Millennials say real estate investing is one of the best ways to build wealth, and you don’t need a ton of time or money to start

It turns out millennials aren't as obsessed with crypto as we thought.

According to a new survey from Bankrate, over one-third of millennials say real estate is the best way to invest money they won't need for at least 10 years, more than the share of millennials surveyed who prefer stocks, savings accounts and certificates of deposit (CDs), gold, bonds, and cryptocurrency.

Real estate can be a very lucrative investment at any age, but usually requires a huge time commitment and lots of cash — or very good credit — to get started. For busy millennials with less cash to spare, a real estate investment trust (REIT) may be an easier place to start. REITs are a good option for diversifying an investment portfolio, as they represent an entirely different asset class than stocks and bonds.

An REIT will provide exposure to the real-estate market without the time and cost commitment of buying a property to either manage or fix up and sell. Equity REITs, the most common type of REIT, allow investors to pool their money to fund the purchase, development, and management of income-producing commercial real estate. A typical REIT focuses on a specific type of real estate, such as apartment complexes, hospitals, hotels, or malls.

When the REIT collects rental income from its properties, at least 90% of those earnings are returned to the investors as dividends, which are then taxed as ordinary income. You can invest in REITs either in the public market or the private market.

If you want to keep your investment liquid, stick to publicly traded REITs. You can buy individual shares or invest in a mutual fund or exchange-traded fund (ETF) that holds REITs through a brokerage firm, IRA, or 401(k). 

In addition to a quarterly or monthly dividend check, another benefit of investing in REITs is the potential for long-term appreciation. If the real-estate market you're invested in gains value, your shares may, too — just like owning stock in a publicly traded company. Between 1978 and 2016, publicly traded US equity REITs returned an average of 12.87% annually, while stocks returned 11.64%. However, like any investment, returns aren't guaranteed.

If you're willing to part ways with your money for the potential to earn greater returns, consider investing in the private real estate market through an online broker like Fundrise.

Fundrise helps you invest in real estate projects around the US without having to actually manage them. Investors can choose a portfolio to invest in based on their goals — either supplemental income, balanced investing, or long-term growth — and earn dividends quarterly. Fundrise says its platform is best for investors who have a time horizon of at least five years.

Written by Tanza Loudenback

Warren Buffett’s Berkshire Hathaway just made a big bet on real estate

Store Capital, a real estate investment trust, said Monday that Berkshire Hathaway invested $377 million in the company.

That amounted to 9.8% of outstanding shares purchased at $20.25 apiece, Store Capital said in a statement. Its shares gained by as much as 11% to $23.10 in premarket trading.

Store Capital invests in single-tenant real estate for profit.

"An investment in our company from one of history's most admired investors represents a vote of confidence in our experienced leadership team and an affirmation of our profit-center real estate investment and management approach," said Christopher Volk, Store Capital's CEO. He was referring to Berkshire Hathaway Chairman Warren Buffett.

Buffett has said real estate was a solid investment that was less volatile than stock prices and likely to produce gains. In 2016, he said he didn't believe that US real estate was in a bubble.

This investment follows Berkshire Hathaway's provision last week of a 2 billion Canadian dollar ($1.51 billion) credit line to Home Capital, Canada's largest non-bank lender that accepted responsibility for misleading investors about problems with how it underwrote mortgages.

Written by Akin Oyedele

Why Commercial Real Estate Is An Important Investment Class

The perfect investment — one that is highly profitable and completely secure, with numerous tax advantages and stability — is, like the unicorn, a mythical beast. Investment has always, from its very beginning, entailed the idea of some risk.

When many investors think of a well-diversified portfolio, they often only think in terms of investments like stocks and bonds, or maybe a mutual fund or ETF. Savvy investors understand the importance of having a diversified portfolio. Diversification protects you against losses. If one investment class performs poorly, you can still reap gains from others. It’s a balancing act that works. A truly diverse portfolio will go beyond just investing in stocks and bonds and also include assets like commercial real estate (CRE).

Even when market cycles fluctuate for one reason or another, CRE remains a desirable investment thanks to its stable nature. That steady nature makes commercial real estate a great way to diversify a portfolio. In addition, investing directly in CRE offers assets that can appreciate and provide cash flow.

