Demand in South Florida’s commercial real estate market is producing low vacancy rates and a number of major developments in an array of sectors
MIAMI – July 2, 2015 – (RealEstateRama) — Demand in South Florida’s commercial real estate market is producing low vacancy rates and a number of major developments in an array of sectors, according to local experts at the third annual Miami Association of REALTORS® Commercial Alliance Midyear Update that took place recently in Coral Gables. Five of South Florida’s top real estate professionals discussed Miami’s booming retail market as well as local developments in the multifamily, capital markets, industrial, and office sectors in an event presented by the MIAMI Association of REALTORS, the nation’s largest Realtor group with 36,000 members.
“South Florida’s diversified economy as well as its reputation for being one of the world’s top global cities is encouraging more investors and global financiers to create leading commercial projects here,” said Barbara Tria, 2015 commercial president for the MIAMI Association of REALTORS. “The speakers at the third annual RCA Miami Midyear Commercial Update showed just how strong our local commercial market is performing, and where it will be in the coming years.”
Beth Azor of Davie-based Azor Advisory Services analyzed Miami’s booming retail market. Miami has the 15th lowest retail vacancy rate among major U.S. cities, according to a recent National Association of Realtors (NAR) and Reis, Inc. report. The local market’s 6.3 percent retail vacancy rate is lower than the national average (9.6).
Gerard Yetming, CBRE’s senior vice president of investment properties and multi-housing, said statistics show more than 360,000 residents located to South Florida between 2010 and 2014, making it the sixth-fastest growing metropolitan area. In the first quarter of 2015, Miami-Dade County had a 3.4 percent vacancy rate in apartments with a year-over-year rental rate increase of 5.9 percent. The current rate of condo completion is well below that of the peak in 2008 while values of condos have returned to peak levels, Yetming said.
Manny de Zárraga, the executive managing director for Holliday Fenoglio Fowler, spoke about capital markets and how high demand for quality assets combined with low interest rates continues to compress cap rates. South Florida is seeing additional demand for assets from global markets. Several sovereign wealth funds, including China, have a mandate to invest in American real estate, Zárraga said. The Miami hospitality market continues to be strong, with record sales of hotels. Miami has the nation’s second-best performing hotel industry behind New York City.
Christopher Sutton, Flagler’s vice president of business development, discussed escalating demand in the local industrial market. Miami’s industrial vacancy rate of 5.3 percent in May 2015 is the third-lowest in the nation among major cities, according to NAR and Reis. Only Orange County (Calif.) and Los Angeles performed better, registering rates of 3.4 and 3.6 percent, respectively.
Diana Parker, CBRE’s senior vice president of brokerage and office properties, showed how local office vacancy rates have dropped to 13.5 percent in the first quarter of 2015. Overall rental rates increased 3.5 percent in the first six months of 2015. Miami’s office market is seeing significant new demand from technology businesses. An increasing number of companies, including Microsoft, are working to turn Miami into America’s next tech hub and the results are beginning to be seen in the office market, Parker said.