Blog

Category: <span>Trends</span>
No Comments

The Numbers Behind South Florida’s Multifamily Boom

Author: Admin
Categories: Commercial News,Multifamily,Trends

With investors and renters continuing to flock to South Florida, the region has proven itself to be a promising real estate market and the multifamily sector has been strong. There were 603 multifamily properties sold in South Florida during 2021, totaling $11.4 billion. This is more than double the previous $5.5 billion annual sales record set in 2016. Not to mention, all three South Florida counties experienced record average per-unit sales last year: Miami-Dade came in at $278,432, Broward showed strong performance with $281,163, and Palm Beach topped the others with $292,221. Most of these sales involved out-of-state private capital investors, eager to get into the growing South Florida commercial real estate market.

Because multifamily has performed so well in South Florida, it’s not surprising that rent rates have also gone up. Last year, effective rents increased by 19.7 percent in Miami-Dade, 23.3 percent in Broward and 32.1 percent in Palm Beach. Average rent rates were $1,997 per month in Miami-Dade, $2,073 per month in Broward and $2,280 per month in Palm Beach. Factors contributing to the strong rental demand include population growth, a surge in single-family housing pricing, the snapback in rent growth from a static 2020, and a net absorption of almost 20,000.

We have also seen the value-add upside deals becoming more commonplace once again and savvy investors are finding South Florida an attractive area for their future investment opportunities. Rental demand is also growing due to the business-friendly nature of South Florida and the ability of employees to work remotely with many choosing South Florida as their new home. Over the next five years, it is projected that 14,800 new renters will enter the South Florida market each year, according to Cushman & Wakefield’s multifamily forecast for 2022. This is based on historic homeownership rates where 60 percent of individuals enter into homeownership and 40 percent choose to rent, though that is subject to change.

The demand for multifamily properties and rising rental rates has caused vacancy to go down and absorption to skyrocket. In 2021,  the vacancy rate in Miami-Dade went down from 6.7 percent to 3.2 percent; 7.4 percent to 3.2 percent in Broward; and 7.9 percent to 4.1 percent in Palm Beach. This marks the first time in almost 20 years where all three counties have sub-5 percent vacancy rates. We saw a similar trend with absorption, with 19,136 net units absorbed in South Florida in 2021. Over the same period, there were only 7,362 new units delivered and added to the market. Positive net absorption fueled by strong rental demand has created limited rental supply despite new apartments being built.

The region’s population influx was the main driver behind high absorption levels in 2021. South Florida’s net absorption  reached almost triple the new supply added to the market. Since 2017, the region’s population has grown by 135,130 and during the same period 34,499 new apartment units were built. This means one unit was built for every 3.9 net new people to the region. Over the next five years, South Florida is expected to see a positive net migration of 323,062 people. Using the same ratio, the region would need over 82,000 new rentals to keep pace with the population growth for the next five years.

Looking ahead to what’s in store for 2022, it’s expected that out-of-state private capital investors will continue to remain most active in the multifamily market as they opt to add more of these properties to their portfolios instead of office or retail. Other trends that we saw in 2021 will likely continue into 2022, include new construction increasing but in-line with absorption levels, rents continuing to increase, but not at the same levels witnessed in 2021, and the migration of capital and new residents to South Florida. The market is ideally positioned for continued long-term growth and sales activity will be strong thanks to positive market fundamentals.

Chris Owen is director of Florida research at Cushman & Wakefield. Calum Weaver is an executive managing director for Cushman & Wakefield’s multifamily group in Florida.

 

Source:  Commercial Observer

No Comments

Multifamily Developments In Pipeline Could Take Years To Finish

Author: Admin
Categories: Commercial News,Multifamily,Trends

Feeding into a record-breaking in demand real estate market, multifamily developers have enough work in the pipeline to last into 2024.

With a tremendous amount of backlog, demand for multifamily development will not diminish any time soon, said Al Fernandez, president for ANF Group, a firm providing construction management in commercial, multi-family and education projects.

