Miami’s Construction Rebound
If the recession of 2008 had a poster child, Miami would be it. Cranes were dormant, and high rises were left unfinished. In the best cases, completed condominiums were converted into apartments.
That is far from the case today.
Cranes are now working vigorously in certain parts of the metro area, building mixed-use projects, offices, condos and hotels.
Enter New York City-based MEPS firm MG Engineering (MGE). Looking to capitalize on the resurgence of the city, MGE planted its southern roots in Miami earlier this year.
Bruce W. Jaffe, a principal of the firm, said that the renewed building boom has driven commercial real estate developers to seek a due-diligence engineering firm with experience in the country’s largest market. “Clients recommended and pushed us to open an office down there to help keep up with the demand,” he pointed out.
And for good reason.
According to Quinn Eddins, director of research and analysis of Florida for CBRE, numerous areas are booming right now. For example, the $1 billion Brickell City Centre underway in that neighborhood is a strong example of the demand for space. It is set to have two office towers, two apartment towers, hotel and 500,000 square feet of retail.
Projects like this exemplify cooped up demand, Eddins observed. “You’re seeing more offices built right now than you have in quite a while.”
One of the main reasons for this construction surge is that Miami is considered the country’s gateway to Latin American markets. Historically, it was considered a safe haven by foreign investors from countries south of the United States to invest money into condos because it is such a strong tourist attraction. This gateway has brought national and international corporations, from a broad range of industries, to the city to open local offices.
“The condominium market, the initial driving force down here, is now developing into other property sectors,” said Jose R. Baz, an MGE managing director who was hired to head up the Miami office. He also stressed that it’s “no longer just a party town” and that both Baby Boomers and millennials are gravitating toward the more urban live/work/play environments that make mixed-use properties thrive.
Brokerage firm Cushman & Wakefield concurs. In its most recent report on the Miami office market, the company stated that vacancy rates are decreasing, in part, due to a drop in metro Miami’s unemployment rate, which was at 5.2 percent in the second quarter, a 1 percent improvement for the same period a year ago. This increased demand has also pushed up office rents, which average $40.35 in the city’s CBD.
Michael Marino, an MGE principal, pointed out that there are investors from abroad from places such as Europe, India, China and Latin America investing in the South Florida market.
Jaffe also said MGE’s expertise in technology and security infrastructure also gives those types of clients more of an incentive to pick a firm with national experience.
The Miami commercial real estate industry has definitely improved since the downturn and has bounced back. Its diversified economy, combined with tourism demand, and its status as a gateway city for foreign investors, will likely make it attractive to investors for quite some time.