Category: Commercial Realty

On a recent episode of America’s Commercial Real Estate Show, the host sat down with Ryan Severino, Chief Economist at BGO, for an in-depth discussion about the state of the economy, commercial real estate, and the potential impact of the Trump presidency. The conversation navigated through economic optimism, sector-specific challenges, and strategies for navigating the evolving commercial real estate landscape.

Economic Resilience and Optimism

Severino underscored the strength and adaptability of the U.S. economy, describing it as a “stalwart performer” even amidst high inflation, rising interest rates, and geopolitical tensions. He highlighted the economy’s ability to weather significant challenges, including the pandemic, inflationary pressures, and global disruptions. Severino’s forward-looking perspective pointed to continued momentum into 2025 and beyond, provided policy changes remain measured and pragmatic.

Severino emphasized that recent election results have buoyed optimism in the market. Increased activity on commercial real estate listings and transactions, he noted, reflect a growing sense of confidence among investors and businesses.

Trump Administration Policies: Implications for the Economy

Severino and the host discussed potential policy shifts under a Trump presidency, examining areas such as energy, tariffs, and border policies:

–Energy Production: Trump’s “drill, baby, drill” stance could bolster U.S. energy independence and potentially lower inflationary pressures by stabilizing energy costs. However, Severino stressed the importance of profitability for producers and the broader geopolitical dynamics influencing global oil prices.

–Trade and Tariffs: Proposed tariffs on Chinese imports raised questions about their strategic impact. While targeted tariffs addressing excess capacity or national security concerns could be beneficial, widespread punitive tariffs might risk inflationary effects and trade wars, potentially complicating economic recovery.

–Immigration and Labor Supply: Border policies and deportation strategies could have significant implications for the labor market, particularly in industries reliant on immigrant labor. Severino called for clarity and balance in crafting immigration policies to avoid unnecessary disruptions to the workforce.

Commercial Real Estate: Navigating Challenges and Opportunities

The discussion shifted to the implications of economic trends for commercial real estate. Severino noted that the industry’s biggest hurdle in recent years has been rising interest rates, which have curtailed transaction volumes and liquidity. However, with the Federal Reserve easing rates, he anticipated a more favorable environment for lending, underwriting, and transactions.

Key takeaways included:

–Sector-Specific Trends: Office properties remain out of favor for many investors, but both Severino and the host expressed optimism about their long-term potential. Meanwhile, secondary property types, including industrial and specialty properties, are garnering increased attention and investment.

—Investor Confidence: Recent large-scale acquisitions by major players signal a vote of confidence in the commercial real estate sector. Severino characterized these moves as a sign of shifting sentiment and a precursor to stabilization and growth in valuations.

–“Wall of Maturities”: The looming challenge of maturing loans could test the market further. While some properties face difficulties refinancing at higher rates, Severino predicted a measured resolution, with the majority of collateral likely to weather the storm.

The Fed, Financing, and Market Momentum

Severino expressed confidence in the Federal Reserve’s capacity to support economic growth by reducing interest rates. He argued that lower rates would rejuvenate transaction activity, stabilize valuations, and improve capital availability. The host echoed this sentiment, noting increased activity and interest across his listings and deals, a promising sign for the broader market.

Final Thoughts: A Resilient Future

Closing on a high note, Severino praised the resilience and dynamism of the U.S. economy, emphasizing its ability to adapt to challenges and capitalize on opportunities. He projected a positive trajectory for economic growth and commercial real estate, provided policymakers avoid destabilizing moves.

The conversation offered a blend of economic analysis, practical insights, and optimism, reminding listeners of the cyclical nature of markets and the opportunities that lie ahead.

Takeaway for Industry Participants: Whether navigating office property challenges or exploring opportunities in secondary property types, staying attuned to market shifts and policy changes is crucial. The show underscored the importance of adaptability, informed decision-making, and seizing opportunities in a dynamic landscape.

