In 2015, foreign investment in South Florida’s commercial real estate hit a nine-year high.
Capital investment in commercial real estate in South Florida by foreign parties increased 65% in 2015 to about $2.6 billion, according to a report by CBRE Group. Most of the investments came from Latin American countries, which increased 189% to $703 million. Foreign investment in Miami-Dade County, specifically, more than doubled to $1.8 billion. Statewide, the investments grew by 85% to $4.3 billion.
While foreign investments in commercial real estate in 2016 were slightly less than in 2015, experts say it is still higher than in years past. Since 2007, foreign investors have found hotel, retail, and industrial real estate to be the most attractive investments in South Florida.
There are many opportunities for investment in commercial projects in South Florida, whether it’s new construction or a renovation. If you’re thinking about investing in the area, here are some questions to ask:
What are the market’s vacancy rates?
Before investing in commercial property, consider the area’s general vacancy rates, which can impact investment. South Florida’s commercial vacancy rates are some of the lowest in the state of Florida.
In the first quarter of 2016, Miami-Dade County office space vacancy rates were 10.3%, 4.4% for industrial spaces, and 3.3% for retail spaces.
Vacancies are correlated with demand. And, high, sustained demand ensures that the investment remains attractive long term.
How well do I know the market and sector?
Having a strong knowledge of the market and the specific sector will have a huge impact on your success. If you have specific knowledge in a certain industry, consider investing in that sector. You need to know as much as you can to maximize the cash flow with the project.
Is the location good?
Location is essential, and you (obviously) need to cater your project to it. Warehouses need to provide logistical simplicity, whereas retail needs high traffic and visibility. In the end, you get a high occupancy if you can show your prospective tenants how your project helps their profitability.
Does the investment fit within my goals?
Investors should make sure their investments meet their own objectives and fit in well with their existing portfolios. And, this may vary depending on if you choose to build from the ground up or renovate an existing space.
Asking careful questions is essential to a successful development in the long term. As we’ve been doing commercial construction in South Florida for more than 17 years, we can help answer any questions you might have. If you’re considering an investment, give us a call.
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