,642 (48,323) 0 38.93 Kendall 2,057,358 6.2 6.2 28,691 23,589 0 30.61 Miami Beach 820,885 8.5 8.5 2,740 3,130 0 44.76 Miami Lakes 1,055,277 13.7 15.0 1,945 34,912 0 25.63 North Miami 442,752 2.0 2.3 11,025 23,243 0 30.95 South Dade 467,756 27.7 27.7 0 (16,614) 0 28.85 Wynwood 100,645 5.0 5.0 4,034 889 40,000 35.23 I V 2021 CBRE, INC. FIGURES I MIAMI I Q42021 Market Area Overview lLO AVENTURA 1 MIAMI Y�r LAKES" c .rc �j +!'; k NORTH 92- r MIAMI HIALEAH w•fNIAMI BEACH S. �BISCAYNE.BLVD ALLAPATTAH CORRIDOR-` �h11AMtl,;' . AIRORTf �a CORAL-,2DOWNT.OWN - DPORAL :;CORAL ._WAY BRICKELL GABLESr , e2r yCOCONUT GROVE ... (F. .. - KEN DALL ECONOMIC OUTLOOK Continued job growth is expected to push the unemployment rate down to pre-COVID lows in 2022 amid historically low labor -force participation. Inflation should ease to the mid-2% range by year-end as supply chain disruptions ease and production capacity improves. The U.S. economy continues to expand amid the pandemic, with sturdy income growth supporting consumer spending. Business investment should remain elevated to satisfy demand and alleviate supply shortages, supporting GDP growth in the mid-4% range for 2022. In response to higher -than -expected inflation, the Federal Reserve is expected to end its quantitative easing program ahead of schedule in 02 and raise the federal funds rate several times over the course of the year. As the Fed raises short-term rates,10-year Treasury bond yields could hit the mid-2% range by year-end. Nevertheless, due to countervailing forces —particularly slower labor -force growth —financial markets do not anticipate a significant uptick in long -duration yields. DADE Contacts josh Bank Marc L. Miller Managing Director Associate Field Research Director +1305 3816423 +1305 3816428 Som. ,re—;­pofddW. .yfiw ­ffdr f bm1&"fb— Josh.bank@cbre.com m6rc.millerl@cbro.com ,� rr�arlenrtrM.ond redefinliion.ow Francisco Martinez Research Analyst +1305 3816432 francisco.martinezl@cbre.com © Copyright 2021. All rights reserved. This report has been prepared in good faith, based on CORE's current anecdotal and evidence based views of the commercial real estate market. Although CORE believes its views reflect market conditions on the date of this presentation, they are subject to significant uncertainties and contingencies, many of which are beyond CBRE's control. In addition, many of CORE's views are opinion and/or projections based on CORE's subjective analyses of current market circumstances. Other firms may have diff evert opinions, projections and analyses, and actual market conditions ir. the future may cause CORE's current views to later be incorrect. CORE has r.o obligation to update its views herein if its opinions, projections, analyses or market circumstances later change. Nothing in this report should be construed as an indicator of the future performance of CBRE's securities or of the performance of any other companys securities. You should not purchase or sell securities -.of CORE or any other company —based on the views herein. CORE disclaims all liability for securities purchased or sold based on information herein, and blpboeg"Ieli",13 Waive all claims against CORE as well as against CBRFs affiliates, officers, directors, employees, agents, advisers and representatives arising out of the accuracy, completeness, adequacy or your use of the information herein. CBRE 16.4% Vacancy Rate 55K YTD Net Absorption, SF _ $45.04 Ak Asking Rent, PSF (Overall, All Property Classes) ECONOMIC INDICATORS Q4 2021 Y0Y Chg 1.2M Miami Employment 3.7% Miami Unemployment Rate ECONOMY Miami -Dade, part of the South Florida region, had an unemployment rate of 3.7% in November 2021, down 10 basis points (bps) from the previous month and 450 bps lower than one year ago. Nonagricultural employment rose by 70,100 jobs, or 6.2%, over the year to 1.2 million. Every single employment sector gained