The post Video: BGO Chief Economist Ryan Severino Discusses Potential Impact of Trump Presidency on Economy and Real Estate appeared first on Hawkins Commercial Realty.

Stabilized purchase: BentallGreenOak pays $60M for Medley warehouse with locked-in tenant

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The post Miami Commercial Real Estate News November 13, 2024: Medley Cold Storage Sells for $60M; Miami to Aventura Train Plans Delayed; More… appeared first on Hawkins Commercial Realty.

In a recent episode of “America’s Commercial Real Estate Show,” the show host discussed the key findings from the Emerging Trends in Real Estate 2025 report published by PwC and the Urban Land Institute. The host was joined by Andrew Alperstein, a partner with PwC’s Financial Markets and Real Estate Group, who shared valuable insights from the survey results and interviews gathered from over 2,000 industry participants. Together, they delved into the report’s highlights and significant trends shaping the commercial real estate landscape. This discussion is national in scope, thus observations can apply less or even not at all to Miami area commercial real estate.

The Shift in Market Sentiment: “The Time Has Come”

A major theme in this year’s report is the improvement in market sentiment as the industry looks ahead to 2025. Andrew noted that, compared to recent years, there’s a notable shift in confidence. He described the cautiously optimistic outlook, tempered by memories of pre-2020 highs. With the Federal Reserve’s recent rate cuts and increased transaction activity, the report aptly titled this year’s theme “The Time Has Come,” suggesting that the market may finally be poised for a turnaround.

Key Trends and Insights

1. “Be Careful What You Wish For”: The report highlights that the real estate sector, which has grown accustomed to historically low interest rates, must now adapt to a “new normal” with rates higher than in recent memory. While rates may not return to previous lows, opportunities for gains will come from asset selection and management rather than from falling rates.

2. A New Real Estate Cycle: As capital markets open up and debt becomes more available, transaction activity is expected to grow in 2025. Though debt costs remain high, there is pent-up capital ready to deploy, and this could lead to the start of a new real estate cycle.

3. Shifting Supply and Demand Across Sectors:
– Industrial and Multifamily: While these sectors have seen an influx of new supply, particularly in the Sun Belt, they continue to benefit from strong demand. However, tenants are gaining a bit more leverage in the face of slowing rent growth.
– Office Market Challenges: The office sector continues to struggle, with lingering concerns about vacancy and demand. However, some high-demand assets and markets show resilience, indicating a “flight to quality” for top-tier office spaces.
– Retail Resilience: Retail real estate has stabilized after the turbulence caused by e-commerce growth. Many obsolete spaces have been repositioned, and vacancy rates remain low across most markets.
– Hospitality and Data Centers: The hospitality sector is seeing a resurgence, driven by strong consumer demand for travel, though corporate travel is still slow. Meanwhile, data centers remain in high demand, with power and infrastructure availability becoming critical factors in site selection.

4. Demographics and Migration: The migration trend to the Sun Belt, driven by cost of living, job opportunities, and warmer climates, continues but with growing awareness of climate-related risks. Severe weather events are increasing, adding new considerations for investment strategies in these areas.

5. Affordable Housing Shortage: The ongoing affordable housing crisis presents both challenges and opportunities. There is a significant demand for housing across income levels, yet construction constraints continue. As Andrew emphasized, collaboration between local governments and developers will be crucial to increasing supply.

6. Technological Advances and PropTech: Technology continues to reshape commercial real estate operations and tenant experiences. Innovations in property management and tenant engagement are improving efficiency and ROI. Real estate, historically slower to adopt new technologies, is seeing increased interest and investment in PropTech, particularly in multifamily and hospitality sectors.

7. Sector-Specific Observations:
– Student Housing: Investor interest is growing in student housing as a viable addition to diversified portfolios, with higher yields than conventional multifamily.
– Self-Storage: This sector remains attractive due to stable demand and sticky tenant behavior. However, new supply, particularly in the Sun Belt, will need to be absorbed.
– Medical Office: Medical office properties, differentiated from traditional office assets, benefit from steady demand and long-term leases, especially near hospitals or healthcare systems.