Let’s look a little more in-depth at the advantages of investing in commercial real estate.

Solid Returns Over Time

In general, most investors understand that it is better to hold an asset over time than to jump in and out chasing gains. In this respect, CRE can provide solid, predictable returns. Investors in commercial real estate typically receive steady cash flow for their investments, with income generally distributed annually, quarterly or even monthly. That’s because high occupancies and predictable rents often provide the steady cash flow that most investors are looking for.

The average annual return of commercial real estate over 20 years is roughly 9.5%, nearly 1% greater than the S&P 500's average annual return of 8.6% over the same period of time. Those types of returns add stability to an investment portfolio.

An Escape From Correlated Returns

Correlated returns mean that one investment's return is linked to the performance of another. The returns for those investments, either positive or negative, tend to move in the same direction at the same time. Commercial real estate, by contrast, is a noncorrelated investment. Its performance is not typically linked to that of the stock or bond markets.

Real Estate Is A Tangible Asset

For many people, real estate is attractive because it is a tangible asset. It’s an asset class that investors can see and touch. You can visit a property yourself to learn more about its size, condition, location and other factors that can affect earnings. If something happens to a structure on an investment property, the land is still there for rebuilding or for sale.

For some people, that’s more reassuring than buying shares in companies that may not survive. However, it should be noted that real estate has some risks that other investments, such as stocks and bonds, do not. For example, unoccupied properties may cost an investor money over time. Additionally, real estate is a fairly illiquid asset. That makes it an investment that is best for those who are in for the long haul rather than those who may need their money on short notice.

Leverage

Not only is CRE likely to appreciate, but most owners also carry mortgages on their property. This allows them to leverage their investment dollar, while at the same time building equity in the property.

For example, a property that is purchased with 20% equity and 80% debt only has to go up 20% in value for the invested equity to have a return of 100%. However, that leverage comes with additional risk — the risk of foreclosure if the property can’t make its monthly mortgage payments. Therefore, the key is to make moderate use of debt ensuring there is enough cash flow from rents to service the monthly mortgage payments.

Tax Advantages

No discussion about the value of commercial real estate as an investment would be complete without mentioning some tax benefits in owning CRE. When you invest in stocks and bonds, you can expect to put aside a portion of your earnings to pay capital gains taxes. Unless the investment is part of a qualified plan or retirement account, these taxes are hard to avoid.

By contrast, with commercial real estate, there are a number of ways to reduce or eliminate capital gains. If you have purchased well-located properties, those properties should go up in value over time. Yet, for tax purposes, you can depreciate the value of the buildings over time, which helps to reduce yearly taxable income. The net effect is you are depreciating for tax purposes what should turn out to be an appreciating asset for investment. Not many asset classes provide this benefit.

Additionally, profits when you sell may be postponed completely through what is known as a 1031 tax-deferred exchange. A 1031 exchange allows you to defer taxable gains if you invest in something similar within a prescribed amount of time.

It’s An Inflation Hedge

An advantage of commercial real estate is that it can offset the long-term impact of inflation. A major factor is the fact that property rents can be adjusted with inflation, which is often the result of strong economic growth. This is quite different from investments such as stocks or bonds, in which inflation can yield diminishing returns.

Conclusion

Is commercial real estate the right investment for everybody? Probably not. But the benefits of investing in CRE include noncorrelated, predictable returns over time, along with tax advantages and an inflation hedge. That makes it close to the mythical unicorn in offering superior investment returns.

Written by Mark Tiefel - Forbes Councils Member

With Booming Numbers, Miami’s Hospitality Market Can’t Lose

Yeah, yeah, Miami might be underwater soon, but for now at least, the city has a key ingredient going for it: hard numbers.

The city is first in employment growth and fourth in population growth, according to a CityLab analysis of fastest-growing cities this August. Last year broke tourism records — 16.5 million overnight visitors and 6.8 million day-trippers came through — and 2019 is likely to top those. All of this bodes well for the city's hospitality industry.

