MIAMI: CRE Pros Share Market Insight At 2015 Outlook Conference

MIAMI: CRE Pros Share Market Insight At 2015 Outlook Conference

2015 Miami Outlook ConferenceThe 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

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