Downtown Miami Population Growth: Good News for Commercial Real Estate Market
- Apr 01, 2010
Much has been reported on Downtown Miami’s recent spike in residential occupancy, with nearly three out of four of the condo units built since 2003 now filled.
The impact this population growth is having on Downtown’s real estate economy is already being felt: the area’s retail occupancy of 5% is among the nation’s lowest as business owners flood the area to serve and employ new residents.
The next question on the minds of many observers is what impact residential occupancy will have on Downtown’s office market, where nearly 1.2 million SF of new class-A construction is slated to come online this year, beginning with 1450 Brickell, which delivered in February.
To this point, several factors signal that Downtown Miami’s growing residential occupancy will accelerate absorption of its new office product:
- Downtown Miami’s condo boom yielded something for everyone, from ‘mansions in the sky’ overlooking Biscayne Bay, to cool, affordable condos for young professionals. This means office users – from executives at the top looking to purchase, to professionals straight out of college looking to rent – can call Downtown Miami home.
- While the vast majority of Downtown occupants are full-timers, the City’s condo oversupply is appealing to foreign buyers in the hunt for a long-term investment. As a result, executives at multinational companies looking to establish a South Florida presence have Downtown Miami in their sights.
- Now that a healthy base of residents is in place, corporate users are placing greater emphasis on Downtown’s quality of life when evaluating their office location. Downtown is home to Miami’s top cultural and entertainment destinations, a flurry of new restaurants, pedestrian-friendly streets, new parks and green spaces, and an efficient public transit system that helps make for an easy commute, giving the area a leg up on popular submarkets like Coral Gables.
As more and more Downtown Miami units fill up – occupancy absorption is expected within the next 25 months – we’ll be keeping an eye on office market stats. My guess is that steady population growth, coupled with a gradually-improving economy, will have a net-positive effect on the office market. The million-dollar question is what the extent of that impact will be.
What do you think? Have you experienced a similar market dynamic in your hometown? Sound off in the comments section.
Danet Linares is Executive Vice President of Blanca Commercial Real Estate.