Miami Commercial Real Estate Investment


Miami has an alluring combination of vibrant culture, stunning beaches, and thriving business environment. All this has transformed it into a hotspot for real estate investment, particularly in the commercial sector. Whether you're a seasoned investor or just stepping into the realm of commercial real estate, this comprehensive guide will walk you through the ins and outs of Miami's commercial real estate market.

If you're aiming to optimize your real estate portfolio, consider delving into the realm of commercial real estate investment structured debt. Wondering why? Well, the enduring and reliable cash flow stemming from fixed-interest payments forms the very foundation of debt-based investments. Regardless of the market's ups and downs, borrowers faithfully honor their monthly commitments, resulting in the safeguarding of investment value.

Miami's Economic Landscape: A Magnet for Commercial Investment

Miami's diverse economy is a major draw for commercial real estate investors. The city's strategic location as a gateway to Latin America, coupled with its flourishing trade, finance, and tourism sectors, provides a stable foundation for various types of commercial ventures. As the regional business hub, Miami offers an array of opportunities for retail, office, industrial, and hospitality investments.

Prime Locations for Commercial Investments

When considering Miami's commercial real estate, location is key. The city boasts several prime neighborhoods that attract businesses and customers alike. The Brickell Financial District is known for its upscale office spaces. Wynwood is a burgeoning arts and retail hub. The Design District offers luxury retail spaces. The Downtown area features a mix of office and retail opportunities. Each neighborhood presents distinct advantages, catering to different commercial objectives.

Diverse Commercial Property Types

Miami's commercial real estate landscape offers a wide range of property types to suit various investment strategies. From office buildings and retail centers to warehouses and hotels, investors have the flexibility to choose a property type that aligns with their financial goals and risk tolerance. The thriving tourism industry also makes hotels and hospitality ventures particularly attractive in this city.

Foreign Investment and International Appeal

Miami's global appeal makes it a magnet for international investors. Its proximity to Latin American countries, coupled with a business-friendly environment and strong cultural connections, draws foreign capital seeking stable investments. The city's status as a hub for trade and finance further enhances its international allure.

Tax Benefits and Incentives

Investors in Miami's commercial real estate can benefit from various tax incentives. The state of Florida has no personal income tax, which can be a major advantage for individuals and businesses alike. Additionally, certain local incentives encourage investments in specific areas, fostering growth and development.

Market Trends and Growth Prospects

Miami's commercial real estate market has shown resilience and growth over the years. While there may be market fluctuations, the city's economic stability and increasing demand for commercial spaces offer promising long-term prospects. The city's continuous efforts to attract new businesses and industries further contribute to its growth trajectory.

Industrial Market of Miami

The industrial market of Miami is witnessing a steady uptick in industrial rents due to the tightening industrial spaces demand. 

Here are some key statistics that highlight the state of the industrial market of Miami:

  • Total Industrial Inventory: The cumulative industrial inventory in Miami accounts for a substantial 25,210,041 square feet.
  • Asking Rent (Average): Average asking rates trend upward, pushing north of $16.00 p.s.f. NNN, a new record for industrial products.
  • Vacancy Rate: Vacancy rates sit at 1.8% and are expected to remain low for the foreseeable future.
  • Absorption: Absorption for the quarter is positive, totaling 1.6 million s.f. concentrated in Northwest Dade.
  • Leasing Activity: The leasing activity has flourished, with a remarkable 9.4 million square feet leased.
  • Key Lease Transactions: Key lease transactions involve notable tenants, such as USPS leasing 179,634 rentable square feet, Custom Veterinary Services securing 147,768 rentable square feet, and Capital Logistics occupying an impressive 136,989 rentable square feet.
  • New Construction: The industrial landscape is further expanding, with a substantial 2.7 million square feet currently under construction.
  • Key Construction Completions: Noteworthy construction completions include the Home Depot facility, spanning an expansive 1,050,000 square feet, and the Intcomex establishment, which covers a substantial 221,984 square feet.
  • Largest Industrial Submarkets: Miami's dominant industrial submarkets include the Airport West Submarket (inclusive of the City of Doral), Sweetwater, and unincorporated regions across Miami.

Office Market in Miami

The office market in Miami is undergoing a significant surge in investment, even in the post-pandemic era. This momentum can be attributed to the city's inviting climate and abundant business prospects. Miami's highly sought-after submarkets, including the bustling Brickell area, vibrant Miami Beach, dynamic West Palm Beach, trendy Wynwood, and picturesque Coconut Grove, are witnessing a remarkable influx of lease agreements, particularly from private equity firms, hedge fund companies, and family offices.

