The JJL’s Pulse360 2015 panel members provided predictions about South Florida’s commercial real estate (view all commercial listings), and the outlook is looking very bright. Among these predictions were:
• 2015 is looking to be a strong year for commercial real estate in Florida due to steady investments and a strengthening economy.
• Prime office spaces may see an increase rental rates from 15 to 25% over the next two years as new workplace construction slows, and absorption rates begin increasing.
• South Florida is continuing to grow in popularity thanks to the tourism boom, and world-class hotels, restaurants, and retail locations.
• Millennial entrepreneurs and their rush to the urban core, including in places such as the Design District, Miami Beach, and Wyndwood, along with the increasing popularity of shared office spaces, will cause changes in the face of work sites.
• The Miami Worldcenter, Brickell City Centre, and the Design District, which are three of the top ten retail destinations in the nation, are all currently being built in Miami.
• Currently, the only prime office tower that is slated to be built is the Brickell City Centre by Swire Properties, and it will not be completed until 2019.
All of these predictions and findings show that South Florida is poised to take advantage of the increasing demand for space required by national and international retailers who are choosing to take advantage of the tourist base in Miami. This tourist base, which includes international travelers from locations such as Brazil, arrive in Miami with empty suitcases that they plan to pack with purchases to take back home with them. Major retailers want a piece of that pie.
Land Price Increases
Another driving force behind the increase in office rental prices is the high land prices. This is causing many developers to abandon office sites, and change their focus to the popular luxury condominiums that are being bought up by foreign buyers, many of whom pay in cash.
Considering that the Swire project is the only one expected to occur between now and 2019, JJL’s Pulse360 members believe that this will result in one thing – rental rates will go sky high. These rates will be driven by the lack of additional supply of office spaces in a market that is already tight, and according to the predictions, this is going to be a major push to getting those rental rates even higher.
While there are no other projects currently under development, Nitin Motwani, who assisted with the creation of Venture Hive, a shared workplace for entrepreneurs close to downtown Miami, has said that there have been other developers who are interested in the concept, and creating sites that are similar. However, the problem with creating those sites is that financing is not as easy to secure since it is outside of the typical office space. Motwani believes that this will change as well, although it may take up to 10 years for that type of financing to become the norm.
All of these predictions show that South Florida is a prime location for retail rentals, and it is only going to get better.