Like new multifamily buildings like St. Martin Place and Edison Place apartments in Miami, calls from either new developers or existing developers for multifamily projects in Miami-Dade will continue to be an increasing trend, he said.

“I would say that no one particular area in Miami-Dade has been isolated,” Mr. Fernandez said. “For these types of units (market rate rentals), I think they’re sprinkling it all over the county.”

In the past year, Miami delivered 7,400 units and had a net absorption of 13,900 units. The county also experienced year-over-year positive rent growth of 19.7%, according to CBRE Group’s multifamily end of 2021 market report.

Riding the multifamily construction trend wave is a soon-to-be luxury waterfront townhome community in North Miami Beach called Koya Bay.

Real estate firm Macken Companies has broken ground on the intracoastal waterway in the Eastern Shores neighborhood at 4098 NE 167th St. Koya Bay will feature 10 four-story residences in a gated community with three-, four- and five-bedroom floorplans ranging from 4,327-5,288 square feet.

With VCM Builders as general contractor, the project is expected to be completed in early 2023. Koya Bay is currently 60% sold and Macken predicts to sell out somewhere between $28 million and $32 million.

“We are thrilled to have reached this milestone and look forward to delivering an exceptional community to the City of North Miami Beach,” said Alan Macken, principal for Macken Companies.

Local developers are fortunate to be based in South Florida, which is the epicenter of growth, Mr. Fernandez added.

“I think that the reason that we’re having so much success with this multifamily product is because we have over 1,000 people a day moving to South Florida,” he said. “We’re going to continue to see this growth, even if there is a slowdown throughout the rest of our country, for several years to come.”

 

Source:  Miami Today

No Comments

$100 Per Square Foot? Rent For Prime Office Space Puts Miami On Par With New York

Author: Admin
Categories: Commercial News,Offices,Trends

It’s a new record price for Miami office space — and it’s sending shock waves through the city’s real estate market, at a time when companies are still trying to figure out their return-to-work plans as the coronavirus pandemic drags on. Recent leasing activity at 830 Brickell, an office building under construction defined as Class A for its location, amenities and management services, has hit at least $100 per square foot, area real estate brokers say. That puts the property on par with pricing in New York City at places like the World Trade Center and offices in Midtown East and Soho.

While individual firms at the 830 tower are not disclosing their leasing terms, companies that have recently signed leases for offices there include Microsoft, private equity group Thoma Bravo and Canadian investment group CI Financial. AerCap, an Ireland-based firm that is the largest aircraft financing group in the world, just signed a lease this week, too, at the coveted Brickell office building.

“There’s a heightened demand for office space here, whether it’s new-to-market tenants or local tenants expanding,” said Ryan Holtzman, Miami-based managing director at Cushman & Wakefield real estate group. “$100 — that’s new in Miami’s history.”

 

Source:  Miami Herald

No Comments

Incentives Bring New Life To Film Industry In Miami-Dade

Author: Admin
Categories: Commercial News,Trends

After a few starts and stops over the past two years, Miami-Dade’s film industry is coming back to life and reclaiming its reputation of being one of the most desirable shooting destinations in the world.

Miami is on everybody’s radar, with winter conditions that are far more favorable here than shooting practically anywhere else in the US, said Bruce Orosz, CEO of ACT Productions and Greater Miami Convention & Visitors Bureau chairman.

“We are continuing to work very aggressively on broadening out and continuing incentive development, which has become one of the anchor points for any film or TV project that’s being developed, because when they look at the bottom line, they all also look at what are the gives and gets from a location,” he said.

Miami-Dade has its own incentive program, which offers a $50,000 tax credit to productions spending $500,000 up to $1 million and $100,000 to productions surpassing $1 million. To qualify, productions must hire 70% of cast, crew and vendors locally and shoot 70% here.

