Lone Star Doubles Down on South Florida with Coral Gables Office Buy

CORAL GABLES, FL – January 09, 2026 – In a powerful affirmation of South Florida's resilient commercial real estate market, global investment firm Lone Star Funds has acquired The Alhambra, a premier Class A office complex in the heart of Coral Gables. The deal, completed with local partners Highline Real Estate Capital and Square2 Capital, marks the firm's second nine-figure investment in the region in less than a year, signaling a deliberate and confident strategy to capitalize on the area's sustained economic and demographic boom.

The acquisition of the 326,451-square-foot property follows Lone Star's purchase of a 410,561-square-foot Class AA tower in Fort Lauderdale in February 2025. Together, these transactions underscore a broader trend: while office markets in other major U.S. cities face headwinds, South Florida's premium assets are attracting significant institutional capital, drawn by robust growth and a pronounced "flight to quality."

A Market Defying National Trends

South Florida's office sector has become a national standout, consistently outperforming its peers. While other metropolitan areas grapple with high vacancy rates and the lingering effects of hybrid work, Miami-Dade has absorbed nearly 3 million square feet of office space since 2020. By mid-2025, Miami boasted the lowest office vacancy rate among 25 major U.S. markets at 15.5%, a figure substantially healthier than the 19.7% national average.

This strength is fueled by a tangible influx of businesses and talent. The Miami-Dade Beacon Council reported that 45 corporate relocations and expansions in the past year are set to create over 10,000 new jobs and inject more than $800 million in capital investment. This has created durable demand for high-end office space, particularly in desirable submarkets. As a result, rental rates have soared, with Class A rents in Miami-Dade climbing an average of 37% since early 2021. This performance stands in stark contrast to most major U.S. cities, which have seen vacancy rates rise over the same period.

“We continue to see attractive opportunities in this area of the country,” said Jérôme Foulon, Global Head of Commercial Real Estate at Lone Star, in a statement accompanying the announcement. “We believe that the commercial real estate market in South Florida will continue to grow with more businesses expanding operations in the state.”

The Coral Gables Advantage

The decision to invest in Coral Gables is particularly telling. The affluent submarket is rapidly emerging as a premier office destination, offering what some analysts call "smart luxury." It provides a compelling alternative to the sky-high rents of Miami's Brickell financial district, where Class A rates now frequently exceed $90 per square foot. In contrast, Coral Gables offers relatively more affordable rates, which averaged around $54 per square foot in mid-2025, without sacrificing quality or amenities.

This value proposition, combined with a highly walkable, urban-suburban environment, is driving significant tenant migration. The area recorded nearly 250,000 square feet of new leases in the first quarter of 2025 alone. Major firms like City National Bank of Florida and Nicklaus Children's Hospital have recently committed to large footprints in the neighborhood, drawn by easier commutes for employees living in Miami's bedroom communities and proximity to top-tier private schools.

“We have witnessed the tenant migration to Coral Gables driven by a more favorable commute, proximity to Miami’s bedroom communities and private schools, and more affordable rents,” noted Tessa Truex, Managing Director at Lone Star. She highlighted The Alhambra's prime location “at the doorstep of Giralda’s Restaurant Row” and its premium, unobstructed views as key differentiators.

With a vacancy rate that dipped below 10% in late 2024, Coral Gables is one of the tightest submarkets in the county. This dynamic creates a stable, appreciating asset class for investors like Lone Star.

A Strategic Play for Best-in-Class Assets

Lone Star's acquisition strategy appears laser-focused on acquiring what it calls “best-in-class office assets with strong locational attributes.” The Alhambra, a two-building complex adjacent to a Hyatt Regency Hotel, fits this profile perfectly. It is a top-tier property with a diversified roster of institutional tenants in a location that offers a rich amenity base.

This approach reflects the firm's identity as a value investor, seeking opportunities in markets undergoing significant positive transformation. By partnering with Miami-based Highline Real Estate Capital and Square2 Capital, firms with decades of experience repositioning office properties in Florida, Lone Star leverages deep local expertise to execute its vision. The financing for the acquisition was arranged by JLL Capital Markets, who also represented the seller, underscoring the high-level institutional nature of the transaction.

Lone Star's strategy is not just about buying stable assets; it's about tapping into the ongoing evolution of the workplace. In a post-pandemic world, companies are using high-quality, amenity-rich office environments as a tool to attract and retain top talent. Properties like The Alhambra and 401 East Las Olas in Fort Lauderdale are positioned to meet this demand, offering the modern, vibrant spaces that define the future of work. This focus on the top end of the market insulates such investments from the broader softness seen in older, less-desirable office stock. As businesses continue to flock to South Florida, the demand for these premium properties is expected to remain strong, validating the strategic bets made by forward-looking investors.