The View from 50,000 Feet
The U.S. economy remains on solid footing and by summer this year is expected to surpass the longest economic expansion in history, and the 120-month mark set from March of 1991 to March of 2001. Even so, it seems we are trying to talk ourselves into a recession, with frequent media reports variously titled “The recession, when will it strike?” Yet no one bothers to remind us that Australia is entering its 29th consecutive year without two consecutive quarters of negative economic growth, otherwise known as a recession. Economic expansions don’t stop from fatigue – something must cause them.
The Nasdaq Composite Index inched toward exiting the bear market in entered on Christmas Eve, rebounding nearly 20 percent to a Feb. 8 close of 7288.24. It would have to reach 7431.50 to make it official, and if it does, it would be its second-fastest exit from bear marketing territory in history. The rally was led by the FAANG stocks of Facebook, Apple, Amazon, Netflix and Google.
Turning to the property markets, strong Q4 activity pushed 2018 above 2017 for investment volume in the U.S.
The View from 20,000 Feet
Broward County added 15,800 net-new jobs during 2018, bringing the Ft. Lauderdale-Pompano Beach-Deerfield Beach MSA to an employment base of 866,300, and with a jobless rate 3.3 percent. Trade, transportation, utilities and professional services led job growth, according to Florida’s Department of Economic Opportunity, Bureau of Labor Market Statistics. Construction (3,300), education and health services (2,100), leisure and hospitality (1,500) were other job sectors that posted gains. However, the county lost 600 financial services jobs and 500 government jobs in 2018.
South Florida should receive increased flows of investment capital into commercial real estate as a result of the Tax Cuts and Jobs Act of 2018, according to Miami law firm Berger Singerman and the firm’s fifth annual survey of over 2,000 local real estate professionals and property investors. Indeed, the Miami condo market was recently featured in national news as the most likely relocation target for New Yorkers and people from Connecticut.
This is the first year that people will be filing tax returns under the new law, and with new limit for SALT deductions (State and Local Taxes) set at $10,000, high-income earners and families with large mortgages are expected to flee high-cost states, including California, where it is not uncommon to pay property taxes of $20,000, $30,000 and even more annually – 100 percent of which was deductible under the old tax rules but won’t be starting this year.
Recent transaction feature
Morris Southeast Group represented the worldwide leader in marine propulsion systems, ZF Marine Propulsion Systems Miramar, LLC in a 62,552-square-foot industrial warehouse lease in Miramar.
The View with Boots on the Ground
The industrial market led other South Florida property sectors in 2018 (again) by posting 5,149,470 square feet of positive net absorption for the year. The overall vacancy rate stood at an historic low of 3.8 percent at year end, with the average quoted asking rental rate for available space at $10.33 per-square-foot at the end of the fourth quarter. Total industrial inventory in the South Florida market amounted to nearly 439 million square feet, or about the same size at Boston’s industrial market.
Total industrial building sales declined on a year-over-year basis and through the first three quarters of 2018, with 167 buildings of 15,000 square feet or larger traded hands, for a total volume of $1,051,381,525, according to CoStar. That compares with 171 building sales in the first three quarters of 2017 with a total volume in excess of $1.3 billion. Cap rates compressed during the year, falling from 7.18 percent in 2017 to 6.59 percent in 2018. At the close of the year, over 7.4 million square feet of industrial property was under construction, led by North Miami Beach industrial submarket (1.75 million square feet), Miami Airport (1.09 million square feet) and Southwest Broward County (1.07 million square feet).
The South Florida office market was stable during 2018 and ended the year with an overall vacancy rate of 9.1 percent on tepid positive net absorption for the year of 115,133 square feet. The overall office vacancy rate was 8.9 percent at the beginning of last year. Two of the quarters posted negative net absorption last year while two quarters were positive. At the end of the fourth quarter, 3,522,479 square feet of new office space was under construction.
The average quoted asking rental rate for all classes of office product was $32.86 per-square-foot at the close of the fourth quarter. Class A space averaged $39.71, while Class B space was $27.76 and Class C space was $14.87 per foot. Total office inventory at year end was 233,380,457 square feet.
Total office building sales of 15,000 square feet or larger increased in 2018, when 87 office transactions closed in the first three months last year, with total volume exceeding $1.5 billion,
compared with 2017 when 107 office buildings sold, also with total volume greater than $1.5 billion. The average price-per-foot was $215.43 in 2018, versus $213.15 in 2017. Cap rates changed little, averaging 6.81 percent last year compared with 6.72 percent during the same period of 2017, according to CoStar.
