Carol Brooks, CREC
The makeup of our people is also evolving. A report by the Miami Downtown Development Authority (DDA) found that the city’s urban core has experienced 100 percent population growth since 2000 as its population becomes younger and more educated. Residents ages 25 to 44 make up 46 percent of the population and 58 percent of residents over the age of 25 have a college degree.
It’s easy to overlook the impact these trends are having on commercial real estate in favor of Miami’s headline-grabbing residential market, but the demographic shifts taking place are also impacting the office market as employers cultivate a workforce increasingly dominated by Millennials drawn to growth-oriented jobs.
This change has been in the making for years as Miami’s public and private sectors invest in creating new business opportunities for young professionals across industries less prone to economic swings, such as technology and finance.
Evidence suggests the efforts are paying dividends. The inaugural eMerge Americas innovation conference, held this past spring, drew 6,000 people and put Miami on the map of some of the largest technology companies around the world. At the same time, hundreds of millions of dollars are being poured into creating a viable tech infrastructure in the form of new research facilities, incubators for early-stage companies, and new college degree programs.
On the finance front, Miami has welcomed at least 10 new-to-market hedge funds and financial firms — including the $6 billion Universa Investments — that have relocated from other cities within the past year. Many of these companies are moving here in hopes of tapping into a surge of new wealth entering the U.S. via Miami from Latin America and Europe. They are also drawn to Florida’s favorable income tax policies.
Miami’s Millennials are changing the way companies occupy office space. For example, some corporate firms are bypassing formal offices in high-rise towers in favor of flexible workspaces that lend themselves to creativity and collaboration, even if it means doing away with amenities such as covered parking garages and Class A finishes.
Likewise, mainstay office submarkets such as the central business district and Coral Gables are ceding ground to emerging and smaller-scale neighborhoods such as Wynwood, Midtown and Coconut Grove. As a result, we are experiencing a surge in demand for infill development sites and properties primed for adaptive reuse.
We are also seeing a wave of forward-looking capital improvements come on line, including the introduction of co-working spaces in existing buildings, landlords partnering with tenants to upgrade their offices in line with current design trends, and the advent of amenities catering to Millennials — everything from fitness classes and yoga sessions, to bike valet services.
While the diversification of Miami’s economy will continue to fuel office demand, all signs indicate that shifting demographics within the city’s talent pool are recalibrating the way office space is identified and utilized. Savvy employers and property owners are embracing this change with an eye toward long-term growth in a competitive market.
— By Carol Brooks, President and Co-Founder, CREC. This article originally appeared in the January 2015 issue of Southeast Real Estate Business.