Florida Real Estate Market Trends: What’s Ahead for Real Estate Owners & Investors in Florida?
Despite another pandemic year and the uncertainty that came with it, commercial real estate in Florida experienced a dramatic recovery in 2021. With demand for housing steadily rising as people flock to the Sunshine State for the good weather, it seems Florida’s real estate market is gearing up for another booming year.
Commercial Real Estate Sectors to Watch
While a rising tide lifts all boats, they don’t all rise to the same level. That’s the case with Florida’s commercial real estate market. With that in mind, here are the outlooks for the four major CRE sectors.
1. Multifamily sectors look promising
Multifamily real estate investors can expect a strong demand for rental housing. A lot of homeowners are cashing out because the value of their homes has gone up, but that inventory is not being replaced by new rentals.
Additionally, more people are migrating to Florida from other states lured by sunshine and a friendlier tax environment. Because of high population growth and the fact that building activity lags demand, South Florida is currently one of the fastest-growing rental markets in the U.S., with rent prices on the rise in Miami Dade and Palm Beach County.
Rental demand has soared since the pandemic started as rising home prices push out some would-be home buyers. The median price for a single-family home in Florida has risen to a record $348,000. In the last two years, the housing market has been defined by record low interest rates.
When mortgage rates are low, people are generally willing to take on more debt and this has led to a buying frenzy. By the law of supply and demand, if demand for housing is high yet supply is low, home sales prices will rise.
2. Hotel real estate is looking good
Perhaps in response to the pandemic, there’s a growing demand for work-from home opportunities. As a result, there’s an increasing demand for turnkey, fully-furnished investment properties that cater to a group of people looking to travel while engaging in remote work, including vacation homes and motel real estate.
It’s safe to say that 2020 was a gloriously terrible year for hotels with record-low occupancy rates as people sheltered in place. But that’s no longer the case. Countries have opened up and hotel operations have resumed, and the lodging industry is capitalizing on rising rates of leisure travel.
3. Industrial assets will remain hot
Bolstered by an unprecedented boom in e-commerce and retail sectors, the industrial real estate sector has experienced record year-over year growth. Now’s a great time to invest in warehouse space along logistics pipelines to cater to retailers of all sizes, from craftspeople on Etsy to ecommerce giants like Amazon.
Nearly 700 million square feet of industrial space has been absorbed since pandemic demand, with rent prices rising in tandem. Plus, vacancies have fallen to historical lows. As such, investors looking for stable commercial investments should venture into the industrial space.
4. Retail will continue on an uneven roll within the Florida real estate market.
The pandemic was particularly hard on brick-and-mortar stores. Even then, the retail market is expected to recover. In-store sales have rebounded strongly as many people prefer shopping in person where items, size and fit are important. While the rise of online shopping is still affecting brick-and-mortar, it’s clear that consumers want more of both.
The recovery in retail will be driven by smaller shops, such as neighborhood centers and single-tenant stores. Going by this trend, individual tenants may be the right choice to fill strip malls and downtown spaces.
5. The office market is showing improvements
The continued prominence of working from home has made investing in office properties a mixed bag. Fortunately, more workers are returning to the office, even if only on a hybrid work schedule. After months of lockdowns, people are craving face-to-face interactions and companies are eager for employees to return to the office.
That said, there’s a structural shift away from traditional office setups. Landlords must keep up with this shift by providing flexible leases and personalized offices that facilitate connections and collaborations. In addition, there’s a rising demand for coworking spaces that may improve the performance of office markets.
Investing in the Florida Real Estate Market in 2022
As a buyer, tenant, or investor, it’s crucial to do your due diligence and partner with an experienced real estate agent to determine the right investment vehicle for you. I do feel the outlook for the commercial real estate market in 2022 is positive. Now’s the time to sharpen your focus on emerging opportunities in the multi-family, industrial and office sectors.
Anthony Macaroni has years of experience in all of these sectors of commercial real estate throughout Florida. Along with his experience, Anthony will provide unique reporting that affords you an insight into the real estate market that no other real estate agent can provide. For more information, contact Anthony Maccaroni today to schedule a free consultation.