As job growth supports a healthy economy in Southwest Florida, the region is experiencing major population growth, causing a surge in new Class A multifamily construction. The number of new construction Class A units in Southwest Florida has increased by nearly 150 percent year-over-year. In first-quarter 2018, there were 257 Class A units completed, and in first-quarter 2019, that number rose to 622. With this increased supply of Class A properties, there is now more demand in Class B properties among renters, and ultimately from investors. Class B properties tend to have more affordable rental rates, and investors have now noticed the potential for higher investment returns. Illustrating this demand, in the first quarter of 2018 in Southwest Florida, there were 17 Class B properties sold that totaled nearly $39 million. In first-quarter 2019, the sale volume increased to $68 million with nine properties sold. Also, investors were willing to pay more for these assets if they had a value-add component With Class B vacancies being tight at 4.6 percent, investors are making interior and exterior improvements to properties and gradually raising rental rates to increase their returns. For example, a value-add Class B multifamily property in Fort Myers recently …
At mid-year 2018, Orlando’s economic engine is performing like a well-oiled machine, fueled by brisk business expansion, healthy in-migration, accelerating job growth and steady population gains. In fact, Orlando ranked No. 3 in the nation for population growth during the period between 2010 and 2017. Office market fundamentals remain solid with steady demand for high-quality, Class A space largely outstripping available supply, particularly in high-demand areas. Job creation continues to fuel economic growth in Orlando with a rise in non-farm employment of 46,840 over the trailing 12 months ending in May. There has been a sustained decline in the unemployment rate as well, which stood at 3 percent in May. Spec, Mixed-Use Projects Development activity has been restrained over the last several years. However, a handful of key office projects have recently broken ground in high-demand areas. The most exciting development activity is occurring in the urban core, where a number of projects are moving forward. Speculative Class A office construction is once again rising with the $100 million Church Street Plaza going vertical after a slight construction delay. SunTrust Banks Inc. recently announced plans to relocate its Orlando headquarters from the SunTrust Center building into 90,000 square feet at …
Fundamentals in the Orlando multifamily market are exceptionally strong and should remain healthy as long as this economic cycle continues. Following a period of no construction after the recession, new supply is finally starting to catch up with pent-up demand held in check during the downturn. Even with over 7,000 units projected to be delivered annually for the next several years, occupancy rates should hold strong between 95 and 96 percent. Supported by continued economic expansion in the Orlando metro area as well as strong population and job growth, we remain bullish on the multifamily market and do not see the potential risk of oversupply any time in the near future. The justification for continued new construction makes sense given Orlando’s history. As in most markets throughout the country, the recession halted new multifamily development in Orlando. From 2007 to 2009, there was virtually no new supply added to the market. It was not until 2010 that construction picked up again, and by that time, post-recession job creation had already taken off, causing a tremendous amount of pent up demand for housing. Each year since, new supply has been quickly leased, and it has not yet slowed. As of July …
Driven by the delivery of new product, the Miami multifamily market is experiencing a period of increased transaction activity. Always in high demand, but generally a thinly traded market, Miami has seen a significantly higher volume of market-rate multifamily sales in the last two years. While Miami-Dade County has maintained strong fundamentals overall, its sales volume has historically trailed nearby markets in Broward and Palm Beach counties. In 2014 and 2015, Miami saw an average total sales volume of $150 million, compared to $935 million in Broward County and $675 million in Palm Beach County. Although Miami-Dade County is home to half of South Florida’s population, it has historically accounted for just 20 percent of South Florida’s multifamily sales volume. Part of the reason is that Miami is in high demand because institutional, foreign and private investors are enamored with Miami-Dade County and want these multifamily assets in their portfolio. Likewise, each of these groups tend to hold Miami-Dade properties for extended periods of time. Further, in the early 2000s, the condo conversion trend eliminated much of Miami’s Class A rental inventory, increasing the scarcity of this type of multifamily product. In 2017, however, Miami saw over $820 million in …
After several years of strong absorption in leasing and robust sales volume, there’s no question that Miami’s industrial real estate market is the desired location for national tenants and institutional investors alike. But many insiders are questioning if sustaining that level of growth is possible and if there are still profitable transactions to be found. The answer is a resounding yes. There is little indication that the Miami industrial real estate market will slow down with vacancy rates hovering in the low 4 percent range. The rise of e-commerce, strong population growth and the region’s role as the gateway to Latin America all bode well for continued leasing growth and have solidified the region as a top-tier industrial real estate market. It’s been exciting to watch Miami earn a rightful place among the nation’s top brass. The keys to staying relevant in Miami’s increasingly competitive and sophisticated market are to search for opportunities that support the demand for large-scale industrial space for single-users, take a closer look at previously passed over deals, get creative about a parcel’s potential and remain focused on infill strategies. Although Miami’s growth will continue, there will likely be fewer buildings to purchase. According to the …