Geographic Market Trends and Top Cities

The report identified Texas and Florida as key markets, with strong investment sentiment driven by demographic and economic trends. Dallas ranked as the top city for real estate investment. While climate risks and recent severe weather events were discussed, they didn’t significantly deter sentiment in Florida markets, where interest remains high.

The Future of Real Estate: Contrarian Opportunities

Toward the end of the show, the host and Andrew discussed the potential for contrarian investments, particularly in the office sector. While the office market may still face challenges, there is an opportunity for savvy investors to acquire quality office assets in high-growth Sun Belt markets. With a potential decrease in supply and growing occupier demand, investing in office spaces could yield significant returns over the next few years.

Looking Forward to 2025 and Beyond

Both the host and Andrew were encouraged by the findings, especially the improved market sentiment. As the show host pointed out, increased transaction activity suggests that the market may be ready to enter a new phase of growth. He expressed confidence in the real estate sector’s resilience and its ability to adapt to emerging trends, regulatory changes, and shifting economic landscapes.

For anyone interested in diving deeper into these trends, the full Emerging Trends in Real Estate 2025 report, a comprehensive 133-page publication, is available on PwC and ULI’s website.

The post Video: PwC Partner Andrew Alperstein Discusses the PwC/ULI Emerging Trends in Real Estate 2025; The Time Has Come appeared first on Hawkins Commercial Realty.

Watson Island Referendums Pass, Allowing Four New Towers

Miami voters voted yes on two separate items on the ballot yesterday relating to Watson Island, paving the way for new development. The two separate ballot questions were: Charter Amendment: Partial Conveyance for Revised Development at 1111 Parrot Jungle Trail on Watson Island Shall Miami’s Charter be amended authorizing sale and/or lease of 5.4 acres on Watson Island…

Four Towers Planned On Watson Island

Developers are now planning a total of four towers on Watson Island, according to the Herald. The development proposals are contingent on two separate items to be voted on by City of Miami voters in a referendum, scheduled for tomorrow. On the north side of the island, two residential towers are planned to rise 40 stories each, by developers Terra and ESJ Capital Partners.

Voters approve Watson Island referendums to sell city land for condo projects

Miami voters approved two ballot measures tied to selling city-owned land to different development groups so they can build more condos on Miami’s Watson Island. In exchange, the city will receive public benefits in the form of park space and a baywalk. The referendums waive competitive bidding and allow the city manager to negotiate the sales of property on Watson Island…

Voters Give Thumbs-Up To $2B Of Development On Watson Island

Two high-rise projects are set to rise on Watson Island in Biscayne Bay after Miami residents voted to greenlight the developments by a comfortable margin Tuesday.  Coconut Grove-based Terra Group and Aventura-based ESJ Capital Partners gained approval to redevelop the Jungle Island animal theme park into two condo towers, paying the city $135M for 5.4 acres on the north…

56-Story Miami World Tower 1 Gets TCO

Miami World Tower 1 has obtained its initial Temporary Certificate of Occupancy, according to contractor Coastal Construction. It is TCO #1 for the tower, Coastal wrote. Miami World Tower 1 rises 56 stories and includes 565 apartments, 3,000 square feet of full service restaurant, and 401 parking spaces. Construction activity was first spotted at the Miami World Tower…

Another 57-Story Tower Planned In Edgewater

A developer has acquired property in Edgewater where it will soon file plans for a 57-story tower, according to the SFBJ. Grupo T&C will file plans in Q1 2025 for a building with 600 and 800 residential units. Some of the units will be developer-owned rental apartments, while others would be condos allowing flexible rentals. The developer paid just over $15m for property…

Peruvian developer William Ticona pays $15M for Edgewater resi dev site, expanding his Miami pipeline

