Miami’s commercial real estate market offers a wide range of projects, assets, and property types due to its pivotal access as an Atlantic coastal town and its geographic position near Central and South America. These factors give Miami a distinct cultural influence and importance as a transportation node between North America, Central America, South America, and Europe. It also possesses economic diversity with many opportunities illustrated by a variety of business sectors within the 305.
Along with these elements, there is the presence of wealth from national and international funding flowing into the region as investing in the state continues to produce positive returns. In fact, HFF Securities recently ranked the top US Commercial Real Estate Investment Markets, and Miami stood in 11th place (just below Boston) with an investment score of 3.5.
Miami’s commercial real estate also serves as one of the leading contributors to South Florida commercial real estate which shows consistent, positive signs through a wide range of fiscal measurements: economic growth, unemployment rates, vacancy rates, and foreign investments (to name a few). Many of the aforementioned statistics are directly impacted by The Magic City.
It is important to mention that the pandemic has obviously played a role in global and local economies; however, Florida saw an increase of nearly 250,000 residents during the last year, as people are migrating to different states. The Sunshine State offers no income tax for residents, which is a major plus for people considering new places to live.
Insight on the Current Miami Commercial Real Estate Market
Miami and the South Florida market as a whole have remained resilient in the face of COVID-19, benefiting from the strong population migration.
A laissez faire attitude by the FL government towards mandated closures has allowed businesses to thrive during these challenging times; coupled with low taxes and an overall business-friendly environment, many companies are now searching for space to establish a foothold in the area, further accelerating the migration.
For sale inventory has remained dismal; when coupled with strong demand and ample liquidity, this caused downward pressure on cap rates for all product types.”
– Marcos Puente, Director of Acquisitions, MMG Equity Partners
To highlight some of the major economic statistics in the area, we broke down the key points of Miami’s commercial real estate market with metrics that focus on 4 primary sectors: office, industrial, multifamily, and retail. This report includes: cap rates, vacancy rates, sales volumes, and population growth.
1) Miami Cap Rates
Miami’s cap rates remained fairly stable year-over-year from 2019 to 2020 across all CRE sectors with minimal movement / change. Although it should be noted that they all went down a fraction of a percent or so.
- Office: 6.3% (6.8% in 2019)
- Industrial: 5.8% (6.5% in 2019)
- Multifamily: 5.1% (5.6% in 2019)
- Retail: 5.9% (6.2% in 2019)
2) Miami Vacancy Rates
Miami’s vacancy rates have also remained stable year-over-year, with the biggest difference seen in the office sector: a change of -2.6%.
- Office: 11% (8.4% in 2019)
- Industrial: 4.9% (4.4% in 2019)
- Multifamily: 7.1% (5.7% in 2019)
- Retail: 4.3% (3.8% in 2019)
3) Miami Asking Rates
- Office: $39 / SF ($45 / SF in 2019)
- Industrial: $9.8 / SF / NNN ($10.40 /SF / NNN in 2019)
- Multifamily: $1,545 / unit ($1,545 / unit in 2019)
- Retail: $37 / SF ($39 / SF in 2019)
4) Miami Absorption Rates (12 Month Net)
- Office: -1,100,000 (372,000 SF in 2019)
- Industrial: 4,100,000 (2,500,000 SF in 2019)
- Multifamily: 6,690 Units (6,621 Units in 2019)
- Retail: 143,000 SF (1,200,000 SF in 2019)
5) Miami CRE Sales Statistics (Past 12 Months)
Miami’s commercial real estate market sales in 2020 across the four principal sectors.
Miami CRE Total Sales Volume
Miami Office: $697M
Miami Industrial: $1.1B
Miami Multifamily: $1B
Miami Retail: $1.2B
Miami Office Sales
Sales Comparables: 327
Average Cap Rate: 6.5%
Price / SF: $240
Average Vacancy During Sale: 13.4%
Miami Industrial Sales
Sales Comparables: 436
Average Cap Rate: 6.5%
Price / SF: $135
Average Vacancy During Sale: 6.9%
Miami Multifamily Sales
Sales Comparables: 190
Average Price / Unit: $222,000
Average Price / Multifamily Property: $6,500,000
Average Vacancy During Sale: 7.2%
Miami Retail Sales
Sales Comparables: 354
Average Cap Rate: 5.9%
Price / SF: $273
Average Vacancy During Sale: 3.2%
6) Miami CRE Properties Under Construction
Miami’s commercial real estate market is currently experiencing a strong presence of new construction projects across all sectors. Each sector is adding over 1% of inventory to their respective markets, as indicated by the stats shown below. Miami’s multifamily market is adding nearly 10% of inventory with apartments and other multifamily assets being constructed meeting the demand of a growing population in the area.
Miami Office Properties Under Construction
# of Properties: 26
Total Square Feet: 3,471,066
% of Inventory: 3.1%
Miami Industrial Properties Under Construction
# of Properties: 16
Total Square Feet: 2,876,539
% of Inventory: 1.2%
Miami Multifamily Properties Under Construction
# of Properties: 48
Total Units: 11,694
% of Inventory: 7%
Average # of Units: 244
Miami Retail Properties Under Construction
# of Properties: 34
Total Square Feet: 2,056,662
% of Inventory: 1.5%
7) Miami Labor Force Statistics
Not unlike a majority of cities across the United States and the entire world, the unemployment rate peaked after the subprime market crash in Miami to 13% in 2009. However, economic recovery during the past few years drastically changed the employment situation for the better. Since 2009 the unemployment rate in Miami dropped nearly 10% to 2.5%. The labor force has also taken a hit during the pandemic with unemployment numbers rising during the middle of 2020, and then recovering a bit during the latter part of the year. The full statistics of the pandemic’s effect have not been released yet.
Labor force statistics are an excellent barometer for the economy, not just because it shows employment levels, but it demonstrates the overall health of the economy. Naturally, when there are more employed citizens, they can then contribute more to the economy by spending and contributing to the fiscal flow.
The current weekly wages in the Miami region as of 2020 is:
$1,039 for Miami-Dade County
$1,103 for Palm Beach County
$1,000 for Broward County
Fortunately, despite the pandemic the employment situation is moving in a positive direction as more and more people start to call Miami home.
8) Miami Population Growth
One of the most impactful reasons for the previously stated stats is continued population growth. Florida alone is ranked 4th in the nation for population growth from 2010 till 2017 at 11.6%. Florida is also projected to hit a population of 23 million residents by 2025.
Meanwhile, Miami is currently 40th among all cities nationwide in terms of population growth from 2016 to 2018 with an increase of 2.7% (currently 470K+ residents).
Miami is now the 42nd most populous city in the United States; however the entire urban area is the 4th largest in the nation with 5.5 million residents.
Since 2010, Miami’s population grew 15.6%, with a minimum growth of 1.2% and a maximum of 3.25% year-over-year. This consistent, tangible increase of residents in Miami is a primary engine for all of the economic surpluses going on in the area, especially in the CRE market.
Similarly Miami-Dade’s Population has grown by over 260,000 residents from 2010 to 2018, which represents an increase of 10.5%; however, demographics are showing that there is a slowing in population growth that may represent a reverse in the coming years.
This progressive impact is witnessed with the illustrated stats above, and since the population is projected to continue its growth, the commercial real estate market in Miami will continue to produce favorable statistics.
Figures and stats collected from CoStar, Colliers, Avison Young, TheRealDeal and BizJournals reports.