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>Conference Update: South Florida's Market Remains
Sunny
August 17, 2007
By Amanda Marsh, Associate Editor, Commercial Property News
Contrary to its normal August weather, there is hardly a
cloud in the sky for South Florida's commercial real estate
market. Four of the region's leaders addressed more than
350 attendees today at CPN's annual South Florida Properties
Opportunities Conference, held at the Westin Diplomat Resort
& Spa in Hollywood, Fla.
The Miami-Dade County office and industrial market is “the
most active we've seen in our history,” with rental
rates growing and occupancies at rates over 90 percent,
said Jose Juncadella, principal of Fairchild Partners. Neighboring
Broward County has also seen historic lows, but has experienced
some flattening, said Ken Morris (pictured), president of
Morris Southeast Group/CORFAC International, noting that
there are some speculative buildings that are still looking
for tenants. Larger tenants are pushing hard to insulate
themselves from rising operating expenses, while institutional
landlords have a leg up with insurance rates due to the
amount of assets in their portfolios.
Space is still hard to come by in many markets, as shown
by one of Juncadella’s recent office assignments.
He had to find 50,000 square feet of space for a tenant,
but was only able to find two blocks of space in the region.
These space constraints will continue through 2008, but
he anticipates more on the market once there are more construction
deliveries in 2009. Additionally, rental rates will continue
to rise, but as new space delivers, costs will keep an upward
pressure on rental rates. There are more tenants on the
subletting side, as well, but Morris added that there are
not as many kicking tires as there used to be.
Retail remains strong as occupancy rates average 95 percent.
Consumer spending also remains strong, with $4.5 billion
spent on retail this year, more than all of 2006, noted
Brad Peterson, managing director of The Staubach Co.
“We’ve had a perfect storm the past few years,
but the only change is that capital markets aren’t
as strong as they used to be,” said Christian Lee,
executive vice president of CB Richard Ellis Inc., who noted
that there might not be as many investment sales. However,
he contended than now is still a good time to sell property,
and the capital markets should improve by the end of the
year.
South Florida’s barrier to entry will be what protects
the market, “but there will be a finite level,”
Morris said, adding that tenants will increasingly factor
aspects such as transportation and housing as an impetus
to moving to the region.
Although there has been commentary on the lack of developable
land, Juncadella pointed out that South Florida’s
biggest developers, such as Flagler Development Co., hold
a large amount of the available space. “There’s
enough for at least 10 years, but smaller developers may
have a harder time getting land,” he said.
One hot topic that appeared a few times during the conference
was the building of three class A office buildings in the
downtown area—Brickell Financial Centre, 1450 Brickell
and Met2. Juncadella said that the market will only demand
one-and-a-half buildings, but it still remains to see who
will deliver first and whether the buildings will bring
too much space to the market.
Jonathan Kingsley, managing director & executive vice
president of Grubb & Ellis Co., moderated the State
of the Market panel. The conference also included a keynote
on downtown areas by Akerman Senterfitt shareholder Neisen
Kasdin, and panels on capital markets & investment,
affordable housing, development and occupancy costs.
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