William Ticona bought a residential development site in Edgewater for $15.1 million, advancing his plans to expand his real estate empire from Peru to Miami. Ticona, who leads Lima-based Grupo T&C, scooped up the 0.8-acre vacant property at 404, 412, 416, 420, 432 and 436 Northeast, according to his broker. The seller was G&L Associates at 35th Street, an entity led by Nicolas…

Private School Shortage Cited After Billionaire Moves Firm To Miami

Two years after billionaire Ken Griffin moved Citadel to Miami, his biggest concern is the shortage of private schools here, according to the NY Post. Griffin announced a donation earlier this year to a 2-year old private Catholic school in North Miami, according to the Herald. Citadel’s relocation was announced in 2022, and the company has been working out of offices…

Linkvest Capital, MMG Equity Acquire Mixed-Use Destination in Downtown Homestead

Linkvest Capital and MMG Equity Partners have acquired Homestead Station, a mixed-use entertainment destination located on 4.8 acres at 4 S. Krome Ave. in downtown Homestead, about 39 miles south of Miami. LV Lending previously held a first mortgage on the property, and the acquisition was completed through a deed in lieu of foreclosure to Linkvest Capital and MMG Equity.

$400M Sale of W Hotel South Beach in Miami Brokered

Newmark has brokered the more than $400 million sale of the W Hotel South Beach in Miami. Reuben Brothers purchased the 20-story, oceanfront property from Tricap. The sale marks the largest hotel transaction in the Miami market this year, according to Newmark. The property is also the newest hotel to sell in the market since 2021. The W Hotel, which Tricap completed in 2009…

Developers Unveil Updated Vision and New Details For Surf Row Residences at 8800 Collins Avenue in Surfside

Miami-based LD&D, in partnership with ONE Capital and IGEQ, has introduced a new vision for Surf Row Residences, a collection of 25 bespoke condominiums situated just a block from the beach at 8800 Collins Avenue in Surfside. Designed by Alfonso Jurado Architecture and Boris Pena Architects, the project has been reimagined to align with evolving market demands.

‘Jean-Georges Miami Tropic Residences’ to Offer 329 Luxury Condos at 3501 NE 1st Ave in Miami

Soon, Michelin-Star Chef Jean-Georges Vongerichten may be known for more than innovative cuisine: his name could soon be synonymous with luxury residences. Sales have launched for Jean-Georges Miami Tropic Residences, an upscale high-rise comprising 329 condos, ranging from one-bedroom to four-bedroom floorplans. Future residents will have access to more…

Developer Planning 70-Story Brickell Tower Signs Covenant

The developer planning a 70-story tower in Brickell has signed a covenant with the county. The covenant, which was recorded on November 4, states that the property is within feasible distance to the water and sewer system, and will be connected as a condition of a building permit. Miami-Dade is currently in process on zoning approval for the site. An updated version…

61-Unit Hotel Planned In Edgewater

Zoning approval is in process for an 8-story hotel in Edgewater. The development name is listed as the Sonder Hotel – Edgewater Miami on plans. The hotel units will be a mix of studios and 2-bedrooms. Units will range from 381 to 742 square feet. The roof level will have a pool and a gym. Parking for 20 cars is planned within the new building. Miami’s Planning, Zoning and Appeals…

Lease-Up Of 323-Unit Allapatah Apartment Building ‘The Julia Residences’ Reached In Under Six Months

Developer Neology says it has achieved lease-up for its newly completed Allapattah apartment building, known as The Julia Residences. The 14-story, $140 million tower is named after Julia Tuttle, the founder of Miami. The 323 “attainable luxury” apartments are now 95% occupied, which took less than six months. Neology’s first project in Allapattah, No. 17 Residences…

Bldg Ventures plans short-term rental-friendly condo project near Miami’s The Roads neighborhood

Bldg Ventures is planning to develop Atelier Residences Miami, a short-term rental-friendly condo project near Miami’s The Roads neighborhood. Prices for units in the planned 10-story, 148-unit building at 1265 Coral Way will range from $400,000 to $2 million, according to a press release. Bldg, led by CEO René Bello, anticipates a total sellout of $80 million…