Retail real estate in South Florida finished 2018 with a slightly higher vacancy rate then where it started, moving from 3.7 percent to 4.1 percent, yet overall the property sector had a good year, given the onslaught of ecommerce and its affects in other U.S. markets. For the year, 735,202 square feet of retail space was positively net-absorbed, and rental rates increased 3.05 percent from a year earlier, finishing 2018 at an average of $28.16 per-square-foot.
During the four quarters last year, nearly 2.6 million square feet of new retail space was delivered to the market. At the close of 2018, approximately 5.3 million square feet of retail product was under construction, reported CoStar. Retail real estate encompasses Shopping Centers – including community centers, neighborhood centers and strip centers), Power Centers, General Retail Properties, Malls and Specialty Centers, such as outlet malls, airport retail and Theme/Festival Centers.
During the first nine months of 2018, 92 retail properties were sold with a total sales volume of $1.03 billion, compared with the same period in 2017, when 80 retail properties sold for a total sales volume of $1.08 billion. Cap rates came down for retail real estate in 2018, moving from 7.07 percent in 2017 to 6.48 percent last year.
Ken Morris attended the Society of Industrial and Office Realtors (SIOR) Fall World Conference in Denver, CO this past fall. With nearly 1,000 fellow SIORs and sponsors in attendance, it was excellent networking with Thought Leader breakout sessions, panels and brilliant speakers. One of the best speakers at an SIOR event in years – Four-Star Admiral and Navy SEAL William McRaven, presented the keynote address during the Friday session.
Click here for the story “You Just Don’t Quit” Says SEAL Team Six Boss McRaven
Sponsored by Prologis, Four-Star Admiral and Navy SEAL William McRaven was a special speaker for a number of reasons, among them, SIOR has been trying to get him as a keynote speaker for four years but his schedule did not allow it until the Denver conference.
McRaven shared SEAL training stories, stories from his 37 years in the military and of course, the story about the raid on Osama Bin Laden’s compound. He said he was always impressed how people stood up in their darkest moments. “That’s when you have to be your very best – in dark, dark moments when everything is on the line.” He also pointed out that “risk is only relative to you – if someone else is taking a risk, it’s not relative to you.”
Operation Neptune Spear
McRaven is credited for organizing and overseeing the execution of Operation Neptune Spear, the special ops raid that led to the death of Osama Bin Laden on May 2, 2011. CIA Director Leon Panetta delegated the raid to McRaven, who had worked almost exclusively on counter-terrorism operations and strategy since 2001.
According to The New York Times, “In February, Mr. Panetta called then-Vice Adm. William H. McRaven, commander of the Pentagon’s Joint Special Operations Command, to CIA headquarters in Langley, Virginia, to give him details about the compound and to begin planning a military strike. Admiral McRaven, a veteran of the covert world who had written a book on American Special Operations, spent weeks working with the CIA on the operation, and came up with three options: a helicopter assault using U.S. Navy SEALs, a strike with B-2 bombers that would obliterate the compound, or a joint raid with Pakistani intelligence operatives who would be told about the mission hours before the launch.”
Of course the SEALs opted for the helicopter assault and SEAL Team Six executed the raid on Osama Bin Laden’s Pakistan compound, accomplishing their mission.
President Obama, Vice President Biden, Secretary Clinton, Secretary of Defense Robert Gates, Chief Counter-terrorism advisor to President Obama John Brennan (he later became CIA Director) and others tracked the progress of Operation Neptune Spear with impassioned interest and concern. Most people believe this photo was taken in the Situation Room, but McRaven said it was not; rather, it was taken in an adjacent room of the White House.
McRaven’s greatest point during his talk was on toughness, saying “training brings out the toughness in people” yet mostly, “you just don’t quit,” whether it is as a special operations warrior, or in life, sports, and business, if what you want is worth fighting for.
During the Q&A with McRaven, he was asked about Millennials and the generation behind them, or young people just entering and graduating from college. He was very optimistic about this generation and expressed “great confidence in young kids today.” He reminded us that earlier generations of Americans had little faith in what the Baby Boomer generation might accomplish, and it turns out that we have done okay.
Buying, selling, leasing space or do you own commercial property that requires third-party management to take care of the asset? Call Ken Morris at 954.240.4400 or email him at firstname.lastname@example.org.
