Despite falling rents, South Florida’s commercial market is improving

Only Miami-Dade's historically tight retail sector shows rent growth
April 27, 2012 03:45PM

Miami-Dade retail is among South Florida's best performing commercial markets (source: Colliers International)

Though not yet reflected in rental rates, the outlook for South Florida’s commercial real estate market is improving, according to a first quarter market report released today by Colliers International. Evidence of the gains come from falling vacancy rates throughout industrial, office and retail properties in the tri-county area. The industrial sector has performed best, as vacancy rates have declined in all three counties. Retail vacancies are down in Miami-Dade (at less than 5 percent, they’re near record lows) and Palm Beach counties, but are flat in Broward, and office vacancies are down in Miami-Dade and flat throughout the rest of South Florida.

However, rents are declining or holding steady for all property types across all markets, with the exception of retail spaces in Miami-Dade County. As a result, Colliers believes tenants will continue to hold the upper hand for the duration of 2012.

Nevertheless, the improved occupancy is luring interested investors from South America, Germany and Canada, according to Colliers, and investment sales activity increased 46 percent year-over-year in the first quarter.

As capitalization rates continue to fall for the region’s strong multi-family sector, Colliers expects continued increases in investment activity for commercial properties. With lending beginning to loosen just as distressed properties push their way through the market, Colliers predicted the remainder of 2012 will “be a great year for value oriented investors.” — Adam Fusfeld