South Florida’s ascent as a major player in the tech sector is highlighted by its recent inclusion in the Cushman & Wakefield Tech Cities 2.0 annual report, which documents the state of current and rising tech centers and their effect on local commercial real estate.
The comprehensive report included major North American markets and breaks them down into three categories:
The Miami-Fort Lauderdale-West Palm Beach market is in the “Tech is important” category, which indicates that the area has many important sectors in which tech is a growing force.
There are many positive indicators pointing to South Florida – and the Miami-Dade area in particular – as a rising tech star.
In 2017, Miami ranked eighth in venture capital funding among U.S. cities, bringing in $1.3 billion for local startups and placing it squarely between heavyweights Seattle and Chicago. In addition, the Miami-Fort Lauderdale area placed first for new business creation in the Kauffman Foundation’s 2017 Index of Startup Activity. This development is being mirrored in other areas of the U.S., with new tech hubs emerging in such disparate places as Philadelphia and Provo, Utah.
Unsurprisingly, hiring in South Florida tech has been robust, reaching a 16-year high. The sector has grown steadily – 27.6 percent from 2012 to 2016 – and 69 percent of entrepreneurs said they planned to grow their staffs in 2018, up from 64 percent the year before.
New companies and vibrant partnerships pop up regularly, including The LAB and Refresh Miami, “a community of hackers, early adopters, entrepreneurs and change artists,” in a diverse array of neighborhoods like Overtown, Coconut Grove, Brickell, and Wynwood. Neighboring Fort Lauderdale also has its fair share of tech companies, a number that is rapidly growing.
The tech landscape has also branched out of literal “technology” to encompass innovative aspects of the media, law, and retail sectors, all of which have stepped up to compete for talent and space, which leads to another area affected by this boom – real estate.
Of the many areas that have felt the impact of South Florida’s growing tech industry, the local commercial real estate market is one of the most significant. Starting in 2017 and continuing into the middle of 2018, the tech and life sciences industry made up 10.8 percent of all leasing activity in Miami-Dade, 5 percent in Broward, and 4.4 percent in Palm Beach.
Although there are many bright spots in the region’s tech fortunes, research is not yet among them. South Florida spends approximately $565 million annually on academic research and development. While that may sound impressive, it only ranks 24th in the U.S. and 43rd when adjusted for population.
One ace in the hole for South Florida is the rich diversity of its population. The local tech sector has begun to play a significant role in enabling a diverse workforce that sets it apart from the hiring issues in Silicon Valley.
In addition, Miami’s lower cost of living gives it a recruitment advantage over more expensive areas like New York, Boston, or San Francisco. It has a wide pool of fields under the tech umbrella, including hospitality, travel, transportation, and logistics. And the city’s reputation as the gateway to the Americas gives it unique access to capital from that region.
South Florida’s compelling blend of culture, talent, and, yes, sun and sand, make it a shiny new gem in the realm of promising tech areas. The impact on commercial real estate is clear: The Tech 2.0 report concludes that promising tech “markets typically experience more rent growth and larger property value increases than peer cities.”
Morris Southeast Group is excited by this development and we stand ready to help CRE investors and companies in the tech sector meet their growing real estate needs. For a free consultation or to learn more about our property investment opportunities and/or other services, call us at 954.474.1776. You can also reach Ken Morris directly at 954.240.4400 or via email at email@example.com.