How South Florida Has Grown as a Market for Business

With an influx of new residents due to pandemic relocation, the South Florida market is one of the country’s hottest. Partner Insights spoke to Tom Capocefalo, Executive Managing Director and Miami/South Florida market lead for Savills, to discuss what the area’s growing population means for the local CRE market.  

Commercial Observer: South Florida has seen an influx of new residents since the start of the pandemic. What has this meant for the South Florida office market, and what has happened to office rents over this time?

Tom Capocefalo: The recent influx of new residents and company expansions into South Florida has put pressure on the region’s office market due to the heavy demand and limited supply of available office space in the region. As a result, tenants are finding it challenging to secure quality space while landlords are enjoying increased rental rates. Over the last 12 months, rents across all asset classes have increased as a result of this heavy demand. Of course, as rents go up, landlord concessions invariably go down, making tenants’ occupancy costs substantially higher. We believe that rates will continue to edge up as the focus on South Florida continues to be a driver for additional out-of-market businesses coming into the community, predominantly the financial services and technology sectors.

What are some of the greatest challenges currently facing South Florida occupiers?

The cost of office rents and the lack of quality space alternatives due to high demand, limited supply and land restrictions. We just don’t have a tremendous amount of available land with appropriate transportation access to build additional projects on. We’re effectively bound by our geographic corridors.

Savills is currently planning an expansion in South Florida. Talk about how big Savills is in the region today, and what sort of growth plans are in the works.

Savills maintains its South Florida regional office in the Wells Fargo Center in downtown Miami, which is essentially the nerve center of the office market in South Florida. This location provides us with a direct presence in the marketplace and allows us to be in close proximity to the professional office users such as law firms, technology companies, and financial services groups. As South Florida continues to densify its population, there’s an opportunity to further attract professional personnel by expanding our market coverage. 

We are currently planning to open another office in the region, allowing us to attract additional talent out of Broward and Palm Beach Counties.  This office will provide us with broader client coverage from an increase in personnel focused on the office, industrial, and retail disciplines.

And why is South Florida a market worth expanding in right now on the commercial side?

Florida promotes a welcoming business environment and no personal state income tax. Many cities in the region are recognized internationally as business destinations, specifically Miami and Palm Beach. Companies want to be in places where there are easy mechanisms for doing business, and access to quality-of-life environments and growing job markets which continue to improve.

You opened Savills’ Miami office just over 20 years ago. What are some of the greatest changes you’ve seen in the region over that time?

Twenty years ago, I don’t think the area was appreciated as a true destination for businesses. We were always recognized as the gateway to the South American business environment, but the direction now seems to be substantially more domestic in nature and focused on the growing U.S. technology, logistics, and financial services businesses. For instance, when firms like Microsoft, Spotify, Millennium Partners or Goldman Sachs announce substantial footprints in the marketplace, then other U.S. organizations recognize the competitive value and follow suit accordingly. Overall, this has been one of the more visible changes I’ve directly experienced.

Talk about a few of your greatest South Florida-based deals and accomplishments.

I’ve been fortunate to have a long and rewarding career at Savills. I’ve focused quite a bit of my time on the law firm advisory business to include clients such as Greenspoon Marder, Hogan Lovells, Baker McKenzie and other top-tier law firms with national and international footprints. I’ve also been fortunate to represent one of the world’s largest international travel software developers, Amadeus, and have done work for some of the largest accounting firms in the country including RSM Consulting and Kaufman Rossin CPA. I’ve also had the pleasure to represent several of the area’s larger distribution companies like Interport Logistics and Flora Logistics. It’s been a great 20 years of being able to provide advisory services on a tenant-only basis, and I’ve got many more to go.

What are your biggest goals, both personally for yourself and for the Savills South Florida office, over the coming years?

To continue the expansion of Savills as a brand in the marketplace and to bolster our brokerage expertise in the Tri-County area through a multiple of disciplines. South Florida is a fast-growing region with an ever-increasing business footprint, and we see this as a great growth generator for the firm. As we expand, I’m also looking forward to grooming the next generation of Savills leaders. Otherwise, I continue living a good life and helping others any way I can. I don’t think it’s very complicated. There’s tremendous satisfaction one can get out of your life’s work if you truly enjoy it.