Historically, South Florida has been among the strongest commercial real estate markets in the country, with continually solid returns and safety for the capital of global investors. Strong population growth, a high volume of attractive real estate, diverse cultural offerings, a travel destination for large segments of the population and a central hub for international business, especially with South America, makes it a hot investment opportunity.
With growing investment from global players in China, Canada, Germany, Singapore, Saudi Arabia, and Qatar up substantially and with the current economic conditions, there are many reasons why South Florida remains a popular place for commercial real estate investment.
Growth in the Florida Retail Market
Retail growth in Miami and South Florida has been explosive in recent years. Among the top retail markets in the country, Miami saw 5% growth in hospitality employment in 2015, reaching an all-time high in jobs in that sector. The $1.7 billion Miami Worldcenter and $1 billion Brickell City Centre are among the largest construction projects in downtown Miami. Investment continues to flow into retail and has shown no signs of letting up.
Business Incentives in Florida
Florida is attractive to businesses for a number of reasons. With no personal income tax, investors and entrepreneurs flock here to reduce their tax burden. According to Chief Executive Magazine, Florida is the #2 rated state for business and according to Tax Foundation, it is the #1 tax climate in the southeast, and #4 overall. For this reason, 20% of US businesses that export are located in Florida, and the state ranks 5th nationwide in high-tech employment.
Foreign Investment in Commercial Real Estate
As of 2015, Florida ranked fourth in the US for cross-border capital flow, as an increasing number of international investors jumped into the real estate market. The investment rate has reached a 9-year high as of 2016 with $4.3 billion in investment from outside the US flowing, up 85% from 2014. That growth has been driven by a larger number of countries as well, with new investments from Spain, Germany, UAE, and China. Latin American countries suffering from poor economic performance are investing heavily as well as they see South Florida’s Commercial real estate market as a haven for capital.
Commercial Real Estate in Miami Offers High Yields
Compared to other global gateway cities and existing cultural hubs in the US, I-90 corridor, and in Europe, South Florida offers comparatively higher yields on investment. Assets in Florida markets are performing strongly right now with a 10% gain in the first half of 2016. Other Florida cities like Orlando, Tampa and Jacksonville have also been targeted due to these higher relative gains.
Commercial Real Estate Investment Trusts
Combined with low-interest rates and a strong job market, REITs have had a major impact on the Miami commercial real estate market. A record 15.5 million people visited Miami in 2015 and the population of the city has grown by nearly 8% in the last five years to 2.7 million. The combination of this growth and institutional investment from outside developers has meant more rapid growth than would otherwise be possible, and consistent interest in the region.
Commercial real estate in Florida and South Florida have been strong, consistently performing investments for both domestic and global investors, and continue to generate capital growth as the area grows and flourishes. Whether evaluating Florida NNN properties for sale or other commercial investment opportunities, there has never been a better time for commercial real estate investments in Florida.