If you subscribe to the notion that “a rising tide floats all boats,” then all of South Florida is benefiting from the renewed interest by out-of-market and international investors in all of the region’s commercial property sectors. In addition to regular South Florida investors from America’s Northeast and affluent Latin Americans, Florida has experienced a significant number of property acquisitions by Canadians in the last 18 months. While much of the international investment has focused on Miami/Dade County, one of the largest Broward County investments this year has come from Miami-based Fifteen Group, which recently acquired the Sawgrass Technology Park for $52 million in Sunrise, Fla. The Class B office and industrial buildings were formerly occupied by Racal Milgo and the seller had planned to redevelop the campus but never did. While industrial, multifamily and retail are garnering the most attention, the pricing structure for office properties is improving. The current cap rate for well-located, stabilized assets is on average 7.5 to 8.5 percent and falling as the market recovers. Much foreign investment is tied to capital flight and is less concerned with achieving the highest yield. As such, pricing is less important to those investors. In terms of sales …
Market Reports
Orlando has always shown an uncanny ability to grow, diversify and prosper, all while shrugging off a few economic hiccups along the way. Now, it appears that “the City Beautiful” is doing it again, with apartment development leading the way. Not since Lincoln Property Co. built the 164-unit Aspire apartments in 2008 has any significant multifamily rental development taken place in downtown Orlando. Yet, over the next two years more than 2,000 new rental apartment units are expected to dot the downtown landscape. This represents an untested pace for downtown, higher than any other two-year stretch in Orlando’s history. Although the addition of this many units may raise some concern (especially understanding Orlando’s history of overbuilding), several well established multifamily developers have taken a deeper look into Orlando’s urban lifestyle; and they like what they see. It would appear that through a mix of public/private partnerships, infrastructure improvements and quality of life, downtown is on the verge of moving one step closer in its quest of becoming one of the most robust “live-work” cities in the U.S. Laying the foundation for its continued transformation is the nearly $5 billion in capital investments that have been, or are being, invested in …
“Hot” does not adequately describe Miami’s current residential real estate climate. Back from the brink of extinction in late 2009, the residential condominium market in Miami is currently booming. The apartment market is booming as well, but did not take it on the chin like the condominium market did. From 2009 to 2010, Greater Downtown Miami was considered one of the most overbuilt markets in the country. Developers delivered approximately 34,000 condos in the market in a six-year period, more than double what was delivered in the prior 40 years. The majority of those units came on line during the crash, which left Miami with an unsold inventory or more than 20,000 units in early 2010. Forecasters expected it would take 10 or more years for that inventory to be absorbed. Today that inventory of developer-owned units is down to less than 900, according to Condo Vultures, Miami’s condo watchdog. One can almost say that Brazil and Argentina brought back Miami’s high-rise condominium market. Brazilians and Argentineans in particular, but not exclusively, have experienced hyperinflation — to the point of scheduling the purchase of groceries on payday — like few others. They therefore have an acute understanding of the need …
It looks like the worst may be over for the Tampa Bay office market, and 2013 is shaping up to be the best year for investment sales and leasing activity since before the start of the recession. The health of the local office market is directly tied to job growth, and professional and business services employment has increased over the past few years. With additional job growth forecast in 2013, tenant expansions could develop as the year progresses. Many tenants weighing moves to larger spaces in the near term will monitor available spaces and advance timetables in the event vacancy in their target locations falls rapidly. For owners of Tampa Bay office properties, the news comes at a great time, as they should see some relief from high vacancies in 2013. That said, additional tenant demand will be needed to make a significant dent in the overall vacancy rate and support more substantive rent growth. Overall, the Tampa/St Petersburg office market ended the fourth quarter of 2012 with a vacancy rate of 13.6 percent, which was down from the previous quarter. Net absorption totaled 356,991 square feet, which was a vast improvement over the negative 390,098 square feet recorded in …
Retail operations struggled in the Jacksonville metro through the first half of 2012, but residential construction across the area will contribute to increased leasing activity in the coming months. In the bustling region around the already-expanding St. John’s Town Center, several new housing developments will add between 2,400 and 3,100 residential units, while more than 2,000 apartments are planned in the Arlington/Baymeadows/Mandarin submarket. High-end retailer Nordstrom has signed a lease to anchor the addition to St. John’s with a 124,000-square-foot store set to open in the fall of 2014, and another 30,000 square feet is planned for smaller stores. In other areas of the metro, retailer H&M has opened its first Jacksonville location at the Avenues mall. Winn-Dixie is planning six new stores, and retailers Family Dollar and Dollar General are poised to open a combined six new stores as well. These retailers moving into the region will help attract smaller tenants to nearby locations, filling in dark space and enabling owners to lift rents. After third quarter 2012, employment was down 500 positions although employers created 5,300 jobs during the third quarter. Employment over the quarter was broad-based, as 10 of the 11 sectors realized gains. Employment growth was …
