Ben Mandell is biding his time.
Over the past three or four years, his firm purchased one property, and it was a distressed deal. Although the real estate industry expected a more favorable investment market this year, those hopes were crushed.
“A lot of people seeing the macro market now are thinking differently,” Mandell of Miami-based Tricera Capital said. “As far as acquisitions are concerned, we are on the sidelines but looking at when we should get back on the court.”
While many brokers and investors on the ground say it doesn’t feel like South Florida’s commercial real estate deal flow has cooled, there is definitely a chill in the air.
Across the region, commercial real estate deals have slowed this year. The market is responding to and opting to wait out the turbulent geopolitical landscape marked by the Iran War, skyrocketing oil prices, ambiguity over tariffs, dimmer expectations for interest rate cuts and pressure on property values.
All of that creates uncertainty with operating costs, said Miami-based lender BridgeInvest’s Alex Horn. “Because of this uncertainty, it creates hesitance from investors from leaning in on the investment. We are seeing that across the board.”
First quarter commercial deal volume was down 23 percent from the same time last year, according to CoStar Group. Although quarterly data can be choppy and skewed by a single large sale, the data also shows deal volume in the first three months of the year was down 11 percent from the first quarter average dating back to 2017.
The slippage marks a delay in the much anticipated market reset since rates increased, with interest and cap rates still elevated, continuing deal paralysis for some investors and sellers.
“It was, ‘Survive ’til ’25,’ and we are here at the other end [of the second quarter] of 2026 and people are saying, ‘Now what?’” Horn said. “2025 was supposed to be the year we just grit our teeth. Now 2026 is in a similar sort of vein.”
South Florida is still a magnet for investors and businesses drawn to its tax-friendly climate and growth as an office hub, but even this real estate haven is catching its breath. While the tri-county area is resilient, this dip in activity proves that the region is still susceptible to global economic shifts and a shaky geopolitical landscape.
Still, many investors are adjusting and buying, and some asset classes are feeling the slowdown more than others. A camp of brokers vehemently downplayed the data showing a drop in investment sales, insisting that deal activity has actually picked up for them.
“Times of uncertainty may make people pause. I don’t think that Florida is feeling that,” Marcus & Millichap’s Douglas Mandel said, adding he closed more deals this year than in the first quarter of 2025. “There’s a lot of capital still pouring into Florida.”
Tricera’s Mandell countered that financials really have to pencil for him to pursue a deal. He’s keeping an eye out for such deals but in the meantime prefers to wait out the turbulence.
“Right now, it is still difficult to get acquisitions over the finish line even in Miami,” he said, “unless there is a splash to it, which is few and far between.”
Buyers in, sellers out
Investor confidence is wavering as the Iran War adds a layer of global unpredictability.
“The war right now is creating hesitation [about] are we lowering interest rates or are we even raising them again,” Kodsi said.
The drop in sales volume is most pronounced in multifamily, data shows. First quarter multifamily deal volume totaled nearly $750 million, down 26 percent from the same period last year, and a 16 percent drop from the long-term first quarter average since 2017, CoStar shows.
This comes as the asset class is feeling the sting from an oversupply. Developers seized on the influx of newcomers in the first three years after the pandemic’s onset, leading to hefty deliveries in recent years. A record 18,600 new units hit the market in 2024; 20 percent of those apartments weren’t leased that year. Amid slower leasing, the average asking rent has decreased and concessions increased, though fewer recent construction starts are expected to alleviate this.
For some of Kodsi’s Class A, well-located apartment complexes, capitalization rates are still about 5 percent, he said.
“If you are buying at a 5 percent cap rate and borrowing at 4.5 interest but add all the fees, you are not getting the benefit of financing,” he said.
Higher cap rates imply lower values, which could mean a better deal for buyers but not for sellers. The bid-ask gap, or the delta between the higher prices sellers expect for their properties and the lower prices buyers are willing to or can pay, remains.
The outcome: Many buyers are still in the market but sellers aren’t willing to divest for less than what they expect for their property. Kodsi is frequently approached by investors interested in his multifamily complex in Broward County and another one near Orlando, but he’s turning them down.
“We need cap rates to drop and interest rates to drop, which would give us more value. That’s really our biggest hesitation,” said Kodsi, head of development firm Royal Palm Companies. “Most groups are just holding on, waiting for interest rates to drop.”
On the retail side, roughly $605.7 million in sales closed in the first quarter, down 16 percent from last year’s first quarter and 11 percent from the long-term first quarter average, according to CoStar.
Although leasing and rents are strong, the lack of interest rate relief is still freezing out leveraged investors, leaving only cash buyers and generational buyers in the game, said Gabriel Navarro of Pinecrest-based retail investment firm MMG Equity Partners.
“The bid-ask spread is wide because of where rents are sitting today and the strength of retail,” he said. The bid-ask gap “is probably 15 percent today. Both sides are being rational. It’s just that they can’t agree.”
