The Jacksonville multifamily market can lay claim to being the healthiest in Florida, not because of blockbuster demand or rapid construction, but because steady growth has kept it from overheating. The pace of construction and absorption should sustain the market for at least the next six months to a year. With an unemployment rate at 5.8 percent in September, it’s clear that the metro market has bounced back from the recession, boosting demand for housing. GE announced that same month they would be opening a new plant, adding 500 jobs. Additionally, Forbes ranks the city sixth nationally in its list of best cities for tech jobs, just ahead of Silicon Valley. Unlike other regions of the state that attract retirees and foreigners, Jacksonville is drawing young professionals and recent college graduates who are well-matched to small-scale multifamily projects. These single, well-educated and childless individuals tend to be renters. And because of their sophisticated tastes, they are driving the creation of live-work-play communities that resemble well-established submarkets like Brickell in Miami and along Magnolia Avenue in Orlando. Residents who want to be close to entertainment districts are moving into the Southside submarket, which is close to downtown and the St. John’s …
Market Reports
With a booming tourism industry driving economic expansion and a new owner/renter paradigm impacting apartment renter dynamics, Orlando is experiencing continued expansion in apartment development. Currently, development for more than 22 apartment communities totaling over 6,000 units is underway in just three hot submarkets. Demand has continued to keep up with this new supply, surging to a 10-year high in the second quarter of 2014, with market-wide occupancies topping 95 percent. Job Creation Metro Orlando is predicted to have an average annual growth rate of 4.1 percent from 2013 to 2020, putting it 13th for growth among American cities, according to a report from the U.S. Conference of Mayors. With an unemployment rate of 5.7 percent — well below both state and national unemployment averages — Orlando is outpacing much of the country in job creation and economic growth. Orlando’s $50 billion tourism industry has undeniably distinguished itself as the leader for growth in Central Florida, with the largest theme parks currently undergoing historic expansions. This will add thousands of jobs to Central Florida’s employment market over the next few years. For example, Disney World announced in early July that it is actively hiring for 1,000 new local jobs, and …
The Central Florida industrial market (comprised of Seminole, Orange and Lake counties) is currently undergoing a transformation, one that will make the majority of property owners very happy. After suffering crippling vacancy rates from early 2008 through the end of 2011, Central Florida has rebounded solidly and the good news is that there is still time to capitalize on the opportunities. The current rebound can be attributed to several items, not in any particular order: • Increased employment opportunities: Orlando’s unemployment peaked in September of 2010 at 11.7 percent and it has steadily decreased. In April of 2014, the unemployment was at 5.2 percent, according to the U.S. Bureau of Labor Statistics. • Lack of new product / inventory: Since 2008, there have only been a handful of new, speculative industrial buildings built as demand was not there and rental rates were depressed due to the massive amount of vacancy. This has resulted in there being very few choices for companies desiring new, first generation product and led to the current new building pipeline of over 2.4 million square feet under construction as of July. • Absorption and rental rates: In 2012, we experienced positive market absorption slightly better than …
Miami’s residential boom is not the only red-hot segment of South Florida real estate market. While the world’s attention may be fixated on Miami’s next crop of “starchitect”-designed condo towers and their sky-high penthouses, the city’s commercial office sector is also surging. Growing interest among domestic and multi-national tenants, coupled with diminishing supply and a lack of new office product set to deliver in the coming years, have given way to new confidence in Miami’s office market and initial talk about the need for future commercial development. This would have seemed unlikely as recently as 2010, when three new Class A office towers prepared to deliver 1.9 million square feet of new space in downtown Miami. The first of those buildings to deliver, 1450 Brickell, has been 100 percent leased and occupied since the first quarter of 2013 and is home to a number of global firms, including JPMorgan Chase, American Express, SAB Miller, H.J. Heinz Co. and BBVA Compass. The other two buildings are also experiencing positive absorption as demand for downtown Miami office space grows. This activity is taking place as Miami’s urban core emerges as an international destination for commerce, investment, residential living and travel. What was …
Although the Tampa Bay economy may not have improved as much as everyone would like, the retail market is experiencing incredible activity. Many positive trends — redevelopment, new retailers, expansions, higher rents and, soon, new development — are driving the market upward: • The retail vacancy rate was back down to 7 percent for the first time in almost five years, according to CoStar Group. • Retail rents, which plunged between mid-2006 and mid-2012, finished the year at $13.69 per square foot and show signs of strength. • The number of square feet of retail space delivered to the market hit its lowest level in the past five years, according to CoStar Group. • Land is becoming scarce, especially in growing communities south of Tampa. Considering these conditions, it looks as though it’s a landlord’s market again. We can chalk this phenomenon up to the enthusiasm of restaurants, retailers and professional service firms demanding space due to a slight but steady rise in consumer confidence. Hillsborough County collected $14.7 million on its local option sales tax in November, the latest month for which state figures are available as of this writing. That figure changed very little in 10 of the …
Demand for industrial space remains strong in Miami’s commercial real estate market as enhancements and improvements to the city’s airport and seaport — along with the expansion of the Panama Canal — promise to bring a boom in trade to the South Florida area. In July, Miami’s industrial real estate vacancy rate stood at 5.8 percent, nearly four percent below the national average of 9.4 percent, according to the National Association of Realtors (NAR). Experts agree that Miami’s industrial real estate vacancy rate will continue to shrink as local infrastructure enhancements and improvements near completion, leading many companies that already utilize industrial space to vie for a slice of the 220 million square feet of storage and warehouse space presently available in Miami-Dade County. The new tunnel, rail and the deep dredge at the port, along with terminal improvements at the airport, have increased demand for millions of additional square feet of industrial space from users and offshore investors from South America, Canada, Europe, and China, both to lease and purchase property. Investors and users realize Miami will experience an increase in trade and commerce once the Panama Canal expansion is finished and they want a stake in it. Once …
In just one generation, the Orlando market and its surrounding area became one of the premier vacation destinations in the United States and the world. With a room inventory second only to Las Vegas, this tourist hot spot strongly felt the financial market meltdown of 2008. However, the last two years have seen the hotel market undergo a strong recovery. In fact, the rate of recovery in the region’s hotel segment is stronger than for hotels nationwide. This trend and the lean operations many hotels adopted during the downturn should produce excellent operating returns for hotels in the region for the foreseeable future, assuming no overbuilding. Improving Vital Signs With a 2008 total room inventory in the metro Orlando region of 111,551 rooms and 437 properties, hoteliers could demand an average daily rate of $106.25. According to STR, in 2009 that daily rate dropped a very painful 11.8 percent to $93.70. This corresponded to a drop in occupancy from 65.2 percent to 60 percent. Between 2008 and 2012, the total inventory of both rooms and properties increased. This growth saw the number of properties rise to 456 and total room inventory to 117,396 in 2012. The permanent and temporary closing …
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 …
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 …