Miami commercial real estate will remain strong in 2018 especially in the industrial and office sectors!
2017 was a year when the commercial real estate market in Miami experienced a big shift: The office market became the dominant growth sector, we experienced a significant business interruption from Hurricane Irma, borrowers faced a tightened lending environment, and more buyers have entered our market.
For 2018, we expect that the Miami commercial real estate market will be strong, notably in the industrial and office space sectors. However, we do expect that development of new projects will slow down as banks tighten their lending criteria.
The office space market in Miami is expected to have steady momentum, creating a positive outlook for 2018. A number of factors are contributing to this growing market:
- Many US companies are expanding their presence in Florida to reach Latin American customers.
- Many Latin American companies are expanding their presence in Florida to reach US customers. For instance, the US division of the Latin American banking giant, Banco de Brasil Americas signed a new lease for 17,000 sq. ft. of office space in Brickell in 2017.
- Miami is becoming a hub for many new-to-market companies in the tech sector.
- As these companies move to Miami or are created here, new job opportunities emerge and the population grows to capture these openings.
As the job market grows in Miami, the office market continues to rise to meet this growing demand for space. Class A office space absorption will rise in Miami-Dade and Broward counties. Office spaces in Coral Gables will also see a good share of leasing activity while the office spaces in Miami Beach and Brickell will remain comparatively steady.
According to The Office Market Report 2017 by the Commercial Industrial Association of South Florida, overall office space vacancy rate dipped to 9.7% throughout Miami-Dade while the absorption rate also tripled over the same period in 2016.
Heavy leasing activity focused mainly in class A space in the CBD with significant leases signed also in the larger suburban submarkets of Airport West and Coral Gables is our forecast.
Real estate development projects should see some slowdown as the banks have tightened their lending policies but there has been very little commercial office development. Consequently, we expect the office market will continue to have high occupancy in 2018.