While the private home market in Florida is suffering, the commercial market is better then ever and investors view the market as "very reasonable."
Many investors are looking to relocate to the Sunshine State because commercial property in Miami is less expensive then in other major cities such as Manhattan. While sales have not yet gone through, interest is high.
CB Richard Ellis said that current acquisitions require money up-front because real estate trusts have become more aggressive. The closing periods are also short.
While rents have increased for commercial properties, Institutional investors are able to keep margins under control thanks to storm-related insurance premiums and utility surcharges. Increased taxes are also a factor.
Retail and multi-family properties are in such high demand because a year without storms has helped to stabilize insurance costs and rents continue to rise. Vacancy rates are also at their lowest rates in over a decade. "It's a very tight market and the market recognizes that," Bell said.
Three major office buildings coming to Miami will add 1.9 million square feet to the business district and that vacancy rates have fallen to 8.3%, down from 16.4% two years ago. Office construction has increased throughout Miami-Dade, Broward and Palm Beach counties. West Palm Beach is considered the best place to set up shop, as the city is yielding the highest returns in five years.
Exports, rather then construction and retail activity, will be responsible for most of the growth because of the weak dollar. The commercial boom is in direct opposition to the housing market, which has slumped lately. Business-to-business transactions will end up being more important to the commercial market than consumer-to-business transactions. Investment, Investment Banking and business services are also expecting to help the market.
While Orlando is faring best right now, Miami's industrial zone is considered to be the future. Vacancy is already down to 4.2% in Miami-Dade and major players in the institutional field are looking to buy small properties now to establish themselves for when the time comes. A Real Estate Service recently sold 6.1 acres near the Pan American Business Park for $23 a square foot. A warehouse will be built on the property. The sale price is reflective of the fact there is less land available now in the area. There's only so much inventory and so much land. The rush of capital has become very aggressive.