In a city known for its fast-shifting real estate cycles and ever-changing demographics, it’s becoming clear that change is the only real constant in Miami. Examples are everywhere — from the construction cranes dotting the skyline and trendy neighborhoods emerging throughout the region, to a fresh crop of international investors and the launch of entirely new industries. 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 …
Market Reports
Jacksonville boasts the fourth-largest metro population and the largest city proper population in the state of Florida. It is the 14th most populous city in the United States, and with a breadth of approximately 841 square miles, it is the largest city in the contiguous United States by area. The county seat of Duval County, Jacksonville touts a population of approximately 900,000 people (2012 estimate) with a median household income of $50,701 and a median age of 31.4. The unemployment rate is presently on a downward trend decreasing 80 basis points from August to September 2014 to 5.8 percent, which was significantly lower than the previous year’s rate of 6.6 percent and Florida’s 6.1 percent. Jacksonville’s retail market remains strong despite the lack of available space in the mature Class A submarkets such as Town Center, Rivercity Marketplace, Mandarin, Orange Park, West Beaches and Beaches. National retailers and restaurants remain active seeking deals throughout Duval County, yet are still hesitant to consider Class B and C submarkets given their selective national site strategies. As most of the highly desirable spaces has been absorbed, there is more demand for new space than any time in recent memory. Although several redevelopments and …
Are Hikes in Construction, Rent Around the Corner for Jacksonville Industrial Market?
by John Nelson
Over the last four years, North Florida’s industrial market appears to have stabilized. While rental rates remain flat offering a variety of expansion opportunities for users and tenants, rental increases and new construction opportunities may be right around the corner. Consider the facts: the Jacksonville industrial vacancy rate now hovers around 8.5 percent, the lowest in the last five years and down from a high of 11.4 percent in 2010. Rental rates, now in the $3.98 per square foot range for the last two quarters, have stabilized from a high of $4.38 per square foot reported in the first quarter of 2010, according to CoStar. Because of a finite supply, with an increase in demand for Class B and Class C space, a rent increase may be in the forecast. Add with the lack of choices for large blocks of Class A space, expect more build-to-suit activity, or speculative construction. In 2014, two speculative industrial projects were announced in Jacksonville. In order to meet a contractual construction deadline within the city of Jacksonville’s master developer agreement, Hillwood Investment Properties launched a 510,000-square-foot cross-dock project at Alliance Florida. Hillwood was chosen as the master developer of Alliance Florida, formerly Cecil Commerce …
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 …
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 …