The commercial real estate industry’s leading brokers and commercial development experts provided insight into the state of the retail, office, mixed-use, multifamily and industrial sectors moving into the second half of this year and 2024 during NAIOP South Florida’s annual mid-year update. NAIOP supports commercial real estate professionals with advocacy, education and business opportunities and connects its members through a powerful North American network. NAIOP South Florida is the largest chapter in the state.
With continued optimism about South Florida’s resilience and long-term potential for growth in various commercial sectors, the panelists weighed in on a wide range of important topics including leasing activity, continued return-to-office work occupancy issues, construction costs, material and labor shortages, skyrocketing insurance prices, predicted land shortages and multi-story industrial options, the development of urban environments in suburban locations to attract tenants, affordable housing, job and population growth and the cost of living.
“There’s a lot going on in the market, and as a leading organization for the commercial real estate industry, our mission is to support our members’ success by delivering programing to keep them well-informed and connected,” said NAIOP South Florida Executive Director Jules R. Morgan.
The program was divided into two panels, beginning with a broker panel moderated by Christian Lee, vice chairman of CBRE, which included panelists Jonathan Kingsley, vice chairman of Colliers, Jaime Sturgis, chief executive officer of Native Realty and Tom O’Loughlin, executive vice president of CBRE.
Top land broker Christopher Thomson, executive director for Cushman & Wakefield, served as moderator for the developer panel, which featured distinguished panelists Jordan Bargas, senior vice president of development for Related; Malcolm Butters, president and co-founder of Butters Construction & Development; James Bry, executive vice president of Sunbeam Properties & Development, developer of the Miramar Park of Commerce; and Robert Given, vice chairman of CBRE.
The group of industry experts confirmed that with interest rates at a higher rate than expected a slower economic recovery is anticipated in 2024. Industrial demand was viewed as normalizing, and healthy, with no current oversupply issues. Retail leasing is active, especially for restaurants and service-based retailers. Office markets have seen a decrease in volume and size of transactions but there continues to be optimism for future growth. In addition, construction costs continue to remain high due to pricing fluctuations in materials and labor availability.
The panel also discussed the return-to-office and its impact on real estate occupancy rates. While return-to-office work mandates are still loose, the tide is beginning to turn as business leaders increasingly realize the need for in-person engagement and collaboration, especially with the younger workforce still in need of training.
While offices in urban markets are faring better than those in suburban markets because of the rich amenity base inside or near those downtown office buildings, there are still many positive benefits to suburban offices and corporate parks, especially as developers commit to develop vibrant mixed-use communities in their immediate vicinity.
Jonathan Kingsley, vice chairman of Colliers, said that suburbs are still a safe choice for businesses in today’s environment. “Corporate office parks tend to be less expensive, particularly in the flex-office market, where tenants can access their own single-story space, control their airflow, avoid busy parking garages and common elevators. They offer all the fundamentals, particularly when surrounded by some type of retail amenity base.”
James Bry, executive vice president of Sunbeam Properties & Development, later went on to describe his company’s diversification strategy which includes developing mixed-use communities near the company’s existing office park, Miramar Park of Commerce. “We’re seeking to create an urban environment in a suburban location by developing the 130 acres adjacent to the office park. We’ve got more than 13,000 people who work at the park, and this will provide an energetic and walkable place to go for lunch, meet after work and live nearby.”
Development panelists also touched on the ongoing strength of the industrial market while pointing out the challenges faced in the multifamily sector due to rising insurance costs and increased debt rates. The group noted some positive momentum in certain subsets of the office market such as Brickell Avenue. While the group suggested that Florida is no longer just for retirees, concerns about the cost of living and schooling options were also noted as challenges to Florida’s future attractiveness.
Malcolm Butters, president of Butters Construction and Development, referenced a recent Bureau of Labor Statistics report stating that Florida now has more jobs than New York for the first time ever. “The future is very bright,” he said. “This growth trend is going to continue, and we will keep attracting new young professionals, employers and people with discretionary income which has the power to increase the demand for real estate and uplift the entire state economically.”
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