News And Press

 

Procacci Development Corporation, a Boca Raton, FL office developer, is shopping a deal to develop a 181,000-square-foot office building five miles west of Miami International Airport. The $50 million spec Class-A project is located in the Airport West submarket in The Dolphin Commerce Center, a large office park at the crossroads of SR 836 and Florida’s Turnpike Extension. Phil Procacci, a veteran niche player in the Florida office market, heads the firm. In the mid-1970s, he was one of the largest landlords to the state of Florida. After the Hurricanes of Jeanne, Francis, and Charlie in 2004, he developed a new breed of Class-A office buildings that were hurricaneresistant to 185-miles-per-hour and had 100% backup power to run the buildings for fourteen days. He developed two office buildings in W. Palm Beach, and four office buildings at The Dolphin Commerce Center that met the stringent Hurricane-resistance and power backup standards. Later this month permits for the 4-story spec building will be completed, with construction starting in early 2009. Delivery is expected toward middle of 2010. The project, known as The Crossroads at the Dolphin Commerce Center and located at 1905 NW 117thAvenue, has been pre-certified to gold-level LEED standards. It includes the hurricane-resistance and backup power features of the firm’s earlier projects.State Farm, Wells Fargo, Humana, Royal Bank of Canada, University of Phoenix and the General Services Administration (GSA). In January 2007 GSA leased 90,000 square feet from the firm in a standalone build-to-suit building at The Dolphin Commerce Center. Humana leased 56,000 square feet in the same office park in Q4 of 2007. The GSA has leased an additional 70,000 square of office space from Procacci over the past 90 days. "We continue to sign leases due to the value we have put in our buildings," said Procacci. The developer, which is vertically integrated with development, construction, leasing and property management capabilities, owns 43 acres in The Dolphin Commerce Center. The firm has the immediate possibility of developing another 180,000-square-foot office building near the project.

"We are covering two of the most important characteristics tenants are looking for in the Florida market; namely, a quality office environment through the requirement of LEED certification, but also the security and peace of mind of hurricane resistance. We think we can be very successful even in a soft market because this is something companies here really need to have to run their businesses," said Procacci. The office market in Miami-Dade County is strong due a large presence of international companies, particularly firms that trade with South America and the Caribbean. Many of these firms are growing, and unemployment is relatively low compared to other counties. He added: "There is not that much coming out of the ground right now, we are the only firm in the area offering this type of project, and large tenants with leases rolling over in 2010 are looking for renewal space right now."

 

Some of Procacci’s tenants have included State Farm, Wells Fargo, Humana, Royal Bank of Canada, University of Phoenix and the General Services Administration (GSA). In January 2007 GSA leased 90,000 square feet from the firm in a standalone build-to-suit building at The Dolphin Commerce Center. Humana leased 56,000 square feet in the same office park in Q4 of 2007. The GSA has leased an additional 70,000 square of office space from Procacci over the past 90 days. "We continue to sign leases due to the value we have put in our buildings," said Procacci. The developer, which is vertically integrated with development, construction, leasing and property management capabilities, owns 43 acres in The Dolphin Commerce Center. The firm has the immediate possibility of developing another 180,000-square-foot office building near the project.

 

Procacci said that there won’t be much new office product being brought onto the Florida market over the next few years, but that doesn’t mean there won’t be opportunities. He said: "We see upside in niche plays like the Crossroads project, some build-to-suit opportunities, and in acquiring distressed assets at significantly below replacement cost."

The Crossroads is the first project the firm is considering funding with a JV equity partner. In the past, the firm funded projects with its own equity and through the strength of its local banking relationships and ability to obtain government leases. "The project will either be pre-leased, or we will need to bring in third-party equity to assist in satisfying the leverage requirements that lenders are demanding today. We are looking to team up with an equity player who likes what we have done, likes our team and wants to grow our office building portfolio," said Procacci.

The equity required is $17 million; the hold period is 5-7 years. He added: "We are flexible and want to create a fair transaction between the two of us so that we can both make money and move onto to other ventures together. We want to find a partner not only who is willing to put up the equity, but one we feel compatible with." Procacci noted the sea change in the development business over the past few months, with more stringent underwriting standards. "Lenders are looking as hard at the sponsor as they are at the project," he said. They also want to know the strength of sponsor’s existing portfolio and be assured that distress in the portfolio won’t hurt the sponsor’s ability to move forward on new projects. The firm is talking to some large tenants and has a lease proposal right now to a prospective tenant for 60,000 square feet, about one-third of the building. He expects the building will have a total of 10-15 tenants when fully leased. For more information, call Phil Procacci at 561-416-1421.

Download PDF

---

Back