Miami has one of the most dynamic real estate markets in the US. With a high density population, diversified economy, a natural barrier to entry, Latin American influence, and access to two of the most active ports in the country, it is healthy compared with other parts if the country, according to a new report from CB Richard Ellis.
At the end of 2008, the vacancy rate was 10.8%, placing Miami with the fifth lowest overall vacancy rate in the US, the report says. With many Latin American operations and typical tenant sizes for domestic regional operations in the 10,000 to 25,000 square feet range (relatively small compared to markets like New York), Miami's market has not seen the same amount of downsizing on office space from the economic downturn as other markets across Florida.
Direct asking lease rates have increased because prime buildings in key submarkets, such as Brickell, Downtown Miami, and Coral Gables, put more space on the market in the latter part of 2008, but did not lower asking lease rates.
Landlords have offered incentives such as free rents, moving costs and improvements to keep tenants and they, in turn, have been reluctant to move.
Even the fact that three million square feet of space is due to be delivered over the next 24 months and vacancy rates are expected to increase the outlook is still optimistic. 'Miami has a resilient office market with strong fundamentals that will ensure long term vitality,' the report says.
The industrial sector is poised for a strong re-bound, the analysts say. Miami's industrial real estate market will depend on its fundamentals as the gateway to Latin America to bring the market through difficult economic times,' the report adds.
'Due to the lack of available land and high costs of construction, limited new development will occur in Miami and what is already a tight market will become constrained once the economy recovers and demand increases,' it continues.
Lack of available financing continues to be a challenge for investors but the report concludes; 'As the credit markets thaw and pricing corrections complete, there will likely be pent up demand towards the middle of 2009 and through 2010'.
