The Brightline train system is an express rail service connecting Miami, Fort Lauderdale, and West Palm Beach. Recently purchased by Richard Branson’s Virgin Group, and to soon be renamed the Virgin Trains USA, this service offers 30-minute trips between the three existing South Florida stations. The connectivity provided by this rail system has already influenced the strategies of commercial real estate occupiers, investors and developers.
Office users are benefitting from improved alternative commuting. With heavy traffic being a fact of life in South Florida, Brightline’s alternative rail option has attracted users such as Viacom, Ernst & Young and Carlton Fields to the Miami Terminal at Miami Central 2 and 3. This commercial real estate development by Florida East Coast Industries consists of 320,000 square feet of office and retail space and was delivered in 2017. In April 2019, Miami Central 2 and 3 sold to Shorenstein for $159.4 million, or $498 per square foot. At the time it traded, this was the highest per-square-foot price for an office asset in Miami’s Central Business District (CBD) for the preceding 24 months.
Setting a record high in the Fort Lauderdale CBD is 1 E. Broward. The 352,000-square-foot office was built in 1984 and renovated in 2013. It sold to Pacific Coast Capital Partners for $108.5 million, or $308 per square foot. This is the most expensive product that has traded on a per-square-foot basis in the past 24 months. Four blocks from the Fort Lauderdale Terminal, Stiles is developing The Main Las Olas, a mixed-use project including 357,000 square feet of office. Thirty percent of this project is preleased to users that include Akerman, BBX Capital and Berger Singerman.
In West Palm Beach, tenants such as Comvest Partners and Lewis, Longman & Walker have already preleased office space at 360 Rosemary. This 300,000-square-foot development by Related is located immediately adjacent to the West Palm Beach Terminal and is projected to deliver in early 2021.
Commercial real estate investment and development opportunities with integrated or nearby rail are clearly in high demand across South Florida. Commuters that consider the daily cost of the Brightline compared to other options find that the high-speed train’s service is only slightly more expensive than driving. With decreased risk from avoiding the roads and the productivity made possible during the train ride, the premium paid makes Brightline an attractive and viable commuting alternative.
Future expansion of the rail service will connect West Palm Beach with Orlando (Phase 2) and will allow for further expansion to Tampa. Phase 2 will add 170 miles of track and connect Central and South Florida. As office users adapt to the new connectivity, we may see more offices located closer to the terminal stations. They may also be smaller in size to capitalize on having multiple offices in less expensive areas, rather than a primary location in the heart of one of the South Florida Central Business Districts.
Christopher Dubberly serves as Senior Vice President in Transwestern’s South Florida office where he specializes in tenant representation and agency leasing on behalf of occupiers and owners of commercial office space.
SEE ALSO:
- Ports Feed the Insatiable Appetite for Industrial Real Estate
- Infrastructure Not Making the Grade
- On the Right Track: Mass Transit’s Influence on the Office Market
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Photo source: gobrightline.com