“That’s a 10% return and, in addition to that, we have some other local municipality incentives that you can bundle up,” Mr. Orosz said. “Assuming you meet all the criteria, you can pick up additional incentive dollars. So, there’s some tremendous opportunities now for producers and studios to monetize and help cut the expenses. There are ways to probably push incentive numbers up somewhere around 15%.”

As a filming-friendly environment, production companies still have covid testing and protocols in place, and that increases the cost of the projects, however the safety-first approach allows for film projects to continue moving forward, said George F. Andrews, Miami-Dade County Mayor Daniella Levine Cava’s senior advisor for policy and planning.

“The county has been at the forefront for resuming safe and healthy filming through the Greater Miami Convention & Visitors Bureau’s initiative #PracticeSafeSets Program,” he said. “Over 80 hotels are offering a variety of flexible, safety-first production options from sequester quarantine scenarios for actors and crew to using Miami hotels as filming locations to utilizing ballrooms to build sets.”

Following the protocols of local health officials and CDC regulations adds to the expertise of the local film community, Mr. Orosz added. “We have what they called ‘safe sets,’ and that speaks to the way we do business here, which is to keep it at the highest possible level of professional production, and we want to keep that image.”

 

Source:  Miami Today

No Comments

Offices On The Beach: Billionaires Bankroll Class A Office Space Near Their Homes

Author: Admin
Categories: Commercial News,Miami Beach,Offices,Trends

Since the beginning of the 20th century, when developers cleared away vegetation and alligators from a sandbar just off the coast of Miami, Miami Beach has been a retreat for the wealthy wishing to escape cold winters.

But now the wealthy don’t want to just play in Miami Beach; they want to work there, too. More wealthy executives, including those who arrived during the Covid-19 pandemic, are bankrolling buildings and leasing office space close to their sprawling mansions and luxury condominiums. It’s a burgeoning trend that could help change the perception of Miami Beach as a place just for fun and sun.

The city is poised to welcome its first top-of-the-line Class A office projects in years as officials are eager to fast-track office development to diversify the municipality’s economy beyond hospitality.

Stephen Rutchik, executive managing director of office services at Colliers, said the demand for Class A office space is driven by principal decision-makers and their employees who live in Miami Beach and want to avoid commuting on South Florida’s congested roads.

“Living and having an office on Miami Beach is a quality-of-life decision,” he said.

There are 4.9 million square feet of office space in greater Miami Beach – which includes Surfside, Bal Harbour, Bay Harbor Islands and Sunny Isles Beach – according to Colliers’ 2021 fourth quarter office market report. However, only 1.3 million square feet of that are the Class A spaces sought by companies hoping to encourage remote workers to spend more time in the office.

By comparison, downtown Miami has 5.1 million square feet of Class A space available, and the Brickell Financial District has 4.8 million square feet, the Colliers report stated.

Lyle Stern, co-founder of Miami Beach-based commercial brokerage Koniver Stern Group, said billionaires, technology and investment companies have been opening offices in Miami Beach for years, but that pace has quickened during the pandemic. However, hardly any Class A office space has been built since the early 2000s, he said.

“The vast majority of [wealthy] folks who moved down here during the pandemic want an office here; they just cannot find office space,” Stern said. “We are not just talking about someone sitting at home with a computer, but someone who has six, seven, eight, nine, 10 analysts working for him, as well.”

With vacancies at a considerable low in the city, some billionaires have sought to build offices of their own.

Barry Sternlicht, president and CEO of Starwood Capital Group, an investment firm overseeing $100 billion in assets, moved his company’s headquarters out of Lincoln Place at 1601 Washington Ave. after completing a new 144,430-square-foot building at 2340 Collins Ave. And energy investor and Miami Beach resident Wayne Boich is constructing a 15,997-square-foot office at 1910 Alton Road that will include a penthouse for him on the fifth floor.