jobs year -over -year (YOY) except for those in the construction and education and health services industries which decreased by 1,300 jobs total. Office -using employment, including those in Professional & Business Services, Financial Activities and in Information, increased by 28,500 jobs in the last 12 months. SUPPLY Overall vacancy ended the year at 16.4%, an increase of only 20 bps when compared to the fourth quarter of 2020 but 90 bps lower than the previous quarter. This was the second consecutive quarter where vacancy lowered from the previous quarter since the _ start of the pandemic in early 2021 when vacancy increased for six consecutive quarters. Class A vacancy reached 20.8%, an increase of 140 bps YOY while Class B lowered by 110 bps to 14.6%. New Class A construction deliveries, most notably the Gateway at Wynwood project in the Biscayne submarket, delivered with substantial vacancies and were the main drivers for the jump in Class A vacancy. There was over 986,000 square feet (sf) under construction with the bulk coming from 830 Brickell in the Brickell Avenue submarket. That project's expected delivery date, already 50% preleased, was the first half of 2022. DEMAND New leasing activity totaled over 2.7 million square feet (msf) in 2021, 115.0% higher than 2020 and 6.0% higher than the pre- 12-10o. pandemic levels in 2019. The flight to quality trend continued as Class A space accounted for 1,8 msf, the highest annual amount Forecast on record in the last 15 years. The Airport West Submarket, the largest office submarket in Miami -Dade, accounted for the most leasing activity in the year with over 763,000 sf, or 27% of the total. Positive net absorption in both the third and fourth quarters of ® 2021 pushed absorption positive for the year with 55,000 sf. MARKET PRICING m 4.2% U.S. IV IV Unemployment Rate Numbers above are monthly figures, Fl. Dept. Economic OPP Overall asking rents reached $45.04 per square foot (psf) full service, an increase of 8.6% YOY and the first time above $45.00 psf. New construction with higher -than -average rents and landlords that continued to push asking rates, in part due to the heightened demand, were the main drivers for the increased rates. Several submarkets reached all-time high asking rates including Brickell, Downtown, Biscayne, Coral Gables, and Miami Beach. Class A rental rates climbed 8.2% to $51.02 psf in 12 months, driven by most office users who favored premier assets. Rates in the CBD, which includes both Downtown and Brickell Avenue, ended the year at $49.70 psf, an increase of 11.8% in the last 12-months. SPACE DEMAND / DELIVERIES 950 j 700 ' 450 -0 5L-ft___W_t — 0 -300 -550 800 201E age 472 gf,074 2020 2021 OVERALL VACANCY & ASKING RENT $45 $30 $15 $0 2018 2019 2020 2021 ■NetAbsorption, SF ■Construction Completions, SF r_ Asking Rent, $ PSF --Vacancy Rate 20% 15% 10% 5% MARKET STATISTICS INVENTORY SUBLETVACANT DIRECT VACANT OVERALL CURRENTQTR OVERALL YTD LEASING UNDER CNSTR OVERALL AVG OVERALL ASKING RENT ASKING RENT AVG SUBMARKET Brickell Avenue (SF) (SF) 6,533,887 71,438 (SF) VACANCY RATE 810.205 13.5% OVERALL NET ABSORPTION ABSORPTION -3.343 (SF) ACTIVITY -80,194 (SF) 585,558 (SF) 638.355 (ALL CLASSES)' (CLASS A $56.27 $b4.4b Downtown 7,168,954 91,271 1,739,986 25.5% 33,254 -148,156 210,643 0 $47.04 $55.60 0x;D 13,702,.341 10,709 2,55%191 19.411, L"9.3'11 •228,354) 796,101 631).355 t49.70 S58.22 Coral Gables 6,284,671 51,097 961,409 - 16,1% 40,594 -34,699 265,709 163,741 $45.04 $48.65 Airport West 10.919,083 98,883 1,896,406 18.3% 80,448 -32,827 763,016 0 $36.05 $37.66 Coral Way 626,935 4,903 19,563 3.9% -3,100 -9,375 13,441 0 $32.07 N/A South Dade 3,338.113 0 253,997 7.6% -6,680 18,259 120,874 0 $35.84 $43.62 Northeast Dade 2.504,767 6,217 169,333 7.0% 13.587 62,040 152.317 0 $46.81 $53.07 Biscayne 2,715.513 4,159 745.103 27.6% 96,786 195.892 345,676 184.300 $57.81 $61.80 Miami Lakes 1,772,858 0 259.276 14.6% 38.616 52,221 134.905 0 $29.94 $30.55 Coconut Grove 1,214,163 29.023 128,316 13.0% 24,429 111,128 111,782 0 $50.87 $66.55 S. Gables/ S. Miami 562,504 0 16,117 2.9% 3,079 816 13,851 0 $31.82 N/A East Airport/Central Dade 641,936 0 49.317 7.7% -3,544 -8.150 9,141 0 $28.29 N/A Miami Beach 1,837,296 1,325 160,732 8.8% -21,154 -72,235 64,358 0 $57.12 $59.87 Nonpr,.E1D15nin,rban 32,417"4 195.507 358,316 1,G59.Str'. 