Kaufman Rossin partnered with Bisnow to present the 8th annual Miami State of the Market, an event where Miami’s commercial real estate all-stars discuss the future of the city and the factors shaping it.
This year’s discussion centered on trends in development and construction of residential projects, retail, office space, and infrastructure. City of Miami Mayor Francis Suarez delivered the keynote address, and panels covered “Capital Flow, Investment Sales and Leasing,” “The Future of Miami’s Urban Core and Connecting Neighborhoods,” and “Macro Trends and Major Projects.”
Here are five things you need to know:
Miami’s urban core is undergoing a Renaissance.
We are witnessing the growth and redevelopment of neighborhoods like Downtown Miami, Coconut Grove, Liberty City, and Little Haiti. In Downtown Miami, the boom in condominium development has brought back a focus on the community as a residential area. “Downtown Miami used to be a 9 a.m.-5 p.m. environment,” said Angelo Bianco, Managing Partner at Crocker Partners. Now there is an exciting early-evening and weekend scene; suburban residents are going to Downtown to experience fine dining, entertainment, and shopping. New microbreweries opening this fall promise to expand the craft beer culture that has been increasingly popular among millennials, but until recently was mostly concentrated in Wynwood.
Residential density translates to opportunity for developers.
On the capital flow and investments panel, Leandro Barbuscio, CPA, tax principal at Kaufman Rossin, noted that he has observed a shift in foreign investment in the last 12 to 18 months, from residential to commercial properties. He also noted investors are showing more appetite for up-and-coming development areas such as Overtown and Doral, not just the traditional Miami Beach or Brickell areas.
There is a lot of opportunity for commercial development in the retail arena, as well, though new-to-market developers may be hesitant after seeing the effect that tech giants like Amazon have had on large retailers. The concern is that traditional retail will struggle to compete in the era of online shopping. Panelists said the key to success for retail properties lies in positioning themselves closer to home. Stores should be easily accessible for the working population. Floor-level shops in residential and commercial buildings provide a sometimes much-needed opportunity for residents to shop on their lunch hour- a convenience that is not yet available in most neighborhoods in Miami-Dade County, and an opportunity for developers to step in and satisfy that need.
Business is moving to Miami, and entrepreneurial activity is booming.
Miami made the list of top 20 cities being considered by Amazon for its new headquarters. The Miami-Fort Lauderdale area ranked No. 1 in the Kauffman Foundation’s 2017 Index of Startup Activity and the local tech scene is gaining momentum. The city also experienced a significant increase in residents with bachelor’s degrees over the last 10 years, according to panelist Alan Kleber, managing director at JLL. Moreover, Miami continues to be a hub for business with Latin America thanks to its geographic location.
All of these factors, combined with the favorable tax environment and year-round tropical climate of the Sunshine State, are attracting quality labor to the area. Panelists said Miami is doing better at retaining its top talent, leading to more business activity and additional opportunities for competitive development of workspaces.
The office of the future is a place to work, live, and play.
Open concept layouts to promote collaboration, floor-to-ceiling glass to maximize natural light, healthy dining options, standing desks, electric car charging stations – these are some of the features that can be expected in modern office spaces. “Home is becoming more like the office, and the office is becoming more like home,” points out Bianco. Tenants’ expectations are high; they want a certain level of comfort at the office and that is pushing businesses to prioritize amenities more than ever before.
After decades of inactivity, Coconut Grove has become one of the hottest development areas for Class A office space, with three new projects currently underway. Terra, one of the largest development firms in South Florida, will soon deliver 78,000 square feet of office space at its Mary Street project. The innovative building, where Kaufman Rossin will establish its new home, is still under construction and already fully leased.
The business community is also becoming increasingly more environmentally conscious, and sustainability is on the rise, according to the panelists. PACE (Property Assessed Clean Energy) provides financial assistance to projects that want to meet certain energy standards. LEED certification (Leadership in Energy and Environmental Design) is the most widely used green building rating system. Developers and designers are actively seeking these credentials to remain competitive in progressive business environments.
“Miami is the global city of the future”
In the last 12 years Miami has positioned itself among top global destinations, with projects like the Adrienne Arsht Center for the Performing Arts, Marlins Park, the Perez Art Museum Miami (PAMM), and Brickell City Center, helping it appeal to a more sophisticated and highly educated audience. Other projects in the pipeline, like the proposed soccer stadium, will make Miami even more attractive. Mayor Suarez says it will be “the global city of the future.”
In order to cater to an upscale audience and measure up to other cosmopolitan cities across the U.S., the panelists seem to agree: Miami needs to focus on infrastructure and transportation. “Necessity breeds invention,” said Nick Hamann, principal at Urban Atlantic Group, a leader in community development and investment.
Brightline is one way of addressing that need. Some go as far as saying that the new train service is redefining Miami, changing the landscape, and revolutionizing the urban core by setting a new precedent: proximity to a train station is now high on the list of must-haves for developers and investors. Connecting Miami’s neighborhoods in an efficient and reliable way is going to take priority over the next five years, said City Manager Emilio Gonzalez, who shared the city’s plan to invest in expanding the trolley system, as well.
Miami’s real estate market growth is not expected to slow down anytime soon. In fact, the city is generating interest in new commercial opportunities, reviving neighborhoods, and investing in innovation and resiliency plans. “What many people who aren’t living in [the city of] Miami don’t understand is that it is 90 percent underbuilt in terms of our zoning capacity, believe it or not, so we have a ton of growth available,” said Mayor Suarez.
Contact me, or another member of Kaufman Rossin’s real estate industry group, to learn more about development and construction trends and how these may affect your business.