2016 forecast: Lower office, retail vacancy in Miami

TD Bank predicts lower office and retail vacancy rates and a higher apartment vacancy rate in the Miami area this year.

In the Miami-area apartment market, “overall supply has caught up with demand” and the area’s vacancy rate will rise to 4.7 percent this year and 5.1 percent next year from 4.4 percent in the fourth quarter of 2015, TD Bank said in a commercial real estate forecast for U.S. markets.

“The overall strength of the labor market, particularly in the low-wage … industries such as the leisure and hospitality sector, is contributing to robust demand for apartment units,” TD Bank reported.

The bank also predicted that the Miami-area retail vacancy rate drop to 3.3 percent this year and 3.2 percent next year from 3.4 percent in the fourth quarter of 2015: “Arguably the strongest performing segment of the Miami metro is retail … Over the forecast horizon, new construction will not be able to keep up with demand.”

“Favorable fundamentals bode well for the office space segment in Miami,” TD Bank reported. “As absorption continues to outpace deliveries, vacancies are expected to fall further, putting upward pressure on rents.”

The bank forecast that the Miami-area office vacancy rate will drop to 9.9 percent this year and 9.3 percent next year from 10 percent in the fourth quarter of 2015.