Big plans, little construction: Mapping South Florida’s long-delayed megaprojects

Nearly a decade ago, the Ghermezian family unveiled plans for an ambitious project: American Dream Miami. The Ghermezians’ Triple Five Group, owners of American Dream mall in New Jersey and Mall of America in Minnesota, proposed a sprawling mixed-use, phased 6.2 million-square-foot development with up to 3.5 million square feet of retail space, a massive theme park…

Massive Golden Glades rebuilt on $908 million road

Now 10 years in the making, the Golden Glades Interchange is on track to be the largest state-funded construction effort in Florida history. The mammoth $908 million project will help ease traffic flow in South Florida, one of the most heavily congested corridors in the nation, targeting major highways. Florida Department of Transportation (FDOT) officials say they are very…

UHealth Doral opening piece by piece through 2026

UHealth Doral is being rolled out in a phased approach rather than all it once. “It [the opening date] was Sept. 16, and we’ve done a phased approach,” said Dede Austin, assistant vice president of ambulatory services at UHealth Doral. “It’s been a phased approach opening. We started with the radiation oncology on Sept. 16 and then we, each week, expanded the services.

Lourdes Boue: Doctors Hospital/West Kendall Baptist’s CEO looks ahead

A distinguished healthcare executive, Lourdes Boue leads two hospitals within Baptist Health’s 12-hospital network: West Kendall and Doctors. Since joining Baptist Health in the ‘90s working in strategic planning, Ms. Boue has built an impactful career spanning more than two decades, marked by her dedication to advancing healthcare services and community well-being.

Design review recommends adaptive reuse project for Wynwood

A developer who is already making an impact on the Wynwood Arts District with a mixed-use project called Wyncatcher I now proposes a companion project that will fill out the block with more new retail uses and office space. Wyncatcher II is an adaptive reuse designed to bring new life to an old two-story warehouse at 2150 NW Miami Court. The Wynwood Design Review Committee…

$500 Million Mixed-Use Project Planned on 147-Acre Site Near Miami Gardens

A company led by Juan Carlos Mas, a member of the prominent Mas family with stakes in MasTec, has proposed a $500 million mixed-use development on 146.8 acres of county land just west of Miami Gardens at 20000 Northwest 47th Avenue. The project is planned to include workforce housing, retail, a hotel, warehouses, and recreational sports facilities. The Miami-Dade…

400-Foot Tower Submitted To FAA Near Omni

Plans for a tower near the Omni have been filed with the Federal Aviation Administration. The proposal was received by the agency on October 29. According to the filing, the tower will rise 392 feet above ground, or 400 feet above sea level. The site coordinates match a property that was reportedly sold to an affiliate of Sabet Group of Los Angeles in 2022. At the time, the SFBJ…

How is Flow revolutionary? Adam Neumann: “It’s a feeling”

It’s been two years since Adam Neumann launched his residential venture Flow and over six months since its first properties went live. And yet the haziness around how Flow will “revolutionize” community-based living — as Neumann promised — is as thick as ever. At The Real Deal South Florida Real Estate Forum, founder and publisher Amir Korangy pressed Neumann to explain.

Pedestrian Bridge Connecting Brightline To Aventura Mall Sitting In Storage For Months

A $20m pedestrian bridge has been sitting in storage for months, according to Miami-Dade Commissioner Eileen Higgins. Drone photos of the bridge were captured by Joel Franco. The county is waiting for an easement to be signed by a private property owner before construction can begin, Higgins said. See the pictures below.

