Demand for office space is rising in Miami Beach. The city’s vacancy rate was 8.2 percent in the third quarter 2021, compared to 10.7 percent for the overall Miami-Dade office market during the same period, according to Colliers. The average asking rent hit $51.57 a square foot compared to $44.59 for the overall Miami-Dade market in the third quarter.
Last month, Pebb Capital and Maxwelle Real Estate Group formed a joint venture with Miami Beach developer Russell Galbut to convert the shuttered Bancroft Hotel at 1501 Collins Avenue into a high-end office property. The partnership bought the site for $47 million from a Galbut-related entity. Galbut submitted plans for the conversion to the city of Miami Beach in April:
A joint venture plans to convert the closed Bancroft Hotel and a building next door in South Beach into high-end offices, marking another bet on the tourist area morphing into a workplace hub.
Pebb Capital, based in Boca Raton and New York City, and Miami-based Maxwelle Real Estate Group are partnering with Miami Beach investor Russell Galbut on the project, according to a Pebb news release. Pebb and Maxwelle bought the property at 1501 Collins Avenue for $47 million from a Galbut-affiliated entity.
The five-story property, developed in 1939, totals 100,0000 square feet, half of which will be converted into luxury office space, Pebb’s Todd Rosenberg said via email. The workspace will be built out in the Bancroft shell, and in the vacant space next door at Ocean Steps, which currently only has a small office on the second floor.
The property includes 210 underground parking spaces.
The vision is for the offices to offer amenities that capitalize on the nearby beach. This includes a private beach access only for select members who work onsite, according to the release. Other amenities are similar to those of a luxury condominium, such as a spa, fitness center, and food and beverage concepts provided by LDV Hospitality.
The joint venture plans to invest more than $20 million into interior gut renovations and exterior refurbishing, Rosenberg said.
Maxwelle Real Estate, whose director is Richard Weisfisch, is a real estate buyer, developer and investor, according to its LinkedIn page.
The Bancroft Hotel, designed by architect Albert Anis, is within the Miami Beach Ocean Drive-Collins Avenue historic district, although the next-door Ocean Steps property is not part of the district, according to the city website.
In April, Galbut, a co-owner and managing principal at Crescent Heights, submitted plans to a Miami Beach city board for the office conversion project.
This is the latest push by developers to establish South Beach — widely known as an anything-goes party destination — as an office market.
Earlier this year, Miami Beach requested developers submit proposals to develop parking lots near Lincoln Road into Class A office space, banking on demand fueled by executives migrating south. The aim is for a public-private partnership to redevelop the three lots next to Lincoln Road between Alton Road and Meridian Avenue. Combined, the land could be developed into more than 383,000 square feet of mixed-use office space.
In 2018, Barry Sternlicht’s Starwood Capital Group moved its headquarters from Greenwich, Connecticut to South Beach. It is building a new headquarters at 2340 Collins Avenue, while operating at a temporary space during construction.
Miami Beach in May approved an overlay district allowing 65-foot tall office buildings but banning hotels in the Sunset Harbour neighborhood