“Miami has a growing population, whereas New York and LA are stagnant,” Dream Hotel Group Vice President of Development and Acquisitions Christian Glauser-Benz told Bisnow. He considers Miami a safer place than most to do business because of low taxes and the diverse visitor set it attracts: South Americans, Europeans and snowbirds. With a rapidly transforming city center, “downtown is finally dense enough to sustain 24/7 restaurants. The ecosystem is finally ready,” Glauser-Benz said.

Read more at: https://www.bisnow.com/south-florida/news/hotel/miami-hospitality-101418?utm_source=CopyShare&utm_medium=Browser

Miami's downtown population has increased by 40% since 2000, according to the Downtown Development Authority. The $2.7B mixed-use Miami Worldcenter is underway on almost 30 acres.

Glauser-Benz, who will be a panelist at Bisnow's South Florida Hospitality and Tourism Summit Nov. 7, will soon open a downtown location of Dream's boutique hotel concept, to complement one on South Beach and others in New York, LA, Nashville, and Bangkok and Phuket, both in Thailand. In looking for new hotels, he looks for highly dense and hip locations with lots of millennials and great bar scenes. 

Because Dream caters to upscale millennials, Glauser-Benz doesn't fret much about home-sharing. “Airbnb is selling a room and a shower," he said. "We’re selling an experience.”

Read more at: https://www.bisnow.com/south-florida/news/hotel/miami-hospitality-101418?utm_source=CopyShare&utm_medium=Browser

He also said that, despite hotels being typically one of the most vulnerable asset classes during an economic downturn, his company is well-positioned because of its well-to-do clientele.

“We offer a niche product that attracts high disposable income, so our demographic is normally shielded from any financial stress," Glauser-Benz said.

Greater Miami's Convention and Visitors Bureau has a "hotels-first" initiative, positioning hotels at the center of the guest experience. In Miami Beach, a revamped convention center opened last year, and the city will host the Super Bowl in 2020. Multiple cruise lines are building new terminals.

This week, Live Nation bought a 51% stake in Groot Hospitality, which owns Liv and Story nightclubs and five restaurants, the Miami New Times reported.

"Miami is such a hotbed of hospitality, and people all want a piece of it, but you have to have proof-of-concept in order to be successful here," Groot CEO Dave Grutman told the MNT.

Miami has been good to restaurateurs, as well. Michael Schwartz, a winner of the prestigious James Beard Award, has opened six new concepts in just the past year and a half, going from chef to businessman. While's he not quite a real estate mogul, "Maybe I should have been," he joked.

Schwartz, who will also be a panelist at the Bisnow event, made a name for himself when he opened Michael's Genuine in the Design District, pioneering that neighborhood in 2007. His recent openings under his Genuine Hospitality Group include Tigertail + Mary in Coconut Grove, Traymore in Miami Beach, Amara at Paraiso in Edgewater and an out-of-state outpost of Michael’s Genuine in Cleveland. 

Schwartz said the success of the original Michael's Genuine gave him a competitive advantage to demand better lease rates for his other concepts. It also prompted lots of people to come to him with offers for new business ideas, though he rarely acts on those, he said.

In Miami, where 22 million people flew into MIA in 2018 and 6 million went on a cruise, tourists make up about 30% of his customers, Schwartz said. But when designing a restaurant, he prioritizes locals.

“We don’t forget tourists for our restaurants — we want them, we need them — but tourists want a local experience," Schwartz said.

If he could give advice to any young chef who’s interested in opening his or her own restaurant, he’d stress the importance of the real estate.

“Spend money on good legal counsel and sign a good lease," Schwartz said. "You don’t want to be thinking about these things in the long run.”  

Written by Marcella McCarthy

Florida’s commercial real estate markets poised for continued growth

Florida is one of the fastest-growing states in the country – population growth, along with tourism, are two of the biggest drivers of our economy. Miami-Dade County alone has over 2.75 million residents, making it the seventh largest county in the U.S. A recent Wall Street Journal article reported on a study it conducted on population change by state from July 2016 to July 2017, and Florida ranked the fifth fastest growing state by percentage of one-year population growth, at 1.59 percent. For that 12-month period, 327,811 net new residents were added including births and in-migration. Nevada was second fastest, adding 2.0 percent of its population (58,275) while Idaho was the fastest growing state, at 2.2 percent (36,917).

