Cain International’s Justin Oates Talks 830 Brickell and Miami’s Office Stock
Cain International’s man in Miami, Justin Oates, talks leasing at 830 Brickell, the Magic City as a tech draw and the evolution of the area’s office stock
Perhaps the most buzzed-about address in Miami today is 830 Brickell.
A partnership between Cain International and OKO Group is the force behind the 55-story trophy office tower, which so far has attracted mega-tenants including Microsoft (MSFT) and Canadian asset manager CI Financial (which doubled its space last month). The draw is clear: 830 Brickell offers new-to-market tenants the top-tier Class A office space they are accustomed to in other gateway cities — something that is still a rarity in Miami.
The Cain and OKO partnership is also the team behind Missoni Baia and Una Residences, luxury condominium towers that reach 57 and 47 stories, respectively.
Justin Oates joined Cain in November 2019 to lead the firm’s Miami office and, even as a global pandemic loomed just around the corner, he hit the ground running.
Commercial Observer caught up with Oates to find out why he believes Miami isn’t even close to reaching the crest of its impressive growth wave.
Commercial Observer: You’re Cain International’s “Miami guy,” but you’re not from Florida originally, correct?
Justin Oates: I grew up predominantly in the Boston area. I was actually born in Connecticut, lived in Manhattan for a couple of years, Boca Raton [Florida] for a couple of years, but from the age of 10 onwards I was in Boston. I had experiences in different cities moving around as a kid, but I always had a lifelong South Florida connection between having grandparents down here and my father has now retired down here.
You joined Cain in 2019, following roles with Savanna and Imperial Companies in New York City. Why was the opportunity a good fit for you?
When I was thinking about the next phase of my career, I was thinking about where I wanted to be long term, and I knew I wanted the next chapter to be in a growing market. I wanted to get out of New York, and Miami made the most sense to me given my personal connections to South Florida. I love New York and think it’s the most interesting real estate market in the world, but I wanted to establish my career in a different market that I thought could experience a wave of growth over the next 10 to 20 years.
I was very fortunate to be connected with Cain in 2019. I wouldn’t have moved to Miami for just any role, but this role was interesting to me because I was able to step into an existing portfolio, and a partnership with OKO Group on three really high-profile projects: 830 Brickell — a 650,000-square-foot trophy office tower we’re developing across from Brickell City Center — Missoni Baia and Una Residences. The opportunity to step into these projects and really learn the market was something really unique, and being part of a global firm like Cain International was really compelling.
So, I moved to Miami on Feb. 1, 2020 — right before the pandemic. There was all this concern about the virus then, but nobody really knew how big of an issue it would eventually be. It was a pretty interesting time to adjust to a new city.
What specifically appealed about being in South Florida?
To me, Florida is at this really unique tipping point where Miami and South Florida [more broadly] have experienced a ton of growth over the past 10 years and it’s a good indication of what’s still to come. I think people with a pessimistic view will look at Miami’s growth over the past 18 months and say, “This is all pandemic-related; people are fleeing to places they can be outdoors,” but if you look at the growth, it’s been sustained over decades and a lot of the tenants moved pre-pandemic.
The development of Brickell and Miami over the past 10 years has created this critical mass of infrastructure as well as residential, commercial, dining and fitness options that didn’t exist before. Going back to the `90s and early 2000s Miami was a tourist destination, and Brickell and Downtown weren’t major business hubs. The development wave that happened from 2007 onwards has shifted the perception of Miami as a leisure destination, with all the focus on South Beach, to it now being a real hub for domestic business.
How do you split your time between projects?
No two days are the same. We have the projects we’re partnering with OKO on, we have a land site we’re evaluating next steps on, and Cain has also been appointed to asset manage and execute on the redevelopment of the Delano hotel — we don’t have a partner on that. So I’m involved with the Delano project’s strategy, execution and programming. We’re looking to relaunch the hotel in the next few years and are working with the historic preservation board and engaging an architect and interior designers. We’re in the pre-development stage but it’s a really unique and exciting project and the asset played an integral role in the reemergence of South Beach in the early ‘90s.
The Missoni Baia project will be completed in the next couple of quarters, and sales have been really strong over the past six to 12 months, with lots of domestic buyers. We’re now 90 percent sold, and Cain and OKO did over $300 million in condo sales volume across our Miami projects in 2021. Una Residences is scheduled for completion in 2023, and I’m really excited for that one — it’s a marquee development on Brickell waterfront.
But, I spend most of my time day to day on 830 Brickell. It’s a trophy office tower like South Florida has never seen, and the first standalone office tower in Miami in over 10 years. We saw an opportunity four years ago to build something truly unique in a city center location and create a new tier of office space in Miami. Miami tenants have accepted a less-than-stellar office product and we’re now moving the office sector forward. It’s a high-rise building with floor-to-ceiling gas, highly amenitized, valet parking, and we’re looking to integrate as much technology as we can.
It’s been interesting to watch the application of technology, as real estate is a pretty old-school industry.
It’s something we’re really focused on, and we want to create a tenant experience that doesn’t exist in South Florida. We see 830 Brickell as being the One Vanderbilt or Hudson Yards of Miami.
Building a building of this quality also really helps attract new-to-market tenants. For a tenant that’s coming from New York or San Francisco or Chicago and is used to the Class A office experience, we’re the only game in town in terms of an office product they may be accustomed to in another gateway city.
Does that open up an opportunity to reposition aging office stock?
I think a lot of groups are kicking the tires on that, because there is a lot of office stock between Downtown and Brickell. So there is an opportunity for sure in certain areas to bring 30-year-old buildings up to today’s standards, but it’s much easier to build from scratch than retrofit. It all comes down to economic analysis.
