Commercial real estate outlook bright: JLL’s Pulse360 panel
South Florida’s prime office rental rates could rise as much as 15 percent to 25 percent during the next two years, as absorption increases and construction of new workplaces slows.
At the same time, the rising popularity of shared office space will change the face of work sites, as millennial entrepreneurs flock to the urban core, including Wynwood, the Design District and Miami Beach.
Those were among the predictions Wednesday from panel members at JLL’s Pulse360 2015, held at the InterContinental Miami.
As Florida’s economy continues to strengthen, and investment remains steady, 2015 promises to be a strong year for Florida’s commercial real estate market, according to JLL’s forecast.
In fact, amid an uncertain global environment, marked by geo-political turmoil and economic declines, “the United States is really the shining star around the world,” said keynote speaker John Sikaitis, Washington, D.C.-based U.S. research director for JLL.
South Florida, with its booming tourism, as well as increasingly world-class restaurant, hotel and retail offerings, is growing in popularity, said Gregory Rumpel, managing director of JLL’s Hotels and Hospitality Group. “People have discovered it again,” he said. “It’s not the same Florida as it was 20 years ago.”
Three of the nation’s top 10 retail destinations now under construction are all in Miami: the Design District, Miami Worldcenter and Brickell City Centre, said Nitin Motwani, principal and managing director of Miami Worldcenter Group. The demand for space remains strong among national and international retailers that are lured to Miami’s tourist base, he said, citing Brazilians who arrive with empty suitcases to fill with purchases.
Motwani, who was involved in creating Venture Hive, an entrepreneurial shared workplace near downtown Miami, said he has had overtures from developers interested in creating similar sites. “The challenge is financing, because it is not the norm, but it will be in 10 years, ” he said.
The next prime office tower to be built in downtown Miami will be Swire Properties’ Brickell City Centre, in 2019, and no new construction is expected between now and then, said Jeff Morris, managing director of Capital Markets for JLL. With land prices high, developers are turning to condominium projects, instead.
“I don’t think we will see traditional offices ever built on Brickell again,” he said. “Four years of no supply and already a tight market. The sky is going to be the limit for rental rates.”