I Hate Half-Assed Remakes

It looks like we will see a reboot of the 2008 financial panic, aka, "The Great Recession," only this time, it will be commercial real estate, (CRE) and not residential real estate that's going to cause a crash.

The WSJ is talking about a collapse in CRE in Miami, and one specific project, but it's really a canary in a coal mind:

The challenges swirling around a skyscraper known as One Brickell City Centre, which at around 1,000-feet high would be Miami’s tallest corporate tower, show how the city’s once-sizzling office market is starting to cool.

New York developer Related Cos. and Swire Properties, an international development firm founded by the British Swire family, are struggling to find an anchor tenant roughly a year after the groundbreaking. Related is restructuring its agreement with Swire, which owns the land, according to people familiar with the matter.

Swire even has considered selling the 1.55-acre site in Miami’s downtown, according to a document viewed by The Wall Street Journal.

Swire said it “continuously evaluates different options for its development sites” and that the one for One Brickell City Centre “is currently not for sale.” Related said it was continuing to work with Swire.

Rising interest rates and hybrid work have punished the U.S. office market. Miami for years weathered such headwinds better than most cities, thanks in part to a steady stream of corporate relocations and limited supply of office buildings.

………

But Miami is also suffering its most acute case of growing pains since the pandemic accelerated the business boom. Single-family home and rental prices have risen in Miami more than most anywhere else, and property insurance costs are soaring. Those trends make it harder for employees to move to the city. Executives who do relocate to Miami find that the top private schools are at capacity.

Yeah, the situation in Florida with property insurance verges on a Mad Max level apocalypse.

Related chairman Stephen Ross is among those whose interest in new South Florida projects has intensified. One Brickell City Centre, the 1.5 million-square-foot tower with 68 floors, is one of his more ambitious efforts. At the groundbreaking, Ross called it “the most important project in Miami,” while Swire president Henry Bott said the building would be “a beacon” for the city, with outdoor terraces on almost every floor.

Ross had pledged to bring in big-name tenants to the tower, which is scheduled for completion in 2028. He spoke with Ken Griffin about moving his hedge-fund firm Citadel to the site, according to people familiar with the matter.

………

Now the Citadel chief executive is no longer in discussions for a Dolphins stake. His company also passed on becoming the anchor tenant at One Brickell City Centre in favor of developing the waterfront site Griffin bought in 2022, where his plans include a luxury hotel for the top of the office tower.

Because Mr. Griffin no longer needs the office space, because people are working from home 3 days a week.

It's just one building, but it's points to a more general problem, and it looks like the lessons of the Great Recession have been unlearned in less than 2 decades.