Plans Revealed for 420-Foot Condominium Tower at 1250 West Avenue in South Beach

A partnership between JDS Development, led by Michael Stern, and entrepreneur Gianluca Vacchi has announced plans for a 420-foot luxury condominium tower at 1250 West Avenue in South Beach. Designed by Kobi Karp, the proposed tower aims to replace an existing 286-unit building currently allowing short-term rentals. Unlike the current structure, the new development…

Self-Storage Project Unfolding at 275 South Krome Avenue in Florida City

In August, Florida YIMBY reported on three self-storage ventures unfolding in both Miami-Dade and Palm Beach counties. The projects intend to meet the growing need for storage as South Florida’s population rises. Now, we’ve learned of another self-storage development taking shape in Florida City. The project is led by Ohio-based Amsdell Storage Ventures 83 LLC. It purchased…

St. Regis Bal Harbour condo association sues Qatari owners, alleging host of defects

St. Regis Bal Harbour Residences condo association is suing the property’s owners and managers, alleging building defects, health and safety issues and financial mismanagement. Mold, corrosion, flooding and exposed wiring are just a few of the defects alleged in the lawsuit filed this week in Miami-Dade Circuit Court by the Bal Harbour North South Condominium Association…

Q & A: Ed Easton goes toe-to-toe with institutional giants in South Florida’s industrial market

Ed Easton doesn’t see himself ever retiring from South Florida’s real estate game. His Doral-based eponymous commercial real estate firm runs smoothly, entering its 50th year of existence by keeping it all in the family. Easton’s adult kids, nephews and grandchildren have all been groomed to keep Easton Group in peak condition against multibillion-dollar national conglomerates…

Easton Group Buys Former Sears At Miami International Mall

The Easton Group bought the former Sears store and surrounding parking lot at the Miami International Mall from Seritage Growth Properties for $17M. The Miami-based development and real estate management firm took out a $12M loan from North Miami-based New Wave Loans to acquire the 13-acre Doral property, according to property records sourced…

South Florida holds growing role in global trade

Miami once was known as the gateway to the Americas. More recently, South Florid has grown an outsized role beyond the hemisphere to become a critical global trade hub. From sea and airports, to the foreign trade zones, to the importers, exporters and logistics facilities that rely on them, the region’s trade infrastructure and providers are connecting South Florida to the world.

Lease roundup: Tricap, Foster + Partners opening Miami Design District offices; Eataly, pickleball on tap at CityPlace in West Palm

Real estate firm Tricap and architecture firm Foster + Partners will open offices at the Design 41 building in the Miami Design District. Tricap, led by David Edelstein, leased 1,500 square feet; and Foster + Partners leased 4,000 square feet of indoor office space and a 3,500-square-foot patio at 112 Northeast 41st Street, according to broker Tony Arellano. The companies are…

Late developer Sergio Pino’s Miami apartment building faces $45M foreclosure

A Miami apartment building developed by the late Sergio Pino is facing a $45.4 million foreclosure suit. Pino, a prominent South Florida real estate figure who founded Century Homebuilders Group, died on July 16 from a self-inflicted gunshot wound at his Coral Gables home. At the time, the Federal Bureau of Investigations was closing in on raiding his home and arresting him…

New office space will lure firms to South Florida: TRD Forum panelists

The number of companies migrating to South Florida has slowed, but will reaccelerate as the region’s inventory of new office space expands, according to panelists who spoke Wednesday at The Real Deal South Florida Real Estate Forum. “Relocation activity has moderated partly because we don’t have enough high-quality office space,” said Jeremy Larkin, a founding…

TRD Forum panelists: The “Citadel effect” is boosting Brickell

Billionaire hedge fund manager Ken Griffin’s bet on Miami’s Brickell office market is boosting the neighborhood’s cachet among out-of-town executive condo buyers, according to a trio of experts addressing thousands of real estate professionals on Wednesday. Griffin is spearheading the development of a planned $1 billion 54-story mixed-use tower with a 212-room hotel…

Developers’ choice, Tomas Regalado, coasts to victory in Miami-Dade Property Appraiser race

Backed by developers, Tomas Regalado rode the red wave in Miami-Dade County to win the property appraiser’s race. Regalado, a Republican who served as Miami mayor from 2009 to 2017, beat Democrat Marisol Zenteno by 15 percentage points in Tuesday’s presidential election. Zenteno, who works as an analyst for the office she was seeking, captured 42 percent…