In 1963, Walt Disney approached two of his staff songwriters, the Sherman Brothers, to come up with a catchy tune for the UNICEF exhibition in the upcoming New York World’s Fair. The result was “It’s A Small World (After All).” Little did Mr. Disney know that his song could easily be the soundtrack for today’s boom in tiny living.
Americans these days are obsessed with simplifying their lives. Television channels, like HGTV and DYI, are filled with shows celebrating tiny homes. In addition, YouTube has channels dedicated to tiny food and tilt shift photography, an effect that makes the big, wide world look like a child’s model train set. Even IKEA celebrates tiny living with displays of efficient living space in just a few hundred square feet.
In recent years, there has been great interest – especially among aging Baby Boomers – to leave suburbia and return to city life. Developers responded by developing residential spaces above retail and commercial spaces, creating easily walk-able neighborhoods where people could live, work, and play.
Rents, though, outpaced salaries, and a younger workforce soon found themselves priced out of the urban opportunity. In cities like Miami, for example, living in an exciting urban neighborhood often requires multiple roommates and/or doubling up in bedrooms.
It was only a matter of time before the tiny revolution made its way to the big city. Tiny homes, usually placed in rural or some suburban settings, could be adapted to urban life if they could be stacked on top of one another – in other words, the birth of the micro-unit building.
Cities across the country are in various stages of developing towers of micro-unit apartments. While some may see it as an attempt to jump on the tiny fad, for many urban neighborhoods, the micro-movement is seen as a chance to breathe new life into downtown centers. The size of the apartments forces residents to not collect stuff, but to experience city life.
Living in a micro-unit is not for everyone. Most micro-dwellers are Millennials and younger, who are living alone and who have consciously chosen to trade space for affordable living in densely populated neighborhoods. Often, the micro-apartment is viewed as a stepping-stone for a specific life chapter, with residents staying for one to two years.
While many of the buildings feature amenities, such as communal full kitchens, gyms, and pools, they do not always have parking. The micro-unit towers are often located near public transportation so residents can easily commute or walk to their destination. Moishe Mana Tower, for example, will be close to public parking garages, but will also provide onsite bicycle parking.
At Morris Southeast Group, no real estate wish is too big or too small. Our team of professionals can help you find the right investment fit for your needs. For a free consultation, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at email@example.com.
For better or for worse, we live in a data-driven world. Everything we do, eat, wear, or Google leaves a digital footprint to be placed in an algorithm for further crunching, analysis, interpretation, and distribution.
The easiest example is to do an Internet search for anything – a new mattress or a future vacation destination – and see how quickly related information and ads appear in your Facebook newsfeed. From Netflix preferences to complex medical diagnostics, big data is transforming the way many industries conduct business.
For years, big data has transformed industries around the globe, and the growth of the Internet of Things has accelerated this trend. Banking and insurance are two such industries that have turned data analysis into an art. Thanks to modeling massive amounts of information, they are better able to see trends, steer marketing initiatives, and determine risk factors.
While the real estate industry has used data to a point – to get a better view of property values and taxes in a particular neighborhood, for example – 2017 is predicted to be the year that big data will have a much greater influence. The key phrase here is predictive analytics.
Simply stated, predictive analytics is the gathering and analyzing of data through a variety of means, including statistics, mining, and artificial intelligence, to make predictions about the future. For the commercial real estate industry, the availability of this information and the indication of trends can bring the client-broker relationship to a whole new level. Thanks to good data, the broker may be able to spot a client’s need before the client is even aware of the need.
Let’s say there is a client interested in making a real estate investment, perhaps to own a building and then to lease out space. If the local market doesn’t meet the client’s criteria, a smaller market might.
Armed with data, the broker can fine-tune and automatically obtain a location – perhaps a secondary market the client never considered, where prices are lower but future potential is high – and that future potential might be mapped with numerous points of data, from trends within a certain industry to overall economic factors and interest rates.
The key to strong predictive analytics is rich data gathering. To meet that need, companies and apps are popping up to compile data and overlay it so that the combination provides meaningful answers.
Among the data that can be used for a successful transaction:
Even unsuccessful deals can lend a helping hand. One app, for example, gets feedback from prospective tenants to analyze what about the property they didn’t like, such as the physical layout of the space, ceiling height, or windows. This information not only helps the broker to find a more suitable space for the tenant, but it also helps the broker work with the owner to consider renovations.