Strip away the growth-by-percentage and Florida was the second fastest growing state while Texas was the fastest growing state, adding 399,734 people in that one year.

We expect this trend to continue, and not just because of Florida’s weather and business-friendly climate. The recently passed federal legislation placing a $10,000 limit on SALT taxes (state and local taxes, and specifically, property taxes) that can be deducted from personal income taxes is driving more people out of high-tax states like Connecticut, New Jersey and New York.

Florida has always attracted relocations from those states and expect the new tax code will spur even greater migration to the state. With no personal income tax, inheritance tax or estate tax, investors come here to reduce their potential tax burdens. In 2019, Chief Executive Magazine ranked Florida No. 2 by state for business climate. According to the Tax Foundation, the Southeast region of the country was ranked No. 1 for most favorable personal income tax laws.

Which brings us to real estate and real estate investing. In 2017, Florida was the No.1 state where foreigners bought and sold commercial property. The state is perennially in the top 10 for foreign direct investment (FDI), and has nearly 1 million jobs supported directly by FDI.

More recently, Buildium.com, a RealPage company that provides property management software and related accounting tools, ranked the top 50 U.S. real estate markets for residents and investors and Florida was mentioned seven times.

This latter point serves as a reminder, and we advise clients along these lines frequently, not all Florida markets are alike, and every region has its own nuances. Investing in South Florida, which alone has no fewer than four distinct submarkets, is vastly different than Orlando, Pensacola, Tampa or Jacksonville, the latter of which is booming in large part because of its port and the June 2016 opening of an expanded Panama Canal (which allowed Neopanamax container ships to come to East Coast markets instead of West Coast markets).

For these reasons, when choosing a market to expand or invest into, work with a local expert, like the 12 NAI global offices in Florida that serve every primary, secondary and tertiary market in the state. Last year, eight transactions closed that were referrals between NAI Florida offices covering the spectrum of real estate sectors. Although one person may be an expert in their market, they do seek out the help of another expert when their client chooses to expand to a different market.

Looking ahead, we expect robust commercial real estate activity for the following reasons:

• There will be an enormous amount of transit-oriented development built around the game-changing Brightline rail service linking Miami and Orlando, and eventually Tampa as evidenced by Brightline’s major projects in Miami, Fort Lauderdale and West Palm Beach. Along the Metrorail in Miami, there are existing, and under development, mixed-use projects of 10 to 20 stories at nearly every rail station.
• In Miami, there are three more cruise terminals being added to accommodate more cruise ship traffic. The influx of cruise passengers will drive demand for hotel, retail, food and beverage and industrial space for years to come. Plus, the influx of new residents to the state will create thousands of new jobs.
• In Palm Beach County, 125,000 new housing units have been recently approved. In addition to construction jobs, new homes will drive demand for professional services, which in turn will drive demand for more offices, warehouse/distribution product and retail real estate.

Where can we help you next? Give NAI Miami a call at 305-938-4000.

NAI Global is a leading global CRE brokerage firm. NAI has 375+ offices located throughout North America, LATAM, APAC and EMEA, with 6,000 professionals, managing 1.15 billion SF of property and facilities. Annually, NAI completes $20+ billion in CRE transactions. www.naiglobal.com

Written By Jeremy Larkin – Co-chairman, NAI Miami

Knight Foundation granting more than $1 million to fuel Miami’s startup scene

The Knight Foundation announced Thursday approximately $1.1 million in spending to spur entrepreneurship in Miami.

Eight local groups will be awarded as much as $250,000 each. The largest grantee is Black Angels Miami, a soon-to-be-launched organization of black investors focused on increasing spending on minority-owned startups. Other recipients include Venture Cafe Miami, the Miami Herbert Business School, and the Idea Center at Miami Dade College.

Knight has also allocated funds to support the launch of two other local entrepreneurship organizations: Function, described as “a membership organization that connects Miami’s investor and private wealth community” designed to fund early-stage tech startups; and Craftspeople, which will hold monthly workshops led by “seasoned founders and venture builders” to help mentor fledgling startups.

