Commercial real estate is normally riskier and more rewarding than residential. Florida, is not only a tax paradise with 4th biggest economy in the United States, its gross domestic product reached $ 1 trillion in 2018, which makes its GDP 17th in the world, in other words, it is doing much better than many countries, such as Netherlands, Saudi Arabia, Switzerland, Turkey, and etc. Florida is also a proud example of many above-national-average, for example, News & World Report has recently ranked Florida 2nd in terms of fiscal stability and 9th with its economy nationwide. Miami is also ranked 8th in terms of business growth (0.7% above the national average) since 2010, and 18th in terms of wage growth (1.9% above the national average).
Let us investigate the key reasons that make South Florida stand out as a highly-desired commercial real estate investments destination.
Reason #1: Geographical advantage
South Florida is easily accessed by any transportation means: by land, air, and sea, which makes it the biggest hub for international business, especially with Latin America, as investors there have been traditionally drawn to Florida due to long-term cultural ties. The investment flow from this area has increased dramatically over the past years due to the political and economic instability that forced South American business owners to search for a safe haven for their assets.
Florida’s financial climate thus has always been favorable for business investment. While Broward County features very attractive domestic investment opportunities, Miami-Dade County is predominantly popular among foreign investors. Florida has recently been ranked a number 1 state where the commercial property was bought and sold by foreign businessmen and investors. Consequently, Florida’s real estate market is constantly being saturated with investments from large global players in Saudi Arabia, Qatar, China, Germany, Singapore, and Canada.
Reason # 2:Promising job growth indicators
Florida’s job growth indicators сan easily become a reason for serious envy for business owners from other states. According to an annual report by Forbes for 2019, annual job growth for Miami (Miami-Dade County) is 3.0% and 2.5% for Fort Lauderdale (Broward County). With the national average increase being only 1.8% over the past year, South Florida is not only showing impressive results but is also very likely to hold its strong position for a while, due to the fact that the acceleration in numbers happened dramatically over the past few months. This only proves that the demand for commercial housing is here to stay.
Reason # 3: Higher yields for commercial real estate
With assets in Florida markets that have been performing very well for the past several years, South Florida offers much higher yields on investment compared to other gateway cities in the United States. Miami-Dade County should be noted as the best area for opportunities for positive returns as it offers a wide variety of commercial real estate properties that is constantly growing due to the influx of new businesses and the non-stop population growth. It is important to note that unlike many other Florida’s counties, i.e. Orlando (Orange County), where the massive population growth between 2010 and 2040 is predicted to be provided by retirees increasing the numbers in this age group by roughly 90%, Miami-Dade’s population is rapidly growing due to millennials who relocate and start families and new businesses. Skyrocketing tourism is only adding even more to this equation. Miami and Fort Lauderdale are among the biggest tourism meccas in Florida which provides consistent interest in the region.
Reason #4: Retail market growth
A recent report by online real estate marketplace, Ten-X, shows that Miami and Fort Lauderdale are Florida’s biggest retail centers. With over 2 million people employed in the retail sphere and with over 270,000 retail stores all over the state, it is safe to say that South Florida is more than an attractive place for commercial real estate investments in the retail sector. Moreover, such large-scale projects as, for example, a $1.05 billion Brickell City Centre and a $1.7 billion Miami Worldcenter, Miami-Dade and Broward are rapidly becoming a paradise for retail-based businesses, attracting big names from the industry putting malls on the must-visit map for Florida’s endless flow of tourists.
Reason # 5: Commercial Real Estate Investment Trusts
REITs are having a major impact on the commercial market of South Florida all due to low-interest rates and the booming job market. REITs invest across a broad array of sectors, including retail, entertainment, and hospitality sectors, and they are also cross selling other clients they have in different markets into South Florida’s market. Their presence is one of the many other guarantees for the Florida economy’s further healthy growth and, as a result, an ever-growing demand for commercial real estate property.