A New York fund that burst into Miami's Wynwood district paying previously unheard-of sums has done it again—this time shattering its own per-square-foot record set in January.
Brooklyn-based RedSky Capital LLC dropped $29.5 million to buy the Wynwood Block, a retail complex at 2621 NW Second Ave. running the length of the neighborhood's main commercial drag between 26th and 27th streets.
The purchase follows a bevy of recent deals by RedSky and London-based JZ Capital Management, which have purchased just under $100 million worth of Miami real estate in the past 10 weeks.
Ben Mandell, an associate with the Miami office of brokerage RKF, said RedSky is not done yet. The investment venture is looking to pick up "as much as they can get" in central Miami neighborhoods, particularly Wynwood and the Design District.
"They're buying for the future of the area," he said.
Mandell, Drew Schaul and John Ellis at RKF represented RedSky in the transactions.
In the latest deal, RedSky is getting a retail asset that's fully occupied and a short walk away from a 5,485-square-foot building at 2407 NW Second Ave. that the fund purchased in January for $10.5 million. That purchase set a record $770 per square foot for the area.
While the RKF brokers declined to discuss per-square-foot pricing on the new Wynwood deal, public records show Wynwood Block contains 28,754 square feet of built-out space, which would peg the latest deal at a record-smashing $1,025 per foot. The $726 price paid for each square foot of land also sets a record.
"They're buying a strategically located asset," Mandell said.
He said RedSky, which is a large property owner in the Williamsburg and Bushwick neighborhoods of Brooklyn, is hoping to somewhat recreate the experience they had investing in New York real estate, where its investments in industrial neighborhoods on the verge of gentrification have paid off handsomely.
"In Williamsburg, Brooklyn, when they bought five years ago, everyone said they were overpaying," Mandell said. "Look at them now: They're sitting pretty."
Schaul added, "If the area gets up-zoned, which we think is a high possibility, the dollars and cents make sense."
Wynwood business leaders are working with the city to change the configuration of allowable uses in what had been a predominantly low-rise industrial enclave. Where almost no buildings exceed three stories, the future could bring eight-story mid-rises with up to 150 dwelling units per acre.
Aside from the up-zoning, making the math work on pricey Wynwood acquisitions would require bringing in a new class of tenant willing to pay higher retail rents, which at the moment are flirting with $60 a square foot. Schaul said Wynwood is being looked at by "the usual suspects, the anti-mall retailers that are catering to the millennials." Mandell cited national retailers Warby Parker, Shinola and TOMS as possibilities.
The Wynwood Block deal, which closed Feb. 27 but has yet to be recorded, follows two large RedSky deals a few blocks north in the Design District. On the same day, the company bought 1 NE 40th St., a two-story, 19,436-square-foot property, for $29.25 million.
On Sunday, RedSky closed on the building next door at 35 NE 40th St., a three-story, 17,391-square-foot retail property, for $28 million. It's occupied by Oak Tavern, a 140-seat bar and restaurant with an outdoor patio.
"That assemblage gives them a large footprint, and it could shadow-anchor Dacra's boutique hotel," Mandell said. "It's a great location for what we see to be high-end contemporary retail."
Schaul noted the Design District purchases "get back to the basics of location, location, location."
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