Raul Moas, Knight program director for Miami, said the investment announcement reflects Knight’s interest in helping Miami “level up” as a startup, innovation and entrepreneurship center along the lines of Austin or Atlanta. In 2019, a Knight-backed report concluded that the groundwork to build successful high-growth companies had been laid, but that further investment was needed.

“We’ve broken through,” Moas said. “We now have viable, growing companies that have found success. The question is: What gets us to the next echelon, and helps our ability to attract and retain exceptional talent and capital.”

Here is the full list of grantees:

Black Angels Miami ($250,000): “To contribute to a more diverse and inclusive venture investment landscape within Miami’s startup community by supporting the launch of Black Angels Miami, an angel investment group connecting its members to top-notch startups while also increasing the number of black angel investors.”

Function Collective ($240,000): “To elevate Miami as a source of investment capital in the global venture capital ecosystem by supporting the launch of Function, a membership organization that connects Miami’s investor and private wealth community and activates them in early-stage technology investments across the hemisphere.”

Venture Cafe Miami ($160,000): “To expand the diversity of high-growth businesses in Miami and engender a more inclusive entrepreneurial ecosystem through Passport, a program that trains and connects founders in low-growth businesses with each other and with partners to enable these businesses to transition to higher-growth.“

Craftspeople ($140,000): “To increase the availability of high-growth company building expertise so that Miami’s founders do not have to look elsewhere for guidance and mentorship by supporting the launch of Craftspeople, a membership organization that brings together entrepreneurs through monthly workshops led by seasoned founders and venture builders.”

Black Men Talk Tech ($100,000): “To support more successful tech ventures led by black men by better connecting black entrepreneurs and investors through the expansion of the Black Men Talk Tech conference.”

Miami Herbert Business School ($100,000): “To increase the flow of global leaders and knowledge coming through Miami by supporting a speakers series featuring distinguished leaders in business and venture building.”

The Idea Center at Miami Dade College ($50,000): “To create additional avenues for new participants to enter Miami’s startup ecosystem, and to create a denser, more familiar community of entrepreneurs and high-potential talent by supporting the local chapter of 1 Million Cups, a national network of weekly meetups by and for entrepreneurs.”

Out In Tech ($50,000): “To support community building and career advancement within Miami’s startup community for LGBTQ+ stakeholders by supporting the launch of the Miami chapter of Out in Tech.”

Written by ROB WILE

Cruise traffic is up in South Florida. Here’s what that means for the hotel industry

MIAMI

The number of cruise passengers in South Florida grew in 2019 continuing a five-year upward trend. That means a boost for hotel development and room rates, too.

PortMiami had 6.7 million cruise passengers in 2019, up from 5.59 million in 2018, according to the commercial real estate brokerage and property management firm JLL.

Port Everglades in Fort Lauderdale also experienced an uptick in visitors, from 3.87 million in 2018 to 3.9 million in 2019.

The uptick in activity will draw more foreign investors, development and an increase in room rates for the industry, said JLL Hotels & Hospitality Group Investment Sales Managing Director Gregory Rumpel.

“Most people taking a cruise fly in the day before departure,” Rumpel said. “That’s going to benefit hotels.”

Foreign investors see the activity and want a stake in a growing hospitality market, Rumpel said. He’s seen an uptick in investors from the Middle East since last year.

New hotel supply increased since 2015 and will continue to grow over the next five years, Rumpel said. Markets outside of Miami Beach, including the downtown core and Brickell, are expected to see an uptick in inventory.

Passenger growth and the addition of new terminals in PortMiami is already stimulating hotel development. Hotel brands are expanding in the Miami Beach market, from budget-friendly Sonder to the upscale luxury brand Aman.

Miami Worldcenter developers hope to tap into the cruise passenger growth, too, with the addition of three hotels to the 30-acre site in downtown Miami, including a Marriott Marquis, citizenM and Legacy Hotel & Resort.

