The year ahead looks promising for commercial ventures given that Miami’s business recovery is in full swing, according to experts who provided market overviews at the CCIM (Certified Commercial Investment Member) Miami‘s 2015 Commercial Real Estate Outlook conference held at Coral Gables Country Club January 21.
Miami was at the forefront of every trend in real estate last year and promises to be so in the industrial market going forward, said Michael K. Silver, first vice president of CBRE. He said demand for Class A segments is extremely high and the new buildings with 30-foot clear ceilings and wider column spacings have a depth of 160 to 165 feet that can be divided up into 17,000-square-foot units for the larger number of users in that space range.
Miami’s industrial market is one of the most desirable investment markets in the country, Mr. Silver said. As land prices continue to rise and the amount of developable land diminishes, he said, Miami’s existing warehouse product sales are expected to climb.
Currently, 452,386 square feet of industrial space is under construction. In the past two years, Mr. Silver said, 40% of the 3.4 million square feet of space delivered was pre-leased before construction was completed.
He said trends driving the industrial real estate market include the rapid growth of E-commerce, which is prompting retailers to adopt omni-channel models that integrate online and actual stores. In turn, more inventory is being held in distri bution centers rather than store room floors.
The expanded Panama Canal will bring larger container ships to Miami’s port, Mr. Silver said, and this has prompted an increased demand for industrial space in port-centric locations.
The economic recovery has brought increased demand for organic and specialty foods, which has led to a greater demand for food storage and distribution centers, Mr. Silver said “Perishables is an important concept,” ‘he said, describing a pilot program at PortMiami that allows additional fruits and vegetables to come in and saves five days of travel time.
One of the biggest changes for Miami in the past few years is its excellent business environment, drawing hedge funds and financial institutions, all of which need office space, said F. Antonio Puente, senior vice president of Fairchild Partners.
He said new-to-market tenants are at the highest level Miami has seen.
Rental rates will continue to rise, possibly 5% to 10% per year on average, Mr. Puente· predicts. He pointed to new office buildings at 1450 Brickell Ave. and 600 Brickell Ave. where premiere space has been renting “north of $60 per square foot-a number we have never seen.”
Very few office buildings are to open over the next 24 months, Mr. Puente said. “Demand for office investments by institutions remains strong and will continue forward,” he said. “Prices have continued to increase·as CAP rates have com pressed.”
Mr. Puente predicted the leasing market will stay active but he cautioned that many tenants have already signed their leases early for longer terms and locked in today’s pricing, adding that there are very few large tenant expirations left for the next 24 months.
The better the economy, the more demand for multi-family housing, said Arnaud Karsenti, managing principal of 13th Floor Investments.
There’s been a multifamily vacancy rate compression across South Florida and rental rates have grown, he said. Demographics remain favorable with millennials and baby boomer s driving the demand.
Mr. Karsenti said going forward the market will probably be impacted by job growth, demographics, interest rates and cost of capital. .
Source: Miami Today