| A recent report by Dwntwn Realty Advisors revealed that commercial real estate transactions in the Greater Miami Area plunged 80% QoQ in the first three months of this year. Total sales volume reached $194M, well below the Q1 2022 figure of $977M. Despite the considerable drop in sales volume, Miami continues to remain the preferred destination for investors. Despite the economic uncertainties, transaction volume is on course to match, if not surpass, pre-COVID-19 figures. Dwntwn Realty Advisors is led by Tony Arellano and Devlin Marinoff.
The report includes data from commercial land, office, multifamily, industrial, and retail deals from Miami Beach and the neighborhoods of Brickell, downtown, Overtown, the Arts & Entertainment District, Edgewater, Wynwood, Midtown Miami, Design District, Little Haiti, Little River, and the Upper Eastside. The most significant drop was seen in the office sector, which plummeted 97% from $226M in Q1 of 2022 to $6M in Q1 of 2023. Multifamily sales hit $40.6M, declining 83% from $235M. Industrial and retail sales volumes dropped 89% and 65%, respectively. Marinoff told The Real Deal that the credit crunch from stricter lending restrictions resulted in a quieter first quarter. He pointed to strong demand from out-of-state investors that do not need financing. Some notable sales in the first quarter were the downtown commercial land sale for $39.5M, the $26.5M sale of Beach Plaza Hotel, and the sale of a retail building at 124 Collins Ave for $23M. There is always a high demand for commercial real estate in Florida because of the state's tax-free status and infrastructure, such as ports that attract investors. Other favorable factors include robust migration, climate, tax advantages, and a business-friendly improvement. Miami's multifamily market has continued to see an increase in demand due to immigration. The annual rental growth rate was 7.7% in 2022, the highest in terms of rental rates. According to another report compiled by Avison Young, quarterly leasing activity was down 304,674 square feet. The most notable transaction was tech company Kaseya signing a lease at the Wells Fargo Center to relocate its headquarters from Silicon Valley. The total space leased and deal count declined by 17.2% and 28.9% QoQ, respectively. In the first quarter, rent increased by 11.7% to $57.33. Asking rates at properties like The Fifth were as high as $191 per square foot. The asking rate has increased 16.6% YoY in suburban submarkets with highly amenitized offices. A Yardi Matrix report revealed insurance costs in Florida could rise up to 50% higher than last year and threaten new development and sales. The increase is forced by climate-related risks. |
