Miami’s commercial real estate market offers a wide range of projects and property types due to its pivotal access as an Atlantic coastal town. Miami has distinct cultural influence 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 Florida’s commercial real estate market, 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.
We broke down the highlights of Miami’s commercial real estate market with metrics that focus on 4 primary sectors: office, industrial, multifamily, and retail.
1) Miami Cap Rates
Miami’s cap rates have stayed very stable year-over-year across all CRE sectors, with minimal movement / change.
- Office: 6.8% (7.2% in 2018)
- Industrial: 6.5% (6.7% in 2018)
- Multifamily: 5.6% (5.8% in 2018)
- Retail: 6.2% (6.4% in 2018)
2) Miami Vacancy Rates
Miami’s vacancy rates have also remained stable year-over-year, with the biggest different seen in the industrial sector: a change of +1.5%.
- Office: 8.4% (8.6% in 2018)
- Industrial: 4.4% (2.9% in 2018)
- Multifamily: 5.7% (5.8% in 2018)
- Retail: 3.8% (3.8% in 2018)
3) Miami Asking Rates
- Office: $45.02/SF
- Industrial: $8.78/SF/NNN
- Multifamily: $1,545/ unit
- Retail: $39.35/ SF
4) Miami Absorption Rates (12 Month Net)
- Office: 372,000 (297,164 SF in 2018)
- Industrial: 2,500,000 (1,571,733 SF in 2018)
- Multifamily: 6,621 Units (4,998 Units in 2018)
- Retail: 1,200,000 SF (857,000 SF in 2018)
5) Miami CRE Properties Under Construction
Miami’s commercial real estate market is currently experiencing a strong presence of new construction projects across all sectors, as indicated by the stats shown below.
Miami Office Properties Under Construction
# of Properties: 25
Total Square Feet: 3,042,128
% of Inventory: 2.8%
Miami Industrial Properties Under Construction
# of Properties: 27
Total Square Feet: 4,068,202
% of Inventory: 1.8%
Miami Multifamily Properties Under Construction
# of Properties: 66
Total Square Feet: 15,594
% of Inventory: 10.1%
Average # of Units: 236
Miami Retail Properties Under Construction
# of Properties: 56
Total Square Feet: 3,457,319
% of Inventory: 2.5%
6) 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%.
This is an excellent barometer for the economy, not just because more people are employed, but it demonstrates that companies are doing better overall. They have the cash flow to hire for respective vocations within their organizations. Of course, those employed citizens 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 4th Quarter 2018 is:
$1,104 for Miami-Dade County
$1,122 for Palm Beach County
$1,1064 for Broward County
Fortunately, the employment situation continues its positive trend as more and more people start to call Miami home.
7) 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%. 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 44th 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.