By: Max Crampton-Thomas
4 Min read December 2020 — As a health crisis that spilled over into virtually every sector, the COVID-19 pandemic created much uncertainty throughout 2020. Real estate professionals, developers, landlords, investors, and tenants closely watched and experienced factors such as remote work, reliance on technology, bolstering of the E-economy, and overall reconsiderations of real estate usage influence. However, for South Florida and Miami-Dade County, real estate leaders are optimistic about the future of the local real estate market, the leaders told Invest: Miami 2020.
Charles Penan, Executive Vice President, Aztec Group
We remain highly optimistic for 2021. We expect more buying, selling, recapitalizing than previous years. Any one of those aspects requires capital. We are also excited for Miami’s Brightline eventually connecting to Orlando and reaching Tampa and the Cruise Port. It is a pivotal development that will greatly assist Miami’s growth, especially In the urban core. The potential of the commuter rail that will go from Central Station to Wynwood, Design District, Little River, FIU Biscayne and Aventura is going to be fantastic. We are also excited about the continued population growth our state has enjoyed, as it brings more people to either buy or rent apartments, condos and houses and shop in stores throughout Florida. It also provides a higher tax base that enables improvements in our schools, roads and public services.
Cristina Glaria, Co-Founder & Senior Vice President, Tower Commercial Real Estate
We will continue to work with and advise landlords to provide flexibility for tenants when signing leases and offer potential incentives so that tenants feel comfortable committing to longer terms. I’m pleased to report that the landlords we work with have been quite receptive. They do what they need to, to make it easier for tenants to make decisions that will benefit their company in the long run and move forward. Now is actually a good time to make a longer-term lease arrangement, as you are in a better position to secure more competitive terms rather than waiting until the dust settles and demand increases.
I believe this market will offer our firm, Tower Commercial Real Estate, with a great opportunity for business development. There are a limited number of commercial brokerages in South Florida, and some of the larger firms will be confronted with conflicts of interest as the office markets soften due to an increase in sublease space availability and new construction deliveries. This is a prime opportunity for our firm to enter into those submarkets where we don’t already have a presence.
I also expect demand to increase in suburban submarkets such as Wynwood and Coral Gables as companies start bringing employees back to the office. After working from home for the past 6 months, employees and decision makers are no longer used to their commute adding a couple of hours to their work-day which will cause markets outside of the urban core to gain popularity and appeal. Class A office space will remain in high demand as companies compete for top talent and will continue to use their office space as a recruiting tool. Miami will continue to be a desirable location for both foreign and domestic investors because of its connection to Latin America, growing reputation as a global city along with affordable office rents and lower housing costs.
Stephanie Rodriguez, Vice President of Leasing & Development, Duke Realty
As far as our company is concerned, there is a generalized positive outlook within the industrial space from our partners, such as brokerage firms. Miami is highly land constrained, there will always be value in this particular market. The short term is hard to anticipate until we have more clarity within the overall situation. We may see a slight uptick in vacancy rates but it will be matched by increased demand from users in the e-commerce and cold storage sectors. The timetable will be set as soon as Floridians are allowed to go back to work.
Paul Kaplan, Managing Director, KW Property Management & Consulting
Growth has slowed down a little, which is to be expected. But to my surprise, it is still going well. Cohabitation was being pushed in the last few years, which is almost like college dorm living for adults. I definitely see that being a big concern as people want more space and privacy amid COVID-19. I think we will get through this and condos will continue to be built. But there will be much more accountability and responsibility on us as a management company to ensure we keep properties clean and adhere to all protocols required by the CDC.
Our business is an essential service as defined by the federal government. We have to be prepared with the proper protective equipment because we are on the frontline, but we have been ahead of the game. We also need to revise our corporate atmosphere and downsize our office space. We have learned that technology is a major asset and we are all learning we can do it this way.
Stephen Nostrand, President & COO, ONE Commercial Real Estate
It is all about capital, equity and debt. Debt markets have been constrained to a certain extent. We see that going forward still because even if we get a vaccine and things begin to come back gradually because of consumer confidence, 2007-08 lenders do not forget. Debt markets are not going to come back for quite some time. That translates into less leverage for people buying or developing.
There is no other area in the United States that is like South Florida. There is capital on the sidelines that will blow everyone’s mind, to the tune of trillions of dollars, and that only covers domestic resources. Add in the international component and it grows considerably. Sovereign wealth funds are going to increase their allocation in commercial real estate in 2021. If just the five top sovereign wealth funds increase their appetite by 1 percent, that is $200 billion of new money available. People are looking at us from every angle, there will be new international markets opening up that we have not experienced. The next 24 months are going to be game-changing for South Florida. We are extremely stoked and excited for the region’s new real estate chapter.
There is a highly interesting development on the residential side where we are beginning to see more than one investor in the residential space wanting to get out and get into the commercial space.
In terms of challenges, climate change is an incredibly important and somewhat scary challenge for the region. We all have to realize that sea level rise is real and that the environment is changing, this year’s hurricane season serving as a perfect example. We have to dedicate significant amounts of time and resources to find ways to fix those problems. Many people are ignoring all of that because it has not been integrated into normal conversations. It needs to be.
For more information on our interviewees, visit:
https://www.aztecgroup.com/team-view/charlie/
https://tower-cre.com/our-people/cristina-glaria/
https://www.dukerealty.com/markets/south-florida/
https://kwpmc.com/team-member/paul-kaplan/
https://www.linkedin.com/in/steve-nostrand-bb08897/
