Booming Office Market, Soaring Apartment Rents Give Miami Developers Justified Optimism
Miami's office market is going from strength to strength, according to Cushman & Wakefield of Florida Vice Chairman Brian Gale.
“Overall, the market is very strong,” said Gale, who represents office landlords. “Some submarkets are certainly stronger than others, but we’re seeing close to single-digit vacancy for all of Miami. And the one important thing to know is there’s been a plethora of new-to-market tenants moving from out of state or out of the country. Moreso than even tenant expansion or demand-and-supply constraints, that’s been a factor.”
Gale, who will be a featured speaker at Bisnow's Miami State of the Market event Sept. 20, said demand was evident in a slate of new office construction in Coconut Grove, Coral Gables, Brickell and Wynwood. His team just took over leasing at The Landing at MIA, a 1.2M SF office park west of Miami International Airport, and he has three groups interested in the largest block of 125K SF.
Gale said the continued interest is being driven by a number of factors, like South Florida’s population growth, tax reform driving northerners southward and a growing focus on selling to Latin American markets.
Gale said the threat of climate change has "not hurt commercial one bit.” The outlook looks good for the near future, too, he said.
“Brightline definitely is going to make a huge impact on the market over the next five or 10 years," and as Tri-Rail expands to downtown Miami next year, and eventually to Aventura and Wynwood, “it’ll be a huge change for us once we get mass transit on the east side of town," he said.
On the multifamily front, Cushman & Wakefield’s Midyear Market Update offered some other indicators on the state of the South Florida market: For the eighth year in a row, rents reached record highs; they have gone up by about 25% in just five years.
Fifty-eight market-rate properties now under construction will add 18,215 new units, but 555,000 new residents are expected over the next five years. Lending is “as plentiful as ever,” the report said.
Of course, that means many more people in traffic.
“Our most popular mode of public transportation is the city-run Miami Trolley, which has doubled in boardings in the past five years," City Manager Emilio Gonzalez told Bisnow. "We are expanding the system to reach into neighborhoods and help solve the first and last mile challenge. Developers should study the popularity of alternative public transportation such as these trolleys and consider bringing developments closer to these routes as well.”
Gonzalez and Miami Mayor Francis Suarez will also both be speakers at Bisnow’s State of the Market event Thursday.
Gonzalez stressed that the city is working to become more pedestrian-friendly. The city offers reduced parking requirements for transit-oriented development projects — a fact recently seized upon by Melo Group, which is giving rent discounts to residents who forgo cars in its new downtown apartments.
“Miami continues to attract people from around the globe, but we also need to take care of our own,“ Gonzalez said. “Some of our most vulnerable residents are those in affordable housing or trying to find it. We need private entities and nonprofits to work in partnership with us to ensure that we have a resilient housing market.”
Gonzalez said that the new federal opportunity zone program could help attract partners to improve economically distressed communities.
“With that said, the investment has to be done responsibly to protect the character of our neighborhoods and align with the wishes of those who live in them,” he said.
Join Bisnow Sept. 20 for the Miami State of the Market event.