Mixed Blessings Found in South Florida Real Estate Market Boom
Six years ago, no one would have described the real estate business as being in the middle of a “boom cycle.” But those are the exact words real estate watchers are now using to describe the market in South Florida.
The South Florida Business Journal, which hosted a panel discussion on real estate trends in November, reports industry leaders are optimistic about the region’s future. The event, known as the South Florida Real Estate Review, drew experts in banking, development, and commercial and residential real estate to discuss current trends and future predictions.
Reasons for Optimism
Panelists said they were seeing increased demand for cold storage facilities and higher clearance warehouses, according to the Journal. Office space, which had seen little on the development front until recently, is now getting renewed attention – and apparently just in time. As one expert who spoke at the event told attendees, companies looking to acquire new commercial office space are finding their options limited, and the expectation is that the market will remain tight for another two years.
The retail sector appears to be looking up as well with analysts now reporting vacancy rates below 6 percent. That makes sense, the Journal noted, because as overall development increases, so does the demand for shops and restaurants.
Sore Spot for Consumers
The signs all point to an economy that’s finally on the mend. But there is at least one trend line that will give many consumers pause: apartment rents in South Florida are on the rise.
As the Sun Sentinel reported earlier this month, the housing bust of several years ago “fueled a resurgence in the apartment sector, with former homeowners turning to rentals in large numbers. A lack of existing supply quickly led to a landlord’s market that still remains in place.”
That in turn led developers to start building thousands of apartment units in Palm Beach and Broward Counties where rents have risen 5.5 percent and 4.4 percent respectively from a year ago, according to the Sun Sentinel.
While that may be welcome news to the construction trade, many of the new developments have been luxury apartments with monthly rents in the $1,400-to-$3,000 range, putting the homes out of reach for many consumers.
Florida Cities Receive Poor Grades on Home Affordability
In fact, the website Interest.com, which conducts an annual Home Affordability Study, recently gave Tampa and Miami an “Affordability Grade” of D and F respectively, citing those cities’ low median incomes of under $50,000. With wages stagnant, that makes the local housing market one of the least affordable in the country right now.
It will be interesting to see what the future holds for the prices of both residential and commercial real estate within Florida. At the Florida Law Offices of Larry E. Bray, we are keeping a close watch on these developments to ensure we have a detailed knowledge of the real estate arena across the state. If you have questions about purchasing or selling real estate, or need legal representation in any other way, call us. We are happy to provide you with a consultation to discuss your needs.