Observers of the South Florida real estate industry don’t go very long without seeing headlines about Miami’s hot commercial real estate market. COVID-19 perhaps has only added to the growth of the market. But even in South Florida where the pandemic hasn’t blunted the market, it has indeed shifted trends and dynamics. On February 2nd, Nitin Motwani, Managing Principal of Miami Worldcenter, and Anthony De Yurre, Partner in Bilzin Sumberg’s Land Development and Government Relations Group, discussed the movement of money and migration as it relates to real estate investment and development in the region during a virtual talk hosted by Bilzin Sumberg.
Mr. Motwani pointed out that despite all of the doomsday prophecies that circulated at the beginning of the pandemic during the spring of 2020, the real estate market in South Florida overall performed remarkably well compared to other major metropolitan areas.
“Frankly, distressed assets in South Florida don’t look all that distressed. Lenders have largely been reasonable and accommodating in working with distressed borrowers”, said Nitin, “You combine this with the fact that the rapid “K-shaped” and remote work-driven recovery is pushing people to relocate to South Florida for the quality of life, which further builds on the unabated pre-COVID entrance of companies- particularly tech- from other parts of the country into the region, and what you get is a lot of capital looking for real estate investment opportunities.”
Industrial properties, which have seen robust investment for several years, have arguably been the least affected by the pandemic, showing no signs of a glut or sinking demand. Even retail, among the sectors hardest hit nationwide, has plenty of bright spots in South Florida. Hotels in Miami Beach, for example, are operating at a much higher occupancy rate than their counterparts in other parts of the country.
Another major driver attracting large amounts of capital to South Florida has been the lack of alternative investment opportunities. With interest rates near zero, investors increasingly see real estate as their preferred option for earning adequate returns.
“Where an investor in the past may have viewed real estate as speculative, they are now seeing it as a long-term, sustainable investment”, said Anthony, “The significant expansion of transit-oriented, infrastructure-driven development in Miami-Dade, Broward, and Palm Beach Counties is evidence of this: People aren’t buying to flip. They’re buying to stay and build their lives here. In turn, the result is a rising tide across all product classes for Miami.”