Colliers’ Rutchik said he is negotiating per-square-footage rents in the low to mid-$100s for Eighteen Sunset, a mixed-use office project at 1733 Purdy Ave., which is slated for completion in 2023. The project is being developed by Marc Rowan, CEO of New York-based Apollo Global Management (NYSE: APO), and Bradley Colmer, managing partner of Miami Beach-based Deco Capital Group.

Colmer said he originally planned to build a residential building in Sunset Harbour. But he opted to build a Class A office project when he noted older office buildings in Miami Beach were snaring premium rents “for product that you would typically call Class B,” leaving money on the table for any developer willing to offer more amenities.

“We thought there was an opportunity there,” he said.

Diversifying The Economy

The Miami Beach City Commission already increased the height limits of office buildings to 75 feet on Terminal Island, western segments of Alton Road, and within the Sunset Harbour Overlay district. On Collins Avenue between Sixth and 16th streets, where height for new construction is maxed out at 50 feet, an urban plan designed by architect Bernard Zyscovich would include 75-foot-tall Class A office structures. The city also issued a request for proposals for developers interested in turning three city parking lots and the municipality’s 17th Street parking garage into Class A offices.

Rickelle Williams, Miami Beach’s director of economic development, said encouraging more Class A office development is part of a strategy to attract businesses in industries that employ a high-wage workforce. That includes technology and financial services firms, as well as companies willing to relocate corporate or regional headquarters, or expand existing offices. That mostly leaves out hospitality businesses, known for paying lower wages.

The city’s strategy includes expediting the permitting process for office projects and giving up to $60,000 a year for the next four years to companies with more than 10 full-time jobs that pay more than $69,385 a year. (The exact amount awarded depends on the number of jobs.)

 

Click here to read more about this story.

 

No Comments

Migration From North Triggering Continuous Economic Growth In Miami

Author: Admin
Categories: Commercial News,Trends

The increasing migration of Northern high-income executives is accelerating the real estate markets and the overall economy in South Florida, while banks are reporting substantial profit gains and are eager to welcome their businesses.

The nation’s biggest banks reported record profits for 2021 thanks to higher investment banking fees and lower loan losses during by the pandemic, according to the Financial Times. JP Morgan increase its profits from right under $30 billion in 2020 to almost $50 billion; Goldman Sachs Group went from around $10 billion to over $20 billion; and Morgan Stanley increase its profits from $10 billion to around $15 billion, according to data from S&P Capital IQ, reported by Bloomberg.

Bank of America, in its third quarter report of profits, showed a revenue of $22.87 billion, a 12% increase since last year. CitiBank, in the release of its 2021 fourth quarter net income, reported $17 billion, compared to $16.8 billion a year ago.

David Glickman, Wealth Market leader for TD Bank in Florida, said that the Covid-19 pandemic has changed the way a lot of companies do business.

“Executives can now work remotely,” he said. “We have a lot of people who are migrating down to Florida for the nice weather, but also because we have no state income tax.”

As professionals are settling in South Florida, they are establishing bank accounts. “That’s a big benefit to local banks,” Mr. Glickman said. “These people are selling their homes and moving down to South Florida, so a lot of banks are going to benefit because people are looking for lending to buy or construct new homes, which in turn impacts the economy, the construction companies… it’s a domino effect.”

According to the Florida’s State Office of Economic and Demographic research, from April 2020 to April 2021, avout 330,000 people moved to Florida. “And all the people coming down are executives, entrepreneurs; they’re going to create opportunities that help expand the economy,” Mr. Glickman said. “There will be a continuous growth, and it’s going to expand beyond South Florida, as Sarasota is expanding rapidly, and Tampa [too]. This is good for the state of Florida, but certainly Miami will be a benefactor with all the money pouring in.”

With the almost 900 people moving to Florida every day, according to Jimmy Patronis, Florida’s chief financial officer, the state’s population has grown by 2.7 million in the last ten years, Harvard Politics reported.

For the banks, this translates into increased deposits, wealth management advisory demand, lending and new relationships with local institutions.
The influx of high-earning professionals relocating to South Florida is bringing economic advantages to the area as they start setting roots, said J.C. de Ona, Centennial Bank’s Southeast Division president.

