2 min read December 2022 — Invest: spoke with Camilo Lopez, Co-CEO and managing partner of Black Salmon, and discussed the evolving real estate market in Miami as more businesses and job hunters seek out the city as a destination. “At the end of the day, the real game is to have a healthy balance between supply and demand,” he said.
What are the biggest opportunities you’re seeing in the Miami real estate market?
Our biggest opportunity comes from our enhanced efficiency due to the consolidation of our previous company, TSG, under Black Salmon. TSG was doing all the development work while Black Salmon handled investments and acquisitions. We found it was more streamlined and easier to consolidate our services under one roof.
But the market is very complicated right now with the Fed raising interest rates to curb inflation, so we are trying to better understand these impacts in every asset across the board and how their valuation is affected. We strategize according to the need, whether it’s industrial, multifamily or senior housing. It will take time for us to see the benefits once inflation is curtailed, but we will be dealing with high, hard costs for a while, and that will be tricky. As a result, it’s tough finding good deals right now, because sellers aren’t as willing to transact at those prices and with the cost of financing being all over the place.
What is your perspective on the massive demand for real estate in Miami right now?
At the end of the day, the real game is to have a healthy balance between supply and demand. We are in a unique situation because a large metro area like New York City has close to 400 million square feet of office space, for example, while Miami has 40 million. That hasn’t stopped a great influx of people and businesses coming in, and with less space available, costs go way up. It’s not uncommon for offices to go for between $100 and $120 per square foot now in response to that demand. And of course, we’re seeing huge demand for multifamily as more workers come in. Even the single-family home market is still on fire, with listing prices above $1 million in many cases. We have a lot in the pipeline, but execution takes time. More tenants and less space means rising costs, and we’re seeing that a lot more today.
How can Miami continue to grow responsibly and sustainably?
The best way to be responsible is to prelease the building. That wasn’t a big trend in Miami a few years ago. We used to complete a building first and then fill it with tenants, but that isn’t the case anymore. Most projects at 75% completion now start soliciting applications. That preleasing will start to grow on the office side too, and that makes for a more efficient process. We have had a focus on companies that are in growth mode because they can bring great jobs to the city. Slowly but surely, Miami is growing into a very large and dynamic urban corridor unlike anything South Florida has seen to this point.
What are the most pressing challenges facing South Florida right now?
Mass transportation is a major issue but that’s very hard to address because of the cost. That said, the city has a great agenda in terms of incentivizing developers to enter Transport Oriented Developments (TODs) to supplement mobility for residents. The idea is that development in multifamily and single family will be prioritized around metro hubs and stations. This enhanced connectivity will also have great positive impacts on our schools, which are also in immense growth mode. Transportation and education get top billing for any young family moving into Miami now.
When I started doing business here 22 years ago, it was hard to fill positions. But now we are getting applications from all over the country. The fact is, Miami is becoming a top destination for the best talent in the country. Other cities can claim better education and universities, but this is where the young talent ends up when they’re looking for stimulating, challenging work with a ton of growth potential.
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