Morris Southeast Group is excited about technology and its ability to meet the needs of tenants, developers, and investors. Not only does it keep all parties satisfied and profitable, it also helps to keep our South Florida cities growing and vibrant.
Our firm has seen a lot of changes since it opened its doors in 1976. We’re proud to have grown with the times, and we look forward to always looking forward. To discover a commercial real estate property that meets all of your needs, contact Morris Southeast Group at 954.474.1776 for a free consultation. You can also reach Ken Morris directly at 954.240.4400 or via email at firstname.lastname@example.org.
LeBron James practiced free throws in this building. Just kidding. But with 16-foot clear height ceilings and a building shaped like a basketball court enclosure, he could have. The ‘Chosen One’ from Northeast Ohio who graced our presence for four years never stepped foot in this property. But now that I have your attention let me tell you who has passed through here: a zillion people who arrived or departed by bus. That’s right. A bus. As in the Greyhound type.
Built in 1939 as a bus terminal, the property we just listed for sale served the community for many years with its original intent. With approximately 12” thick concrete walls, it has withstood dozens of hurricanes. They don’t build buildings like this anymore.
Over the years the Buena Vista residential neighborhood developed around the property and for the past 20 years or so the property has served as a warehouse. A few years ago my client purchased the property for a Miami location to do what they do, which is to create environments and experiences that evoke creativity and inspire interaction through technology, art, architecture and the intersections in between (translation, the company, in this case the seller, is a design and construction firm that creates and builds space for cutting-edge occupiers, such as uber high-end retailers and branded environments that frankly, is hard to put into words). Photos help.
However for business reasons the company is moving on and now this space is available to buy – for $2.35 million.
The property is zoned “non-confirming use under Miami 21 Zoning Overlay,” and could conceivably be redeveloped into mid-density residential apartments or condos. Because of those thick concrete walls and shape, it could also be utilized for art storage, even an art gallery.
Hence the notion that we are in the real estate recycling business. Neighborhoods change. Requirements for space evolves. We evolve. For some of the properties and buildings that endure, they are transformed into the next and highest-best use.
The land area of 123 NW 51st Street is approximately 28,800 square feet and the building is about 21,420 square feet, with a gated parking lot and grade-level loading. It is not your average listing in a Miami suburb.
Opportunity knocks. Interested parties should contact me. Oh, and on an earlier comment that we would not invoke LeBron James’ name in this blog… we beg forgiveness. Who would have known that we would get a listing like this? The rule of “exceptions apply” stands.
What goes around comes around. Art imitates life. Or is it life imitates art? Will the circle be unbroken? Roosters come home to roost. Boomerangs.
You can probably see where I am going here – something of significance has returned to Morris Southeast Group: a property.
Not one that we bought or leased for our own purposes. Or won a property management contract. No. We were awarded the marketing and leasing assignment for 700 Sawgrass Corporate Park in Sunrise, Florida.
A jewel of a flex building, with offices, a showroom area, spacious reception, three dock doors and ample, industrial-type space for light assembly all under one 45,430-square-foot roof, 700 Sawgrass was created as a build-to-suit for one of our clients 12 years ago, and we put them in the space on a long-term lease. Now the property has come back to market, and we have it for lease. Download the eBrochure for Sawgrass Corporate Parkway.
Zoned I-1, 700 Sawgrass is suitable for pharmaceutical, electronics, manufacturing, distribution and more.
We originally represented Martin Professional for the build-to-suit. At the time Martin was the leader in intelligent lighting for the club scene, and they were making great strides toward capturing market share with indoor and outdoor architectural lighting (thus the need for showroom space).
For years the company thrived in that space. So much so that Martin was acquired by publicly traded Harman a couple years ago. Harman isn’t exactly a household brand but many of the companies that Harman has acquired through more than 60 years have been responsible for changing the way people experience entertainment (from the world’s first stereo receiver to the first concert hall loudspeaker).
Thus, between the history of 700 Sawgrass and the notion of “creative space” made popular by the San Francisco and Los Angeles office markets, it would not be a stretch to suggest that 700 Sawgrass could be a highly innovative environment for the next occupier.
We’ll see about that.
Meanwhile, the property is offered for lease ($13/NNN + estimated operating expenses of $4 a foot) or for sale, at $6.4 million.