You’ve had a whirlwind of leasing activity at 830 Brickell.
We’ve had a ton. We’re in discussions with enough tenants that would occupy the entire building, so we’re now in a position where we’re talking with really interesting companies. We announced the Microsoft lease [in September 2021], which was a major milestone for Miami — a blue chip firm in the city’s urban core. I’m really proud of our team for getting that one done.
Miami historically has been home to smaller tenants, taking 4,000 or 5,000 square feet. We’re talking to large tenants, relative to what the Miami market is used to. The CI Financial lease was another major milestone [the firm took 20,000 square feet in September 2021 and doubled that space only last week]. To me, it’s just as important as Microsoft, as CI Financial is headquartered in Toronto, manages $250 billion in assets and was looking for a U.S. headquarters. They had a few cities on their list but chose Miami. And, when they focused on Miami they only really considered our building as they were used to Class A product in Toronto. We moved quickly to get the deal done and we’re thrilled to have them as a tenant.
Do you see Miami as a future tech hub?
Well, the mayor of Miami has been a very good booster of the city, because he’s gotten people to talk about Miami as a potential tech capital. Whether that happens or not is to be determined, but the conversation he’s started has forced people to focus on Miami like they may have focused on Boston or Nashville or Denver a few years ago. I’ve been speaking with people who are founders of small to mid-sized tech companies and they’re asking, “Should I be in Miami?” If enough people want to be here it creates a follow-on effect, and the ingredients are there.
The past 10 years of development have created a dynamic enough city that could attract all this talent. The scale to which a tech hub happens is unclear, but we will see a number of tech firms — whether they’re large-scale, blue chip, public companies like Microsoft or small-scale start-ups focusing on Miami as a compelling place to do business — being interested.
How did the partnership with OKO Group come about?
The partnership is a longstanding and successful one. Cain’s CEO [Jonathan Goldstein] was connected with the CEO of OKO and it started at a principal-to-principal level before forming a true development partnership to do some deals of scale. In 2016, when most of our current sites were acquired, not many people were developing. There was the Zika virus and other concerns in South Florida, but they both shared a view that this was a place that was going to continue to grow over the long term, and they wanted to continue to develop best-in-class assets. We have four projects in partnership with them today and we work very well together.
Are any of your family members in real estate?
Nobody is in real estate, but I got the bug in college. I got my real estate license, and was renting off-campus houses to friends of mine at Boston College. It was a side job, but I knew I wanted to be in real estate. I graduated in the middle of the global financial crisis, and had a job offer from Bear Stearns that was then canceled, which I took as a sign to consider staying in school [laughs], so I found a really interesting program at the University of Virginia, a one-year master’s focused on finance and business — basically a mini MBA. So, I did that and from there I was introduced to Eastdil Secured and joined their New York City office in 2010.
Do you think starting off your career at the bottom of the market was a useful beginning?
For sure. Many in the market today haven’t lived through a significant downturn. At that time it was very interesting because there were a bunch of workouts, there was the Lehman Brothers bankruptcy, and there was true distress in the market. I had an interesting time working with companies who were trying to find opportunities within that distress or working through the legacy assets of companies that had effectively failed in the downturn.
How was the transition to the development side when you joined Savanna in 2012?
I remember on my first day at Savanna I was thrown into a project management meeting with architects and engineers and leasing brokers, and it was something totally different for me. Now I’m at a point in my career where I do both the analytical and capital side as well as the development and execution sides.
But, Savanna was an amazing experience. I was fortunate enough to join at a time when they had raised all this capital and were starting to deploy it, buying B-notes and mezz pieces and also [Class] B office buildings at really good values and a good basis. They started the business in the `90s and started their second fund in 2011, which I got to live through. It was really interesting because we were investing and executing on investments at the bottom of the market, and then seeing the market turn around. I remember thinking, “OK, we need to see this investment hit a certain level of performance and show a certain rent,” but things recovered far more quickly than people anticipated and Savanna ended up doing really well during that cycle.
What’s the most memorable Savanna project you worked on?
To me, 1375 Broadway was a really interesting asset. When Savanna acquired it, the occupancy was 40 or 50 percent and it was a tired building with a split fee and leasehold position. They were able to collapse that, have a 100 percent fee interest in it, and then reinvest into the asset. They had the vision that that whole Times Square South corridor could change. I remember in 2013 it was primarily discount retail, knock-off watches and electronics, and over the past 10 years it’s turned around dramatically. Projects like 1375 Broadway really turned around the area between Times Square and Herald Square, which is now much more walkable than 10 years ago.
I made the jump to Imperial Companies after Savanna, and that was another really interesting opportunity. They were building out an institutional investment team at the time, and I wanted to broaden my horizons and expand into other markets. Imperial was a relatively new firm and the principals, Mike Fascitelli and Eric Birnbaum, had recently left Vornado [Realty Trust]. They ended up developing the Goodtime Hotel in Miami, and Henry Hall, a highly amenitized apartment building near Hudson Yards. Towards the end of my time there I helped put together the Rio hotel off-strip casino deal, which was one of the most interesting projects I’ve worked on in terms of the structuring of the transaction. I learned a new asset class and market.
What are the key opportunities for Cain today in Miami?
Cain has a lot of high-profile projects across the U.S., although Miami is our most active market at the moment. We’re going to build on that in the years ahead and what that looks like remains to be seen, but we’ll be a very active participant in South Florida and continue to help its growth and increase its appeal to new-to-market tenants and new residents evaluating this as a place to live and work.