Market Reports

Miami Office Rent Growth Influenced by Influx of Tech Firms, New Capital Sources

by John Nelson July 25, 2021

The past year has been a long and winding ride, and some unexpected trends have been taking place in the Miami office market, between the onset of the COVID-19 pandemic and through its recovery to date. Logically, one would expect that an ongoing pandemic keeping corporate offices closed and employees working from home would negatively affect occupancy levels and lead to a deceleration in asking rents for office space. On the contrary, the Miami office market has remained solid, and while the area is a natural draw for tourism and entertainment, an increasing number of companies also recognize it as a sought-after location from which to operate their businesses. Tech’s influence on rents Miami has been one of the most active office markets in the nation thus far in 2021. While office markets in the Northeast and California remain partly closed due to several public health initiatives and related business constraints, Miami’s pro-business culture — coupled with Florida’s lack of state income taxes and business development efforts rolled out by Miami Mayor Francis Suarez and the Miami-Dade County Beacon Council — have ensured that the city’s economic engine kept running. Case in point, not only did Class A rental rates …

July 25, 2021

Florida Market Reports Multifamily Southeast Southeast Market Reports

South Florida’s Reliable, Robust Apartment Market is a Safe Haven for Investors

by John Nelson July 18, 2021

South Florida multifamily fundamentals are, and will continue to be, the single biggest driver of performance in the market. Strong rent collection and occupancy performance through the pandemic, population and household growth, low homeownership rates, increasingly expensive home prices, an improving job market, higher wage growth, limited land and a wonderful lifestyle all contribute toward sustainable long-term growth. Demand for multifamily rentals will increase post COVID-19 as South Florida becomes a hotbed of population growth from people migrating from other states due to the business-friendly environment and tele-workers who are choosing South Florida as their new home. In fact, household formations in South Florida are expected to increase more than 44,000 each year over the next five years. Assuming this projection materializes, at 60 percent homeownership rate (consistent with historic homeownership rates) represents over 17,000 new renters per year in South Florida. Investment sales skyrocket In the span of less than 12 months, the South Florida multifamily market went from near-record sales activity to virtually none before rebounding again to close the year. Last year ended with 254 multifamily sales totaling $3.1 billion. Despite almost six months of virtually no investment activity from April through September, total sales volume was …

July 18, 2021

Florida Industrial Market Reports Southeast Southeast Market Reports

Industrial Supply, E-Commerce Demand Create Recipe for Orlando’s Silver Lining

by Alex Tostado October 19, 2020

For years, “just in time” has been the key to driving efficiency of retailers and manufacturers alike. This model by and large combined low-cost production in Asian markets supported by speedy air carrier distribution to move goods while holding minimal cushion for backup stock. Post-pandemic thinking could bring that epoch to an end. The crisis has underscored our distribution networks’ fragility, which are now vulnerable to closed facilities, ports and borders. Many businesses are planning major restructuring of their supply chain processes due to the disruptions that we all have endured in recent months. The new model based on quick recovery will likely be driven by resiliency that ensures adequate merchandise availability in the event of threats to a business’ supply chain stability. This will require more warehouse and distribution space to store goods for deliveries in last-mile markets. The noticeable effects continue to grow as more last-mile oriented warehouse space is leased closer to the end-user. Industrial users see the impact of the pandemic as a short-term challenge that is altering the long-term growth strategy of their corporate planning. By way of example, Publix’s Southeast store sales climbed 21.8 percent for the second quarter of this year. Grocery now …