7,209,759r 11-014, ^.o'p;?G; 2113.00 1,955,070 348,041 5.12.3$ 04 s,n.7.e7 S51.02 TOTALSMIAMI r .:r 'Rental rates reflect lull service ask'ng KEY LEASE TRANSACTIONS 2021 - F. ..ERT 1000 Waterford Airport West Subway 64,256 New 333 Avenue of the Americas Downtown Royal Caribbean Crulses 50,727 New, 830 Brickell Plaza Brickell Avenue Microsoft Corporation 43.885 New 'Renewals not included in leasing statistics KEY CONSTRUCTION COMPLETIONS 2021 TENANT SF OWNER I DEVELOPER :PROPERTY.- 2916 North Miami Avenue Biscayne None 220,900 Rose & Berg Realty/Rose & Berg Really 2850 Tigertail Avenue Coconut Grove D1 Capital Partners L.P. 111,000 The Related Group/Terra Group Page 473 of 874 OFFICE SUBMARKETS 140m I'll 101,1b * onal. "k, M Airport Chris Owen Research Director Tel: +1407 541 4417 chris. owen(ED-cushwake. corn y A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION Cushman & Wakefield (NYSE: CWK) is a leading global real g-0 estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is 4ii".4 4 ffl;�V� ft� '14 1 among the largest real estate services firms with A':'.'..T" approximately 50,000 employees in over 400 offices and 60 4 countries. In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, p: leasing, capital markets, valuation and other services. To 0. learn more, visit www.cushmanwakefield.com or follow ushWake on Twitter. @2022 Cushman & Wakefield. AM rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is Page 474 of 874 presented without any warranty or representations as to its accuracy. www.cushwake.com JLLQ4 2021 Miami Asking rates simmer near all-time highs as positive absorption finally drives down vacancy • Miami saw strong leasing activity in Q4 led by McDermott Will & Fundamentals Forecast Emory's expansion and Royal Caribbean's new lease at One Biscayne. YTD net absorption 93,788 s.f. • While the most desirable assets continue to push asking rents, most Under construction 1,078,975 s.f. buildings kept rates in line with the previous quarter. Total vacancy 19.5% • Strong absorption inQ4broughttheyear-to-date net total into Subleasevacancy 407,716s.f. positive territory. Direct asking rent $46.19.s.f. NO - Sublease asking rent $38.95 p.s.f. Poo - Concessions Stable ► Office market fundamentals are finally starting to catch up with market Supply and demand (s.f.) Net absorption momentum in Miami as 2021 closes with positive absorption, falling vacancy ■Deliveries and record -high rents. While rents have been growing for consecutive 1.0 ; quarters, positive absorption remained elusive until H2 2021, when firms j began to occupy their spaces. Vacancy also fell markedly in Q3 thanks to C 20.0 ..-�_.. - f L absorption and boosted by the owner user purchase o 850 & 860 eJeune which removed more than 160,000 s.f. of vacant space from inventory. Several sizable leases signed this quarter indicate net absorption will i 2017 2018 2019 2020 2021 continue to trend positive as the market expands. Apollo Management leased a new 23,000 s.f. space at 701 Brickell, Wix.com expanded by 15,000 Total vacancy (%) s.f. in Miami Beach, RCL leased a new 50,000 s.f. space Downtown, and McDermott Will & Emory doubled their footprint at Wells Fargo Center to 30% 51,000 s.f. 20% Robust preleasing among assets currently under development will help to moderate vacancy as inventory continues to grow. 830 Brickell, Miami's 10% oe largest office project under construction is now roughly 50% pre -leased. 