Developers Behind ‘Sixth&Rio’ at 501 SE 6th Ave in Fort Lauderdale Secure $96 Million in Loans

In May 2023, Florida YIMBY reported on Sixth&Rio, a multi-million-dollar residential venture in downtown Fort Lauderdale that had recently broken ground. Now, we have an update. Locally based OceanLand Investments has secured $96 million in funding to bring this project to life. According to the South Florida Business Journal, multiple lenders funded the loans…

OceanLand scores $96M construction loan for Sixth&Rio Fort Lauderdale condos

OceanLand Investments scored a $96 million construction loan for its planned Sixth&Rio condo project in Fort Lauderdale. The Fort Lauderdale-based developer landed financing from Invictus Real Estate Partners, a New York-based real estate private equity firm, and West Palm Beach-based Tannenbaum Capital Group Real Estate, according to a press release.

Developers Unveil First Yacht-Branded Residential Tower: Riva Residenze in Fort Lauderdale

Developers WellDuo, Vertical Developments, and GCF Development, together with Italian yacht maker Riva, have unveiled Riva Residenze, marking the launch of the world’s first yacht-branded residential project. The 20-story development includes 36 residences, occupying two parcels with 200 feet of waterfront and a private marina with slips. Sales and marketing…

Walton Street picks up Sunrise warehouse for $19M, as pockets of South Florida’s industrial market soften

Walton Street Capital bought a warehouse in Sunrise for $18.5 million. The Chicago-based firm scooped up the 77,600-square-foot building at 4701 Northwest 103rd Avenue from Plantation-based Miller Property Group, led by Steve Miller, according to records and real estate database Vizzda. The building, known as the Sunrise Corporate Headquarters, was completed by Miller…

Developers Complete and Open Edera Palm Springs, a 264-Unit Residential Community in West Palm Beach

Mast Capital, Rockpoint, and The Spear Group have announced the official opening of Edera Palm Springs, a new residential community offering 264 upscale apartments in the rapidly growing village of Palm Springs within West Palm Beach. Located at 2085 South Congress Avenue, Edera Palm Springs offers a walkable garden-style community with 11 three-story buildings set…

Video: Moody’s Senior Economist Ermengarde Jabir Provides Industrial Real Estate Outlook

In a recent episode of America’s Commercial Real Estate Show, the spotlight was on industrial real estate nationally with a deep dive into the current trends, challenges, and future outlooks impacting the sector in 2024. Featuring insights from Ermengarde Jabir, a senior economist at Moody’s Analytics who also publishes articles at NAIOP, the discussion offered valuable…

CMBS loans in commercial real estate

The market for commercial mortgage-backed securities (CMBS) has created a powerful source of capital for investors—particularly those financing the largest properties. While CMBS loans are more complex than traditional bank loans involving just a borrower and lender, they can be an attractive option for financing commercial real estate, depending on the property…

The condo-hotel conundrum: new state law tweaks balance of power at mixed-use complexes

Many residents bought their condos at the Carillon Miami Wellness Resort because living in a luxury hotel had an obvious allure. The branded oceanfront property is actually a condo-hotel, a complex for both residents and visitors with two restaurants and two cafés offering beachside dining, four pools, a gym and spa. Yet, the paradise is actually a “dictatorship” for residents…

The post Miami Commercial Real Estate News November 6, 2024: Voters Approve Watson Island Land Sale for $2B Development; “Citadel Effect” on Brickell; More… appeared first on Hawkins Commercial Realty.

In a recent episode of America’s Commercial Real Estate Show, the spotlight was on industrial real estate nationally with a deep dive into the current trends, challenges, and future outlooks impacting the sector in 2024. Featuring insights from Ermengarde Jabir, a senior economist at Moody’s Analytics who also publishes articles at NAIOP, the discussion offered valuable takeaways for investors, brokers, and stakeholders in the industry. Given the national scope of the conversation, observations can apply less, if at all, to Miami or other South Florida area industrial properties.