October 19, 2020

Florida Market Reports Retail Southeast Southeast Market Reports

Pandemic May Lead to Opportunities for Orlando’s Most Resilient Retailers

by Alex Tostado October 12, 2020

For the Orlando retail market, which relies heavily on Central Florida’s $75 billion tourism industry, the impact of the COVID-19 pandemic has been twofold. Not only has the local consumer base begun relying more heavily on online shopping and home-cooked meals, but the number of out-of-state and international visitors who typically travel to Central Florida for its renowned theme parks and attractions has plummeted. Statewide, Florida’s tourism industry suffered an estimated 60.5 percent drop in visitors during the year’s second quarter, with international travel down more than 90 percent, according to Visit Florida. Submarkets built around Walt Disney World, the Orange County Convention Center and Universal Orlando, such as International Drive, the U.S. Highway 192 Corridor and Celebration, have taken an especially hard hit. Many restaurants designed around a sit-down experience will not recover. Although creative solutions are in action, sidewalk seating and ghost kitchens can only generate so much revenue to recover restaurants’ already razor-thin margins. But out of the slump have come opportunities for some retailers to shine, whether they’ve adapted their business model or already happened to have pandemic-resistant infrastructure in place. Further, as the winners and losers of COVID-19-era retail become clear, retailers and restaurants that …

October 12, 2020

Florida Market Reports Office Southeast Southeast Market Reports

Orlando Office Market Remains Strong with Pent-Up Capital Poised for Play

by Alex Tostado October 5, 2020

Economic health at the start of 2020 set a foundation for Orlando’s office market that remains in a good position despite headwinds caused by the global COVID-19 pandemic. Nationally, the United States saw its longest-running period of economic growth before non-essential business was paused. Even with the slowdown in tourism, Orlando continues to see an uptick in local economy-boosting sectors, including defense and technology. Additionally, an increasing number of companies and individuals in the Northeast have eyes on Florida to escape denser urban markets and high state and local taxes, which bodes well for the Central Florida region. Fundamentals stay firm The pandemic significantly curbed a lot of new office leasing activity in Orlando in 2020. However, rents have not experienced a measurable decline to date. As of the second quarter, the total average rental rate was $24.92 full-service. Landlords are generally being patient and are not lowering rents or offering above-market concessions when negotiating new deals. Asking rents will likely stay flat for the coming months until the broader economy kickstarts again or the anticipated new sublease space hits the market and compels landlords to be more competitive. Total net office absorption for the Orlando area posted a negative …

October 5, 2020

Florida Industrial Market Reports Southeast Southeast Market Reports

Miami-Dade County’s Industrial Market Sees Healthy Activity Amid COVID-19 Headwinds

by John Nelson May 18, 2020

The Miami-Dade industrial market saw a prolific year in 2019, followed by a healthy, yet slower first quarter in 2020. PortMiami’s record-shattering fiscal year 2019, with cargo operations posting 1.1 million twenty-foot equivalent units (TEUs) and cruise passengers totaling a world’s best 6.8 million passenger total, correlated with the robust warehouse and distribution demand the market experienced throughout 2019. There was a 9 percent uptick in South Florida industrial investment sales, and developers delivered 5.6 million square feet of product to Miami-Dade County. Industrial completions in 2019 exceeded the all-time high set in 2018, and the local inventory expanded by nearly 3 percent. In first-quarter 2020, as the coronavirus pandemic began to unfold and cause widespread global challenges, the flow of cargo continued to meet essential needs from medical supplies to food, while all cruise lines voluntarily ceased sailings. In addition, after a strong start to the year, COVID-19 caused construction to pause and dimmed demand from space users that service hard-hit industries such as tourism and brick-and-mortar retail. The unprecedented boost in e-commerce, grocery, and medical supply distribution currently drives the industrial sector. Leasing remains solid despite roadblocks Overall industrial vacancy in Miami-Dade is at 4.33 percent, up from …

May 18, 2020

Florida Market Reports Office Southeast Southeast Market Reports

Miami’s International Status Helps Sustain Office Development, Fundamentals

by Alex Tostado February 3, 2020

The surge of momentum happening in Miami’s office market is undeniable with the metro emerging as a new international hub for startups and regional companies alike. Fueled by a multilingual workforce and easy access to Latin America and the Caribbean, Miami’s status as an international gateway is drawing the attention of office landlords and investors from around the country, as well as a wide variety of office users. Investors like Starwood Capital, Appaloosa Management and Icahn Enterprises are leaving their traditional New York and New Jersey locations to come to Florida, one of just seven states that do not impose state income tax. Paired with favorable weather and a high quality of life, Miami is a desirable destination for businesses and its workforce. Entrepreneurial activity in the region is also helping to fuel the office market, as the number of foreign business owners who choose to relocate to Miami and set up shop continues to grow. Hot submarkets Miami’s Wynwood neighborhood has quickly earned the reputation as one of the city’s up-and-coming places to be. The district is poised to become the next 24/7 hotspot thanks to a healthy pipeline of residential development underway that will support office growth in …