“Overall, a lot of them are buying homes, leasing office space or buying office or industrial space,” Mr. de Ona said. “So it’s bringing opportunities for banks to do mortgages and to finance them. And with the executives come other employees within their business structure.”

This migration is helping the mortgage industry and the local developers of multi-family projects, Mr. de Ona said.

“It helps the economy in so many different ways – from home buying, to offering jobs and getting office space, to their kids going to our schools, and them buying automobiles, or going to restaurants. A lot of them come down here to invest in business creation or get real estate.”

The New York State 2022 budget legislation is increasing the corporate franchise tax from 6.5% in 2021 to 7.25% in 2022 for companies earning more than $5 million. Personal income tax is also increasing for top-earning New York residents. Taxpayers earning up to $5 million would have a 9.65% income tax rate; taxpayers earning up to $25 million, a 10.3% personal income tax rate; and for people earning more than $25 million, a 10.9% personal income tax rate.

Mr. de Ona said that the trend of New Yorkers migrating to South Florida will continue well into 2022.

“With the tax changes we’re seeing in New York,” he said, “every indication is that they’re going to continue to migrate down here, as South Florida is becoming more and more attractive.”

 

Source:  Miami Today

 

No Comments

Looking To Lease Office Space In South Florida? Here’s What You Can Expect To Pay

Author: Admin
Categories: Commercial News,Offices,Trends

Despite remote work trends, South Florida’s office market showed signs of a full rebound as asking rental rates surpassed pre-pandemic levels, according to recently released data from Colliers.

Among the three counties, Miami-Dade County’s per-square-footage average asking rate of $44.72 was still the highest in the fourth quarter of 2021. That’s a 15.14% increase from the same quarter in 2019, before Covid-19 surges made working from home the norm for many companies.

In contrast, Broward’s average asking rate was $35.47 in the fourth quarter of 2021, which is 13.4% higher compared to two years ago. Palm Beach County’s was $37.25, up 13.29% from the fourth quarter of 2019.

In the Class A office category coveted by businesses wishing to recruit talent and encourage employees to return to the workplace, the rise in per-square-footage asking rates during pandemic times were more modest: up 9.84% to $50.58 for Miami-Dade, 5.9% to $40.30 for Broward, and 8.24% to $43.76 for Palm Beach County.

During that time, Palm Beach County’s office vacancy rate was 9.7%, the lowest of the three counties. In contrast, Miami-Dade had a vacancy rate of 11%, while Broward’s was 12.5%, Colliers reported.

Unlike the other three counties, Palm Beach County’s vacancy rate was even lower than the pre-pandemic fourth quarter of 2019, when it was at 10.7%. During that same quarter two years ago, Miami-Dade’s vacancy rate was 9.1% and Broward’s was 9.7%

“That’s because a growing number of financial companies are migrating from other parts of the United States and setting up shop in downtown West Palm Beach, particularly the substantially completed 270,000-square-foot 360 Rosemary that’s being developed by Stephen Ross, chairman of the Related Cos. in New York,” said Michael Falk, a managing executive director from Colliers’ West Palm Beach office.

These companies aren’t flocking to the area for a bargain: West Palm Beach’s central business district had an average asking rate of $66.07 a square foot ($70.50 for Class A), the highest rate of South Florida’s submarkets during the fourth quarter of 2021.

West Palm Beach’s office boom didn’t just benefit the downtown area. Falk said it had a positive “ripple effect” in other parts of the county, where offices are being repositioned and upgraded, resulting in higher rates and better product in other parts of the county.

“Trends are improving for Broward, too,” said Jonathan Kingsley, executive managing director of office services in Colliers’ Fort Lauderdale office.

He pointed out that Broward gained 218,822 square feet of newly filled tenant space in the third quarter of 2021, and another 150,917 square feet in the following quarter.

 

Click here to read more about this story.

