Although there are significantly less lease deals taking place, South Florida’s office market is on…
It’s Boom Time in South Florida
In downtown Miami, ground is being cleared for Florida’s tallest office tower, with 1.5 million square feet to be filled by firms that have yet to establish a presence in the state. Condo towers branded as St. Regis and Waldorf-Astoria are also planned for the area, with the majority of their unbuilt units already claimed with buyer deposits. A similar trend is happening further north in West Palm Beach, where the arrival of financial giants like Goldman Sachs and Blackrock has driven office rents to record highs. Developers are now creating new workplaces with private terraces and access to yacht charters, as condos are being planned for incoming employees. “We’ve got four or five thousand people coming to West Palm Beach who have not yet arrived,” said Nick Bienstock, CEO of New York City office landlord Savanna, which is making its first Florida investment – a 275-unit condo called Olara. This mass migration of people and money to the Sunshine State, which began as a warm-weather haven from pandemic restrictions, shows no signs of slowing down.
A Changing Demographic
According to a recent report by financial advisory SmartAsset, Florida is the number one destination for professionals aged 25 to 36 earning at least $200,000. In recent years, high-earners arriving in Florida have outnumbered those leaving by over three to one. Furthermore, these newcomers are bringing cash with them, as they purchase homes in a state that is struggling to meet demand. As a result, Florida’s property market continues to outperform most other states in the US. Florida has become a desirable destination for many due to its warm climate and tax benefits, attracting not only retirees but also professionals seeking a better quality of life and job opportunities.
A Market of Superlatives
Florida’s thriving housing market is evidenced by its presence on numerous lists of superlatives. According to a monthly analysis by housing economist Ken H. Johnson, seven of the ten most overpriced housing markets in the US are located in Florida. In August, Miami’s median home price rose 14.6% compared to the previous year, while Fort Lauderdale saw a 5.3% increase. Meanwhile, other previously booming cities like Phoenix, Fort Worth, and Austin are experiencing ongoing declines in home prices. Florida’s success can be attributed in part to its appeal to high-earning professionals from New York and other northern states, who have been relocating in large numbers. This influx of wealth has also led to rising homeownership costs and a shortage of affordable housing in the state.
The Challenges Ahead
The lack of affordable housing in Florida has become a concern for policymakers, as over 1 million residents in the state are spending more than 50% of their income on housing, according to a report by the Florida Policy Project. Rising homeowners insurance premiums compound the issue. To meet future demand and curb costs, Florida will need an additional 500,000 housing units by 2030, as estimated by the Florida Apartment Association. Despite these challenges, Florida’s housing market shows no signs of slowing down, with median prices in Miami and surrounding areas experiencing significant growth in recent years.
Commercial Property Investors Contribute to Florida’s Success
In addition to residential developers, commercial property investors are also contributing to Florida’s real estate success. Data from MSCI Real Assets shows that over $63 billion has been invested in commercial properties in the three regional counties of South Florida. This further solidifies Florida’s position as a thriving real estate market.