Room rates are likely to continue increasing, at least for some sub-markets in South Florida, despite more supply, Rumpel said. His team expects a modest growth between 1% and 1.5% for revenue per available room — room rate multiplied by occupancy rate — across Miami-Dade County and Broward in 2020.

Hotel occupancy increased by 2.5% in Miami-Dade from 2018 to 2019, according to data by the Greater Miami Convention and Visitors Bureau released in December 2019. But rates countywide dipped by about 0.8% from 2018 to 2019. Some areas — Miami Beach, Coconut Grove, Aventura and Sunny Isles Beach — did see a slight increase.

Written by REBECCA SAN JUAN

Sales of New U.S. Homes Reach Highest Level Since July 2007

New-home sales in the U.S. jumped at the start of the year, reaching the strongest pace since mid-2007 on the heels of cheaper borrowing costs, favorable weather and a resilient labor market.

Single-family home sales rose 7.9% to a 764,000 annualized pace in January, exceeding the median estimate in a Bloomberg survey, while the December figure was revised higher, government data showed Wednesday. The median sales price jumped 14% from a year earlier to a record $348,200 as more expensive properties made up a larger share of purchases.

Key Insights

• Mortgage rates near three-year lows, elevated consumer confidence and steady employment are energizing the real estate market. Stronger demand against a backdrop of lean inventories will probably power residential construction for a third straight quarter and contribute to economic growth as business investment remains tepid and concerns mount about the economic repercussions of the coronavirus.
• The number of new homes sold for which construction hadn’t yet started increased to the best level since June, while the number sold and currently being built was the highest since 2007. Those figures indicate a robust pipeline for homebuilders.
• Consumer confidence data from the Conference Board on Tuesday showed a jump in the share of respondents who said they intended to buy a new home within the next six months.

Market Reaction

• U.S. homebuilder shares pared losses after the data, though remained lower on sales and profit from developer Toll Brothers Inc. that missed estimates.

Get More

• Purchases of new homes, which account for about 10% of the market, increased in three of four U.S. regions, led by the Midwest and West.
• The supply of homes at the current sales rate declined to 5.1 months, the lowest since November 2017, from 5.5 months in the prior month.
• Economists in Bloomberg’s survey projected an annualized pace of 718,000 new-home sales for January. Estimates ranged from 674,000 to 792,000.
• The government’s data on new-home sales are volatile on a month-to-month basis. Changes in the seasonally adjusted data have a wide margin of error. There’s a 90% chance that the percentage change in January was between a 9.9% decline and a 25.7% increase, according to the U.S. Census Bureau.

Written by Katia Dmitrieva

Buyer With Miami Beach Ties the Latest to Join Miami Worldcenter

A company with Miami Beach ties bought just over an acre of Miami Worldcenter mixed-use project for $26.78 million, likely a record price for downtown land.

Written by Lidia Dinkova

Between Two Super Bowls, Downtown Miami Real Estate Development Boomed To Record Levels

When South Florida hosted its last Super Bowl in 2010, downtown Miami was still reeling from the great recession and the real estate market crash. Ten years later, as downtown Miami takes center stage for Super Bowl LIV, the city’s urban core has rebounded with an unprecedented building boom that has added more than a dozen new skyscrapers, including the Zaha Hadid-designed One Thousand Museum Miami, CMC Group’s Brickell Flatiron and the massive mixed used project Brickell City Centre.

Christina Crespi, Deputy Director of the Miami Downtown Development Authority (DDA), said South Beach was the hub of activity when the New Orleans Saints defeated the Indianpolis Colts in Super Bowl XLIV at Hardrock Stadium a decade ago. “Since 2010, the center of gravity in Miami has shifted as downtown comes alive as one of the nation’s most vibrant neighborhoods for tourism, business and everyday living,” Crespi said. “Few urban centers in the U.S. have seen this degree of progress in one decade.”

Using data compiled by the Downtown Development Authority and commercial real estate brokerage firms, here’s a look back at how new construction has fueled population growth and economic activity in downtown Miami and Brickell.

Residential

A 2018 demographics study the authority commissioned shows more than 92,000 full-time residents live in downtown Miami, a jump of 38% since 2010. That number will reach 109,617 when the 2020 census numbers are reported, representing 67% increase since 2010. More people are moving to downtown Miami as condo prices have stabilized as the construction cycle winds down. Meanwhile, new apartments are under construction as multifamily developers race to meet demand for downtown living, Crespi said.