 

No Comments

Cryptocurrency Starts To Make A Splash In Luxury Housing. Will It Trickel To Larger Residential And Commercial Markets?

Author: Admin
Categories: Commercial News,Trends

So far, much of the buzz around cryptocurrency in real estate has been the luxury segment of the for-sale housing market. But a few early adopters in commercial real estate have begun to accept crypto in transactions.

Harbor Custom Development Inc. of Gig Harbor, Washington, will soon begin accepting 13 digital currencies as payments for its listed land, development lots, houses, condos and apartment buildings across multiple states it works in.

“We see the writing on the wall that cryptocurrency and blockchain technology, in some form or another, is here to stay,” said Jeffrey Habersetzer, chief operating officer of Harbor Custom Development, in an email. “Opening access to the $2.5 trillion cryptocurrency market is a logical first step for the company, and we are excited about catering to these new buyers.”

Habersetzer said the reception thus far, ahead of the program’s Jan. 24 launch, has been positive. He said he anticipates cryptocurrency buyers to run the gamut: first-time homebuyers searching for a starter condominium, move-up buyers that need more space, luxury homebuyers and Institutional investors looking for entitled land, developed lots or multifamily projects.

But, Habersetzer said, there seems to be a lot of apprehension in the marketplace right now to accept digital currency. He said the firm has partnered with a team of industry experts to create a process that’ll look very similar to a standard cash real estate transaction, with low barriers to entry to those with significant cryptocurrency holdings.

San Diego-based REIT Presidio Property Trust Inc. (NASDAQ: SQFT) last month said it would begin accepting cryptocurrency for tenant payments and common area maintenance charges. The firm is now accepting currencies that include Bitcoin, Ethereum, Dogecoin and Litecoin.

Attempts to reach Presidio by deadline for more information about its program were unsuccessful.

“We believe that these additional payment options will be attractive to some of our current and prospective tenants, especially in new, expansion markets,” said Gary Katz, senior vice president of asset management of Presidio, in a statement last month.

Erin Sykes, chief economist at New York-based residential and commercial brokerage firm Nest Seekers International, said she thinks there’s perhaps even more opportunity for commercial real estate to adopt cryptocurrency than the residential market. But it’ll take optimization across different points of a transaction — owners, contractors, tenants and so on — for it to become widespread, she added.

 

Click here to read more about this story.

No Comments

CRE’s Growth Forecast For 2022

Author: Admin
Categories: Commercial News,Multifamily,Offices,Retail,Trends

ommercial real estate can be expected to perform well this year despite the prospect of higher interest rates, according to the National Association of Realtors.

While interest rates are expected to broadly rise by about 75 basis points, they will still be low compared to historical levels and should not cause a severe decline in investment activity and the ability of companies to service their debt.

Bottom line: CRE’s underlying demand fundamentals should more than mitigate the impact of the slightly higher interest rates in 2022, according to NAR’s 2022 Commercial Real Estate Outlook report.

Office Vacancy Rates to Tick Higher

Only the office real estate market will continue to see higher vacancy rates in 2022.  Ongoing construction is equivalent to 2.6% of the current inventory and it is expected to further raise the vacancy rate to 13.5% (12.2% in 2021) and cause a decline in office rent by 0.8% (-1% in 2021).

However, as seen in the 2021 trends, the high office vacancy rates will remain concentrated in the primary metro areas of New York, San Francisco, Chicago, Los Angeles, Washington D.C., and Boston.

Meanwhile, secondary markets with lower cost of living (home prices or rent) and lower office rents will continue to attract businesses and workers into the area.  Based on the level of under construction activity, developers/investors are bullish on secondary markets like Dallas, Austin, Atlanta, Charlotte, Nashville, Miami, and Salt Lake City.

COVID Will Drive Office Re-Entry

The timing of “the big re-entry” to the office is still dependent on the course of the COVID variants. However, it appears that the Omicron virus is not as deadly as COVID-19 with vaccinations reducing the risk of death.

