Florida Real Estate Market: Property Performance & Trends
The only thing hotter than the Florida weather right now may be the state’s commercial real estate market. For the first quarter of 2022, Florida held the top five most exciting commercial real estate metro markets in the country. These were: Orlando, Fort Lauderdale, Palm Beach, Miami Dade, and Fort Myers.
Commercial real estate in South Florida continues to be the hottest in the region. Accounting for 11 of the 16 top metro areas and performing exceptionally well across most asset types. New, major developments took place, and many property refinances were sealed all across the region. It’s therefore not surprising that the South Florida market has been the standard-bearer in commercial real estate for several years.
There are considerable commercial investment opportunities in Florida.
Snapshot of Strong Commercial Real Estate Markets in Florida
Among metro areas with a population of at least 250,000, these are some of the markets experiencing strong growth.
West Palm Beach industrial market trends:
- Vacancy remains near record lows despite an influx of new supply over the last two years. Leasing activity in Q1 2021 increased by 23.2% compared to that recorded in the first quarter of 2021.
- Leasing demand is sparking new developments. Portman Industrial is planning to redevelop the Palm Beach International Raceway into 2.1 million square feet of industrial space.
- Industrial rents continue to increase as demand for industrial space increases.
Tampa office market industry report:
- There’s an influx of class A office developments. About 3 million square feet worth, on the horizon as more companies consider relocating to the region.
- Sublease availability in the office market is at a record high. Mostly attributed to the 201,272-square-foot sublease space added at Highwoods Preserve I from Syniverse Technologies.
- The Westshore submarket continues to dominate leasing activity in the region.
Tampa industrial market trend:
- The metro area experienced a record high of industrial leasing activity. With about 4.2 million square feet leased in Q1 2022.
- Development of investment properties is booming. Developers target Tampa’s strong population growth. They also look at proximity to neighboring markets and growing labor force.
- Asking rents are on an upward trend as property owners take advantage of the rising demand for industrial space.
Orlando office market trends:
- Orlando leads the way for job growth in Florida. With the leisure and hospitality sector accounting for 50% of annual growth.
- Sublease availability is at a record high as companies continue to check their office space needs.
- Positive net absorption of office space and strong leasing activity in Q1 2022.
The apartment property, industrial, and office property markets in Florida are stronger than the national averages. The retail markets are experiencing slower absorption as consumers cut back on spending.
Commercial Market Insights and Outlook
There are several factors driving Florida’s appeal to commercial real estate investors. At a glance, these include:
- The state’s population growth
- Tax-friendly regulations
- Diverse culture
- Strong tourism industry
Florida also makes a great central business meeting spot as it’s accessible by land, sea, and air.
What’s more, Florida has always been known as a haven for retirees. But now, tech workers and hedge funders are leaving the Bay Area and New York to enjoy the state’s sandy shores. And did you know? Florida’s economy hit a milestone of $1 trillion in 2018 and has been rising since.
You can expect robust commercial real estate activity for the following reasons:
- Real income growth has seen a marked increase in the State. For instance, in the first quarter of 2021, Florida’s personal income growth shot up 65.1 percent in the state.
- Rising mortgage rates will increase the pace of absorption of multifamily properties. Reducing vacancy rates and creating opportunities for rent growth.
- The continuing return of workers to the office and sustained job growth is increasing the demand for office space.
- Retail rent growth is still below the rate of inflation. This translates to positive gross margins for retail tenants, and this is good news for retail investors and property owners.
The commercial property market in Florida is still poised to do well despite higher interest rates and inflation. The state continues to experience strong job growth, a high rate of domestic in-migration, and low vacancy. All which are factors that are driving the net absorption of commercial real estate.
Intelligent Commercial Real Estate Investment
Commercial real estate is everywhere: your local mall, industrial park, and downtown Main Street. Persistent demand for commercial real estate will keep the market strong and robust. Florida is the hottest commercial real estate market right now.
That said, not all Florida markets are alike, as every region has its nuances. That’s why it’s important to work with a local expert when looking at investment properties.
Optimize your real estate investment strategy with expert perspectives. Having access to up-to-date and accurate market trends leads to stronger investments. Whether you’re looking to invest in office, multifamily, or hotel real estate.
Working with the right commercial real estate broker can help you build a more ROI-positive strategy. Anthony Maccaroni provides comprehensive and original intelligence on commercial real market trends. Get in touch if you’re looking for investment advice or commercial properties for sale in Tampa Bay.