At year-end 2010, the average price per square foot for an existing condo sold in Downtown Miami was $224 a square foot. At year-end 2018, the price per square foot rose to $416. In January 2010, the average monthly rent for an apartment in Downtown was $1,765. At year-end 2018, the average rent for an apartment stood at $2,164 per month.

Office

According to another DDA report, more than 6.3 million square feet of office space was leased in downtown Miami and Brickell since 2013. Roughly 72% of new office space is leased to start-up tech and innovation companies. Approximately 58% of companies entering the Miami market for the first time choose to locate in downtown.

Finance and investment firms relocating to downtown Miami are also fueling the office market’s growth. The number of S.E.C.-Registered Investment Advisors in Downtown has nearly doubled over the past five years from 42 to 82, according to the DDA. The amount of total reported assets under management has grown to more than $75 billion and the number of full-time employees working for investment advisors has expanded by an estimated 55%.

Tenant renewals are driving leasing activity, with 89% of downtown users staying in place and expanding their office when faced with an expiring lease, the report states. According to a report from JLL Research, downtown Miami’s total office market had approximately 35 million square feet of space. At year-end 2019, it grew by approximately 10% to 38.5 million square feet.

In 2010, average Class A office rents in greater Miami were $37 a square foot. At year-end 2019, that number was $49.91 a square foot, representing a 35% increase. The vacancy rate dropped 28% between 2010 and 2019.

Hotels

According to the Miami DDA’s most recent tourism report, Downtown Miami is now home to 39 hotels with 8,504 rooms, up from 28 hotels and 6,404 rooms in 2010. This 33% increase in hotel inventory is accommodating a dramatic uptick in visitors, with Downtown Miami ranking among the top-ten U.S. markets for hotel occupancy and the neighborhood attracting six million business and leisure tourists annually, said DDA boardmember Suzanne Amaducci-Adams, a partner at the law firm Bilzin Sumberg and head of the firm’s real estate and hospitality practice.

“Even with the addition of thousands of new hotel rooms and countless short-term rental options, data shows our market is strong,” Amaducci-Adams said.

According to STR, which tracks hotel markets, Miami was the only city in the country to experience a double-digit increase in occupancy rates (11%) from 2018 to 2019. Miami also had the second-largest jump in Revenue Per Available Room at 16.3%.

Written by Francisco Alvarado - Contributor

Existing home sales are up again in South Florida. Who’s buying may surprise you

Sales are up across Miami-Dade County and Broward, according to the latest Miami Association of Realtors report. And it’s not just snowbirds from the northeast driving activity. Millennials, and their parents, are also driving sales.

“Millennials surpassed the baby boomers in Miami. Millennials were renting, but now they are coming to the age [when they are buying], ” said Nancy Batchelor, a Realtor with Berkshire Hathaway HomeServices EWM Realty.

Lower interest rates are sparking investment. “The parents are often giving the deposit for their kids to buy. That’s something we haven’t seen before.”

In another shift, baby boomers are abandoning the suburbs for urban living. “They want to live in a walkable neighborhood and have a carefree lifestyle,” Batchelor said.

Miami-Dade

Total home sales increased by 15.6% year over year, from 1,607 sales in January 2019 to 1,857 sales in January 2020. Condo transactions increased by 16.4%.

Inventory of existing homes decreased by 13.6% for single-family houses — from 7,265 to 6,277 — and 9.8% for condo units — from 16,518 to 14,902. That equals 5.6 months of supply of single-family homes and 12.5 months of supply for condos. A supply of six- to nine- months is considered a balanced market, meaning the market still favors sellers.

Median prices continued to rise. Single-family home prices grew by 7.1%, from $350,000 to $375,000. Condo prices increased by 6.5%, from $230,000 to $245,000.

Luxury sales of homes priced over $1 million rose for both single-family homes and condos. The number of transactions increased by 34.5% for single-family homes, to 78, and by 6.5% for condos, to 49 transactions.

