South Florida Commercial Real Estate Mid-Year Report
It has been a long time since last post so let’s blog! We are about at the mid-way point of the year so let’s take a look at the market and see what is going on in South Florida. Industrial real estate is still leading the way, with pricing and land at record highs and growing. Small bay industrial is near impossible to find much less negotiate price. Office is holding its own but is beginning to slow. Multifamily property is still strong but seeing some decline. Retail store real estate is the most interesting now and the results are mixed. Good markets have little vacancy and rates are very high but secondary markets are declining. There is also an interesting shrinking phenomenon where all retailers, including restaurants, are reducing their store footprints. This is in response to rising labor costs, higher rental rates and increased competition both physical and online. The opportunity zone initiative has not really materialized in the area and the effects of a revamped EB-5 visa program are unknown.
While the Chinese have pulled back their investments in the U.S., we have South Americans, Canadians, and Europeans filling the void here. I believe my prediction of recession in the 4th quarter is still on track but it will be a soft and slow decline rather than a dramatic commercial real estate market crash. After all nothing can go up forever and things work in cycles. We are already in the longest economic expansion in U.S. history and it has to end at some point. Florida will fare much better this time around and thanks to our ever growing population there is always new capital flowing into the market. Banks don’t have the exposure they did last time and people seem more aware of the effects of climate change than ever before. We are adapting and managing growth in a mostly responsible manner. I am still bullish on the area but wary of today’s high prices which are still attractive due to low interest rates. As always thanks for reading and have a great day.
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