Overview of Industrial Market Performance
Ermengarde Jabir (more posts here) noted that the industrial real estate sector had experienced remarkable growth over the past few years, especially during 2021 and 2022, when demand was at an all-time high. However, a shift occurred by late 2023, indicating a cooling period. Despite this, 2024 has shown a modest uptick, particularly in rent growth for warehouse and distribution spaces, with rents up by approximately 7% in Q3—a marked rebound from the early part of the year.

Vacancy Rates and Market Stabilization
Jabir discussed an increase in vacancy rates, with distribution warehouses now at around 6.7%, compared to record lows of around 4% in previous years. However, she emphasized that this rate remains below the historical average, pointing to a healthy market contextually. The forecast for the end of 2024 suggests a vacancy rate of about 6.8%, with further stabilization expected as the market recalibrates to sustainable growth rates.

E-commerce and Inventory Shifts Drive Demand
E-commerce remains a significant demand driver for industrial space, especially for storage, shipping, and distribution functions. With a shift towards “just-in-time” inventory systems—where businesses stock only what is immediately needed—some large retailers, such as Home Depot, are adjusting their logistics strategies, impacting demand in specific areas of industrial real estate.

Reshoring and Nearshoring: Shifting Dynamics
The pandemic and global supply chain issues initially sparked a movement towards reshoring and nearshoring manufacturing back to the U.S. However, this enthusiasm has cooled as the logistical and financial challenges of relocating production have tempered expectations. Jabir suggested that while reshoring may have long-term benefits, its short-term impact on industrial demand is now less robust than anticipated.

Industrial Supply: A Slowdown in New Construction
Responding to a slowdown in demand, developers have pulled back on new construction projects. This reduction in supply has helped prevent a spike in vacancy rates and has supported rent stability. Bull noted that while industrial properties remain in high demand, especially in high-growth markets, new projects are now being approached with caution, aligning with more normalized growth.

Transaction Volume and Cap Rates: Modest Improvement
Transaction activity in the industrial sector is picking up, especially in the Southeast, though it hasn’t fully rebounded to pre-interest rate hike levels. Properties continue to attract interest and fair market pricing, underscoring the strong demand fundamentals within industrial real estate. Cap rates have also seen a slight dip due to recent Federal Reserve rate cuts, which help support property valuations and lending conditions.

The Role of Federal Policy and Economic Conditions
Both the show host and Jabir discussed potential rate cuts by the Federal Reserve in upcoming months, with Jabir noting that positive economic indicators, like GDP growth and low unemployment, suggest that any further cuts are likely to be gradual. Lower rates could aid industrial real estate by easing refinancing pressures and supporting further investment.

The Election Impact: Minimal Yet Notable
Jabir suggested that the 2024 elections could impact specific commercial real estate policies, including the 1031 exchange rule, which has been a staple for nearly a century but periodically faces political scrutiny. Other factors, like trade policies, could affect warehouse demand by altering supply chain dynamics, but overall, Jabir anticipates minimal disruption to the core industrial market fundamentals.

Geographic Trends and Future Outlook
According to Jabir, high-demand areas like Phoenix and Houston are performing exceptionally well, while Southern California faces some challenges due to increased supply. Long-term, she expects vacancy rates to trend lower and rent growth to stabilize between 3-4% annually.

Key Takeaways
The industrial real estate sector, though adjusting from its peak, continues to offer attractive opportunities, especially in e-commerce-driven areas and high-demand markets in the Southeast. Both demand and supply dynamics are stabilizing, suggesting a “new normal” with steady, if less dramatic, growth.

In summary, the show host and Jabir emphasized that while the rapid expansion in industrial real estate is cooling, the sector’s fundamentals remain strong, presenting both challenges and opportunities for savvy investors and industry professionals.

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