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South Florida Experts Weigh In With 2023 Regional Real Estate Forecasts

Office building owners are having a hard time nationwide, but in South Florida, the migration of companies to the Sunshine State coupled with limited trophy office inventory should push rents higher. Limited land for new beachfront projects in Miami-Dade County will drive developers north to Fort Lauderdale and vicinity. And the countries of origin acquiring South Florida real estate will continue to diversify outside of South America.

That’s one of many predictions served up this month by South Florida-based real estate experts as they consider the impact of the pandemic-era boom in the South Florida real estate market and what it could portend for the post-pandemic years .

Trophy office

Vacancy rates on trophy office properties in South Florida will drop below 5%, predicts Tere Blanca, founder, chairman and CEO of Blanca Commercial Real Estate, Inc. This should cause local rental growth to continue to outpace national rental growth.

“Demand from companies migrating to South Florida, coupled with limited trophy office inventory in the near future, will increase trophy office rents to levels seen only in select buildings across the United States,” asserts Blanca. But she adds the positive news must be tempered by the realization that South Florida needs many units of affordable and workforce housing to establish a base for future growth across the region.

Population engine

ISG World CEO Craig Studnicky says South Florida’s single-family home market in 2023 will look a lot like it did in 2022.

“The engine that drives everything right now is population growth; Florida is one of the fastest growing states in the US,” says Studnicky, noting that while newcomers are looking to buy now, pre-construction condos are years away from being delivered. Hurricane Ian’s drain on labor is likely to slow them down even further.

“Despite rising mortgage rates, there is no way around it [home] prices to fall; It’s because of the population that continues to grow at a huge, rapid rate,” says Studnicky, noting it’s as simple as too many people competing for a limited supply of homes. However, there may be some relief coming in the tight rental market. There, the people who moved to Florida and rented for a while have now identified where they want to live and are renting.

Unused land

Miami-Dade County’s supply of vacant parcels for new beachfront developments is severely limited, says Bob Vail, president of Kolter Urban. This will force developers north toward Fort Lauderdale and beyond in 2023. Developers in and around the Magic City must raze existing buildings to make way for new projects. But their counterparts further north in places like Pompano Beach can start building on unused land, allowing them to deliver new properties sooner.

“Waterfront property will always be in demand in South Florida, and I expect buyers to move north to take advantage of the construction timelines,” prophesied Vail.

Similarly, Michael Taylor, CEO and president of Current Builders, says he’s noticed a significant increase in new developments in Lake Worth Beach, a waterfront town located between West Palm Beach and Boca Raton. The city boasts a moderately lower cost of living compared to its neighbors to the north and south. But it is nevertheless centrally located, which accounts for the spread of projects, he says.

International arrivals

The global buyer market for South Florida real estate will most likely grow even more diverse in the year ahead. So says Christian Tupper, vice president of sales for PMG Residential. Miami has historically been considered a magnet for buyers from Central and South America. But, says Tupper, “The distribution of residential buyers has expanded significantly in recent years to include smaller European markets such as Turkey. And [it even includes] an increase in interest from Saudi Arabia and Dubai due to direct flights to Miami [that] starting in 2021.

“We expect this trend to continue, further strengthening Miami’s position on the world stage as a highly desirable city for residents and businesses.”

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