Miami Reaping the Rewards of International Appeal
One reason the South Florida multifamily market has such spring in its step is demand from a diversity of investors, according to the Market Trends panel speakers at Bisnow's recent 3rd annual South Florida State of the Market (see previous coverage in last week's edition). That diversity includes traditional Northeastern buyers, as well as Latin Americans, but also local buyers who are looking to trade up. It's a healthy mix. International demand has shifted more toward buyers who want to live here, our speakers noted, as opposed to those looking only to invest or otherwise place their capital.
Snapped: Aztec Group's Jason Katz and Ezra Katz; Ezra was a speaker on the Market Trends panel. Our speakers also noted that cap rates in the office market are closer to 5%, rather than 6%, these days. Does that mean an overheated market? Maybe not. Many buildings still have leases that are under market, and many of those are going to be up for renewal in the next few years, so there's still upside potential for office investors. There aren't that many buildings for sale in any case, and there's a lot of competition among investors, so cap rates may continue to drop.
Overall, local development has seen a slowdown in new announcements, and in new construction, which is good for the market, the Markets Trends speakers explained. A lot of submarkets either have high barriers to entry, or have little developable land, and those neighborhoods ought to be able to hold onto their values. One more factor: for the first time, Miami's been taken seriously as an international city. Companies know they have to have a presence in Miami, and that's driving demand for office and residential space. Other speakers on the Market Trends panel included Goldman Properties CEO Jessica Goldman Srebnick; Terranova Corp founder Stephen Bittel; Terra Group president David Martin, and Taylor & Mathis principal Brian Gale, who moderated.