Here are key insights into the office market of Miami:

  • Total Office Inventory: The collective office inventory in Miami stands at an impressive 62,877,914 square feet.
  • Asking Rent (Average): Class A office space commands an asking rent (average) of approximately $47.53 per square foot per year, while Class B office space leases at an average of $28.86 per square foot per year.
  • Vacancy Rate: The current rate of vacancy is at 16.7%, signifying the balance between supply and demand in the market.
  • Net Absorption: Interestingly, there was a net absorption of -311,727 square feet, reflecting the intricate adjustments post-pandemic.
  • Leasing Activity: There is a robust leasing activity, totaling an impressive 2.6 million square feet.
  • Key Lease Transactions: Key lease transactions involve prominent tenants, including 830 Brickell Plaza securing a substantial 505,031 square feet (developed by OKO Group and Cain International), Plaza Coral Gables leasing 392,568 square feet (developed by Agave Holdings), and the Royal Caribbean Headquarters occupying a significant 350,000 square feet (designed by HOK).
  • New Construction: Currently, more than 3.5 million square feet of office space is under construction, illustrating the city's active efforts to accommodate growing demand.
  • Largest Office Submarkets: Miami's most significant office submarkets comprise the bustling Brickell district, Downtown Miami, the strategically positioned Miami Airport area, and the elegant Coral Gables neighborhood.

Retail Market of Miami 

The retail market of Miami is witnessing a surge in activity, fueled by the city's expanding population. 

Here are key insights into the retail market of Miami:

  • Total Retail Inventory: The collective retail inventory in Miami comprises an impressive 35,300,386 square feet.
  • Asking Rent (Average): The asking rent (average) stands at $36.70 per square foot per year, operating within a triple-net lease framework.
  • Vacancy Rate: The current rate of vacancy is a modest 4.3%, indicating the balance between available retail spaces and the demand.
  • Net Absorption: There is a positive net absorption of 352,000 square feet.
  • Key Leasing Activity: Key leasing activities include prominent tenants such as Walmart, securing 158,000 square feet, South Motors leasing 72,249 square feet, and Publix occupying 47,955 square feet.
  • New Construction: Currently, Miami boasts an impressive 39 ongoing retail construction projects, collectively accounting for a substantial 3,884,385 square feet.
  • Largest Retail Submarkets: The dominant retail submarkets in Miami encompass Miami-Dade, Palm Beach, and Broward, illustrating the city's influence across a broad geographical spectrum.

Multifamily Market in Miami

The multifamily market of Miami is poised for a promising trajectory, benefiting from the city's expanding population, and showing signs of moderate yet consistent growth.

Here are key insights into the multifamily market of Miami:

  • Total Housing Units: Miami boasts a considerable inventory of 1,032,310 housing units, catering to its diverse population.
  • Renter Occupied: Approximately 48% of the housing units are occupied by renters, underscoring the city's thriving rental market.
  • Effective Rent per Unit: The effective rent per unit stands at an average of $1,905, reflecting the city's multifaceted rental landscape.
  • Effective Rent Growth: Impressively, there has been a notable effective rent growth of 14.9%, illustrating the demand and appreciation in the market.
  • Vacancy Rate: The current vacancy rate hovers around 6.8%, showcasing the equilibrium between supply and demand.
  • New Construction: In South Florida, a robust 22,555 housing units are currently under construction, with anticipated deliveries spanning from 2022 to 2024, indicating ongoing expansion efforts.
  • Investment Sales Trends: Noteworthy investment sales trends include a remarkable record average of $236,900 for the first three quarters of 2021. Additionally, capitalization rates (cap rates) range from 3.3% to 3.75% for Class A properties and between 4.0% and 4.5% for Class B and C properties.
  • Median Household Income: The median household income is recorded at $44,268, offering insights into the financial landscape of the city's residents.
  • Per Capita Income: On a per capita basis, the income averages at $31,437, further highlighting the city's economic diversity.

Bottom Line

Miami's commercial real estate market presents a landscape brimming with opportunities for investors seeking diversification and solid returns. The city's robust economy, prime locations, diverse property types, international appeal, tax advantages, and growth prospects collectively position it as a lucrative destination for commercial real estate investment. 

Assetmonk stands as a thoughtfully curated alternative investment platform, showcasing its focus on structured debt within the commercial real estate domain. Providing an accessible entry point from as low as $12,000, Assetmonk takes pride in offering personalized and exclusive investment avenues to its esteemed investors. Harnessing the potential of Assetmonk's platform paves the way for investors to envision an extraordinary Internal Rate of Return (IRR) that soars to an impressive 17 percent.

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