Ladies and Gentlemen - Look to South Florida!
One area that has become something of a poster child for the real estate plunge has been South Florida. That’s one of the reasons why a good friend of mine, Peter Miralles, president of Atlanta Wealth Consultants, is looking in precisely that region for a rebound that he thinks will come from a more open economic approach from Cuba and a growing popularity in rental properties now that so many people in the state have lost their homes to foreclosure.
South Florida has been hit harder than most large cities in the country. This means more vacancies due to high foreclosure rates. The longer a property is vacant, the more desperate the owner becomes. Motivated sellers are becoming easier to find!
Remember, local Real Estate markets move in cycles. This is evidenced by price-per-square foot changes over time. In terms of the rental rates there has definitely been a shift, especially in the last six months or so, that the tenant may have gained some ground,” says Audley Bosch, C&W Associate Director of industrial brokerage. “In previous quarters, it was a dominant landlord’s position.” It is only a matter of time before it swings toward the landlord again. Supply and demand in Miami were balanced in the last quarter, creating a flattening of rental rates. The average rental rate for all of South Florida is around $7 triple net, noting that less movement in the industrial market has pushed rents to stabilize.
Palm Beach County’s industrial market remains tight with vacancy at 3.6%, the lowest rate in six quarters, according to C&W. Leasing activity increased 29% from a year ago, with the average lease rate at $8.54 price per sf triple net, according to CBRE. More than a million square feet is under construction, which is expected to raise the vacancy rate slightly when projects are complete.
Despite the rise in vacancy and stabilized rental rates, many experts believe the region is insulated from major effects of the residential downturn and corporate downsizing because of international trade. With expansions going on at Miami International Airport and the Port of Miami, industrial distribution fundamentals remain strong. “We’re shining in the state as a market, especially in industrial real estate in relation to our international population and companies,” said Bosch, noting the short distance to Central and South America during times of rising fuel costs.
Overall the market is slow. We’re not seeing a tremendous velocity of deals, but there are still strong indicators that things will get better once the perception of recession dies down. It is getting very exciting (again) for South Florida.
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