545 Wyn is negotiating with several larger users and will likely be fully leased 0% ---- before the close of 2023. The Dorsey has only one floor remaining and 2007 2009 20112013 2015 2017 2019 2021 Gateway at Wynwood continues to see strong activity. This will drive additional development throughout the market, but especially in Wynwood. Average asking rent ($ p.s.f.) Outlook $50 , Direct Sublease The forces driving the rapid rise of Miami's office market continue to strengthen and the repeated resurfacing of the global pandemic will only $40 compound them. Capital migration continues to accelerate in business - friendly Miami, alongside the increasing appeal of the city's open outdoor $30 spaces and lush outdoor amenities. Asking rent growth may stagnate in the near -term but falling vacancy rates and rising absorption will ensure $20 i _ sustained growth over the long term. 2007 2009 20112013 2015 2016 2019 2021 For more information, contact: Ben Landes I beniamin.landesIRM. of 874 © 2021 Jones Lang LaSalle IP, Inc. All rights reserved. Miami I Qa 2021 JLL Research Report Office Statistics Wynwood-Design District Totals 1,260,426 99,652 210,724 16.7% 43.5% 43.5% 560.09 333,929 202,676 Brickell Totals 6,735,319 101,673 24,290 0.4% 12.1% 13.2% $64.20 0 664,300 Downtown Miami Totals 7,180,797 3,996 -245,768 -3A% 24.4% 25.9% $46.43 0 185,258 CBD Totals 15,176,542 205,321 -30,7S4 -0.1% 20.5% 21.7% $54.72 333,929 2,052,234 Aventura Totals 1,550,384 34,242 170,439 11.0% 23.7% 24.1% $53.95 304,000 0 Coconut Grove Totals 1,249,287 364 133,437 10.T% 11.0% 12.2% $53.97 113,127 31,000 Coral Gables Totals 6,277,416 -7,386 -131,819 -2.1% 17.2% 18.2% $45.71 0 163,741 Kendall Totals 2,779,814 13,236 -9,450 -0.3% 12.5% 12.5% $35.69 0 0 Miami Airport Totals 10,520,852 .97,850 -178,818 -1.70.E 19.1% 20.4% $34.56 0 0 Miami Beach Totals 1,883,585 28,586 68,829 3.7% 12.5% 12.7% $58.85 32,015 0 Miami Lakes Totals 1,376,739 21,315 51,924 3.8% 18.2% 18.4% $28.93 0 0 Suburbs Totals 25,638,017 188,207 304,S42 0.4% 17.3% 18.1% $40.48 449,142 194,741 Wynwood-Design District A 994,504 94,742 186,845 18.8% 51.4% 51.4% $60.44 300,768 159,210 Brickell A 4,982,034 85,513 33,416 0.7% 9.3% 10.7% $72.25 0 664,300 Downtown Miami A 4,439,971 -26,561 -112,416 -2.5% 23.4% 25.5% $55.80 0 48,258 CBD A 10,416,509 153,694 107,845 1.0% 29.4% 20.9% $62.72 300,768 871,768 Aventura A 1,226,289 32,620 157,000 12.8% 27.4% 27.8% $56.26 3G4,000 0 Coconut Grove A 705,044 21,166 141,178 20.00h 5.9% 6.3% $67.90 113,127 0 Coral Gables A 4,333,813 -11,333 -103,375 -2.4% 18.7% 19.9% $47.62 0 163,741 Kendall A 1,046,724 -13,958 -52,907 -5.1% 18.6% 18.6% $39.23 0 0 Miami Airport A 5,680,675 105,432 -100,777 -1.8% 24.0% 25.7% $35.76 0 0 Miami Beach A 663,696 7,844 35,810 5.4% 10.1% 10.1% S63.12 0 0 Miami Lakes A 411,618 7,105 .8,507 -2.1% 23.2% 23.2% $30.42 0 0 Suburbs A 14,067,859 148,876 68,422 0.5% 20.7% i 21.8% $42.96 417,127 163,741 0• Wynwood-Design District B 265,922 4,910 23,879 9.0% 13.9% 13.9% $48.50 33,161 43,466 Brickell B 1,753,285 16,160 -9,126 -0.50r6 20.0% 20.1% $43.19 0 0 Downtown Miami B 2,740,826 30,557 -133,352 -4.9% 25.9% 26.6% $32.62 0 137,000 CBD B 4,760,033 51,627 -118,699 -2.5% 23.0% 23.5% $36.23 33,162 180,466 Aventura B 324,095 1,622 13,439 4.10,b 9.7% 10.2% $42.31 0 0 Coconut Grove B 544,243 -20,802 -7,741 -1.4% 17.6% 19.7% $50.92 0 31,000 Coral Gables B 1,943,603 3,947 -28,444 -1.5% 13.9% 14.3% $39.05 0 0 Kendall B 1,733,090 27,194 43,457 2.5% 8.8% 8.8% $32.93 0 0 Miami Airport B 4,840,177 -7,582 -78,041 -1.6% 13.3% 14.2% $33.17 0 0 Miami Beach B 1,219,889 20,742 33,019 2.7% 13.9% 14.2% $56.09 32,015 0 Miami Lakes B 965,121 14,210 60,431 6.3% 16.1% 16.3% $28.10 0 0 Suburbs B 21,570,218 39,331 36,120 0.3% i 13.1% i 13.7% $37.17 32,015 31,000 92021 Jones Lang LOSatte IP, inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is mode to the accuracy thereof. Page 476 of 874