The Real Deal Miami

The week in real estate reports

A weekly feature bringing you the industry's latest intel

June 25, 2015 03:00PM
By Sean Stewart-Muniz

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Inside the construction site of Brickell City Centre, where two new office buildings are under construction

Inside the construction site of Brickell City Centre, where two new office buildings are under construction

Miami construction sees slight decline

Miami’s construction industry saw a slight decrease during May, largely due to shortened spending on residential contracts.

The month had $513 million spent on both residential and non-residential contracts, a 2 percent drop from the same month in 2014, according to data from Dodge Data & Analytics.

That decline is entirely due to residential construction, where contract spending dropped 19 percent — now totaling $248 million — compared to the previous year.

On the other hand, nonresidential contracts saw a 24 percent increase from last year, measuring at $264 million for May.

Though last month’s dollar amounts saw a decrease, the annual figures show a swiftly growing construction industry in Miami. Nonresidential contracts have already hit $1.462 billion in the first two quarters of this year, a 44 percent increase from the same time period in 2014. Residential contracts didn’t see such explosive growth, but still had a significant 14-percent gain — now totaling $2.176 billion.

Businesses moving out of trophy buildings in Miami’s urban core

With rental rates increasing and available office space shrinking, businesses are beginning to look for space outside of Miami’s urban core.

These sames businesses, mostly technology and creative companies, are seeking moldable spaces instead of trophy addresses, according to a report from commercial brokerage JLL.

Demand for these trophy spaces remain high, however, as evidenced by two new Class A office buildings currently under construction: Brickell City Centre Green and Two Brickell City Centre.

“Tech users and other creative firms want unique space – they’re mostly indifferent to building quality as long as they are able to design attractive, creative environments for their employees,” JJ Shephard, of JLL’s Seattle location, said in a statement. “They have shown a preference in recent years for leasing lower-cost space in well-located historic buildings or converted warehouses because they can spend more on their space’s interior and less on rent. It allows them to create their own identity.”

Miami hotels see dip in occupancy in May 

Occupancy rates in Miami’s hotels had a slight decline during the month of May, continuing a downward trend since February.

The city had 2.5 percent less hotel stays in May, compared to the same month in 2014, and occupancy rates have continued to sink since this year’s high in February. The current occupancy rate is 76.5 percent, while February had 87.7 percent.

Despite this, the supply of rooms available and revenue generated from these hotels have been growing. A total of 1,554,154 rooms were active in the market in May, and revenue generated totaled $210,426,187 — a 3 percent increase from last year.