Miami CCIM Outlook Conference 2016
This past January 20th, 2016, at the Coral Gables Country Club, the CCIM Miami Chapter hosted it annual Commercial Real Estate Outlook Conference. This event brings together experts from all sectors of commercial real estate in Miami, from Office to Warehouses space. For this year, everyone is very optimistic about the growth of commercial real estate here in South Florida. Population is still growing and new business continue to relocate to Miami. However, there some concerns on the effects of the slowdown in Latin American and China.
Here are the highlights of every of every industry.
2016 Economic Forecast
Dr. Sean Smith Ph.D. was the keynote speaker of the event and discussed the current state of the US economy. According to Dr. Smith, the economy continues its recovery from the 2008 financial crisis. During 2015, it grew at an average annual pace of 2.2%. Although the unemployment rate is at a strong 5%, the participation rate is at one of the lowest in decades. One of the obstacles for growth has been the burden of legislation that Washington has imposed on businesses, including the Affordable Care Act.
The wildcard for 2016 will be China and other emerging markets. Its economy is slowing down rapidly creating a drastic reduction on the demand for raw materials. The stock market in China is also plunging, further increasing the worries of a hard landing for the country. Lastly, the currency, Yuan, continues under pressure against the dollar as China tries to defend its currency.
Overall, 2016 is expected to be a positive year for the US economy with a positive growth.
Click here for the full presentation of the Economic Outlook
This section was led by Boris Kozolchyk, from Colliers International. He provided an good example of the projects happening in South Florida. At the end of 2015, the retail vacancy rate in Miami Dade was at 3.3% with a total inventory of 125,833,094 Sq. Ft. Broward County was at 5.9% with an inventory of 104, 552,037. Palm Beach was at 4.7% vacancy rate with an inventory of 77,865,596 Sq. Ft.
Some notable projects in the pipeline include the Aventura Mall Expansion, American Dream Miami mall, Downtown Doral. These projects are expected to add over five million square feet of new retail space in the next few years.
Click here for the full presentation of outlook on Retail Space in Miami
Antonio Puente from Fairchild partners conducted the state of the office market in Miami. He noted that Miami continues to become a very important hub for multinational corporations. About 23.1% of the employment in South Florida comes from Trade/Transportation/Utilities. Followed by Professional & Business Services.
At the end of 2015, the vacancy rate for office space is Miami stood at 13.3%, the lowest since 2008 and substantially down from a high of 20.7% in 2010. With limited supply and new deliveries, the vacancy rate is expected to continues it’s decline and put upward pressure on lease rates.
Click here for the full presentation of outlook on Office Space in Miami
Multi Family Market
The Multi Family presentation was led by Jonathan Raiffe from Adler realty. This section of the commercial real estate has been one of the best performing and strongest, specially here in South Florida. Jonathan explained that as the homeownership rate has been declining in the last decade, the households renting have soared. At the end of 2015, about 69 million households rented, up from 63 million in 2004.
For 2015, the occupancy rate for Multifamily in Miami Dade was above 97% with a increase in rent of over 5%. Although there are thousands of new units coming in the pipeline, most of them an condos and these might help alleviate the short supply of rental units available.
Click here for the full presentation of Multi Family in Miami
On the Industrial side, Michael K. Silver, SIOR presented the statistic of the industrial real estate market in Miami. The land supply constrain has made Miami Dade one of the stronger market in the country for Industrial Real Estate. At the end of 2015, the vacancy rate in Miami Dade stood at an average of 3.4%. According to Mike, the inventory of warehouse space in Miami was 208,612,810 Sq.Ft. Broward county was 92,102,236 Sq. Ft. Palm Beach was 45,033,239 Sq. Ft.
In Miami Dade County there is about 1,800,000 Sq. Ft of new industrial space coming in the pipeline. With strong employment growth and more companies moving to Miami Dade, the demand for industrial space is expected to continue.
One specific industry to keep an eye is Marijuana for Medical use. As example, Denver is experience a boom of industrial space due to the production and distribution of Medical Marijuana.
Click here for the full presentation of Industrial Real Estate Outlook for Miami.
To touch on the local economy, Tom Hudson from WLRN provided his outlook and statistics on the growth of the South Florida Economy. The impressive charts was the growth of population in South Florida since the financial crisis. Population stands at around 6 million people, up from around 5.5 million in 2009.
At the same time, unemployment rate has decline from the high of 11% in 2010 to a about 5 in 2015. Most of these jobs being created in the Construction industry, followed by Professional & Business Services and Tourism.
Unfortunately, this growth in population and unemployment has created an increase in the cost of housing. In Miami, housing takes about 35% of income, a 10% difference from the national average of 10%.
The next CCIM Outlook event will take place in January 2017