More than 90% of single-family homes and condos sold for at or near the asking price.

Cash transactions dipped, comprising 33.8% of sales in January 2020 compared to 37.7% in January 2019. Still, that’s nearly double the national percentage of 21%.

“The banks have good rates,” said Batchelor. “They’ve come up with some creative lending programs.”

The number of foreign buyers also declined. Batchelor said about 85% of her clients are from the United States as opposed to five years ago, when that percentage was about 50%.

Broward

Total home sales for existing inventory increased in Broward by 6%, from 1,916 to 2,031 transactions. The number of single-family homes sold outpaced that of condos. House sales grew by 10.7% from 882 to 976, and 2% for condos, from 1,034 to 1,055.

“I think this activity is going to continue,” said Niki Higgins of Douglas Elliman. “I see activity in the market increasing.”

Existing inventory decreased. The number of single-family homes dropped by 17.4% — from 6,162 to 5,087 listings — and condos by 8.4% — from 8,095 to 8,835 listings. There are 3.8 months of supply of single-family homes and 6.2 months of supply for condos.

The median price for a single-family home grew by 5.5%, from $355,000 to $374,450, and by 6.3% for condos, from $160,000 to $170,000.

The number of sales rose by 24.5% for luxury single-family homes to 61 transactions, but decreased by 10% for luxury condos, or 81 transactions.

Higgins sees the the increase in luxury home sales as a lifestyle choice. “More people are looking for a permanent residence and they tend to look for a single-family home for that,” she said. “Some families are upgrading and, for the most part, if you have two-plus children your not going to find condo living to be the right fit.”

Luxury prices are also moving up., she said, noting that the top sale in January 2020 was $12.2 million versus $8.5 million in 2019. “That says that high net worth individuals are moving here.”

Higgins said she sees luxury buyers coming from as near as Plantation and as far as Boston, Chicago and New York City. They often buy in the Bay Colony, Harbor Beach and Las Olas areas.

More than 90% of single-family homes and condos sold for at or near the asking price.

Cash transactions dipped, comprising 38.2% of sales in January 2020 compared to 37.7% in January 2019.

Written by REBECCA SAN JUAN

Miami-Dade Industrial Real Estate Sales Topped $1 Billion In 2019

Institutional investors are gorging on industrial properties in Miami-Dade. In it’s Q4 2019 market report, Avison Young noted industrial investment sales totaled nearly $1.4 billion last year, representing a 27.5% increase from 2018. Close of half of the buyers were institutional investors.

However, industrial developers are running out of vacant land to build warehouses on and are resorting more and more to infill redevelopment, which is often more costly, Avison Young found. The firm also noted that multifamily builders are buying up outdated industrial facilities to convert into apartment buildings, a trend that is likely to continue this year.

“Economic fundamentals remained strong and the rise of e-commerce alongside solid international trade continue to fuel Miami's industrial market despite a slowing of the global economy,” the report states. “Although ongoing trade wars, escalating tensions in the Middle East, and uncertainty surrounding the upcoming political season present some notable headwinds in 2020, some fears have been mitigated with the passing of the USMCA (United States-Mexico-Canada Agreement) in the House during December.”

Investor appetite for industrial warehouses remains strong in Miami-Dade as demand continues to outpace supply, the report states. During 2019, developers added more than 5.6 million square feet of an industrial product. As a result, the local inventory grew by 3%. At the same time, due to pre-leasing activity, 3.4 million square feet was absorbed. The vacancy rate was 4.06% in Miami-Dade last year, according to Avison Young.

The steady flow of development will continue for the next several months. Among the new projects breaking ground or scheduled for completion include:

• Miami Midpoint Logistics Park. After acquiring 18 acres in Hialeah Gardens, Foundry Commercial has announced plans to build a 320,000-sf speculative industrial project. The project has the potential to be a build-to-suit for a large user, or a two-building industrial park.
• Miami 27 Business Park. Two buildings totaling 723,208 square feet in Medley.
• Miami Axis Park. Three buildings totaling 415,460 square feet are scheduled to come online by mid-2020.

Written by Francisco Alvarado - Contributor.