South Florida Market TrendsRead Now
Has South Florida Peaked? In Short, no.
Investor sentiment remains strong in South Florida. With record leasing volumes and consistent year-over-year rent growth, the market is still a hot spot for investment opportunities.
The trendy locations of Lincoln Road and Brickell have proven to be attractive to many businesses. Kaseya, the software company, has leased over 65,000 square feet within the last year. Other notable companies include Marsh Insurance, with 23,000 square feet leased, and Industrious Coworking, which leased 40,000 square feet.
Miami’s leasing activity has totaled more than 1.4 million square feet in the first quarter of 2022, making it the fourth straight quarter where leasing volume eclipsed the one million square feet mark. Currently, South Florida only has 900,000 square feet of sublet space which is less than 1% of Miami’s overall inventory. The office inventory listed for sublet nationally is just over 2%. In part, deal volume decreased during the early months of this year; however, that may be subject to change.
Recently, two development groups won initial approval from the city of Miami Beach to build office spaces in two city-owned parking lots on Lincoln Road. Combined, the two groups are looking to build 210,000 square feet of office space. Despite the additional supply, Miami’s strong leasing activity and rent growth should maintain as the demand for properties in South Florida remains high.
Watermark, a real estate investment trust, recently sold a twenty-five-hotel portfolio in an all-cash transaction of $3.8 billion to Brookfield Asset Management. Two of the hotels were the Ritz-Carlton of Fort Lauderdale and Key Biscayne. Early in May, a twelve-acre storage facility outside of Norland was sold to CenterPoint Properties for $47.5 million. The same property was bought in 2019 by Drake Real Estate Partners for just $12.5 million, further highlighting this combustible market. Not to mention, Miami’s office rent is 10% above where it was in 2020 at the start of the pandemic.
South Florida’s year-over-year 6% office rent growth leads the nation by nearly double. The closest to this figure would be Phoenix and Orlando with 3.4% and Tampa with 3%. With the expected jump in transactions due to increased supply, many experts believe that these numbers and the current investment market should maintain its strength for the foreseeable future.
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