The general definition of commercial real estate commonly involves referring to a vast array of office buildings, licensed brokers, available listings, company agents, sale prices, high rise leases, loans agencies, developer conditions, offices, spaces with views, for sale listings, special sales on office rooms, lending agents, appraisal companies, leasing terms, public parks and auction prices for land.
The Miami commercial real estate scene, and the whole of South Florida as well, continues to be buoyant despite the wrath brought about by the mortgage crisis. While the residential market continues to get a beating, the commercial property markets, although also feeling the brunt, continue to attract buyers, and does not succumb to the pinch caused by rising mortgage rates, foreclosures and falling median home values, owing to the fact that commercial real estate investors tend to be larger firms or investment trusts, and not individual home buyers.
Miami-Dade Office Markets Continue To Be Attractive
The softer demand seen today in the office space market will, according to analysts, result in a higher vacancy rate and a more moderate pace of rental growth in Miami-Dade County this year, although overall conditions will remain relatively healthy, based on the 2008 National Office Report by Marcus & Millichap.
Vacancies will increase this 2008, however the long-term outlook is positive, as demand is seen to rebound in 2009. The report also includes the firm’s annual National Office Index, which analyzes and ranks 43 office markets based on a series of 12-month, forward-looking supply and demand indicators. Miami moves down six places this year to No. 23.
According to the regional manager of Marcus & Millichap, properties in infill areas in North Miami-Dade County, Hialeah and Kendall will continue to be attractive defensive investments, because of the area’s record of steady tenant demand and difficulty adding new supply. The reports highlights include: builders are expected to complete 600,000 sf of for-lease space; vacancy is forecast to stay at 9.7% by year-end; asking rents are projected to increase by 4.6% to $30.32 psf; and effective rents will rise 4.1% to $26.01 psf.
The South Florida Region Continues To Rank High Among Commercial Real Estate Investment
According to Real Capital Analytics’ recently released report on global property market transactions, the South Florida region ranks 15th globally for commercial real estate deals. The report is the first to exhaustively track transactions in major metropolitan areas globally, and has tracked $1.04 trillion in office, industrial, hotel, retail, land and apartment sales worldwide in 2007. In all, 114 metropolitan areas tallied more than $1 billion in transactions.
South Florida is ranked as the 15th-largest metro in the world for commercial real estate investment, and is also one of those very desirable markets, with a large number of conglomerates who want to invest there. South Florida’s popularity as an international travel, trade and business destination creates familiarity among foreign investors, the report adds. It also helps to lower the notion of investment risk, because the region’s commercial leasing, sales and consumer markets are not just totally on U.S. economic conditions and demand.
South Florida’s emergence on the world investment sales scene parallels its rise as an international hub of commerce. Real Capital Analytics’ report further notes that the bottom line is that South Florida, because of its strategic location, has become attractive to international trade and the whole world.