Beyond the short-term effect of the re-entry on absorption, the long-term effect of the pandemic pertains to the need and use of office space (e.g., overall square footage and per employee square footage) and the allocation of office space for employees (fixed or hot desking/hoteling).

CBRE’s 2021 Occupier Survey reported that in the United States, 62% of employers expect to adopt a hybrid schedule with employees going to the office 2.5 days a week. A higher fraction of U.S occupiers expect a contraction of their office space, at 44%, compared to 29% that expect an expansion and 27% that expect no change.

Class B Office Conversions Could Draw Interest

However, the adaptive reuse of office space for other uses such as for lab science and multifamily housing could increase investor interest for office properties, especially the older properties with floor plates and design that are suitable for such conversions.

NAR’s analysis on office-to-housing conversions shows a strong potential for the conversion of Class B office units into housing in New York, Chicago, Los Angeles, and Boston but less potential in Washington D.C. and San Francisco.

Industrial Demand to Remain Robust

The demand for industrial space is expected to remain robust given that consumers have shown a preference for both online and in-store shopping.

With brick-and-mortars also providing online shopping services to complement in-store shopping, the demand for last-mile delivery services will drive the demand for warehouses and distribution centers.

About 460 million square feet of industrial space is under construction, or about 2.6% of the current inventory. NAR foresees that this construction will lead to slower industrial rent growth of 7.4% on an annual basis from the current rate of about 8.4% as of 2021 Q4 (6.7% in 2021). The vacancy rate is expected to slightly increase to 5% (4.9% in 2021).

In the retail brick-and-mortar market, growth will continue to be driven by smaller shops such as neighborhood centers, strip centers, and single-tenant stores. Given the current low vacancy rate at brick-and-mortar stores and with the rise of experiential retail that will drive foot traffic to the malls, vacancy rates are likely to decline further to 4.6%.

Higher Mortgage Rates to Boost Rental Demand

In the multifamily market, higher mortgage rates will boost rental demand as a mortgage payment becomes slightly more expensive. NAR forecasts that the vacancy rate will further tighten to 4.8% in 2022 (5.1% in 2021) and rent growth to average at 10% (7.8% in 2021).

Renters have started returning to the primary metro areas of New York, Chicago, Boston, Washington D.C., Los Angeles, and San Francisco, in part attracted by the huge rent discounts during the pandemic. However, asking rents are picking up strongly which will tend to drive renters to less expensive secondary/tertiary markets or to outlying suburbs of these primary metro areas, especially with the opportunity to work from home.

Rental demand is likely to continue to be strong in the West region and New England states where owning is more expensive than renting. Meanwhile, retiring Baby Boomers are likely to fuel demand in the Sunbelt markets, which will boost demand for commercial space (retail and small offices).

 

Source: GlobeSt.

No Comments

Miami Tech And Financial Sectors Spark Economic Gain

Author: Admin
Categories: Commercial News,Leasing,Trends

Strong population growth, declining unemployment, a slow but steady increase in the population’s GDP and the thriving technology and financial sector in South Florida are the main drivers of the area’s economic growth after the lows of pandemic.

According to the Bureau of Workforce Statistics and Economic Research of the State of Florida, unemployment rate was 4.6% last October with 8,902,400 nonagricultural jobs, a 0.2% recovery from September and a 1.2% recovery from last year. The Miami-Miami Beach-Kendall area was at 3.8% of unemployment, according to the preliminary data, a 6.2% change from last year.

In terms of GDP, Florida was expected to grow 2.5% in the 2019-2020 fiscal year but declined 4.3% in the first quarter of 2020 and 30.1% in the second quarter, according to the Florida Legislature Office of Economic and Demographic Research, published last August. After 2020’s third quarter, Florida GDP rebounded by 33.4%, as people returned to work, and the year ended with a 3.1% growth it the state’s GDP.

