Developers of Eighteen Sunset Propose Changing Use from Residential to Class A Office

Sunset Harbour

Susan Askew
Susan Askew

Developers of Eighteen Sunset Propose Changing Use from Residential to Class A Office:

Glut of residential inventory, lack of office product in Miami Beach cited as reasons

The developers of Eighteen Sunset, approved as a luxury residential building with retail and restaurant space in Miami Beach’s Sunset Harbour, are now proposing Class A office space as the primary use instead. Located at one of the entrances to the neighborhood in the 1700 blocks of Purdy Avenue and Bay Road, the project was approved in 2018 for 12 residential units, parking, and ground floor commercial space. 

The new proposal submitted to the Miami Beach Planning Board includes two penthouse residences but replaces the other residential units with two floors of Class A office space. The building’s exterior design remains the same. Office space is a permitted use in the CD-2 zoning district but the Planning Board's order required approval of any modifications in use. 

The project is being developed by Deco Capital Group. In a letter accompanying the new application, attorney Tracey Slavens of Holland & Knight, wrote the office use is “expected to generate a maximum of 128 employees.” 

“All required parking can be accommodated within the building and will be located on the second floor,” she noted.

Deco Capital Managing Principal Bradley Colmer said the change has been contemplated for more than year following feedback from a “soft marketing” effort for the residential units. 

“Given the glut of inventory that’s out there in almost every sector of the residential market and also the additional cost a luxury condo product entails,” Colmer said, the developers began looking at the office market. “There hasn’t been a new [office] building built in Miami Beach in 20 years.”

As “one of the premier neighborhoods within the City in terms of amenities,” Colmer said Sunset Harbour should be an area of high demand for office space. “There’s really no comparable product that currently exists.” 

While Barry Sternlicht is building a headquarters for his Starwood Capital at 2340 Collins Avenue, Colmer said, “That’s to some degree a legacy project for Barry and not an ideal office location for a number of reasons. From an access standpoint, Sunset Harbour is far superior – from a walkable amenity standpoint – so, we really felt like we would be building a building that’s almost peerless in terms of what currently exists on Miami Beach.” 

City Commissioners, led by Ricky Arriola, a Sunset Harbour resident, have considered encouraging the development of office space as a means of diversifying the City’s economy to reduce its dependence on tourism and hospitality. With the City in the middle of a shutdown due to the impact of the coronavirus, officials are expecting the hospitality industry to lag in its recovery as tourists have less money to spend and may have continued safety concerns with travel. The dependence on tourism and the volatile nature of the revenue is now evident as the City faces a budget gap that is “likely” to be $87 million.

The key targets for office space here are the financial services firms leaving New York, New Jersey, and Connecticut due to changes in the tax law. “We believe there is a significant demand among financial services firms, hedge funds, family offices, those sorts of users,” Colmer said. “We think it’s particularly attractive for them because a number of their principals might also live in the immediate vicinity of the neighborhood.”

Being able to quickly get to an office of “the highest caliber in terms of security” and “spectacular” views, Colmer believes, will be a big draw. “That’s one of the things we always loved about the site… the potential for the downtown views,” he said. “We’re effectively a waterfront building.”

Another attraction, the large balconies and terraces in the approved plans which will be maintained. “We think that will be a unique amenity for office users and something that is not typically found in most Class A office products,” Colmer said. “Office users these days want to have that sort of ability for flex space, yoga on the deck, lifestyle amenities” which “we believe will be a strong selling point for the building.”

The challenge to building Class A office space in Miami Beach, he said, is the current City code which he called “quite outdated and just a mishmash of different restrictions that have been put in place over time.” In the City of Miami, he said, “For a five-story building you can go to nearly 80 feet. You get 25 feet on the ground floor and then you get 14 feet per floor above that.” In Miami Beach, he said, a five-story building is 55 feet tall. Instead of 12 to 14 foot ceilings, you have 8 ½ to 9 feet, “so the challenge is creating the type of office product that is really suited to the user that we’re hoping to attract.”

“Hopefully, that’s something that the City will address as it’s going through this process and we’re in this crisis and the City’s looking to expand its revenue base outside of purely hospitality-focused product,” he said. “I think the type of users that we’re looking to attract have staying power and also will be the type of revenue that the City wants.”

Colmer said, in a way, the building already has attracted that kind of tenant as Deco Capital is considering taking some of the space for its own use.

“The city should look to incentivize development, particularly in commercial districts, to create better product, competitive product with other jurisdictions,” he said. “I think we’re falling well behind Miami in terms of creating contemporary, competitive product that attracts the highest end users but, one way or another, we are moving [forward] with this additional use to the building.”

The item is scheduled to be heard by the Planning Board in May, however, a vote is likely to be delayed if the City remains under emergency orders that prevent in-person meetings of the land use boards.

Details of the application and proposed change of use can be found here.

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