700 Sawgrass Corporate Park is situated on 3.7 beautifully landscaped acres, near many fine restaurants and high-end, business class hotels. All major highways (I-595, I-75 and the Sawgrass Expressway) are nearby and the property is less than a half hour from Ft. Lauderdale-Hollywood International Airport. Interested occupiers should contact me.
The Wall Street Journal ran a feature on Fort Lauderdale in a recent Property Report and wasted little time comparing the Broward County city to a city nearby that is better known internationally.
Here is the second paragraph: “The city (Fort Lauderdale) has long been viewed as a stepsister to its flashier neighbor 30 miles south, Coral Gables.”
Just kidding about Coral Gambles, but we love that community as much as Miami, and not just because we do South Florida real estate deals in both places!
The WSJ story centered on the recent acquisition of New River Center, and Stiles Corporation’s $108 million purchase of the 20-story office tower the local developer did with Prudential Real Estate Investors (the seller was Invesco Ltd.). The deal capped the best investment year in downtown Fort Lauderdale since 2007.
“For the first three quarters of 2014, office property deals totaled $302.9 million, compared with $299.6 million for all of 2007, according to CBRE Research and Real Capital Analytics,” the WSJ reported.
Well you know how we feel about comparisons to 2007. It’s like saying “Hurricane XXXX is nearing the coast of Florida and landfall is expected by morning.” Fill in the blank, but how come so many hurricanes have names like Russian Ballerinas, or the Bad Guy in a B-rated horror flick?
The article referenced Fort Lauderdale’s low unemployment rate (4.8% in November), and the wonderful stat that 27 suburban tenants have moved to downtown Fort Lauderdale since 2011, occupying some 446,000 square feet of space in so doing (source: CBRE, but we did a couple of those deals and identified the trend as early as the first half of 2013). Along the way, the office vacancy rate in the downtown has plummeted to 13.2% now from 21.7% at the end of the third quarter 2012.
For people like us in the office brokerage business, those are chest-thumping numbers!
Skipping by the part of the article that discussed the booming residential development in the downtown, the story noted that eight hotel properties opened in Broward County in 2014 and another six are on the way, in part driven by a record 14 million visitors to the county in 2014 (source: Greater Fort Lauderdale Convention & Visitors Bureau).
You can’t necessarily complain about the increase in traffic while trying to make a living in businesses that benefit from population and economic growth, though a little whine with your cheese is acceptable.
If you run a business in South Florida, then one of your main goals should be to expand. However, thatb s easier said than done. The following are four tips to help your business grow:
Develop relationships b Make sure that you develop personal relationships with your colleagues, from going out with them for a drink to inviting them over for dinner. Professional relationships can be instrumental to helping you survive during downtimes and can provide you with more opportunities.
Use these tips to help your business grow and succeed. Once you expand and need more offices, explore South Florida commercial real estate for your business and contact us at Morris Southeast Group today.
Florida commercial real estate investment has a number of benefits for buyers. One benefit that many people simply looking for an investment donb t realize is that buying commercial real estate may allow for more flexible financing terms, making it a more profitable and easier investment in the short term.
You may be able to buy commercial real estate with little or no money down by using private money partners. This payment option is ideal for avoiding interest and maximizing profits, especially on larger investments.
Contact Morris Southeast for more information on commercial real estate.
Investing in real estate is something many people are afraid to do. After all, the real estate market can be volatile and with the economy still in flux, even if it is recovering, it still makes many people uneasy to think about. However, 2014 is going to be a good year for real estate investment and there are several key factors that make this a good time to invest in commercial real estate in the south Florida area.
Contact us at Morris Southeast for more information about South Florida commercial real estate.
Investing in commercial real estate can be a great way to have a nest-egg for retirement or just generate some income outside of work. For some, it can even become a lucrative business all on its own. However, before you jump into real estate investment there at least two main types of investments you really need to understand b speculative investments versus those that are safe.
What is Speculative Investment?
Speculative investment is a type of investment that some make based on predicted trends in the future. For example, you might believe that an area will be on the upswing within 10 years and trends might even show that. Buying a property in that area and holding onto it until the price goes up is speculation. The problem is that trends donb t always hold true, and you could end up losing a lot of money.
Safe investing is very simple. Acquire a property that you can make a percentage of profit on without a lot of risk. The area is stable b the building is in good shape. This likely yields returns, but not as high.
Contact us at Morris Southeast for more information on Florida commercial real estate investment.