Staying Competitive in Miami’s High-Demand Real Estate Market
By Alexandra “Sandy” Londono
South Florida’s commercial real estate market is experiencing accelerated growth with continued demand for office, industrial, retail and multifamily uses. Capital from both the US and abroad is fueling investments in South Florida and competition for commercial real estate is driving market players to adopt creative approaches to meet business goals and client needs.
Trends within the marketplace include mixed-use projects to help increase rates of returns and drive work/life balance, the repurposing of open space to increase property density levels and in turn values, the incorporation of higher levels of amenities within office projects, and more creative use of natural lighting for all office employees within office suites.
South Florida real estate continues to remain in high demand given it benefits from the most important criteria associated with real estate…location, location, location. The South Florida market, from a national and global perspective, is viewed as providing a stable marketplace, excellent weather, and favorable tax advantages. Additionally, it continues to benefit from the influx of new residents, both domestic and international.
These factors have led to high demand from investors as well as users. Currently, Miami-Dade is experiencing strong rental rates and stabilized occupancy rates within all market sectors, except office. However, the market is seeing improvements within the office sector with rising occupancy levels and increasing office rental rates. The resulting changes within this sector should lead to new office development within the coming 12 to 24 months.
Looking into 2017, the South Florida real estate market will remain strong despite softening within the condominium sector due to the strengthening of the U.S. dollar and other factors. The relative strength of the marketplace stems from higher levels of equity required by lenders, a factor that will help offset any negative components associated with increased interest and capitalization rates. Lower debt levels will also provide a cushion if property cash flows fall below a borrower’s anticipated projections.
Ultimately, staying competitive within the marketplace boils down to understanding real estate trends as well as the needs of market participants. Having answers to the following questions provide the basis for creative but sound structuring that allows the client to achieve their goals even during times of slowdown within the marketplace:
- What is the exit strategy of the owner?
- Is it a short- or long-term hold?
- Is it a re-positioning or value-add strategy?
- What are the expected rates of return?
- What items concern the equity partners in regards to structuring?
- What are deal killers in terms of debt financing?
In order to intelligently navigate South Florida’s competitive marketplace, it is critical to work with partners who understand your unique needs and serve as an extension to your business. At Sabadell, our team of dedicated real estate experts focuses on the goals of our clients and help them achieve their business objectives by establishing meaningful and long-lasting relationships. Every year we assist clients with financing on retail, office, multifamily and industrial properties, as well as hotels and mixed use properties throughout South Florida and the state.
Sandy Londono is Vice President of Commercial Real Estate Lending for Sabadell United Bank. Within her current position Ms. Londono is responsible for providing financing on all asset classes inclusive of retail, office, multifamily, mixed use and hotel properties as well as construction lending. She focuses on target loan sizes averaging $20M, primarily within the Florida markets.
Sabadell United Bank, N.A. is a locally managed, nationally chartered banking institution that serves over 40,000 clients through its branch network in Florida. Professionals, businesses, and high-net-worth individuals look to Sabadell as their trusted financial advisor. Sabadell’s Florida operations include Sabadell United Bank, its wealth management division, Sabadell Bank & Trust, and Banco Sabadell – Miami Branch, an international branch of its parent company, Banco Sabadell. Sabadell currently manages more than $17 billion of business volume in Florida. Since 2007, Sabadell has grown its presence in Florida more than twelvefold in terms of business volume.