In an unexpected twist that may signal a downturn in Miami’s robust office real estate market, The Gateway at Wynwood, a modern office complex built to accommodate an influx of technology and finance firms relocating to Miami, is on the edge of foreclosure. Wilmington Trust, acting as the trustee for a commercial mortgage-backed security (CMBS) trust, has filed a lawsuit against R&B Realty Group, the entity that owns the property, in the Miami-Dade Court. The legal action seeks to reclaim a substantial sum of $101.7 million and to take possession of the 14-story office building.
Merely a year after the property was refinanced with a $113 million loan provided by A10 Capital, this foreclosure action highlights the precarious nature of the commercial real estate market, especially in post-pandemic conditions. The Gateway at Wynwood, encompassing a total of 418,337 square feet, with 195,000 square feet allocated for office space, about 25,000 square feet for retail use, and 512 parking spots, was part of a larger CMBS deal following its refinancing.
R&B Realty, based in New York, completed the complex in 2021 and marketed it as an ideal location within Wynwood for new market entrants arriving in South Florida after the COVID-19 pandemic. The realty group acquired the 1.1-acre site at 2916 N Miami Avenue in 2016 for $11.5 million and secured a $76 million construction loan from 3650 REIT in 2020 amidst the initial stages of the pandemic.
However, Wilmington Trust alleges that R&B Realty Group ceased making payments on the most recent loan in December 2023, prompting the foreclosure lawsuit. Additionally, the lawsuit targets a separate retail property, a 5,187-square-foot building leased to Chase Bank across from The Gateway at Wynwood. R&B Realty, owned and operated by the Rosenberg family, purchased this single-story building for $7.4 million in 2015.
Representatives of R&B Realty Group have made no comments regarding the lawsuit yet. The Gateway at Wynwood had previously been in the spotlight for drawing high-profile tech tenants like OpenStore, founded by tech entrepreneur Keith Rabois. Other notable tenants include private equity firm Thoma Bravo, brokerage Marcus & Millichap, biopharmaceutical company Veru, and coworking provider Mindspace. According to Morningstar, at the time of the loan’s origination by A10 Capital, the property was reported to be 66 percent leased.
This foreclosure action against The Gateway at Wynwood may indicate a cooling trend in Miami’s once-hot office market. The pandemic era, which saw an influx of new market entrants flocking to Miami, driving up office space demand and rental rates, now seems to be diminishing.
Recent reports, including one from The Wall Street Journal, have noted that Related Companies and Swire Properties had to amend their agreement for a proposed 80-story office tower in Brickell after failing to secure an anchor tenant. This further suggests a shift in the market.
This situation highlights the evolving dynamics of Miami’s office market and raises questions about the future trajectory of commercial real estate in the region. With the pandemic boom appearing to subside, property owners and investors may need to adjust their strategies to navigate the changing landscape. The case of The Gateway at Wynwood is a stark reminder of the challenges and uncertainties facing the commercial real estate sector in a post-pandemic world.
