Commercial real estate in South Florida is outperforming other markets
While other major U.S. commercial real estate markets struggle with rising inflation and interest rates, South Florida’s industrial, office and retail sectors are holding steady thanks to low vacancy rates, high average rental demand and bumper sales volume, realtors say.
Blackstone landed $1.3 billion in industrial property in Miami-Dade County last year, a sign that the strong performance of South Florida’s commercial sector will continue into 2023, according to a presentation by Realtor Sebastian Juncadella.
The investment giant led all industrial buyers in terms of sales volume in 2022, Juncadella said in a ballroom packed with brokers and developers at the DoubleTree by Hilton Miami Airport & Convention Center on Wednesday.
“Overall, the industrial space is doing very well,” Juncadella said. “[In Miami-Dade], the developers hastened to satisfy the demand. We built the most ever in 2022, and we’ll set a record across the United States [new industrial construction] in 2023.”
Juncadella, with Miami-based Fairchild Partners, joined Rafael Romero with JLL and Kevin Gonzalez with Colliers in giving separate presentations on the Miami-Dade industrial, retail and office markets at the 2023 CRE Outlook conference. Hosted by the Miami chapter of the Certified Business Investment Member Institute, OR CCIM.
New York based Black stone It’s also the largest spender in the West of the Airport, among Miami-Dade’s most sought-after industrial sub-markets, Juncadella said. In June, Blackstone paid $7.6 billion for PS Business Parks, a predominantly industrial real estate investment fund based in Glendale, California. And after its purchase, Blackstone acquired PS’ Miami International Commerce Center, a 3.5-million-square-foot business park in Doral, Juncadella said.
“Blackstone inherited one of the best business parks in Miami,” he said. “Nobody comes close to the amount I spend at the Western Airport.”
Based in San Francisco an introduction It ranked as the second largest buyer of Miami-Dade industrial property last year, with $1.1 billion in acquisitions. Juncadella said the company has led the campaign in paying rents to record highs in the province since the start of the pandemic.
“Prologis started raising rents,” Juncadella said. They were sending us proposals that were weird, far superior to anyone else’s. Slowly, but surely, they have moved the needle, driving over 20 percent rent growth, year-over-year.”
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Gonzalez of Colliers told the CCIM audience that the migration of out-of-state businesses into the South Florida region has created a paradigm shift in the average space that office renters seek.
“In the past, the average renter in Miami was 500 square feet,” Gonzalez said. “If you look at the recent transition, and as we mature, the average size of these tenants [has] 2500 square feet.
Gonzalez said that between 2021 and last year, 76 new companies signed to market 2.5 million new leased office space in Miami-Dade, Broward and Palm Beach counties.
The “poster baby or sweetheart” of the South Florida office market was the Brickell-led sub-market 830 Brickella 55-story office tower under construction, Gonzalez added.
Developed by the OKO group of Vlad Doronin and Jonathan Goldstein, 830 Brickell is 100 percent pre-sale and has achieved rents from Over $100 per square footGonzales said. “This is great news for Brickell,” he said. “Downtown Miami is finally starting to see some rental spread benefits.”
Gonzalez indicated that co-working sites played a major role in meeting the demand of tenants. “I can’t think of a single co-worker who isn’t 95 percent busy,” he said. “Going forward, as we adopt a hybrid office model, co-operators will be essential.”
JLL’s Romero said during his presentation that South Florida has one of the strongest retail real estate sectors in the country. Romero said landlords in the tri-county area are asking for rents of $34.21 per square foot, compared to $23.47 per square foot nationally.
Romero added that the overall retail vacancy rate in South Florida was 3.4 percent last year, compared to 4.3 percent for the entire US retail market. “Last year, we opened more stores than we closed,” he said. “This has not happened since 1995.”