Billionaire Stephen Ross is betting on strong demand for new office developments in the US as older buildings empty out.
Ross’ firm, Related Cos., is moving ahead with its first office project in Miami, a roughly 1,000-foot (305-meter) tower that’s slated to be one of the tallest commercial buildings in the region. Related and its partner, Swire Properties, have begun demolition at the site.
“Florida is really the growth part of the country today and where there’s need for Class A office space,” Ross said in a Bloomberg Television interview with David Westin that will air Friday. “Corporations will go where talent wants to go, and that’s really what’s driving the increase in development in South Florida today.”
Related has been wagering that heightened post-pandemic demand will continue to fuel commercial-property markets in South Florida. Major finance and technology firms have expanded or opened outposts in places such as West Palm Beach and Miami over the past few years, drawn by the warmer weather and lower taxes. Goldman Sachs Group Inc. and Point72 Asset Management are among tenants at Related’s projects in West Palm.
The demand surge runs counter to the trend across much of the US, where the rise of remote work has left swaths of offices empty. Many finance and tech companies have cut staff and real estate costs, leading to record vacancies in cities such as New York and San Francisco. Owners including Brookfield Corp. and Blackstone Inc. have defaulted on office properties.
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“You’re going to see a lot of carnage in older Class A buildings as well as the Class B market,” Ross said, adding it’s a matter of time before corporations insist on getting employees into the office at least four days a week.
“We’ve got to get people back to work,” he said. “They want to go to a place.”