Driven by population and job growth, Miami-Dade County is one of the strongest and most sought-after commercial real estate markets in the Southeast. As of February 2018, the county’s unemployment rate stood at 4.7 percent, which, while only a 10-basis point decline from the rate in February 2017, represents continued positive movement. The metro’s economic stability and growing employment base are significant factors when analyzing the tightening office market. Miami-Dade County ended the first quarter with an overall office vacancy rate of 9.67 percent, a 106-basis point decline from the previous year. Also, net absorption was positive with suburban areas such as Airport/Doral, Coral Gables and South Gables/South Miami remaining primary contributors to the county’s growing office sector. The trend continued from 2017, as the year ended strong with nearly 1.5 million square feet of total net absorption countywide. As overall vacancy declines and rental rates rise, development in Miami-Dade remains active with 717,000 square feet under construction, 657,000 square feet of which is being developed within the top five most in-demand submarkets for corporate growth. Projects such as Two MiamiCentral, Giralda Place and Mary Street are redefining South Florida’s office landscape as mixed-use environments become more ubiquitous. Record-Low Vacancy …
The Miami retail market is healthy, expanding and not showing signs of a slowdown. At more than 2.8 million people with an average household income of nearly $70,000, demand for more retail continues throughout Miami-Dade County. The submarkets of Aventura, North Miami, Coconut Grove, Kendall and Pinecrest, as well as the urban core submarkets of Brickell, Midtown and Wynwood, reflect this with low vacancy rates and increasing rents. Most of the new construction projects underway or recently delivered are in the form of mixed-use projects, both within Miami’s urban core and in well-established submarkets such as Coral Gables, Doral and the Design District. The bad news? Miami is landlocked between the Atlantic Ocean and the Everglades, limiting space for traditional retail development and retailer footprints. But here’s where it gets interesting, and promising — instead of abandoning the market, developers and retailers in Miami-Dade County are simply getting creative with the limited dirt available. Building Density Because of the scarcity of land and its high price per-acre, density is the top priority, resulting in a surge of vertical, mixed-use developments with structured parking. For instance, Brickell City Centre demonstrates that if developers want critical mass, sometimes the only way to …
Economic growth in Tampa Bay continues at an impressive pace, driven by strong population and employment growth over the past several years. The unemployment rate has steadily declined, dropping 110 basis points from December 2016 to a current 3.4 percent, and the strong pace of job growth continues with a rise in non-farm employment of 35,000 new jobs during the trailing 12-month period ending December 2017. As a result, leasing activity has increased, rental rates continue to show incremental growth and there is a strong likelihood of new speculative office construction in the coming year. Major corporations continue to reaffirm their confidence in Tampa with significant announcements of planned corporate expansions by MetLife, Pricewaterhouse Coopers (PwC), AAA and USAA during the second half of 2017. In fact, the Tampa Bay metropolitan area ranked as one of the top 20 “U.S. Markets to Watch” for overall real estate prospects in the Emerging Trends in Real Estate 2018 report published by PricewaterhouseCoopers and the Urban Land Institute. Investment Activity Many investors who in years past were seeking opportunities in gateway markets are now turning their attention to secondary markets like the Tampa Bay area in search of higher yields. There were several …
The Jacksonville and North Florida retail markets are seeing an increase and influx in new investment activity. Analysts are watching the volume, vacancy rate and new construction, and all signs point to a seller’s market, but compared with other Florida cities, the cap rate and the opportunities are still attractive to retail investors. What sets Jacksonville apart from other cities in Florida and across the country is the area’s strong employment growth and the amount of developable land still available. The rate of employment in Jacksonville is growing at double the national average. In addition, the city continues to attract back-office facilities for major banks and for Amazon, and its seaport is busier than ever. Housing also continues to boom in areas like Northern St. Johns County. According to third-quarter 2017 analyst reports, Jacksonville’s retail vacancy rate went down slightly from 4.6 percent in the previous quarter to 4.5 percent, or 93.5 million total square feet. Absorption totaled 710,101 square feet through the first three quarters of 2017, with about 590,000 square feet ready for occupancy or delivered, and 700,109 square feet under construction. Retail Tenant Shift Nationally, we saw stalled volume of sales during the downturn along with declining …
Orlando’s industrial market is coming into its own. As high-profile users such as Amazon, Samsung and Best Buy continue to enter the market, major brands are taking a fresh approach to Central Florida’s logistical advantages, and an increased number of national REITs are combing the area for any opportunity they can uncover. Despite an unprecedented boom of speculative industrial building, demand continues to outpace supply. In the industrial sphere, Orlando has become the juggernaut of Florida. This growth has been fueled by a number of overlapping factors. Tourism has always been a huge driver for Orlando’s industrial sector. Disney World remains North America’s most-visited theme park. The convention business is thriving and Port Canaveral is one of the top cruise industry ports in the world, attracting some of the largest ships. Now, the area’s tech industry is taking off as well. The $75 million, 100,000-square-foot manufacturing research center, BRIDG — just delivered in Osceola County — will be a catalyst for further growth in high-tech manufacturing and research. Add to this the second fastest rate of population growth in the nation, and the city once known primarily as Florida’s tourist mecca is primed for commercial expansion. On the national level, …
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