February 3, 2020

Florida Market Reports Office Southeast Southeast Market Reports

Corporate and Economic Growth in Miami Drive Tenant, Investor Demand for Office

by Alex Tostado November 11, 2019

Miami continues to be a top-ranked commercial real estate market in the Southeast United States. As the economy gears up to enter its longest expansion period in U.S. history, Miami has shown more resiliency than other South Florida markets, recording steady gains in absorption, robust leasing activity and modest rent growth. Economic fundamentals remain strong as job growth continues to fuel Miami’s office market with the unemployment rate trending down to 3.2 percent. Miami’s unemployment rate reached the lowest point in its history, falling to 3 percent in April 2019. The fundamentals in economic growth continue to support corporate expansion in nearly every industry as well as new-to-market growth from other U.S. markets and globally. While in the past, most of Miami’s growth came from Latin America, 60 percent of new-to-market growth now comes from Europe, with Spain being a frontrunner. High demand amid deliveries Miami-Dade County’s overall office vacancy rate rose slightly by 1 percent in the past 12 months, during which time 937,919 square feet of new office space was delivered to the market. More than 500,000 square feet was absorbed during that time. Because of the strong absorption, the vacancy rate was impacted only slightly, bringing it …

November 11, 2019

Florida Market Reports Office Southeast Southeast Market Reports

Office-Using Employment Growth Reaches Record Levels in Orlando

by Alex Tostado October 21, 2019

The end of the second quarter of 2019 marked 120 consecutive months of U.S. economic growth, the longest on record. The steady climb in investment sales over the past few years has been fueled by record amounts of institutional capital and private equity, and office-using employment has reached an all-time high. By the end of March of this year, Florida’s private sector businesses had created over 208,000 jobs over the trailing 12-month period, and Orlando had reached 48 straight months as the state’s top location for job growth. Additionally, the U.S. Census Bureau’s latest figures indicate that three of the top 10 fastest growing cities in Florida are in the Orlando area (Kissimmee, St. Cloud and the city of Orlando itself). Altogether, there is $3.6 billion in multifamily construction underway or planned in metro Orlando, and all of this growth is fueling the need for improved transportation and logistics networks, as well as the corresponding commercial development taking place throughout the market. Finally, world-famous as a vacation destination, Orlando’s $70 billion tourism and travel industry continues to thrive with 75 million visitors during 2018 alone. Urban core grows Downtown Orlando’s renaissance continues, with a total of $2 billion in new …

October 21, 2019

Florida Market Reports Multifamily Southeast Southeast Market Reports

Orlando Apartment Market Shows Long Runway for Future Growth

by Alex Tostado October 16, 2019

The Orlando multifamily market may have an appearance of being oversupplied and on shaky ground, but it is actually thriving and has a long runway for growth ahead. The Orlando MSA has an inventory of approximately 165,000 rental units and about 10,000 units under construction. While that new supply approaches historical high-water marks, the lack of inventory of entry-level, single-family homes and the complexion of the household formation leads us to the conclusion that we are undersupplied in the multifamily space. That being said, within the overall numbers there is likely an oversupply of Class A inventory and an undersupply of workforce housing. Vacancies are hovering in the 6 percent range and rent growth has slowed to around 3 percent after having stronger years. The undersupply of workforce housing is being exacerbated by the value-add business model being employed on most of the Class B and C buyers over the last five years, catapulting the average rents and straining the ability of the working-class to keep rent as a percentage of income at a healthy level. Overall, single-family homebuilding is at a 10-year high, but still well below the pre-recession days. Permits are also soaring, but the makeup of the …

October 16, 2019

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