The Tampa Bay multifamily market is a tale of “have” and “have not.” The market has plenty of buyers and tremendous amounts of capital, and it has seen huge moves in valuation over the last 24 months. However, the market does not a large supply of available inventory or a steady supply of REO assets from lenders or special servicers. Let’s look at the amount of increased deal volume in the last 24 months, according to several sources such as LoopNet, CoStar and Real Capital Analytics. According to compiled sales comps, more than 250 multifamily properties ranging from 20 to more than 600 units have sold in the last 24 months. Compared to the prior two years, this number demonstrates an increase in sales volume of more than 200 percent. Sales prices range from $9,000 per unit on the low end of the scale for Class D fully vacant, REO, boarded-up properties to more than $150,000 per unit for several Class A fractured condo complexes that were 100 percent occupied at the time of sale. Lenders and REO special servicers have taken notice of this trend and have started pricing assets accordingly when they are brought to market through REO …
The Orlando office market continued to inch forward during the third quarter of 2012 with modest net absorption of 74,851 square feet. This marks the ninth straight quarter of positive net absorption for the Orlando office market, which includes more than 38 million square feet of Class A and B office space. Overall vacancy, however, rose 28 basis points quarter over quarter to 17.89 percent due largely to negative absorption in the Maitland Center submarket and due to an increase in available sublease space. The uncertainty created by the presidential election and the pending “fiscal cliff” were likely a factor in these modest third quarter results. Otherwise, office demand fundamentals continue to steadily improve. According to the Bureau of Labor Statistics, unemployment levels dropped to 8.4 percent in September, down from 8.7 percent in August. The office market will ultimately benefit from a multiplier effect as increases in construction and trade today should lead to increased demand for professional services and therefore increases in office using employment in the near future. Positive absorption in the third quarter was mostly due to growth within the Downtown/CBD submarket where 76,287 square feet of space was absorbed. The remaining non-CBD submarkets had mixed …
The sun shines once again on Tampa’s office sector — especially for the Westshore submarket, the largest in the Tampa Bay area. Job growth and a lack of new development have led to strong net absorption and declining vacancy in 2012. All those factors create the very real possibility for speculative office development in 2013, especially given the region’s lack of large blocks of contiguous Class A space. Overall vacancy for Tampa’s 32 million-square-foot office market was 16.7 percent through the third quarter, a full percentage point lower than vacancy at the beginning of 2012. Westshore captured 250,000 square feet of the area’s 350,000 square feet of net absorption, but even the Downtown submarket totaled 100,000 square feet of net absorption through the third quarter — not bad for a section of the market that’s struggled disproportionately over the past few years and has 6.5 million square feet of office space. Conversely, Tampa’s I-75 submarket struggled, with negative 40,000 square feet of net absorption through the first three quarters of 2012, but it has a strong track record over the past 15 years and brighter prospects ahead. Net absorption could’ve been greater, too, but potential tenants waited out election results. …
After five years of economic challenges, the Orlando industrial market — hit harder than any other industrial region in Florida — is rebounding. During the recession, central Florida experienced what amounted to a full stop in home construction, the failure of dozens of banks and almost no foreign investment. Vacancy rates for Orlando’s industrial warehouse market peaked in 2010 at nearly 15 percent and remained high until 2011. But now the economy is picking up. Payrolls expanded by 4,400 jobs year-over-year for the period ending in May and construction of multifamily residential has grown consistently. The improvements are part of a trend that could extend for years. Today, the industrial market that had the highest vacancy rates in the state is now experiencing the greatest absorption, with 1.1 million square feet leased in the second quarter of this year, for a six-month total of 2.4 million feet. That’s a 19.3 percent gain over the same period in 2011 and the third consecutive quarter of positive absorption. The overall vacancy rate has fallen to 10.7 percent, and that doesn’t tell the whole story. Outlying areas and Class C properties are lagging. In Class A and Class B properties in southwest Orlando …
The dust seems to be settling in northeast Florida’s industrial market after the recession. Sales are still down and asking prices continue to decline for traditional industrial properties, but institutional investors throughout the state seem to be in acquisition mode. While investors are looking, there are not many properties for sale. Despite the fact that Jacksonville is the third largest industrial market in Florida, not many institutional-quality industrial properties come onto the market frequently. Rental rates seem to have stabilized for quality properties and landlords are beginning to reduce the value of concessions offered to tenants. The current overall industrial vacancy rate for northeast Florida is about 9.6 percent compared to 9.7 percent this time last year. Although this is still on the high side for our market, it is still much more favorable than Savannah, Georgia, where the reported vacancy rate is close to 16 percent. Savannah is one of the more competitive markets with Jacksonville, due to its vibrant port traffic. Recent transactions that have helped northeast Florida maintain single- digit vacancy rates include Saddle Creek Corp.’s 213,000-square-foot lease in the former General Motors parts distribution center, which is owned by Cabot Properties and located in the Flagler …