South Florida represented a third of the state’s GDP, and Miami-Dade County represents 15.74%, being the “state’s hardest hit county by most metrics,” according to the report.

Mark Vitner, managing director and senior economist at Wells Fargo, said Florida’s economy is rebounding very strongly. “The pandemic brought the long expansion that we had in the prior decade to an end, but in Florida the contraction was relatively short,” he said. “We saw economic activity decline for two months, it felt very sharply, but then it came back really quickly.”

The first quarter of 2021 brought Florida a 7% increase in GDP, ranking 15th in the nation in GDP.

“The output of the economy has recovered faster than employment has because we haven’t added back all the jobs in restaurants and bars and entertainment venues, in care salons and nursing home and childcare centers…,” Mr. Vitner said. “Almost all of those industries employ large number of part-time workers, and the pay is relatively low in many of the occupations in those industries, and they haven’t come back.”

“But the technology sector has been booming,” he added. “A lot of it has been in South Florida, but also in Tampa, in Saint Petersburg, in Orlando, in Jacksonville. We’ve seen a lot of financial services companies; hedge funds, private equity firms and many managers have relocated.”

A press release from the state of Florida in October said the state had gained 72,700 private-sector jobs in businesses over that month. Florida’s private-sector employment increased 5.6%, with 411,400 jobs, over the last year.

Business services added 10,400 new jobs and the hospitality industry added 26,600 new jobs in October, the press release said. According to the Florida Department of Economic Opportunity, there is an 11.2% increase in real estate jobs from the last year.

“The financial sector is well above where it was prior to the pandemic, as well as the tech industries,” Mr. Vitner said. “We had strong job growth in July and August, and a spectacular summer in tourism, the strongest it’s ever been.”

Nonetheless, many people across the country have chosen to retire early rather than go back to work after the post-pandemic era, Mr. Vitner said.

“This is seen particularly among persons over 55, with the stock market as strong as it’s been. Many of those folks have opted to move to Florida and they’re semi-retiring; they’re looking for a next act.”

Florida’s growth in population has mostly come from net migration, according to a Florida Economic Overview report by the Florida Legislature Office of Economic and Demographic Research. “Florida’s population growth of 387,479 between April 1, 2019, and April 1, 2020, was the strongest annual increase since 2005, immediately prior to the collapse of the housing market and the beginning of the Great Recession,” the report said.

In addition, homeownership during last year was at 68.7%, according to the same report. In 2021, it went down to 68.1% for the first quarter and 67% for the second quarter.

“We’ve had, with the economy recovering, drops and then very strong pick-ups in the housing [market],” said Mr. Vitner. “Apartments, particularly in downtown Miami, saw vacancy rates rise during the pandemic as people didn’t want to spend a lot of money to be in a small apartment when they couldn’t get out and about.”

“As the economy reopened, we saw demand revise and we’ve seen vacancies rates come down sharply and rents rise sharply,” he continued. “And there is a lot of apartment construction – not so much condo construction – going on.”

The single-family market concerns him, he said. “We’ve seen a lot of folks buying properties and converting them into single-family rentals and that’s restricting the supply of homes for sale. It really has a compounding effect, because typically someone buys a house and stays there for 7 or 10 years, then sells it and moves to another house. But when these homes get converted into rentals it reduces the pool of homes that are going to be recycled through over time.”

“So right now,” he concluded, “it seems like inventories have been persistently half of where they were in prior cycles.”

 

Source:  Miami Today

What Can We Help You Find?

About FIP Commercial

Discover prime performance for your asset or portfolio with FIP’s Repositioning professionals. We offer experienced asset management professionals and techniques to help you scale the positioning of your property and the growth of returns. Our Valuation professionals will assist you with everything from financial analysis to personalized investment strategies to meet your needs.

Social

Contact Us

2136 NW 1st Ave Miami, Florida 33127 (305) 438.7740 web@fiprealty.com
© 2024 FIP Commercial. All rights reserved. | Site Designed by CRE-sources, Inc.