U.S. Cities Growing Faster than Suburbs
Census data released this summer validated what many in the real estate sector already believed: America’s cities are growing faster than our suburbs. In fact, 27 of the country’s 51 largest metro areas saw their urban cores grow at a faster rate than the surrounding suburbs last year. The dynamics underway in Miami’s commercial real estate market reflect this urban shift.
Miami’s Urban Markets Rebounding
Like most major U.S. cities, Miami’s office market suffered during the depths of the recession. Vacancy rates doubled due to oversupply of new product and contraction by companies across the board, resulting in negative absorption in the class A market. But in contrast with our urban counterparts, Miami’s market is bouncing back sooner than many projected as new to market tenants arrive, foreign investment pours in, and existing users look to upgrade their space.
The focal point of this rebound has been Miami’s urban markets – areas with a high density of commercial, residential and retail product. This marks an important swing versus the previous 50 years when, aside from downtown Miami, many of our market’s commercial users preferred suburban office space.
Miami Urban Submarkets Expanding
Downtown Miami and Brickell receive much of the attention due to the high volume of lease activity underway at assets such as 1450 Brickell, but urban submarkets including Doral, Coral Gables and Downtown Dadeland are benefitting as well.
In fact, some of the Miami market’s largest lease transactions of the past year have involved major users entering or expanding into urban submarkets. Examples include the Miami Herald Media Company’s upcoming relocation to the former U.S. Southern Command Headquarters in Doral, HBO Latin America’s lease at 396 Alhambra in Coral Gables, and Preferred Care Partners’ lease renewal and expansion in Downtown Dadeland.
With so much focus placed on the commercial, residential and retail growth underway in downtown Miami and the adjacent Brickell Financial District, we are now beginning to see a significant spill-over effect on urban submarkets outside the city’s core.
Look for this activity to continue as Miami’s business base becomes more global, our mass transit system improves, and an increasing number of residents and business executives seek homes in urban areas that offer an enjoyable quality of life at home and at work.