Office sales fared better, closing out the quarter at roughly $836.5 million, 10 percent less than last year’s first quarter but 16 percent over the long-term first-quarter average for South Florida, CoStar shows.
Sellers have had to part with properties for two reasons: Either equity partners are seeking an exit, or the landlords can’t refinance maturing debt, experts said.
In some of this year’s discounted trades, Chicago-based flex office provider Expansive parted with the five-story Edgewater office building for $19 million, or $2 million less than it had paid in 2019. In February, the Shidler Group surrendered the ground lease and leasehold interest in lieu of foreclosure for a Boynton Village apartment complex to Harbor Group International. The deal was valued at $79 million, the same amount as the loan Harbor Group had provided in 2021.
But much of the distress has worked its way through the market since interest rate increases started in 2022, meaning fewer sellers are offloading their properties due to debt woes, said Alex Karakhanian, who leads Miami-based Lndmrk Development. This also explains the drop in investment sales.
“Frankly, no one’s really selling,” Karakhanian said. “The properties that needed to be sold or had to be sold due to debt volatility or issues with [refinancing] your debt … that kind of got cleared out over the last couple of years.”
For buyers willing to search for a deal, the current climate isn’t all bad. North Miami-based IMC Equity Group, for example, is looking for properties with cap rates higher than the interest.
“If I buy at a 9 percent cap and borrow at 7 percent, and three years from now rates go down to 6 percent or 5 percent, I refinance,” said IMC’s Carlos Segrera. “It doesn’t bother me as much. A quarter basis points up or down, we adapt. I just look for a different price.”
In January, IMC bought a Princeton apartment complex for $33.5 million, a 24 percent discount from the property’s last price in 2021.
IMC joins a camp of investors that are not factoring more expensive financing, higher oil prices and the Iran War into their decision-making. While gasoline prices are up, the increases will settle at some point, Segrera relayed.
“In no way we are saying, ‘I feel the world is going upside down, I am not going to buy,’” Segrera said. “Something is always going to happen in the world. I can’t do anything about that.”
Bright spots
Investors able to close commercial purchases without hunting for higher cap rates or distress are still in the mix, though their deals are sporadic.
Those buyers are well-established South Florida players who have an unwavering commitment to the region. Moishe Mana –– the biggest landlord in downtown Miami who plans to renovate aging buildings and turn the area into a campus-like hub connecting tech firms and entrepreneurs from North America and Latin America –– grew his holdings, paying $110 million for the One Downtown office tower.
Billionaire Ken Griffin, who’s also been an aggressive buyer of residential and commercial properties in South Florida since moving his firms Citadel and Citadel Securities to Miami in 2022, partnered with Goldman Properties on the $181 million purchase of Wynwood’s 545Wyn office building.
In another bright spot in the market, industrial investment sales have fared the best this year. Deal volume hit $824.4 million, 14 percent higher than in the first quarter of last year and 34 percent higher than the first quarter average from 2017, CoStar data shows.
Industrial properties often have triple net leases, meaning tenants are on the hook for taxes, insurance and maintenance expenses, said broker Miguel Pinto, founder of Miami-based Apex Capital Realty.
“The banks I am talking to all love industrial,” Pinto said. “We are putting out a lot of transactions and closing hard, but all are on the industrial side.”
In the biggest industrial deal this year, Kurv Industrial, formerly Bridge Industrial, dropped $219.7 million to acquire an 820,000-square-foot warehouse portfolio in Pompano Beach. Kurv financed the purchase with a $154.8 million loan.
Outlook
The exact extent of geopolitical pressures’ effect on commercial deals is unknown. Much of the first quarter activity was deals investors had been working on last year, but closings trickled into this year, brokers said.
“The summer is going to be really telling,” Horn said.
Several factors are at play.
After the Federal Reserve left the benchmark rate unchanged this year, talk ensued that it could eventually increase the rate as inflation and oil prices remain elevated. Yet, investors and brokers also are betting on reprieve in light of Fed Chair Jerome Powell’s ending term, with his replacement Kevin Warsh already having expressed his wish to cut the rate.
Because 10-year Treasury yields are elevated, investors also are more likely to deploy capital in much riskier real estate only if it comes with higher returns.
“With all this market uncertainty, people are saying they can get a good return on a low-risk 10-year Treasury, therefore everything else has to pay more than that,” Horn said.
Gregory Matus, of brokerage Franklin Street, said a commercial deals pickup in South Florida also depends on the housing market.
When housing “recovers fully, South Florida will be guns blazing,” he said. “We need to get past this war, and we need the interest rates to come down.”
On Wednesday, the U.S. and Iran agreed to a two-week ceasefire. Whether it holds could prove pivotal for commercial deals.
“It’s hard enough to predict what is going to happen to market dynamics in a normal environment than in an irregular environment,” Horn said. “Everyone is waiting for the dust to settle before investors make decisions. It’s having ripple effects throughout the entire industry.”
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Real estate feels the impact of Iran war